Medicaid Managed Care – Page 6 – The National Academy for State Health Policy

Webinar: Cross-Agency Approaches to Substance Use Disorder Prevention and Treatment

March 20, 2019/in Policy Webinars Behavioral/Mental Health and SUD, Chronic and Complex Populations, Chronic Disease Prevention and Management, Cost, Payment, and Delivery Reform, Medicaid Managed Care, Medicaid Managed Care, Physical and Behavioral Health Integration, Population Health /by NASHP Staff

Wednesday, March 20, 2019
4-5 p.m. (ET)
Watch this NASHP-ASTHO webinar.

Cross-agency collaborations are critical to develop and execute comprehensive approaches to substance use disorder (SUD) prevention and treatment. State public health and Medicaid agencies must look beyond their traditional roles to design a strategy greater than the sum of individual agency activities to achieve broad population health impact. The Association of State and Territorial Health officials (ASTHO) and the National Academy for State Health Policy (NASHP) share national recommendations detailing how public health and Medicaid officials can launch and sustain partnerships that align policies, funding, staffing, and data across agencies to address SUD.
This webinar shares insights from state officials to address the needs of people living with or at risk of developing SUD and feature state examples of successful partnerships in action.

Colorado Develops New Payment Method for Physician-Administered Drugs – with the Potential to Save Millions

March 18, 2019/in Policy Colorado Blogs Administrative Actions, Cost, Payment, and Delivery Reform, Health System Costs, Medicaid Managed Care, Prescription Drug Pricing, Quality and Measurement /by Johanna Butler and Jennifer Reck

The National Academy for State Health Policy (NASHP) provided a grant to the Colorado Department of Health Care Policy and Financing to develop a new payment methodology for physician-administered drugs (PADs). PADs are drugs delivered by intravenous infusion or injection in clinical settings. The category includes costly drugs, such as chemotherapy and other specialty medications.
Developing an appropriate payment methodology is a challenge for states due to a lack of information about how much providers actually pay to acquire these drugs. Colorado’s current methodology reimburses providers based on an average sales price (ASP) plus 2.5 percent – however, it is unknown how closely these prices reflect what providers actually pay. One recent analysis suggested that hospital markups for a variety of brand name drugs ranged from three- to seven-times more than the average sales price. Hospital markups for generic drugs were even higher.
To determine what providers actually pay for PADs, Colorado contracted with Myers & Stauffer to survey Medicaid providers from July to August 2018 to establish their actual acquisition costs. Using the aggregated acquisition cost data, Myers & Stauffer developed an average acquisition cost-based payment rate model and compared them to existing payment rates in Colorado.
They found that current Colorado payment rates were 12 percent higher overall than the average acquisition cost-based rates, meaning this new methodology could produce significant savings for the state.
The new model for payment rates based on the average acquisition cost survey is similar to the average acquisition model that many states currently use to pay for pharmacy-dispensed prescription drugs – called the National Average Drug Acquisition Cost (NADAC).
For more information about Colorado’s trailblazing work and research findings on the impact of NADAC on state drug spending, register for the upcoming NASHP webinar State Tools to Lower Medicaid Prescription Drug Costs: Exploring Payment Methodologies for Retail and Physician-Administered Drugs, from 2 to 3 p.m. (EST) Friday, March 29, 2019.

How the President’s Proposed Budget Impacts Critical State Health Programs

March 18, 2019/in Policy Blogs Administrative Actions, Behavioral/Mental Health and SUD, CHIP, Chronic and Complex Populations, Chronic Disease Prevention and Management, Cost, Payment, and Delivery Reform, Eligibility and Enrollment, Eligibility and Enrollment, EPSDT, Health Coverage and Access, Healthy Child Development, Maternal, Child, and Adolescent Health, Medicaid Managed Care, Medicaid Managed Care, Medicaid Managed Care, Population Health, Prescription Drug Pricing, State Insurance Marketplaces /by NASHP Writers

The President’s 2020 budget request proposes a 12 percent reduction in the US Department of Health and Human Services (HHS) budget, compared to 2019 federal fiscal year (FFY) funding levels. The following highlights some of the key components of the President’s proposed $87.1 billion HHS budget proposal that could impact state health programs.

Affordable Care Act (ACA) and Insurance Markets

The proposed budget recommends the following changes to the ACA and insurance markets:

Converts Medicaid and private market subsidies into state block grants: The changes are modeled after a 2017 bill originally proposed by Sens. Lindsay Graham (R-SC), Bill Cassidy (R-LA), Dean Heller (R-NV), and Ron Johnson (R-WI), which would convert Medicaid as well as private market subsidies (e.g., advance premium tax credits and cost-sharing reductions) into block grants for states. The program would require that states dedicate 10 percent of their grants toward funding that protects high-cost individuals, including those with pre-existing condition. The change is estimated to result in $777 billion in cuts to these programs over a 10-year period.
Establishes a minimum contribution standard for health insurance premiums. Amends premium tax credit calculations to require that individuals contribute a minimum percentage of their income toward insurance premiums. Currently, there is no such requirement, enabling some consumers to pay as little as zero for insurance once tax credits are calculated.
Funds the cost-sharing reduction (CSR) program: Proposed appropriation for CSR payments through calendar year 2020, with a request that CSR funding remain in place as long as the CSR requirement remains in place for health insurers. However, the budget only allocates $479 million in funding for calendar year 2020, which falls significantly short of the Congressional Budget Office’s CSR cost estimate of $10 billion in FFY 2020. The President’s proposed FFY 2019 budget included a similar proposal that was not funded.
Reduces the grace period for payment of health insurance marketplace premiums: This suggests that the 90-day grace period consumers are given to enact marketplace coverage be reduced to 30 days.
Expands availability of health savings accounts (HSAs): Allows HSAs to be combined with any plans that are below a certain value threshold based on their benefits and cost-sharing structure (actuarial value of up to 70 percent). Current law only allows for use of HSAs with high-deductible health plans.

Medicaid

The President’s FFY 2020 budget contains some significant changes to Medicaid financing that were in the FFY 2019 budget, as well as other proposals impacting its policies and program operations:

