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Brief & Report

Medicare Physician Fee Schedule Reform: Structural Topics and Recommendations to Strengthen the System for the Future

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Recent years have witnessed a growing bipartisan call to reform how Medicare reimburses for physician and other health professional services. Stakeholders assert that the current system—the Medicare Physician Fee Schedule (PFS)—is misaligned to today’s practice patterns and market dynamics. Many constituencies maintain that the current approach is insufficiently updated, embeds known pricing distortions, and does not appropriately effectuate value-based care principles, such as providing cost-conscious, high-quality care that prioritizes performance measurement and patient experience. Calls for reform are further prompted by increasing concern about the viability of independent physician practices, including the implications of consolidation and private equity acquisition of physician offices. Finding a workable comprehensive solution to updating physician payments is an uphill battle stymied by the significant cost of doing so, competing stakeholder positions, and the complexities of restructuring payment.

The original design of the Medicare PFS, still in use today, is based on the resources typically needed to provide services to patients. First implemented in 1992, the PFS is a fee-for-service (FFS) system of payment premised on the idea that services should be separately valued in relation to each other. This requires information on the effort and costs incurred to perform those services and how those variables change over time. The Centers for Medicare & Medicaid Services’ (CMS’s) efforts to update data used to set rates in the required budget neutral manner often result in system instability and may take years to fully implement due to concerns about redistribution. These innate vulnerabilities have been compounded by three decades of policy decisions, statutory changes, and advancements in care delivery.

While established metrics suggest that physicians’ participation in the Medicare program and beneficiary access is currently adequate, the Medicare Payment Advisory Commission (MedPAC) raises concerns that beneficiaries may experience more access to care barriers moving forward. For the past two years, MedPAC has recommended physician payment updates based on changing economic conditions, as well as additional “safety net” payments to physicians treating low-income beneficiaries. Reducing health disparities and improving the foundation of care is a top priority for many in this country, and payment reform within the PFS and more broadly that expands technology while also investing in person-centered, community-oriented care (especially for populations that are underserved and/or living with multiple chronic conditions) is central to that cause.

As robust policy discussions are taking place to explore these issues and identify solutions, Arnold Ventures engaged HMA to provide accessible background and context on the PFS for people who may be unfamiliar with the payment system, including a review of how the stakeholder community got to the point of needing to “fix” the fee schedule. Through a thorough assessment of the most pressing policy and payment concerns, we identified several key structural issues within the physician fee schedule that should be considered and balanced when making policy changes to the payment system.

Blog

Medicaid unwinding check-in: data-driven insights for future action

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In this week’s In Focus section, HMA Managing Director Matt Powers and Associate Principal Lora Saunders discuss observations and perspectives as we approach completion of the Medicaid unwinding.   

Overview  

In response to the COVID-19 pandemic, CMS offered states an enhanced federal match in exchange for states pausing Medicaid disenrollments. As a result, Medicaid enrollment increased from around 71 million at the start of the pandemic to more than 92 million in December 2022, when Congress passed a bill to end the “continuous eligibility” provision. States began to resume normal (pre-pandemic) redetermination activities in early 2023—a massive undertaking of attempting to reach and verify eligibility for the then 94 million Medicaid enrollees known as “unwinding.”  

More than 70 percent of the efforts that will precipitate the largest one-year drop in enrollments since the program’s inception in 1965 have been completed. The enrollment reductions to date have been virtually identical to HMA’s aggregate projections, and overall enrollment remains well above pre-pandemic levels. Perhaps most importantly, the Medicaid unwinding has put policymakers in a position to better evaluate how to improve enrollment and redetermination processes going forward.   

Figure 1 summarizes pre-pandemic enrollments, unwinding enrollments, and the projected end of 2024 enrollment. If the current trend holds, national Medicaid enrollment will be approximately 80 million enrollees—down from the 94 million pre-unwinding enrollment peak and nearly 10 million greater than the 71 million pre-pandemic enrollment. 

Our team’s assessment of the status of and data related to the Medicaid unwinding has led us to the following observations: 

  • Arkansas, Iowa, Nebraska, Utah, and West Virginia have completed the redetermination process. More than half of the states are within two months of finishing the process. 
  • The states that saw Medicaid enrollment grow the most under the continuous coverage policy are generally the same ones that are experiencing the greatest enrollment declines during the Medicaid unwinding. 
  • Some larger states—including California, New York, and Texas—have sizeable outstanding redeterminations.   
  • Nationally, more than 70 percent of all Medicaid enrollees have completed the redetermination process.  Figure 2 points out how far along states are with the redetermination process as of late April 2024. 

