Payment models evolving at the state level

Vermont and Minnesota are among states working through provisions of the Affordable Care Act to establish health insurance exchanges and to drive healthcare delivery and payment reforms to the extent that their legislatures enable them.

Vermont, for instance, is focused on the systemic costs of healthcare -- not just the Medicaid costs or the state healthcare budget, but the entire private and public healthcare system. The entire healthcare system totals $5 billion, with the state budget accounting for $1 billion.

“We’re looking at not just how to control the $1 billion but how to control the entire package,” said Mark Larson, commissioner of the Vermont Department of Health Access. While Vermont has a 7 percent rate of uninsured individuals, a growing problem is that 27 percent of the 600,000 population is underinsured because insurance is too expensive.

“Ultimately our goal is to divorce healthcare from employment in order to provide universal access to health care,” Larson said at a recent conference of the World Health Care Congress.

Because Vermont is a small state, it has fewer barriers to trying to shift from volume-based reimbursements to value-based payments for the entire healthcare system. The state has about three primary private payers in addition to Medicare and Medicaid, so it’s easier to work in the same direction.

The health insurance exchange, which the legislature recently approved, will create an entry point for those applying for private insurance to “get to the point where we can use the exchange to create more streamlined administrative systems as well as a more consolidated system,” Larson said.

While the exchange and tax credits will help many people afford insurance, those provisions do not dramatically reduce Vermont’s healthcare costs. “What allows us to do that is integrating pay-for-performance and payment reform," Larson explained. "As long as the individual and small employers’ system remains fragmented, then we can’t get to that larger goal.”

Vermont is moving over the next several years toward a universal single-payer healthcare system. Larson described it as being more “like police and fire departments and the library, for which people pay their taxes and then everyone would get a Green Mountain Care card.”

Consumers would see one integrated healthcare system with one financing system. “It would be publicly administered through our department, and on our back end we would figure out what we charge to Medicaid, what to charge Medicare, and what goes through private financing,” he said.

Whether or not the health reform law existed, Minnesota also has been moving toward improving quality and accessibility, population health and lowering costs. Underlying it all is changing how to pay providers for healthcare to get to delivery system reform.

“We see the Affordable Care Act not as driver of change but the opportunity to do things that otherwise we wouldn’t want to do; [it] gives us another tool,” said Scott Lietz, assistant commissioner for the Minnesota Department of Health.

Minnesota Gov. Mark Dayton issued an executive order upon taking office in 2011 stating his vision for health reform around better health and lower costs, including an insurance exchange.

The state legislature, however, has not passed the necessary legislation. So the current planning is largely around administration through the state insurance and commerce departments and Medicaid. A task force is studying options for the exchange, and the state has received $31.3 million so far to plan and establish it.

Like Vermont and other states, Minnesota has expanded its Medicaid coverage to more categories of individuals over time and has promoted medical home models, with about 20 percent of clinics certified as medical homes, he said. The state is also examining how to build in an accountable care organization (ACO) with the Medicaid program to improve quality.

An ACO model allows large and small providers to share care and build a foundation of a healthcare home.

“It is a way for us to contract more directly with providers than through managed care for the Medicaid program," Lietz said. "It is a change from the past and alignment at the provider level to programs in the commercial market."

Minnesota has a safety-net ACO demonstration among Hennepin County providers in Minneapolis, through which it hopes to integrate not just medical care but behavioral health, social services, and other county services such as food supports under a capitation rate.

The goal with the Hennepin demonstration is to obtain savings outside of Medicaid programs, and to do a good job managing people’s medications, social services, mental conditions and substance abuse conditions.

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