Cuts overall program funding: Proposes to cut $777 billion over 10 years from Medicaid and marketplace subsidies.
Repeals ACA’s Medicaid expansion and targets Medicaid funding: Advocates repealing the ACA’s Medicaid expansion and supports a refocusing of Medicaid on individuals the program was “originally intended to serve.”
Requires work and community engagement initiatives: Notes that work and community engagement demonstrations for able-bodied adults enrolled in Medicaid have been approved in eight states. Proposes that all able-bodied, working-age individuals meet work requirements to receive Medicaid benefits (and other federally funded public assistance programs), predicting this will save $130.4 billion over 10 years.
Gives states the ability to change certain program elements and eligibility determination processes: Proposes to give states additional flexibility over Medicaid benefits and cost sharing, including making non-emergency medical transportation optional and allowing states to use state plan authority to increase copayments for nonemergency use of emergency departments rather than requiring a waiver to do so. Proposes to allow states to apply asset tests for individuals who are financially eligible for the program through the Modified Adjusted Gross Income (MAGI) standard. States would also be permitted to conduct eligibility redeterminations for MAGI-eligible individuals more frequently.
Reduces the federal match rate for Medicaid eligibility staff: Reduces the federal match rate for Medicaid-eligibile workers from 75 percent to 50 percent by FFY 2024, predicting this will save $7.4 billion over 10 years.
Prohibits Medicaid payments to public providers in excess of costs: Proposes to limit Medicaid reimbursement for health care providers operated by a unit of government to no more than the cost of providing services to Medicaid beneficiaries.
Allocates resources for program integrity and data collection: Includes measures designed to address waste, fraud, and abuse, as well as forthcoming guidance from the Centers for Medicare & Medicaid Services (CMS) about improving data collection of Medicaid supplemental payments.
Continues Medicaid Disproportionate Share Hospital (DSH) reductions: Current law reduces Medicaid DSH allotments between FFY 2020 and FFY 2025. This budget proposes to continue DSH allotment reductions from FFY 2026 through FFY2029 and estimates this will save $25.9 billion over 10 years.
Allows states to provide postpartum coverage for pregnant women with substance use disorders (SUDs): Proposes to make it easier for states to offer pregnant women diagnosed with SUD full Medicaid benefits for one year postpartum, which would cost $245 million over 10 years.
Improves maternal mortality and morbidity interventions: Through the Center for Medicare and Medicaid Innovation, it proposes to explore a potential service delivery model to test ways to address maternal mortality and morbidity rates.
Extends postpartum Medicaid coverage: Proposes making it easier for states to extend full Medicaid coverage for up to one year after birth for postpartum women with SUD. Currently, postpartum Medicaid coverage ends 60 days after birth, which can be a barrier to SUD treatment for postpartum women.
Expands flexibility for enrolling out-of-state providers in Medicaid: Currently, when Medicaid beneficiaries receive care outside of their home state, their provider must enroll in the beneficiary’s home state Medicaid program to receive payment. To reduce paperwork and promote access to specialized out-of-state care, the budget proposes allowing out-of-state providers to be paid as long as they are enrolled in Medicare or any state Medicaid program. This proposal would cost $9 million over 10 years.
Extends Medicaid managed care waivers: Currently, to implement mandatory, risk based Medicaid managed care, states must request waivers from HHS every two to five years. This budget proposes permitting the HHS secretary to approve waivers for longer time periods, and even make the state’s managed care authority permanent if a waiver has been renewed once before.

Proposals Affecting Individuals Dually Eligible for Medicare and Medicaid

Coordinates review of Dual Eligible Special Needs Plans marketing materials: Allows for joint state and CMS review of marketing materials for Dual Eligible Special Needs Plans.
Revisits Part D special enrollment period for dually eligible individuals: Clarifies the special enrollment period (SEP) for Medicare Part D to allow CMS to apply the same annual election process for all eligible individuals, but maintains the ability for dually eligible beneficiaries to use an SEP to opt into integrated care programs or to change plans following auto-assignment.

Prescription Drugs

Expands Medicaid drug coverage demonstration: Would allow up to five state Medicaid programs to test a closed formulary under which they negotiate prices directly with drug manufacturers. However, states in this demonstration cannot participate in best-price reporting or the Medicaid Drug Rebate Program. Closed formularies would permit states to pursue a selective and more cost-effective specialty pharmacy network, but leaving the rebate program is a risk states need to weigh. Predicted savings is $410 million over 10 years.
Eliminates the Medicaid rebate cap: There is currently a statutory cap on manufacturer drug rebates at 100 percent of a drug’s average manufacturer price. Once the cap is reached, manufacturers can increase a drug’s price without increasing associated Medicaid rebate. Lifting the cap will ensure manufacturers pay rebates covering all prices of a drug. It will also protect state Medicaid programs from the cost of excessive price spikes and incentivize lower list prices.
Authorizes the Health Resources and Services Administration (HRSA) to collect a user fee from participating 340B hospitals. Covered entities would pay 0.1 percent of total 340B drug purchases to create a sustainable source of funding to manage the 340B Drug Pricing Program.
Requires 340B transparency. All 340B-covered entities would need to report savings achieved from the 340B program and their uses to HRSA.
Improves integrity of rebate program: Enables HHS to impose fines on manufacturers when they misclassify drugs for Medicaid drug rebate purposes. Predicted savings are $347 million over 10 years.

Children’s Health Insurance Program (CHIP)

The President’s proposed budget only includes one suggested policy change that does not offer much detail.

Eliminates an existing fund and establishes a new one to provide states with additional federal CHIP funds in case of a shortfall. The proposed budget eliminates the Child Enrollment Contingency Fund, which provides additional funding to states that anticipate a shortfall of federal funds due to higher-than-expected CHIP enrollment. However, it also creates the Shortfall Fund and tasks CMS to transfer unused annual appropriations to this fund for states that need additional federal CHIP dollars.

Prevention and Public Health

The HHS budget request prioritizes public health through its investments in the opioid crisis and by targeting funds to support the launch of an initiative designed to end HIV/AIDS across the country. The high-level budget breakdown:

Continues support to prevent, treat, and support recovery from opioids, including:
- $1.5 billion for State Opioid Response grants in support of all states and territories;
- $221 million to expand the behavioral health workforce, including an additional $4 million for a new effort authorized in the SUPPORT for Patients and Communities Act to increase the number of providers that are able to prescribe medication-assisted treatment;
- $120 million to support SUD treatment and prevention, including opioid abuse, in rural communities at the highest risk;
- $476 million for the US Centers for Disease Control and Prevention to continue current activities in support of all 50 states and territories, as well as local jurisdictions, to track and prevent overdose deaths;
- Align SUD treatment privacy protections with other confidentiality protections;
- Prevent abusive prescribing by establishing HHS reciprocity with the Drug Enforcement Administration (DEA) to terminate provider prescribing authority;
- $330 million in Department of Justice funding for opioid-related state and local assistance, including: $145 million for the Comprehensive Opioid Abuse Program to support, treatment and recovery, diversion, and alternatives to incarceration programs; $125 million for drug courts, mental health courts, and veterans treatment courts; $30 million for residential substance abuse treatment; and $30 million for prescription drug monitoring programs, as well as funding for the DEA to combat illicit drug use and trafficking; and
- Funding for US Department of Agrilculture: $44 million in distance learning and telemedicine grants, of which $20 million would be dedicated to projects that combat the opioid crisis. In addition, the budget proposes $60 million in community facilities grants, which can be used to support treatment centers and other community needs.
Aims to end the HIV epidemic: The HHS budget invests $291 million in FFY 2020 for the first phase of the administration’s proposed initiative, which will target areas with the highest infection rates with the goal of reducing new diagnoses by 75 percent in five years and 90 percent in ten years. The initiative includes:
- $140 million investment in CDC to test and diagnose new cases, link newly infected individuals to treatment, connect at-risk individuals to pre-exposure prophylaxis (PrEP), expand HIV surveillance, and directly support states and localities;
- $70 million in new funds for the Ryan White HIV/AIDS Program within HRSA to increase direct health care and support services, in an effort to increase viral suppression among patients in targeted, high-incidence areas. Also includes $50 million to HRSA for expanded PrEP services, outreach, and care coordination in community health centers;
- Prioritizes the reauthorization of the Ryan White program; and
- $25 million in new funds for the Indian Health Service to screen for HIV and prevent and treat hepatitis C in those living with HIV/AIDS.