Medicaid Unwinding: The Road Ahead 

As the Medicaid unwinding process enters its final phase in most states, we are looking back at the experiences and lessons that can be applied to make impactful changes to Medicaid eligibility policies, systems, and procedures. 

Despite the challenges that the pandemic presented, the safety net was tested and responded well. In early 2020, the number of employed Americans decreased from 158 million to 133 million, and unemployment levels quickly reached 15 percent. Many new healthcare policies targeted direct access issues (e.g., financial supports to providers and telehealth regulatory relaxations), whereas the Medicaid continuous coverage requirement was intended to mitigate the effects of the abrupt spike in unemployment and potential effects on healthcare insurance. Table 1 shows how HMA projects national coverage patterns to change by type of coverage from before the pandemic through the end of the Medicaid unwinding. While the number of people with employer-sponsored insurance (ESI) or uninsured remains essentially flat, Medicaid enrollment grows significantly, and marketplace enrollment nearly doubles. Myriad federal and state policy changes contributed to a remarkably stable uninsurance rate during one of the most volatile economic periods in the past century. 

A next question for policymakers is whether, or to what extent, the rate of uninsured people can be sustained or reduced. The broad state adoption of policies to expand postpartum coverage to 12 months from two months and the nationwide January 2024 requirement for states to offer 12 months of continuous Medicaid coverage for children provide a coverage and continuity boost, especially given that nearly 40 million children will benefit from the new law. Other policy levers have the potential to be widely accepted and provide a further incentive to move people who are uninsured toward coverage, more stable insurance products, and more predictable outcomes and costs relative to the inefficiencies and ineffectiveness of non-coverage. 

Pivoting to best practices and making policy changes permanent. Just as the relaxation of relatively rigid telehealth policies has become more accepted, post-Medicaid unwinding will provide a natural opportunity to assess best practices and consider permanent policy changes.    

  • Making Ex Parte Durable Policy.  Evidence suggests that ex parte policies effectively reduce churn. Further refinement of longstanding ex parte policies is within reach. Ensuring ex parte appropriately manages both the complexities of household versus individual eligibility issues and addresses the weaknesses of unreliable member contact information can improve the likelihood that ex parte can effectively serve as durable policy.  
  • Pivoting from Paper to Electronic Communications.  The Medicaid unwinding has seen more partnerships and innovation with state and federal workers, providers, managed care organizations, and consumer advocates, and allowed the increased use of mobile devices for outreach and engagement. Making more deliberate strides to simplify eligibility and move the eligibility platform, patient engagement, and member outreach to more reliable communication methods (e.g., email, text, and member portals rather than paper communication) while adhering to privacy and security requirements is a logical next step.   
  • Continuing to Measure Better. Call abandonment rates, call center wait times, and application processing times—metrics that focused on some of the key challenges to a successful redetermination and timely access to care—received greater attention during the unwinding but were frequently overshadowed by other primary metrics like “disenrollments” and “procedural terminations.” Though disenrollment data and procedural terminations could be used to identify potential areas of concern, their emergence as primary metrics often diverted energy from innovative engagement and redetermination efforts. A focus on contextualized metrics that provide actionable information will support effective oversight and monitoring.

Marketplace growth may be the real story. Throughout the pandemic, marketplace enrollment has steadily increased, jumping nearly 90 percent from 2020 to 2024 and 30 percent from 2023 to 2024, to reach more than 21 million enrollees. Driving the growth in marketplace enrollment are temporarily increased marketplace subsidies and Medicaid unwinding public awareness campaigns.  

  • The marketplaces are proving to be a reliable source of coverage for consumers without health insurance access through ESI or other public programs, particularly in times of significant change such as the Medicaid unwind. With more marketplace enrollees and, therefore, broader risk pools, more health insurers are considering offering marketplace plans and are assessing competitive advantages like lower costs, broader provider networks, and more robust drug formularies. 
  • Figure 3 shows that marketplace growth in non-expansion states is far outpacing marketplace growth in Medicaid expansion states, suggesting that the key elements of the Affordable Care Act have developed deep roots.  

