Payment Reformers Tackle Innovation—Different Strokes for Different States

The Affordable Care Act (ACA) established numerous opportunities for states to improve their healthcare payment and delivery systems, allowing for a fundamental transition from rewarding volume to value. As states leverage grant opportunities such as the State Innovation Model (SIM) initiative, many are diving into multi-payer payment reforms to enhance quality of care, increase positive outcomes, and lower costs. NASHP’s Achieving Payment Reform to Improve Integration and Quality of Care project, supported by Kaiser Permanente, is disseminating innovative and promising payment transformation efforts implemented by state leaders.
At NASHP’s 2014 Annual Conference, state officials from Iowa, Tennessee, and Washington presented on a panel titled “A Fresh Crop of State Payment Reform Innovations.” All three states received SIM Round 1 Design awards to assist in reform planning and have applied for Round 2 SIM Test awards. Each state has a distinct political context and health care environment that shapes their transformation models. In their determination to achieve multi-payer payment reform, though, all representatives relayed the necessity of ardent ambition and dreaming big to realize change.
“We don’t get to sit on the periphery and be passive. The state has a responsibility to move the market towards value-based purchasing. This is an adventure, and we’re just getting ready,” saidNathan Johnson of Washington State. Washington is beginning to implement its Accountable Communities of Health (ACH) program, which creates entities similar to Accountable Care Organizations (ACOs). Although ACHs are ultimately responsible for their attributed population’s health and well-being, ACHs do not bear financial risk. ACHs are regionally governed entities that include diverse cross-sector membership from medical, behavioral health, public health, social, and educational services as well as consumer organizations, local government, and risk-bearing entities. The ACH structure is based on the premise that health and health care are local and that no one sector alone can improve the health of a population. Washington awarded several counties ACH planning grants and will announce two pilot sites in November 2014.
In contrast to Washington, Iowa is partnering with the state’s dominant commercial insurer to implement ACOs that will ultimately bear full risk. In the first phase, ACOs participate in both shared savings and losses. However, the first phase excludes accountability for specific long-term care and behavioral health service costs. “[ACOs] will be responsible for the people, but not all the expenditures, yet. We will ask the ACOs to create relationships at the community level to understand the complexities of care coordination and needs of behavioral health and long-term care clients,” Marni Bussell of Iowa explained. Once the ACOs have matured, these services will be phased into their budgets in 2017 and 2018.
Tennessee is tackling reform through the development of a model focusing on episodes of care, which only a handful of states are currently testing. The episode model assigns one Principal Accountable Provider to be fully accountable for all parameters of a patient’s care in a given episode, such as a hip replacement or acute asthma. This strategy incentivizes the accountable provider to better coordinate patient care with hospitals, behavioral health specialists, rehabilitation facilities, and others involved in a patient’s care team.
Given states’ ambitious transformation plans, collaboration with multiple stakeholders is critical. “Alignment is a seven-way street,” said Brooks Daverman of Tennessee. Panelists emphasized that given varying healthcare landscapes within and across states, the definition of alignment is not static.

• Tennessee is partnering with four commercial payers in the state as well as collaborating with local initiatives, provider systems, and Medicare.
• In Iowa, stakeholders are working to align quality measures across payers, create a standardized reporting infrastructure, and define accountability for costs.
• With an extremely competitive commercial and Medicaid marketplace, Washington is leveraging its own state purchasing power and interagency partnerships to act as the “first mover” in transformation efforts.

Before the close of NASHP’s conference session, panelists imparted their wisdom to states that are just beginning health system transformation efforts:

• Engage stakeholders, (e.g., payers, providers, consumers) early and often
• Identify and articulate common priorities
• Develop measureable goals
• Create concept papers that can be widely shared
• Use consistent messaging
• Force tough conversations early
• When problems arise, do not resort to the lowest common denominator
• Go big: Challenge yourself and your state to see what you can achieve

States across the nation are demonstrating that the time is ripe to effect change. There are more funding and technical assistance opportunities available now to improve states’ health care systems than ever before in history. The road ahead is an adventure with inevitable bumps along the way. But these states, and many others, are trailblazers on a path to achieve multi-payer payment reform. As Brooks Daverman said, “Don’t be afraid to disrupt something. Innovation always does.”
Share your state’s efforts to transform payment and delivery systems in a comment below or on our multi-sector payment reform discussion page.

This blog post was written with support from Kaiser Permanente Community Benefit.