Expands activities to address HIV/AIDS: Allocates $54 million for the Minority AIDS Initiative within the Office of the Secretary and $116 million for the Minority AIDS program in the Substance Abuse and Mental Health Services Administration in an effort to increase services to disproportionately affected communities of color.
Prioritizes funding for programs that address the needs of older Americans, many of whom require some level of assistance to continue living independently within their communities. This funding provides critical help and support to seniors, providing direct services such as respite care, transportation assistance, and personal care services. These services also include $907 million for senior nutrition programs. This funding is estimated to provide 221 million meals to more than 2.3 million older Americans nationwide.
Cuts CDC’s total discretionary budget authority by $1.276 billion, compared to 2019 funding levels. Program-level cuts would be $153 million. Other changes include:
- A cut of $237 million for chronic disease prevention and health;
- The creation of the America’s Health Block Grant as a means of reforming state-based chronic disease programs; and
- An increase of $10 million for influenza monitoring and prevention.

Health and Housing Issues and Other Programs Addressing Social Determinants of Health

Some components of the HHS budget, and several aspects of the US Department of Housing and Urban Development (HUD) budget, could affect states’ abilities to address health through housing and other social determinants of health. The proposed budget cuts HUD funding by $8.7 billion — a 16.4 percent decrease from 2019 estimate.

Proposes changes to federal investment in rental assistance. The budget request would increase rental assistance to $37.9 billion, which would maintain services for all currently enrolled HUD-assisted households. However, “work-able” residents would be required to pay a greater share of their rent.
Adds funds to the Rental Assistance Demonstration (RAD) program, which supports transitioning public housing to housing voucher and project-based rental assistance units. RAD would prioritize the redevelopment of public housing units in designated Opportunity Zones.
Increases funding for lead-safe healthy homes by $60 million to $290 million.
Supports changes to existing programs:
- Cuts $45 million from Housing Opportunities for People with AIDS, and
- Eliminates the Community Development Block Grant (CDBG), “recognizing that state and local governments are better equipped to address local community and economic development needs.”
Proposes policy and financial changes for safety net programs. The budget cuts $17.4 billion from the Supplemental Nutrition Assistance Program and cuts approximately $1.1 billion from the Temporary Assistance for Needy Families (TANF) block grant. Adds additional work requirements in federally funded public assistance programs, including Medicaid and TANF.

Other Programs

Eliminates several programs serving children and youth with special health care needs (CYSHCN): Proposes eliminating several programs funded by HRSA that help states better serve CYSHCN. These include initiatives to improve systems of care for those with autism and other developmental disorders, pediatric mental health conditions, genetic disorders, and sickle cell disease.
Ends programs promoting screenings for infants and mothers: The budget proposes ending an initiative that supports universal newborn hearing screening and a program that promotes screening and treatment for maternal depression.
Promotes innovations to address maternal mortality: The budget proposes that the Centers for Medicare and Medicaid Innovation (CMMI) create a service delivery model for states to test interventions to improve maternal morbidity and mortality. This proposal would not require Congressional approval, and is in addition to CMMI’s recently released Maternal Opioid Misuse and Integrated Care for Kids models.
Funds Family-to-Family (F2F) Information Centers: Funds F2F Health Information Centers at their current level through 2021.
Maintains Maternal, Infant, and Early Childhood Home Visiting (MIECHV) program: Maintains MIECHV program at current levels.
Promotes foster care: To promote family-based foster care for children with significant disabilities, proposes spending of $357 million over 10 years on salaries for foster parents. The recent Family First Preventive Services Act (FFPSA) placed restrictions on funding for congregate care placements (such as group homes), so this proposal would support states in developing alternatives to congregate care. Additionally, the FFPSA allows states to provide preventive services, such as mental health or substance abuse services, to keep children with their families. The budget proposes creating a flexible funding option that would further broaden eligibility for preventive services and increase the types of services that states can provide.
Caps benefits for families with more than one child enrolled in the Supplemental Security Income (SSI) Disability Program: Creates a cap on the total SSI benefits that families with more than one child receiving SSI disability payments can receive.
Increases Individuals with Disabilities Education Act (IDEA) funds: Proposes a slightly increased level of funding ($13.2 billion) for IDEA formula grants to states to support special education and early intervention services.
Maintains funding for Women, Infants, and Children (WIC): Proposes maintaining current level of funding ($5.8 billion) for the Special Supplemental Nutrition Program for WIC.

Oregon’s Accountable Health Model Addresses Health Equity and Health-Related Needs: Four Lessons from CCO 2.0

March 11, 2019/in Policy Oregon Blogs Accountable Health, Chronic and Complex Populations, Community Benefit, Cost, Payment, and Delivery Reform, Health Coverage and Access, Health Equity, Maternal, Child, and Adolescent Health, Medicaid Managed Care, Medicaid Managed Care, Medicaid Managed Care, Medicaid Managed Care, Population Health, Primary Care/Patient-Centered/Health Home, Social Determinants of Health /by Amy Clary

States developing accountable health models often look to Oregon for inspiration. Oregon established its Coordinated Care Organizations (CCOs) in 2012, pursuant to a Medicaid Section 1115 demonstration waiver. CCOs are local networks of all types of health care providers — including physical, behavioral, and oral health providers — that the state pays a global capitated rate to provide integrated care to Medicaid beneficiaries. This capitation model gives the CCOs flexibility to provide both health and health-related services as appropriate for:

Individuals, such as supplemental food, athletic shoes, or air conditioners, and
The community, such as supporting farmers’ markets or workforce development programs.

A percentage of the global budget is set aside each year for CCOs to earn based on their performance on quality incentive measures, some of which measure progress toward addressing upstream health factors such as smoking prevalence or effective contraceptive use.
The Oregon Health Authority (OHA) is in the process of selecting CCOs to serve Medicaid beneficiaries for a second five-year period, beginning in 2020. The state recently announced that it received 20 letters of intent, with full applications due in late April 2019. As part of this re-procurement process, known as CCO 2.0, the OHA developed a request for applications (RFA) that reflects Gov. Kate Brown’s commitment to health equity and to addressing the social, economic, and life conditions that affect health.
The process also builds on a comprehensive evaluation of the CCO model’s first five years. For example, the evaluation found that the financial incentives built into the CCO model were associated with improvements in the incentive metrics. It also suggested that the state require CCOs to invest a portion of their global budget in the social determinants of health, to ensure CCOs address non-clinical factors affecting health. CCO 2.0 incorporates these and other lessons from the first five years, to help the model build on its strengths and learn from experience.
Oregon recently shared updates on its CCO 2.0 contracting process with states participating in the National Academy for State Health Policy’s workgroup for states with accountable health entities. States seeking to improve health equity and address health-related needs through accountable health models could learn a number of lessons from Oregon’s experience.

Convene without usurping. States and accountable entities can use their convening authority to raise the profile of health equity and health-related social and economic needs. Because accountable entities are locally driven, states can expect them to bring together stakeholders representing a range of community perspectives for focused conversations about community needs. The OHA oversaw an extensive stakeholder engagement process as part of CCO 2.0 that culminated in soliciting public comments on the RFA.