HMA’s experts continue to monitor Medicaid unwinding developments. We are taking a comprehensive approach to assessing lessons learned and opportunities to improve Medicaid as state and stakeholder experiences and data continue to become available over the next two quarters. 

For more information or questions about Medicaid unwinding developments, contact our featured experts.

Blog

Five takeaways from the CMS Medicaid managed care final rule

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This week, our In Focus section reviews significant Medicaid policy announcements from the Centers for Medicare & Medicaid Services (CMS). For example, both the Medicaid and Children’s Health Insurance Program Managed Care Access, Finance, and Quality Final Rule (CMS-2439-F) (view the CMS fact sheet available) and the separate Ensuring Access to Medicaid Services Final Rule (CMS-2442-F) (view the CMS fact sheet) were released April 22, 2024. 

Taken together, these two final rules create new flexibilities and requirements aimed at enhancing accountability for improving access and quality in Medicaid and the Children’s Health Insurance Program (CHIP) across the fee-for-service and managed care delivery systems and provide targeted regulatory flexibility in support of this goal.  

HMA’s April 11, 2024, “What to Watch For” article outlined several proposed changes that CMS was poised to advance in the Medicaid managed care program. We focus today on the approved changes, including:  

  • In lieu of services and settings (ILOSs)  
  • The Medicaid and CHIP quality rating system (MAC QRS)  
  • Medical loss ratios (MLRs)  
  • Network adequacy 
  • State directed payments (SDPs) 

Following are HMA’s insights on the key takeaways in each of these major areas for states, managed care organizations (MCOs), providers, and other stakeholders. In addition, HMA experts will discuss the final rule during a LinkedIn Live on event at 2:00 pm (EDT) April 25, 2024. Go to the HMA LinkedIn feed to watch. 

In future weeks, HMA will review the Ensuring Access to Care final rule. 

ILOSs 

The final rule makes clear that CMS remains committed to the conviction that ILOSs can play an important role in supporting state and MCO efforts to address many of the unmet physical, behavioral, developmental, long-term care, and other enrollee needs. At the same time, CMS continues to put forward requirements in this area to ensure adequate assessment of these substitute services and settings in advance of approval, ongoing monitoring for sufficient beneficiary protections, and financial accountability for related expenditures. 

The final rule presents an opportunity to leverage ILOSs to improve population health, reduce health inequities, and lower total healthcare costs in Medicaid and CHIP, including by addressing unmet health-related social needs as well as through other avenues. To take full advantage of this opportunity, states and MCOs must ensure that that they are prepared to meet the accountability measures outlined in the final rule and partner with existing providers and community-based organizations that already provide such services and settings. 

Medicaid and CHIP Quality Rating System  

CMS finalized most proposed provisions related to mandatory quality measures, the process used to update these measures, the ability of states to include additional measures, and the ability of states to apply an alternative QRS if desired. On this last point, CMS is making several modifications to its MAC QRS proposal to clarify the scope of and to reduce the implementation resources needed for an alternative MAC QRS if a state elects to implement one. 

States will be required to collect from MCOs the data necessary to calculate ratings for each measure and ensure that all data collected are validated. This will require MCOs to assess their capability to produce the mandated data upon request by states and, to the extent possible, to assess baseline performance on measures and proactively operationalize strategies to improve performance where necessary. 

Medical Loss Ratios 

The final rule aligns Medicaid and CHIP MLR QIA reporting requirements with the private market to ensure that only those expenses that are directly related to healthcare QIAs are included in the MLR numerator. CMS notes that this provision will allow for better MLR data comparisons between the private market and Medicaid and CHIP markets as well as reduce administrative burden for MCOs participating across these markets.  

MCOs will need to model the impact of QIA expenditures that are no longer available for inclusion in the MLR numerator to ensure that a resulting failure to meet any minimum MLR requirements can be avoided, and, if it is projected to occur, a strategy can be developed and executed to avert the problem. CMS made this requirement effective as of the effective date of the final rule with no delay because it believes it is critical to the fiscal integrity of Medicaid and CHIP, adding urgency to MCO compliance action here. 

Network Adequacy 

The final rule makes clear that CMS has been persuaded that it needs to increase oversight of network adequacy and overall access to care through a new quantitative network adequacy standard. To measure network adequacy, the agency intends to implement wait time standards, complemented by secret shopper surveys to support enforcement. 

