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A New State Tool to Manage Drug Costs: Experts Share Insights into Outcome-Based Contracts for Medicaid Pharmacy Claims
Colorado and Michigan have joined Oklahoma to become the nation’s pioneering states with approved State Plan Amendments (SPAs) that enable Medicaid alternative payment models (APMs) for prescription drugs in the form of outcome-based contracts with pharmaceutical manufacturers.
In early May, state experts from Oklahoma, Colorado, and Michigan shared their experiences implementing their APMs during a NASHP webinar. A recording of the webinar is available here.
Experts from Oklahoma, Colorado, and Michigan shared their experiences implementing their outcome-based Medicaid alternative payment models during a recent NASHP webinar. Listen to the webinar here.
The SPAs enable states to negotiate contracts based on agreed-upon outcome measures tailored for specific drugs. Outcomes measures vary but may include measures such as patient adherence or reduced hospitalizations. If the drug’s performance fails to meet agreed-upon outcomes and triggers the need for additional manufacturer payments to the state, those payments are made in the form of supplemental rebates. The contract template was developed with the support of the State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D).
Though these outcomes-based APMs are valuable tools for states to manage escalating drug costs, APMs are best understood as “one more tool in our toolbox,” which are most effective when used in tandem with other strategies rather than in isolation, explained Cathy Traugott, pharmacy office director of the Colorado Department of Health Care Policy and Financing. Though these APMs may help states manage payment for high-cost drugs, the high-list prices themselves remain a problem that states are also attempting to address head on. During this year’s state legislative session alone, 47 states have filed 254 drug-cost-related bills (as of May 22, 2019).
Executing and implementing outcome-based contracting can be a time-consuming endeavor for states because of the necessity for state officials to engage with multiple manufacturers in exploratory discussions to identify drug candidates, followed by the data analysis necessary to design, and then track the outcome-based measures.
Oklahoma, whose work NASHP supported through a subgrant from the Laura and John Arnold Foundation, found that the process took longer than anticipated. Terry Cothran, director of the University of Oklahoma’s College of Pharmacy, advised states that pursue outcomes-based contracting to consider dedicating a project coordinator to execute the work most effectively.
To date, these contracts are with state Medicaid agencies only, and have not included inter-agency efforts. Rita Subhedar, state assistant administrator for Michigan’s Department of Health and Human Services, stressed the importance of broad engagement within a Medicaid department to effectively implement these APMs, including pharmacy, medical, and behavioral health staff. A separate, subscription-based payment approach, known as the “Netflix” model, utilizes a cross-agency approach engaging both Medicaid and a state corrections department. This approach was explored in another NASHP webinar, How States Pay for Hep C Drugs Using a “Netflix-style” Subscription Model.
The first results from outcome-based contracting will come from Oklahoma, whose first, one-year contract is scheduled to end July 2019, with three other contracts concluding soon after. Colorado and Michigan have not yet executed contracts.
States Drive Innovations in Quality Measurement and Improvement for Children with Special Health Care Needs
Children and youth with special health care needs (CYSHCN) are a diverse population whose health care needs and costs often exceed those of most children. Improving care for this population is critical, yet challenging, due to the complexity of conditions of some children, and the multitude of systems (e.g., health, education, social services) and supports that children typically use.
With Medicaid and CHIP programs financing health care services for 44 percent of all CYSHCN in the United States, state Medicaid agencies are increasingly targeting CYSHCN as part of their health system transformation efforts to improve health care quality and outcomes. A recent NASHP 50-state scan of state Medicaid managed care programs found that 37 states and Washington, DC, now enroll some or all populations of CYSHCN in risk-based Medicaid managed care. As state payment and delivery system reform efforts advance, tailoring quality measurement and improvement strategies to CYSHCN is a growing priority for many states to improve care for this vulnerable population.
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Despite this growing interest, states face numerous barriers in implementing quality improvement strategies for CYSHCN. For example, many Medicaid agencies lack the resources and capacity to develop robust quality improvement initiatives for this population of children. Many existing quality measures have limitations in their applicability across all CYSHCN populations, and may not fully assess the overall quality of care. Surveys that can be used to measure family experience with care are often challenging and burdensome to administer. Quality improvement is a lengthy and iterative process and requires substantial time and resources for non-complex patient populations. These challenges are more pronounced when developing quality improvement initiatives that meet the unique needs of CYSHCN.