Requiring accountable entities to take on a convening role with diverse stakeholder representation can also help ensure that they are not entering the health equity space by taking over work currently performed by community partners. Instead, accountable entities can identify and build upon the good work already taking place in a community and supplementing it.

Pay for priorities and pay partners. The Oregon legislature codified the state’s commitment to health equity and the social determinants of health by requiring CCOs to direct a portion of their spending to “services designed to address health disparities and the social determinants of health,” consistent with the CCOs’ community health improvement plans. Oregon’s CCOs work with a range of community partners — such as social service organizations, housing service providers, and public health professionals — to improve health equity and meet health-related social needs. Recognizing that the work of these partners helps CCOs earn quality incentive payments, one of the adopted CCO 2.0 policy recommendations encourages CCOs to spend a portion of their funds on the community partners who help them reach their goals.

Even accountable health entities that do not receive global payments or incentives for meeting quality measures could consider acknowledging the importance of their community partners to their work, whether through monetary appreciation or other means.

Align assessments. Accountable entities play a key role in identifying and meeting the health and health-related needs of people in their local communities. At the same time, non-profit hospitals’ community health needs assessments, state health improvement plans, and local health department needs assessments also gauge the needs of their communities, often to fulfill federal, state, or other requirements or expectations. To ensure that these assessments complement one another without duplication, accountable entities can work to bring the parties together to discuss sharing data and information, aligning due dates where possible, sharing tools and resources, and seeking to fill gaps.

Oregon’s CCOs are required to develop local Community Health Improvement Plans (CHPs) and Assessments (CHAs). As laid out in in the adopted CCO 2.0 policies, the OHA requires CCOs to share their CHAs with local hospitals, tribes, public health authorities, and other CCOs that serve those same communities. It also requires the CHPs to address two priorities identified in the state health improvement plans and requires each CCO to submit its CHA to the OHA. This helps integrate state and local priorities, and ensures that policymakers have an understanding of local and regional needs.

Govern with the community. In Oregon, community voices are built into the structure of CCOs. Each CCO is guided by a community advisory council (CAC) made up of community members. In addition, each CCO has a governing body that by statute must include a member of the CAC, and at least two members of the community at large. This requirement is meant “to ensure that the organization’s decision-making is consistent with the values of the members and the community.” As part of CCO 2.0, CCOs are expected to have at least two CAC members, at least one of whom is a Medicaid beneficiary, on their governing boards.

While many state accountable health entities require community representation in their governing bodies, it can sometimes be challenging to ensure that the full diversity of community voices are heard. Some states use statutory language or guidance to enumerate the types of community organizations or perspectives that accountable entities must include. Oregon goes a step further: CCO 2.0 will require CCOs to report on the composition of their CACs, and on how closely the representation on the councils aligns with the demographic composition of their communities and with the community’s health priorities. This helps ensure that CCOs will engage community members who are in touch with the community’s health priorities, and can provide appropriate insight and guidance.
All eyes are on Oregon as it addresses non-clinical health needs at the individual and community level, and builds health equity into the contracting requirements for its CCOs. Even states whose accountable health models look very different from Oregon’s CCOs, or whose work on community health and health equity is in early stages, may draw on these lessons to inform their next steps. As Oregon’s example shows, states have the levers and expertise to help accountable health entities improve health and well-being in their communities and ensure that community voices are heard in the process.

Support for this work was provided by the Robert Wood Johnson Foundation. The views expressed here do not necessarily reflect the views of the foundation.

Hospital Price Transparency: The Next Frontier

March 4, 2019/in Policy Colorado, Maine, Massachusetts, New Hampshire, Washington Blogs Cost, Payment, and Delivery Reform, Health Coverage and Access, Health IT/Data, Health System Costs, Medicaid Managed Care, Value-Based Purchasing /by Josephine Porter

The Centers for Medicare & Medicaid Services (CMS) took an important first step toward increasing the transparency of hospital finances when it required hospitals to post their charge information, effective January 2019. But, these charges are not prices paid — they are typically the starting point against which commercial payers negotiate discounts.
States with all-payer claims databases (APCDs) have an important tool that allows them to go a step further – they can analyze the differential between “charges” and “prices paid.” This is an increasingly important distinction, particularly as 90 percent of hospital marketplaces are highly concentrated. Research shows that such concentration diminishes the capacity of health plans to negotiate rates and has increased hospital costs from 20 to 40 percent without gaining improvements in efficiency or quality .
New Hampshire Comprehensive Health Care Information System’s APCD releases data that allows the comparison of the difference between what is charged by hospitals and what health plans and consumers pay. The statewide report of charges and allowed amounts for common hospital services in New Hampshire, available at the NH HealthCost website, shows how charges compare to allowed amounts. Analysis of this data, shown in the table, illustrates that the actual amount paid for a service can vary greatly from what is charged, sometimes by more than 100 percent.

Service Category	Median Price Charged	Median Price Allowed or Paid	Percentage Difference between Median Price Charged and Amount Paid
Biopsy skin lesion	$ 189.00	$ 69.12	-173%
Total hip arthroplasty	$ 37,195.00	$ 20,193.17	– 84%
Total knee arthroplasty	$ 14,543.50	$ 5,824.55	-150%
Nasal endoscopy dx	$ 1,119.16	$ 437.85	-156%
Diagnostic colonoscopy	$ 2,553.00	$ 1,800.61	-42%
Fetal non-stress test	$ 369.00	$ 261.34	-41%
Low back disk surgery	$ 10,615.75	$ 6,559.99	-62%
CT head/brain w/o dye	$ 2,030.56	$ 685.86	-196%
Chest x-ray	$ 366.00	$ 146.95	-149%
X-ray exam of knee 3	$ 399.00	$ 189.53	-111%
MRI joint of lower extremity	$ 2,598.00	$ 1,392.21	-87%
Comprehensive metabolic panel	$ 86.92	$ 56.15	-55%
Lipid panel	$ 106.00	$ 68.44	-55%
Glucose blood test	$ 43.00	$ 12.44	-246%
Eye exam new patient	$ 264.65	$ 140.25	-89%
Speech/hearing therapy	$ 313.45	$ 157.70	-99%
Comprehensive hearing test	$ 235.00	$ 188.85	-24%
Cardiovascular stress test	$ 1,154.00	$ 662.88	-74%
Office/outpatient visit new	$ 288.50	$ 188.27	-53%
Emergency dept. visit	$ 2,300.00	$ 1,374.67	-67%

Importantly, the charges and prices paid vary by procedure, hospital, and payer and the data that shows these price differences is available through APCDs. NH HealthCost and similar websites in Maine, Colorado, Massachusetts, and Washington all are valuable resources to enhance transparency by identifying the price for services and the variation of those prices within each state.
Working together, CMS and state APCDs can provide important data to fuel conversations about hospital charges and payments, and the policy issues that the data raises.
Notes
The Affordable Care Act’s amendment to section 2718(e) of the Public Health Service Act requires each hospital operating within the United States to make public a list of standard charges for items and service provided by the hospital including for diagnostic-related groups. CMS published proposed rules for FY 2015 reminding hospitals of their obligation to comply, and again for FY 2019, ultimately finalizing the rules to improve the public accessibility of charge information in a machine-readable format effective January 2019. https://s3.amazonaws.com/public-inspection.federalregister.gov/2018-16766.pdf.