Wait time standards and secret shopper surveys present opportunities for states, MCOs, and providers to collaborate to enhance access where needed and ensure compliance with the final rule. Undertaking secret shopper surveys ahead of implementation of the wait time standards (effective the first rating period beginning on or after three years after the effective date of the final rule) to determine the current performance relative to maximum wait times is a proactive step that is worth consideration by states and MCOs and can also be employed to foster dialogue with providers to address any areas of concern identified. 

State Directed Payments 

CMS is adopting its proposal in the final rule to use the average commercial rate as a limit for SDPs for inpatient and outpatient hospital services, nursing facility services, and professional services at academic medical centers. CMS believes that this approach represents a reasonable limit that is supportive of appropriate fiscal guardrails, while still affording states the flexibility to achieve SDP policy goals. States and providers will need to account for this requirement, along with others, as SDPs are developed going forward.  

Connect with Us 

HMA is ready to support your efforts to understand and take action to account for the managed care final rule’s effects on your state or organization’s strategy and operations. Please reach out to [email protected] to connect with our expert team members on this vital set of issues. 

Blog

Medicaid managed care enrollment update—Q4 2023

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This week, our In Focus section reviews recent Medicaid enrollment trends in capitated, risk-based managed care in 30 states.1 Many state Medicaid agencies post monthly enrollment figures by health plan for their Medicaid managed care population on their websites. These data allow for timely analysis of enrollment trends across states and managed care organizations. All 30 states highlighted in this review have released monthly Medicaid managed care enrollment data into quarter four (Q4) of 2023. The analysis that follows reflects the most recent data posted. HMA continues tracking enrollment as states work towards concluding their Public Health Emergency (PHE) unwinding-related redeterminations and resuming normal eligibility operations. 

Health Management Associates, Inc., (HMA) has reviewed the Q4 enrollment data (see Table 1) and offers the following observations:  

  • Across the 30 states tracked in this report, Medicaid managed care enrollment declined by 7.3 percent year-over-year as of December 2023. 
  • Of the 30 states, 26 experienced decreased enrollment in December 2023, compared with the previous year, as the result of Medicaid redeterminations. 
  • A total of 23 of the states—Arizona, California, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Virginia, Washington, and West Virginia—saw net Medicaid managed care enrollment decrease by 469,000 (0.9%) to 51.5 million members at the end of Q4 2023. (Note: North Carolina expanded Medicaid in December 2023 and was added to the expansion group, in part inflating the change). 
  • The seven states that had yet to expand Medicaid as of December 2022—Florida, Georgia, Mississippi, South Carolina, Tennessee, Texas, and Wisconsin—have seen Medicaid managed care enrollment decrease 25.2 percent to 13.9 million members at the end of Q4 2023.  

Table 1. Monthly MCO Enrollment by State, October 2023−December 2023 

Note: In Table 1, “+/- m/m” refers to the enrollment change from the previous month. “% y/y” refers to the percentage change in enrollment from the same month in the previous year.

It is important to note the limitations of the data presented. First, not all states report the data at the same time during the month. Some of these figures reflect beginning of the month totals, whereas others provide an end of the month snapshot. Second, in some cases the data are comprehensive in that they cover all state-sponsored health programs offering managed care; in other cases, the data reflect only a subset of the broader managed Medicaid population, making it the key limitation to comparing the data described below and figures that publicly traded Medicaid MCOs report. Consequently, the data in Table 1 should be viewed as a sampling of enrollment trends across these states rather than a comprehensive comparison, which cannot be developed based on publicly available monthly enrollment information. 

Expand Your Awareness about Medicaid and Medicare Advantage via HMAIS 

If you are interested in gaining access to detailed information on the Medicaid managed care landscape, an HMAIS subscription is the key to unlock important data. The HMA Information Services (HMAIS) collects Medicaid and Medicare Advantage Special Needs Plan (SNP) enrollment data, health plan financials, as well as developments on expansions, waivers, and demonstrations. Your HMAIS login also provides access to a library of public documents all in one place, including Medicaid RFPs, responses, model contracts, scoring sheets and other procurement related materials. HMAIS combines this publicly available information along with HMA expert insights on the structure of Medicaid in each state, as well as a proprietary HMA Medicaid Managed Care Opportunity Assessment. 