Some state Medicaid agencies, however, are leading the way by designing innovative programs and exploring new ways to align and embed quality measurement for CYSHCN in within broader state initiatives.
- Michigan: Michigan’s Children’s Special Health Care Services (CSHCS) program serves children with special needs. Michigan Medicaid utilizes the Consumer Assessment of Healthcare Providers and Systems 5.0 Child Medicaid Health Plan Survey with the Children with Chronic Conditions measurement set to assess the experience of care and quality of care for children enrolled in the CSHCS program. The survey results are used to guide improvements in the CSHCS program, and they are factored into incentive payments for the state’s managed care organizations (MCOs).
- New York: As part of New York’s overall Medicaid Redesign Team initiatives, the state is changing how children, including CYSHCN, are served in the state’s Medicaid program. One new program that is specifically driving quality measurement and improvement for CYSHCN is Health Homes Serving Children (HHSC). Through this program, participating Health Homes use a care management model to support to Medicaid-enrolled children with complex physical and/or behavioral health conditions. Health Homes report on the “Health Homes Measures Subset,” which is a list of performance measures designed to assess members’ well-being and the impact of care management activities. Some of these measures include adolescent well-care visits, time from health home referral to outreach, and follow-up after hospitalization for mental illness. The HHSC program also develops and maintains a Quality Management Program that monitors, evaluates, and ultimately improves the quality of care for members. The current quality measurement activities are laying the groundwork for New York to eventually integrate Health Homes into its statewide transition to value-based payments, with the goal of holding Health Homes accountable for the quality of care rendered and the outcomes of their members.
- Texas: Texas Medicaid serves children and youth with disabilities and complex conditions in a specialized managed care program called STAR Kids, which uses several strategies to measure and improve the quality of care for enrollees. Prior to the launch of STAR Kids, a study established baseline data for utilization, access, and consumer satisfaction. Now that the program is in its first year, Texas Medicaid will conduct a post-implementation survey of the children enrolled in STAR Kids to assess its performance, compare the performance of MCOs, and determine which measures to integrate into future quality improvement activities. Texas Medicaid also plans to implement additional quality improvement activities for STAR Kids over the next several years, including releasing MCO report cards that can help STAR Kids enrollees and their families select a health plan, and linking financial incentives and disincentives to MCO performance.
To learn more about these and other innovative Medicaid quality measurement strategies targeted to CYSHCN, read NASHP’s new issue brief, State Strategies for Medicaid Quality Improvement for Children and Youth with Special Health Care Needs. The brief includes a table highlighting selected Medicaid quality measurement sets and tools for children, and three case studies featuring ongoing work Michigan, New York, and Texas.
For more information about NASHP’s work on Medicaid Quality Measurement and CYSHCN, contact Becky Normile at bnormile@oldsite.nashp.org.
States Share Innovative Approaches to Improve Population Health through Accountable Health Models
More than 200 state health officials crowded into a National Academy for State Health Policy’s (NASHP) annual conference session recently to learn about strategies to improve population health and reduce costs while simultaneously transforming their state’s health care finance and delivery models.
An Accountable Community for Health (ACH) is:
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They came to hear representatives from California, Michigan, Oregon, and Washington State discuss their approaches to building population health priorities into their health system transformations through “accountable health” organizations. These entities invest in population health improvement through Accountable Communities for Health (ACHs) and care delivery structures that are accountable for population health, such as Accountable Care Organizations and Coordinated Care Organizations (CCO).
During the standing-room-only session, the four state presenters described their unique models, including financing and measurement strategies and relationships to broader health system transformation. Officials shared examples of how these new delivery models invest in social determinants of health to increase health and well-being and control costs. Examples include:
- Several of California’s Accountable Communities for Health have chosen to focus on reducing violence and trauma as a priority. One conference participant observed, “It doesn’t matter how many times people who are victims of domestic violence see a doctor, it won’t improve their health until the violence stops.”
- Michigan’s Community Health Innovation Regions identified the intersection of housing, homelessness, and health as a priority area. Its goal is to strengthen collaboration between health and housing agencies and develop solutions for Medicaid beneficiaries whose housing needs put their health at risk.