Josephine Porter is director of the University of New Hampshire’s Institute for Health Policy and Price and co-chairs the All-Payer Claims Database Council (APCD Council).
Trish Riley is executive director of the National Academy for State Health Policy.

The State of States’ Health Policies: What Governors Highlighted in their 2019 Addresses

February 18, 2019/in Policy Blogs Behavioral/Mental Health and SUD, Care Coordination, Chronic and Complex Populations, Chronic Disease Prevention and Management, Cost, Payment, and Delivery Reform, Health Coverage and Access, Health Equity, Health System Costs, Housing and Health, Maternal, Child, and Adolescent Health, Medicaid Expansion, Medicaid Managed Care, Medicaid Managed Care, Population Health, Prescription Drug Pricing, Social Determinants of Health, State Insurance Marketplaces, State Rx Legislative Action, Value-Based Purchasing /by Anita Cardwell

State of the state and inaugural speeches give governors the opportunity to highlight their recent policy successes and outline key plans and priorities for the coming year. These speeches are strong indicators of governors’ policy goals and often include proposals and funding recommendations for their legislatures.

As a result of 2018 gubernatorial races in 36 states, there are 20 new governors and seven governorships (IL, KS, ME, MI, NV, NM, and WI) shifted from Republican to Democratic control. There are currently 27 Republican and 23 Democratic governors. As of mid-February, 48 governors had outlined policy priorities through their inaugural and/or state of the state speeches or budget addresses.*

View a chart comparing the health topics each governor addressed.

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2-3:30 p.m. (EST) Thursday, March 7, 2019
Learn how Montana officials are using reference-based pricing to standardize prices paid to hospitals to maintain access and keep spending in check. Register here.

Key Health Themes

Forty-five governors addressed health care in their speeches this year, and while many themes were similar to years past, a notable exception was the issue of health care costs and affordability, which emerged as a much more significant concern for governors this year. Twenty-four governors spoke of the need for affordable health coverage and others also addressed Medicaid costs and pharmaceutical pricing.

Behavioral Health Issues
Health issues related to mental health and substance use disorders (SUD) were the most commonly cited by governors. Thirty-seven mentioned these issues — the same number of governors who commented on behavioral health in 2018. Governors frequently highlighted strategies they had implemented or that they planned to implement to increase access to behavioral health services or restructure care systems. For example, New Hampshire’s governor commented on recent initiatives to establish mobile crisis teams and community wrap-around services and plans to continue to improve the quality of the state’s mental health system with an upcoming 10-year mental health plan.

Gov. Michelle Lujan Grisham plans to rebuild New Mexico’s behavioral health system and develop strategies to reduce cost, increase patient access, and focus on improved patient care, better health outcomes, and stronger relationships between patients and providers. In North Dakota, the governor is proposing to invest more than $19 million across a continuum of care services to address the state’s behavioral health issues. In Texas, the governor declared that mental health reform would be an emergency item for the 2019 legislative session.

Fourteen governors (AZ, CO, GA, IN, IA, KY, NH, RI, SC, TX, UT, WA, WI, and WY) referenced plans to increase access to mental health services in schools, with some citing the need to provide these additional services to help prevent school shootings. Iowa’s governor also emphasized behavioral health services for children, citing the recent creation of a children’s mental health board that focused on developing a cohesive children’s mental health system. She noted plans to build on the board’s recommendations, and requested that legislators provide additional funding for home- and community-based mental health services for children.

Twenty-six governors specifically mentioned current and future strategies to address the opioid epidemic — a slight decrease from 30 mentions in 2018 — but this demonstrates that the issue remains a top priority for many states. Ten governors also spoke about the issue of behavioral health within the context of better addressing the needs of justice-involved individuals as they transition back into communities and/or providing mental health and SUD treatment services rather than incarceration when appropriate.

Medicaid Program Reforms and Costs and Medicaid Expansion
In total, 23 governors mentioned Medicaid and/or Medicaid expansion in their speeches, which is similar to last year when 19 governors addressed these topics. Ten governors provided general remarks about their states’ Medicaid programs, highlighting recent program improvements, the growth of overall program costs, or plans to implement reforms to ensure the program’s sustainability. New York’s governor expressed concerns about upcoming Medicaid Disproportionate Share Hospital (DSH) cuts, and that previous proposals by federal policymakers to cut Medicaid funding have created uncertainty.

Fourteen governors specifically mentioned Medicaid expansion in their speeches. Some governors commented positively on expansion or the potential for it, with Maine’s newly-elected governor announcing plans to begin implementing the 2017 voter-approved expansion measure, which had been stalled by the former governor. Nebraska’s governor announced he would move forward with filing a state plan in accordance with the expansion ballot measure that state voters approved in 2018. Utah’s governor noted that while Medicaid expansion is needed, the 2018 voter-approved expansion should be implemented in a fiscally sustainable way, with “common sense adjustments.” Montana’s governor outlined in detail the positive economic effects and increased coverage rates that have resulted from implementing expansion and its importance in helping to sustain small businesses and rural hospitals. He indicated that he would not support adding measures to the state’s expansion model that could potentially reduce enrollment and be costly to administer, and recommended that legislators make expansion permanent. In contrast, New Hampshire’s governor urged the legislature to support the upcoming implementation of federally-approved work requirements for the expansion population, responding to some calls to repeal them.

Addressing Increasing Health Care Costs
In addition to mentioning Medicaid-related health care costs, 24 governors also addressed increasing health care costs more broadly, often mentioning that health care coverage needs to be more affordable for individuals and families. This is a notable increase from 2018, when only 11 governors mentioned the impact of rising health care costs. Colorado’s new governor is taking the bold approach of establishing a specific office to focus on reducing patient costs, improving price transparency, lowering prescription drug costs, and improving the affordability of health insurance. Montana’s governor highlighted the state’s reference-based pricing model for state employee health plans, which has made medical costs more consistent and comparable across facilities and in just two years has resulted in a $13 million reduction in state health plan costs. He also encouraged passage of legislation designed to address surprise medical bills.

Governors in Colorado, Montana, and Rhode Island have signaled plans to establish reinsurance programs in their states to address rising premium costs. Gov. Mark Gordon commented that there is an opportunity to “craft a Wyoming solution for health care” and develop state-led solutions to reduce costs.

Prescription Drug Costs
The rising costs of prescription drugs emerged as a new theme in this year’s speeches, earning mentions from seven governors. This is notable, given last year the issue was not addressed by any governor. Colorado’s governor advocated having residents pay a “fair price” for prescription drugs, and promised to work with the legislature to develop a wholesale importation program. Nevada’s governor plans to create the Patient Protection Commission that will identify options for protecting state residents from exorbitant prescription drug prices. The most comprehensive proposal was came from California’s governor who signed an executive order to establish the nation’s largest single-purchaser system for prescription drugs to leverage the state’s purchasing power as a way to lower drug costs.