For information on how to subscribe to HMA Information Services, contact our featured experts.

Blog

Medicaid managed care final rule: what to watch for

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Our second In Focus section provides a refresher on the Medicaid and Children’s Health Insurance Program managed care access, finance, and quality proposed rule that the Centers for Medicare & Medicaid Services (CMS) published in May 2023. As Health Management Associates, Inc. (HMA), has noted, the final rule is expected to be published later this month. If finalized as proposed, several provisions in the rule will signal the start of a new era of accountability and transparency for the Medicaid program. 

The policy changes are expected to fall into the following major categories: in lieu of services (ILOS), the Medicaid and CHIP Quality Rating System (MAC QRS), medical loss ratios (MLRs), network adequacy, and state directed payments (SDPs). These revised policies will affect Medicaid coverage and reimbursement for years to come. Following is a summary of the proposed policy changes to watch for in the final rule.  

ILOS 

CMS has proposed to expand upon and codify the sub-regulatory guidance around ILOS outlined in State Medicaid Director Letter #23-001. The letter advised state that they have the option to use the ILOS authority in Medicaid managed care programs to reduce health disparities and address unmet health-related social needs, such as housing instability and nutrition insecurity. The final rule would expand upon and codify that guidance. 

For example, although the ILOS proposal adds reporting requirements and guardrails to address fiscal accountability, the proposed rule also noted that the substitution of an ILOS for a state plan service or setting should be cost-effective but does not need to meet budget neutrality requirements. States are also permitted to specify that an ILOS can be an immediate or longer-term substitute for a state plan service or setting. 

MAC QRS 

CMS has proposed a MAC QRS framework that includes: (1) mandatory quality measures, (2) a quality rating methodology, and (3) a mandatory website display format. State Medicaid agencies and managed care organizations (MCOs) will be required to adopt and implement the MAC QRS framework that CMS develops or adopt and implement an alternative but equivalent managed care quality rating system. CMS will update the mandatory measure set at least every two years. Any planned modifications to measures will be announced publicly through a call letter or similar guidance, with measures based on: (1) value in choosing an MCO; (2) alignment with other CMS programs; (3) the relationship to enrollee experience, access, health outcomes, quality of care, MCO administration, or health equity; (4) MCO performance; (5) data availability; and (6) scientific acceptability. 

State Medicaid agencies will be required to collect from MCOs the data necessary to calculate ratings for each measure and ensure that all data collected are validated. In addition, state Medicaid agencies will be expected to calculate and issue ratings to each MCO for each measure. 

Lastly, state websites will be required to contain the following elements: (1) clear information that is understandable and usable for navigating the website itself; (2) interactive features that allow users to tailor specific information, such as formulary, provider directory, and ratings based on their entered data; (3) standardized information so that users can compare MCOs; (4) information that promotes beneficiary understanding of and trust in the displayed ratings, such as data collection timeframes and validation confirmation; and (5) access to Medicaid and CHIP enrollment and eligibility information, either directly on the website or through external resources. 

MLRs 

CMS has proposed three areas for revision to its existing MLR standards, which require MCOs to submit annual MLR reports to states, which, in turn, must provide CMS with an annual summary of those reports. Areas for revision include: (1) requirements for clinical or quality improvement standards for provider incentive arrangements, (2) prohibited administrative costs in quality improvement activity (QIA) reporting, and (3) additional requirements for expense allocation methodology reporting. 

With regard to provider incentive arrangements, CMS proposes to require that contracts between MCOs and providers: (1) have a defined performance period that can be tied to the applicable MLR reporting period(s), (2) include well-defined quality improvement or performance metrics that the provider must meet to receive the incentive payment, and (3) specify a dollar amount that can be clearly linked to successful completion of these metrics as well as a date of payment. MCOs would be required to maintain documentation that supports these arrangements beyond attestations. 

In terms of QIA reporting, CMS proposes to explicitly prohibit MCOs from including indirect or overhead expenses when reporting QIA costs in the MLR. CMS also intends to add requirements regarding how MCOs can allocate expenses for the purpose of calculating the MLR by requiring MCOs to offer a detailed description of their methodology. 

Network Adequacy 

CMS has proposed a range of new network adequacy requirements intended to improve timely access to care for managed care enrollees. Those related to appointment wait time standards and secret shopper surveys are among the most prominent. 