- Oregon CCOs’ global budgets give them flexibility to provide non-medical services that result in better health and lower costs, such as supporting home improvements and rental assistance, embedding mental health professionals in school systems, and promoting gym memberships.
- Washington state’s Accountable Communities of Health are addressing the opioid use public health crisis.
During the conference, NASHP also facilitated a half-day convening of state policymakers from 10 states, across departments and agencies, to advance state accountable health models. During the session, state officials discussed models, shared strategies, and identified multi-sectoral funding to support their focus on population health, health disparities, and social determinants of health. This cross-sector convening included officials from Medicaid and public health agencies and state health transformation offices, along with some key partners.
NASHP will continue to convene meetings, analyze, and report on the evolution of these state models, and build on previous analysis of State Levers to Advance Accountable Communities for Health, to help states advance these transformational efforts. Stay tuned for an upcoming cross-state comparison chart and accompanying issue brief that share lessons and themes related to accountable health models gathered during the NASHP annual conference.
For more information about NASHP’s work on state accountable health models, e-mail NASHP Senior Program Director Jill Rosenthal at jrosenthal@oldsite.nashp.org.
Using Payment Policies to Support Primary Care – Behavioral Health Integration in Medicaid
Many states are developing and implementing strategies for integrating behavioral health with primary care. Integrated care improves patients’ access to behavioral health services, attendance at scheduled appointments, satisfaction with care, and adherence to treatment. Minority populations in particular are more likely to seek mental health treatment from primary care practitioners than from mental health specialists. Medicaid payment policies, including reimbursement for behavioral health screenings, management, and referrals in primary care settings, can facilitate this integration.
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Matching Patients with Their Providers: Lessons on Attribution and Enrollment from Four Multi-Payer Patient-Centered Medical Home Initiatives
Within multi-payer medical home initiatives, it is critical to develop and implement attribution and/or enrollment methodologies that assign participating patients to the practice most responsible for managing their care for two important reasons: the numbers of patients assigned to each practice influences the amount of supplemental PCMH payments paid to practices and which patients are assigned to the practice may affect the practice’s performance on specific cost, quality, and utilization metrics.
This brief, supported by The Commonwealth Fund, presents key considerations for states when developing assignment models: determining the degree of alignment across payers; establishing a means to collect and distribute patient assignment data; assessing the accuracy of the model; and ensuring sustainability. Key considerations presented in this brief were gleaned from challenges and lessons learned from multi-payer initiatives in Maryland, Massachusetts, Michigan, and Rhode Island.
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Michigan – Medical Homes
Michigan’s medical home activity began with a 2008-2010 Improving Performance in Practice (IPIP) program sponsored by the Michigan Primary Care Consortium (MPCC), which combined learning sessions with coaching to implement components of PCMH and chronic illness care. MPCC has also created a patient-centered medical home toolkit.
Blue Cross Blue Shield of Michigan (BCBSM) has also played a large role in spurring medical home activity in Michigan, providing fertile ground to develop partnerships with public payers. As of August 2012, BCBSM had designated nearly 1,000 practices (over 3,000 physicians) as medical homes under its medical home program. Roughly 5,000 providers are working to implement at least one medical home initiative as part of the BCBSM Physician Group Incentive Program (PGIP), extending the program to nearly 2 million Michiganders.
Federal Support:
- Michigan is one of the eight states selected to participate in the Medicare Advanced Primary Care Practice (MAPCP) demonstration program. Medicare has joined as a participating payer in the Michigan Primary Care Transformation (MiPCT) Project. The MiPCT project is building upon the provider infrastructure created through the BCBSM medical home designation program.
- The Michigan Public Health Institute, in partnership with the state’s Department of Community Health, won a $14 million Health Care Innovation Award in June 2012 to support primary care in two counties.The project will train and deploy about 90 community health community workers and will also develop community hubs that will link patients to needed services. Michigan discussed their plans to build community hubs on a NASHP webcast in April 2012; the presentation is available here.
- Michigan has received a duals demonstration grant from the Centers for Medicare & Medicaid Services (CMS) to “coordinate care across primary, acute, behavioral health and long-term supports and services for dual eligible individuals.”