Health Care Coverage
Eleven governors commented on potential changes that may occur to the Affordable Care Act (ACA) and health coverage in general. Many indicated they would take action to safeguard ACA coverage gains and insurance protection provisions. Nevada’s governor expressed support for defending the ACA and blocking any efforts to scale back protections for preexisting conditions, and Gov. Andrew Cuomo said New York should codify the ACA and incorporate preexisting condition protections into state law. Governors in Oregon and Rhode Island similarly pledged to protect coverage of preexisting conditions, and Wisconsin’s governor issued an executive order creating a Healthy Communities Initiative to promote affordable and accessible health care and another to ensure preexisting conditions were covered.

In his speech, Washington Gov. Jay Inslee promised to “fight for a public health option to ensure health care for all,” in reference to his recent proposal to offer a public plan through the state’s marketplace to make an affordable coverage option available across all regions of the state.

In California, Gov. Gavin Newsom proposes to provide Medi-Cal coverage to undocumented young adults up to age 26, and also seeks federal changes to allow states to implement even more comprehensive coverage reforms and move toward a single-payer model. He is also planning to increase the amount of subsidies available for marketplace coverage and would allow higher-income families to access ACA subsidies. To help cover the costs of this expanded financial assistance, Newsom’s budget proposes to implement a state-level individual mandate. Other states are also considering individual mandates — although not mentioned in recent state of the state speeches, the governor of Rhode Island’s budget proposal recommends implementing such a measure, and Nevada’s governor has indicated earlier that his proposed Patient Protection Commission would examine the issue.

Health Care Workforce
Fourteen governors addressed health care workforce issues, primarily identifying strategies to address provider shortages. This is similar to 2018, when twelve governors mentioned health care workforce issues. This year, governors in Missouri and South Carolina commented about current and planned investments in telehealth to increase access to providers in rural areas. Governors in Mississippi, Nebraska and Oklahoma expressed plans to either create or expand existing scholarship programs to help increase the number of physicians in rural areas. New Hampshire’s governor proposed a $24 million investment to increase the state’s nursing and health care workforce. Other governors in Iowa and Washington highlighted strategies to enhance the capacity of the behavioral health workforce.

Miscellaneous Health Issues
Most governors mentioned other health-related topics in their speeches, either as recent accomplishments or as future plans. These included support for seniors, disabled individuals, and/or children in foster care; women’s health issues; and efforts to address broader social and/or environmental issues that directly affect health. Delaware, New York, and Vermont governors expressed concerns about the use of tobacco products by youth. Other governors drew direct connections between homelessness and health, with Hawaii’s governor highlighting that a hospital in his state had become the first in the nation to place medically fragile, homeless patients into housing to promote recovery. Governors in Maine and New Mexico commented on plans to revive their states’ children’s cabinets to support the health and safety of vulnerable children. Rhode Island’s governor characterized gun violence as “one of the most disturbing and preventable public health crises of this generation” and New Mexico’s governor is requesting that the state’s Department of Health study gun violence to help inform gun violence prevention reforms. Other governors (CA, HI, ME, MI, NM, NY, UT, VT, WA, and WI) commented on environmental issues affecting health, with a few noting the connection between climate change and health, and others committing to improve air or water quality to reduce the negative health effects of pollution. California’s governor also established a state surgeon general position to help address health disparities (see this NASHP blog for more information).

Culture of Health
Eight governors mentioned the importance of building healthy communities, commenting that promoting population health helped create healthy economies. In a future analysis of the governors’ speeches, the National Academy for State Health Policy (NASHP) will provide a more detailed look at how states are specifically addressing and/or tackling some of the social determinants of health — defined as the social and economic factors that directly affect health.

NASHP will track these proposals as they move toward implementation by state legislatures. Clearly, health policy is in play in the states and NASHP will continue to report on state initiatives on a range of health issues in the coming year.

*For some states, information from both a governor’s inaugural address and a state of the state or budget address is included in this review. For other states, information from only one speech is incorporated, due to one of the following reasons: the inaugural address has occurred but the state of the state speech has not yet occurred; the inaugural address served as the governor’s primary policy speech and no state of the state address is planned; or the governor did not have an inauguration and only had a state of the state address. As of mid-February, 2019, Louisiana and North Carolina governors had not made speeches.

States Use Policy Levers and Emerging Research to Address Antipsychotic Use in Children in Foster Care

February 11, 2019/in Policy Reports Behavioral/Mental Health and SUD, Children/Youth with Special Health Care Needs, Children/Youth with Special Health Care Needs, CHIP, CHIP, Chronic and Complex Populations, Chronic Disease Prevention and Management, Cost, Payment, and Delivery Reform, EPSDT, Health Coverage and Access, Health Equity, Health System Costs, Integrated Care for Children, Maternal, Child, and Adolescent Health, Medicaid Managed Care, Medicaid Managed Care, Medicaid Managed Care, Medicaid Managed Care, Population Health, Quality and Measurement /by Johanna Butler, Jennifer Reck and Maureen Hensley-Quinn

State policymakers must often take action during an emerging crisis even when evidence identifying the best policy approach is not be available. This report, Evidence-Based Policymaking Is an Iterative Process: A Case Study of Antipsychotic Use among Children in the Foster Care System, explores successful state responses to dramatic increases in antipsychotic prescription rates in Medicaid-enrolled children in foster care. It highlights several strategies, including payment reforms, delivery system innovations, and quality supports for clinical care.

The report results from a convening by the National Academy for State Health Policy of researchers and state officials with expertise in financing and operating Children’s Health Insurance Program and Medicaid programs, children’s health, and health policy and pharmacy research. The meeting preceded the release of a Patient-Centered Outcomes Research Institute-funded study, which examines the comparative effectiveness of state oversight systems in Ohio, Texas, Washington, and Wisconsin.

Read or download: Evidence-Based Policymaking Is an Iterative Process: A Case Study of Antipsychotic Use among Children in the Foster Care System

CMS Releases State Funding to Improve Integrated Care for Children and Pregnant and Postpartum Women Enrolled in Medicaid and CHIP

February 11, 2019/in Policy Blogs Behavioral/Mental Health and SUD, Care Coordination, Children/Youth with Special Health Care Needs, CHIP, CHIP, Chronic and Complex Populations, Chronic Disease Prevention and Management, Cost, Payment, and Delivery Reform, Eligibility and Enrollment, Eligibility and Enrollment, EPSDT, Health Coverage and Access, Healthy Child Development, Infant Mortality, Integrated Care for Children, Integrated for Pregnant/Parenting Women, Maternal Health and Mortality, Maternal, Child, and Adolescent Health, Medicaid Managed Care, Medicaid Managed Care, Population Health, Primary Care/Patient-Centered/Health Home, Quality and Measurement /by NASHP Writers

Last week, the Centers for Medicare & Medicaid Services (CMS) released two highly anticipated initiatives — the Maternal Opioid Misuse (MOM) Model and the Integrated Care for Kids (InCK) Model — which will provide multi-year funding to states to improve integrated care for maternal and child health populations enrolled in Medicaid and the Children’s Health Insurance Program (CHIP).
NASHP has been tracking these important initiatives since they were first announced by the CMS Center for Medicare and Medicaid Innovation (Innovation Center) last year and has compiled and promoted exemplary integrated care delivery models, strategies, and innovations for pregnant and postpartum women and children that states can consider as they develop their applications for these initiatives.
The MOM Model is designed to:

Improve quality of care and reduce costs for pregnant and postpartum women with opioid use disorder (OUD) and their infants;
Expand access, service-delivery capacity, and infrastructure based on state-specific needs; and
Create sustainable coverage and payment strategies that support ongoing coordination and integration of care.