For appointment wait time standards, CMS proposes that state Medicaid agencies develop and enforce wait times associated with routine appointments for four types of services: (1) outpatient mental health and substance use disorder (SUD) for adults and children, (2) primary care for adults and children, (3) obstetrics and gynecology (OB/GYN), and (4) an additional service type determined by each state Medicaid agency using an evidence-based approach. The maximum wait times must be no longer than 10 business days for routine outpatient mental health and SUD appointments and no more than 15 business days for routine primary care and OB/GYN appointments. State Medicaid agencies could impose stricter wait time standards but not more lax ones. The wait time standard for the fourth service type will be determined at the state level. 

State Medicaid agencies also will be required to engage an independent entity to conduct annual secret shopper surveys to validate MCO compliance with appointment wait time standards and the accuracy of provider directories to identify errors, as well as providers that do not offer appointments. For an MCO to be compliant with the wait time standards, as assessed through the secret shopper surveys, it would need to demonstrate a rate of appointment availability that meets the wait time standards at least 90 percent of the time.  

SDPs 

CMS has proposed several important changes to the requirements governing the use of SDPs, strengthening both the accountability required of and flexibility afforded to states. For example, CMS proposes to require that provider payment levels for inpatient and outpatient hospital services, nursing facility services, and the professional services at an academic medical center not exceed the average commercial rate. Furthermore, states would be required to condition SDPs upon the delivery of services within a contract rating period and prohibited from using post-payment reconciliation processes. 

With regard to flexibility, CMS proposes to remove unnecessary regulatory barriers to support the use of SDPs by states to implement value-based payment arrangements and include non-network providers in SDPs. The proposal also permits states to implement, without prior approval, minimum fee schedules in Medicaid consistent with Medicare provider rates. 

What’s Next  

CMS is expected to publish the final rule in April. In addition, CMS plans to publish a separate final rule addressing new regulations pertaining to access to care, which will have equally significant impacts on states, MCOs, and providers. If you have questions about how HMA can support your efforts related to the managed care final rule’s implications and the context of other federal regulations for states, MCOs, or providers, contact our featured experts.

Blog

Medicaid managed care final rule anticipated soon

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HMA has previously reviewed and discussed some of the implications of provisions put forward in the Medicaid and Children’s Health Insurance Program managed care access, finance, and quality proposed rule published by the Centers for Medicare & Medicaid Services (CMS) back in May 2023. It is now anticipated that the final rule will be published later this month in April 2024. Given that the final rule, if it codifies many of the proposed provisions as written, will have a significant impact across Medicaid stakeholders including states, managed care organizations (MCOs), and providers, and that its publication appears imminent, it is valuable to recall the major areas that the final rule will likely address.

The final rule is anticipated to include policy changes in several major areas. These include in lieu of services (ILOS), the Medicaid and CHIP Quality Rating System (MAC QRS), medical loss ratios (MLRs), network adequacy, and state directed payments. When taken together, the policymaking in each of these areas represents the start of a new era of accountability and transparency in the Medicaid program and will affect Medicaid coverage and reimbursement for years to come.

HMA is on the alert for the final rule and will provide analysis and expertise relevant to states, MCOs, and providers, both before and following its release. Whether it is understanding the opportunities to leverage ILOS to address health-related social needs, ensuring operational readiness for data collection and calculation obligations for the MAC QRS, or preparing to comply with MLR requirements related to provider incentive arrangements and quality improvement activity reporting, as well as a host of other topics, HMA will be able to provide insight.

For More Information

If you have questions about how HMA can support your efforts related to the final rule’s implications for states, MCOs, or providers, please contact our featured experts.

Podcasts

Is food the missing link in healthcare’s cost crisis?

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R.J. Briscione is a principal with the HMA Strategy and Transformation Practice. R.J. shares insights gained from his experience in Medicaid managed care, CVS business development, and how he made the leap into healthcare from aeronautics. R.J. shares key insights on addressing food insecurity, nutrition education, and tailored food interventions that measurably drive better health outcomes. Join us as we highlight the vital role of food in healthcare and uncover actionable strategies for community organizations looking to impact patient outcomes by improving upstream determinants of health.

Podcasts

Can continuous quality improvement transform healthcare equity?