Last Updated: April 2014
| Forming Partnerships | The Michigan Department of Community Health leads the Michigan Primary Care Transformation (MiPCT) Project with guidance from the 18-member steering committee representing state agencies, primary care physicians, physician organizations, health plans, employers, and the Michigan Primary Care Consortium. The project is managed by the University of Michigan. The project has also formed a Patient Advisory Council to advise the steering committee. |
| Defining & Recognizing a Medical Home |
Definition: A multi-stakeholder workgroup convened by the Michigan Primary Care Consortium adopted the Joint Principles of a Patient Centered Medical Home as the statewide consensus definition of “Medical Home,” with the inclusion of four Michigan-specific footnotesfurther defining ‘patient-centered’, ‘personal physician’, ‘quality and safety’, and ‘payment’.
Recognition:
The Michigan Primary Care Transformation (MiPCT) Project requires participating practices to meet either insurer-developed Physician Group Incentive Program (PGIP) standards or 2008 NCQA PPC-PCMH standards (Level 2 or 3 required).
Practices that are designated under the BCBSM Physician Group Incentive Program (PGIP) must meet guidelines within twelve “domains of function.” The specific domains are: patient-provider partnerships; patient registries; performance reporting; individual care management; extended access; test results tracking & follow-up; preventive services; linkages to community services; self-management support; patient web portals; coordination of care; and specialist referral processes.
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| Aligning Reimbursement & Purchasing |
Since January 2012, participating practices and providers in the Michigan Primary Care Transformation (MiPCT) Project have received three per-member per-month (PMPM) payments for each attributed patient:
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| Supporting Practices |
The Michigan Primary Care Transformation (MiPCT) Project will support physicians and practice transformation by providing educational opportunities, a Care Management Resource Center, and the Michigan Data Collaborative. The focus of support is on care management, self-management, care coordination and linking to community services. Educational opportunities include learning collaboratives, lean workshops, practice-based coaching, webinars, and seminars. The Michigan Data Collaborative will create a multi-payer claims database and generate metric feedback reports.
MiPCT will also provide clinical models, resources and support aimed at avoiding emergency room and inpatient use for ambulatory sensitive conditions, reducing fragmentation of care among providers and involving the patient in decision-making.
In June 2012, the Michigan Public Health Institute, in partnership with the state’s Department of Community Health, won a $14 million Health Care Innovation Award to support primary care in two counties.The project will train and deploy about 90 community health community workers and will also develop community hubs that will link patients to needed services. Michigan discussed their plans to build community hubs on a NASHP webcast in April 2012; the presentation is available here.
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| Measuring Results |
Reporting activity in the Michigan Primary Care Transformation (MiPCT) Project includes:
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Quality Measurement to Support Value-Based Purchasing: Aligning Federal and State Efforts
Public payers are moving to implement payment strategies that reward value in the health care system by linking payment to quality. This report—the third in a series supported by The Commonwealth Fund to explore opportunities for improvement in federal and state policy— highlights quality measurement strategies underpinning value-based purchasing initiatives at the federal and state level. It also describes opportunities for federal-state alignment identified during a Commonwealth Fund-supported discourse among high-level state and federal officials hosted by NASHP.
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Identification and Assessment of Children and Youth with Special Health Care Needs in Medicaid Managed Care: Approaches from Three States
Increasingly, states are relying on managed care delivery systems to serve Medicaid enrollees that have historically been exempt from enrollment in managed care, such as children and youth with special health care needs (CYSHCN). The federal Medicaid managed care regulations establish the broad requirements for states to identify and assess individuals with special health care needs. However, little has been recently documented about specific state policies or procedures for identifying and assessing CYSHCN. This report, prepared with the support of the Lucile Packard Foundation for Children’s Health, looks at such approaches in three states – California, Massachusetts and Michigan – and includes some promising practices states may consider in implementing Medicaid managed care for this vulnerable population.
February 2014
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For individuals living with complex, often chronic conditions, and their families, palliative care can provide relief from symptoms, improve satisfaction and outcomes, and help address critical mental and spiritual needs during difficult times. Now more than ever, there is growing recognition of the importance of palliative care services for individuals with serious illness, such as advance care planning, pain and symptom management, care coordination, and team-based, multi-disciplinary support. These services can help patients and families cope with the symptoms and stressors of disease, better anticipate and avoid crises, and reduce unnecessary and/or unwanted care. While this model is grounded in evidence that demonstrates improved quality of life, better outcomes, and reduced cost for patients, only a fraction of individuals who could benefit from palliative care receive it. 