The CMS Innovation Center will award a maximum of $64.5 million through up to 12 cooperative agreements with state Medicaid agencies and their care delivery model partners for a five-year period. Applications for the MOM Model are due to CMS by 3 p.m. (EST), May 6, 2019. A CMS webinar about the MOM Model Notice of Funding Opportunity was held Feb. 21, 2019. The recording, slides, and transcript from the webinar are available here.
The InCK Model is designed to reduce expenditures and improve the quality of care for children under 21 years of age covered by Medicaid and CHIP through prevention, early identification, and treatment of behavioral and physical health needs. States and local organizations will work to conduct early identification and treatment of children with health-related needs across settings to:

Increase behavioral health access;
Respond to the opioid epidemic; and
Improve child health outcomes.

The CMS Innovation Center will award a maximum of $128 million through eight cooperative agreements with state and local participants for a seven-year period (awarding up to $16 million per recipient). Applications to implement the InCK Model are due to CMS by 3 p.m. (EST), June 10, 2019. A CMS webinar about the InCK Model NOFO is scheduled for 2:30 to 4 p.m. (EST) Tuesday, Feb. 19, 2019.

Q&A: Do Medicaid Alternative Payment Models for Prescription Drugs Add Value for States?

January 8, 2019/in Policy Oklahoma Administrative Actions, Cost, Payment, and Delivery Reform, Health Coverage and Access, Medicaid Managed Care, Prescription Drug Pricing /by NASHP Writers

In late December, 2018, the National Academy for State Health Policy (NASHP) hosted a webinar exploring Oklahoma Medicaid agency’s use of innovative alternative payment models (APMs) through contracts negotiated with drug manufacturers, which link supplemental rebates to patient outcomes.
The webinar, Medicaid Alternative Payment Models for Prescription Drugs: Do They Add Value for States?, featured speakers from Oklahoma’s Health Care Authority, which obtained a Medicaid State Plan Amendment in June 2018 to implement the APM. Below is a summary of questions and answers about Oklahoma’s groundbreaking program taken from the webinar. A recording of the webinar and its slides are available here.
What are some examples of Oklahoma’s Medicaid APMs for prescription drugs?
Below is a chart outlining the drug, manufacturer, therapeutic class, and outcomes measured for Oklahoma’s first four APMs.

Drug Name	Manufacturer	Therapeutic Class	Outcome Measured
Aripiprazole lauroxil (Aristada)	Alkermes	Long-acting, injectable antipsychotic	Patient adherence to medication
Oritavancin (Orbativ)	Melinta	IV antibiotic for bacterial skin infections	Net costs to the state
Fycompa	Eisai	Epilepsy	Reduced hospitalizations
Invega Trinza and Sustenna	Janssen/Johnson & Johnson	Long-acting, injectable antipsychotic	Overall population adherence

How much staff time is required for the negotiation and contracting processes? How can states balance the benefits of this innovation with the cost of administering the agreements?
Oklahoma received financial support from NASHP for initial analysis and staff time. As that support concludes, Oklahoma officials are currently discussing how the state can supply the staff time needed to complete the upfront work of these contracts. Officials report the Medicaid program must review utilization data to help determine if both parties are pursuing the right patient population, products, and disease states, etc. One potential source of funding for this work could be drug manufacturers. Oklahoma officials plan to discuss how this initiative could be funded sustainably with manufacturers and may build this financial risk into future agreements. Oklahoma is also considering imposing a fee on manufacturers to pay for the initial data aggregation.
Were the drugs selected in the four agreements chosen because of manufacturers’ willingness to engage in these contracts, or did Oklahoma’s Medicaid agency determine what drugs were selected?
Oklahoma wanted a variety of agreements to focus on different drugs in order to test potential APMs for other state Medicaid programs. Oklahoma found that both parties should come to the table with some ideas but expect and be open to discussion. Negotiations were most successful when manufacturers established potential parameters for an agreement before beginning contract discussions. Negotiations succeeded when both parties had an opportunity to have a trusting, but direct conversation about what product might be a good fit. Despite the need to compromise, Oklahoma was able to ensure that each contract had the potential to be beneficial and fair for both sides.
Do any of Oklahoma’s agreements use “fill rate” (the rate at which patients adhere to or fill their prescriptions) or “cure rate” (the proportion of people that are cured from a treatment) to determine value?
Fill rate is used in some of the agreements. Oklahoma is interested in cure rates as an outcome, but it is challenging to obtain accurate, timely outcomes data around cure rates. If Oklahoma officials can find reliable data that both parties can agree on, then they will likely move forward in this area.
Oklahoma has only executed financial APMs that focused on price-volume agreements (as volume increases, unit price decreases), market share, or utilization (adherence).Two of the executed contracts focused on drug adherence. Oklahoma’s first contract with Alkermes for a long-acting, injectable antipsychotic rewards increased patient adherence with a lower drug price for the state through additional rebates. Oklahoma also entered into a contract with Janssen/Johnson & Johnson for another long-action, injectable antipsychotic that focused on increased population level adherence.
Is Oklahoma Medicaid restricting the reimbursement of therapeutically-similar drugs that are not covered by the state’s APM agreements?
None of Oklahoma’s APM agreements involves “disadvantaging” or impeding access to any products not covered by the APM agreements, such as changing their status on the preferred drug list. Two of Oklahoma’s APM agreements do, however, entail removing the prior authorization requirement for the drug in question in exchange for a guarantee of overall cost neutrality (e.g., Melinta’s Orbactiv product and Eisai’s Fycompa product).
Are Oklahoma’s agreements restricted to specialty products?
No, Oklahoma’s agreements were not restricted to any particular drug product or class.
Did Oklahoma find there were high-cost, specialty drug manufacturers interested in APM opportunities?
Oklahoma officials initially approached manufacturers of high-cost, specialty drugs, but they were not interested in completing an APM agreement. Since the completion of the first four agreements, however, officials have considered an agreement where Oklahoma would pay for a very high-cost drug over a defined period of time (e.g., several years) or might pay a different rate depending on whether a person was or was not cured.
These types of manufacturers are beginning to discuss APMs, but it may be a bit early to put one of these kinds of products in the APM arena, but discussions are ongoing. From a manufacturer’s perspective, entering into specialty drug agreements can be challenging because the smaller patient pools who use these drugs make it more difficult to show a clear benefit around such measures as increased adherence or reduced hospitalizations.
When will Oklahoma see results?
Oklahoma’s APM contracts are one-year contracts and initial results will be available after mid-2019. Additional contract periods may be necessary to allow enough time to identity their financial impact.
How are Oklahoma’s APMs expected to reduce hospitalizations?
Oklahoma’s contract with the manufacturer Eisai measures reductions in hospitalizations following initiation of its epilepsy drug Fycompa. If Fycompa does not reduce hospitalizations, the state will receive money back in the form of supplemental rebates.
Oklahoma’s contract with Melinta for oritavancin (Orbativ) removes the requirement for prior authorization in return for an assurance that the state will not see a net increase in costs. Although it is a high-priced drug, oritavancin does not require hospitalization for administration like other drugs in its class, so reduced costly hospitalizations are expected.
Who is Oklahoma Medicaid’s pharmacy benefit manager?
Oklahoma’s Medicaid program is fee for service (FFS) and does not contract with a pharmacy benefits manager (PBM). The Pharmacy Management Consultants and the Oklahoma Healthcare Authority are the pharmacy benefits administrators for the Oklahoma Medicaid program. The Pharmacy Management Consultants are a division of the Oklahoma University College of Pharmacy. This structure allows for data aggregation and analysis and also gives Oklahoma the capability to research other outcomes not necessarily stated in the contractual agreements, such as unintended outcomes, additional benefits, and other health-related outcomes.
Oklahoma is advancing APMs in a FFS environment. Would these APMs work in a state with Medicaid managed care?
Oklahoma officials noted that APM agreements may be easier to achieve in their FFS environment because it allows for efficient discussions and negotiations between just one payer and one manufacturer. While Oklahoma was the only state with APMs for Medicaid prescription drugs as of December 2018, Michigan has since followed Oklahoma’s lead, receiving federal approval in November 2018 for a Medicaid State Plan Amendment to enable APMs. Michigan operates several types of managed care programs that provide health services to Medicaid beneficiaries and may soon be able to offer valuable insights into achieving APM agreements in managed care settings. The success of APMs in states with Medicaid managed care will also depend on how each state sets up with its managed care organizations (MCOs). Some states get all their data from MCOs and require them to follow one drug formulary, which would allow a state to more easily manage APMs.
Do the manufacturers Oklahoma currently contracts with have statewide services with all pharmacy outlets or do some manufacturers limit the distribution of their product? And, is this a factor when deciding whether to contract with a manufacturer?
To date, Oklahoma’s APMs have not caused changes in pharmacy outlets’ services. When there are more agreements involving specialty products, this may be more of an issue and require additional discussion, but Oklahoma officials believe it can be addressed and negotiated in their agreements.
More information on this topic is available at the University of Oklahoma’s College of Pharmacy’s presentation, Overcoming Barriers to Value-Based Contracting.