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Leticia Reyes-Nash is a principal in HMA’s community strategies practice and an expert in healthcare equity and innovation in healthcare service delivery. Leticia shares her inspiring journey from political and community organizing to her work in health policy, highlighting the importance of addressing health equity and the challenges within healthcare systems. She discusses strategies for integrating equity into business practices, emphasizing the need for continuous quality improvement, humility, and patience in healthcare initiatives.

Podcasts

What would it take to make the ACA more affordable?

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Liz Wroe is a principal at Leavitt Partners DC office and former Senate health policy director. Liz talks about the evolution of the Affordable Care Act (ACA), sharing her experiences during the ACA’s passage, repeal efforts, and stabilization of the individual market. She discusses challenges in bending the cost curve, the impact of ACA subsidies and silver loading, and the need for more honest conversations in healthcare policy.

Blog

HMA 2024 Spring Workshop summary and key takeaways

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On March 6, HMA convened a spring workshop of 100 healthcare stakeholders interested in making value-based care delivery and payment work better. This event was designed for those engaging in value-based care and payment transformation, but who are looking to learn from peers to overcome challenges; participants included insurers, health systems, data and tech innovators, service providers, and trade associations.

The event’s name implored people to “Get Real” about the challenges we all face, while reminding ourselves of the imperative of making this transition to ensure the sustainability of our uniquely American healthcare system. In between plenary panels, participants were engaged in cohort discussions exploring the opportunities for progress in areas critical to making value-based care work.  While a summary cannot recreate the real-time discussions and simulations from the event, our discussions delivered insights on several critical themes that we believe are important to track. 

EMPLOYERS ARE LEANING IN: For all employers pay, they are getting less value over the past decade; the changes made to ERISA that hold the C-suite accountable for paying fair prices for healthcare benefits is a seismic shift in making healthcare purchasing a more strategic priority for employers.

  • Elizabeth Mitchell of the Purchaser Business Group on Health illustrated the shift in employers’ awareness – due to data transparency rules – that they aren’t getting the quality they thought they were getting for all that they pay. Transparency, plus a recent change to the Employee Retirement Income Security Act of 1974 (ERISA), is bringing employers back to the table with very specific requests for better outcomes, which they are increasingly pursuing through direct contracting and specific quality frameworks for primary care, maternal care, and behavioral health. Participants continued to reflect on this dynamic in all subsequent discussions, underscoring that this could be a really big deal.
  • Cheryl Larson of the Midwestern Business Group on Health talked about the cost pressure on her members leading them to partner in new and different ways, expressing optimism about all payer solutions and other innovative approaches to leverage the cost data that are now available. In her closing plenary session, she said “this issue of accountability on employers…I am excited and optimistic that there are things we can do to get there faster now.”

Data & Technology HAVE TO IMPACT DECISION MAKING: Patients are using the system the way it is designed today, so we can’t just blame them for poor outcomes…we have to actually stop doing things that don’t work and start measuring things the right way.

  • Dr. Katie Kaney opened with a dinner keynote discussing her efforts to create metrics that give purchasers a better measurement of whole person care, including clinical, genetic, behavioral, and social factors. Audience members remarked that this was a novel approach to quantify what has become accepted correlation in adverse health outcomes.
  • Ryan Howells, Dave Lee, and Stuart Venzke led discussions on Data & Technology, diving into updated federal regulations that present both opportunities and challenges for stakeholders, as well as ways to create corporate strategies that include data and technology, as these issues are no longer optional for anyone in this business. The breakout discussions talked about where we are today vs where we need to be – bridging the gap between data and decision making.

Payment & Risk TOOLS ARE ALIGNING INFORMATION TO ACTION:  Achieving meaningful risk-based contracts is possible but the details matter…mismatched data and information leads to unequal buying power, which cannot be the case in value-based care.

  • Kelsey Stevens, Scott Malan, Hunter Schouweiler, and Kate de Lisle led discussions on Payment & Risk, including an exciting hands-on simulation exercise that helped participants understand ways to increase premium scores by implementing risk-based payment approaches within the care delivery system; this session provided very concrete takeaways for those who attended by combining a simulation with a discussion on measures of success to improve risk-based contracting strategies.
  • Amy Bassano and Kate de Lisle discussed their recent publication on the expanded ecosystem of value-based care entities, looking at the “enablers” who are working with providers and payers to manage risk. This groundbreaking landscape of this market segment highlighted a set of Guiding Principles to ensure these entities are aligned with CMS, provider, and patient goals. Participants had lots of questions for the presenters and were anxious to read the HMA full report.