As Drug Prices Rise, Oklahoma’s Medicaid Agency Advances Alternative Payment Models

December 17, 2018/in Policy Oklahoma Blogs Administrative Actions, Cost, Payment, and Delivery Reform, Health System Costs, Medicaid Managed Care, Prescription Drug Pricing, Quality and Measurement, Value-Based Purchasing /by Jennifer Reck

Escalating drug prices are forcing state Medicaid agencies to explore new payment models. According to Burl Beasley, director of Pharmacy Services for Oklahoma’s Medicaid program, older Medicaid payment strategies, such as negotiating enhanced rebates and multi-state purchase agreements, are not keeping pace with rising drug expenditures.
Beasley cited the strain prescription drug costs were putting on Oklahoma’s Medicaid budget as a driver behind the decision to pursue alternative payment models (APMs) during a Dec. 12, 2018 National Academy for State Health Policy (NASHP) webinar. The webinar featured Beasley, Terry Cothran, director of Pharmacy Management Consultants at the University of Oklahoma College of Pharmacy, and Russell Knoth, director of Health Economics and Outcomes Research at Eisai, a drug manufacturer that entered into an APM agreement with Oklahoma. Since committing to APMs, Oklahoma’s Medicaid agency has become a national leader, with four separate Medicaid APM agreements executed with drug manufacturers.
Oklahoma Medicaid Alternative Payment Models for Prescription Drugs

Drug Name	Manufacturer	Therapeutic Class	Outcome Measured
Aripiprazole lauroxil (Aristada)	Alkermes	Long-acting, injectable antipsychotic	Patient adherence to medication
Oritavancin (Orbativ)	Melinta	IV antibiotic for bacterial skin infections	Net costs to the state
Fycompa	Eisai	Epilepsy	Reduced hospitalizations
Invega Trinza and Sustenna	Janssen/Johnson & Johnson	Long-acting, injectable antipsychotic	Overall population adherence

Beasley drew an important distinction between the two main types of APMs — financial APMs and health outcome-based APMs. Financial APMs are essentially price/volume agreements and may include target measures such as adherence. Financial APMs, which can be managed with claims data, are easier to administer than health outcomes-based APMs, which often require clinical data. The four contracts that Oklahoma has executed to date are all financial APMs, though Oklahoma continues to explore potential health outcomes-based APMs. Oklahoma’s fee-for-service Medicaid payment model helped expedite the execution of APMs, which otherwise may have required additional negotiation and coordination with managed care organizations.
To enable Medicaid APMs, Oklahoma submitted a Medicaid State Plan Amendment (SPA) to the Centers for Medicare & Medicaid Services, and received approval for the amendment on June 27, 2018. The SPA allows Oklahoma to negotiate supplemental rebate agreements that could produce extra rebates for the state depending on a drug’s performance against outcomes agreed upon in the contract with the drug manufacturer. The extra rebates are excluded from “best price” implications, an important consideration to encourage manufacturer participation in APMs.
Michigan has since followed Oklahoma’s lead, receiving approval in November 2018 for a SPA to enable APMs there. Both states received support from SMART-D, the State Medicaid Alternative Reimbursement and Purchasing Test for High-Cost Drugs, including development of a contract template. NASHP provided a grant to Oklahoma to support the extensive data analysis necessary to explore potential drugs and outcomes for measurement in order to execute contracts. NASHP provided the grant through its Center for State Rx Drug Pricing, supported by the Laura and John Arnold Foundation.
Results, including assessments of potential cost savings, are not expected for any of Oklahoma’s APMs until 2019. In the meantime, Cothran was able to share some lessons learned from Oklahoma’s successful efforts to pursue and finalize contracts with manufacturers.

Building a strong relationship and trust between the state and a manufacturer is necessary.
Smaller manufacturers may have greater flexibility than larger manufacturers to enter into APMs more quickly.
Manufacturers are new to Medicaid APMs and are generally not yet ready to take on high-risk contracts.
State Medicaid programs should be willing to pull initial data on drug utilization to get manufacturers to the table.

Knoth shared the manufacturer’s perspective on APMs, which he believes can be a win-win for payers and manufacturers. He stressed that though the concept of an APM is easy to grasp, transitioning from the concept to a signed contract can be challenge because it requires designing an agreement with the power to measure a real effect. Eisai’s contract with the Oklahoma Health Care Authority measures reductions in hospitalizations following initiation of its epilepsy drug Fycompa, and is Eisai’s first APM.

Read a Q&A about how Oklahoma implemented its APM and how it plans to evaluate and expand this innovative model here.
Listen to the Dec. 12, 2019 webinar Medicaid Alternative Payment Models for Prescription Drugs: Do They Add Value for States? here.
Listen to the May 9, 2019, webinar Medicaid Alternative Payment Models for Prescription Drugs: A Look at Three States here.