CARE DELIVERY MEASURES MUST BE TANGIBLE TO PROVIDERS AND PATIENTS: Value-based care requires aligning the right metrics with the right incentives, ensuring providers understand not only WHY but HOW they help improve patient outcomes.

  • Rachel Bembas, Dr. Jean Glossa, and Dr. Elizabeth Wolff led discussions on Care Delivery Measures, underscoring the importance of involving clinicians in the establishment of outcomes measures, as well as ensuring that the diversity of patient experiences are included. Participants remarked that we have a lot of “messy” data today, so we now have to ask the next set of questions on how we best use the messy data to make an impact?
  • Former Congresswoman Allyson Schwartz talked about the continuing promise of Medicare Advantage, and the opportunity to convene a new alliance around Medicare quality metrics as well as the increasing pressure to align these metrics across payers. In the closing plenary, she said “We need to define what we want healthcare in America to look like and then go out and get it…. We have to align the measurements and the standards we use so that providers understand what’s needed and it benefits government, taxpayers, and beneficiaries…we should require plans to have risk-based contracting with providers.”

Policy & Strategy HAVE TO STAY THE COURSE TO ALIGN INCENTIVES: Policymakers can help or hinder movement forward to ensure success…value-based care has to be more than a section in an RFP, but part of the entire scope of paying for outcomes-based care delivery.

  • Governor and former HHS Secretary Mike Leavitt reminded us of the political and policy journey that got value to where it is today, and the unique moment we are in right now that gives us hope as we enter this post-pandemic phase of healthcare spending and policy. He reflected, “We are beginning to see regulations and mechanisms to hold people accountable for healthcare costs…we have to integrate value and caregiving or we will never get to value.”
  • Theresa Eagelson, former Illinois Director of Healthcare and Family Services, talked about the opportunity for states to expand value-based care by setting strong expectations through contracting and by thinking differently about policy choices. She reflected on the role of state administrators, “When we sit here and talk about value-based care, do we know what our north star is? Have we mastered what we want to see in RFPs (for Medicaid)?  We’re working on a good FQHC model in Illinois, but should it be just for FQHCs? We need to spend more time together, across payers, across plans and providers and consumers to figure out what success looks like.”
  • Caprice Knapp and Teresa Garate led a discussion on state and local Policy & Strategy to support integrated care and services that are required to achieve better outcomes. There is a need for services to better coordinate and manage care across social and health services, bringing contracting and payment expertise to more efficiently serve patients. The highly anticipated Medicaid managed care rule can help guide states in updating their approach. Federal analysis of Medicaid data is needed to set benchmarks before we can get to total cost of care approaches.
  • Amy Bassano and Anne Marie Lauterbach led a discussion on federal policy alignment of Medicare FFS and Medicare Advantage, particularly looking at drug spending and the very real burden of medical debt as a driver of policy change. Participants reflected that half the country is indirectly covered through some public insurance. It’s just being done hyper-inefficiently.

HMA is leading the way on value-based care and is committed to continuing these dialogues to drive local, state, and national change. HMA’s value-based care expertise draws from our acquisition of Leavitt Partners and Wakely Consulting Group, two firms with deep ties and expertise on policy, strategy and risk-based pricing strategies, as well as recruitment of clinicians and operational experts who have led organizations through this transition. We will continue to advance the dialogue – and the work – to drive value as a critical way to ensure that our systems of health and healthcare are more affordable, equitable, and sustainable.

Let’s keep the conversation going! Learn more about how HMA can help you succeed with value-based payments and check out the newly released value-based payment readiness assessment tool for behavioral health providers.

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State teams convene to strengthen collaboration across child welfare, behavioral health, and Medicaid

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This week, our In Focus section highlights the Children’s Behavioral Health (CBH) State Policy Lab, held February 7−9, in Baltimore, MD. Health Management Associates, Inc., (HMA), in partnership with national philanthropies and associations, hosted the Policy Lab, which provided an unprecedented opportunity for state cross-systems teams to conduct in-depth work toward creating an equitable behavioral health system of care for children and youth.   

Background 

The lack of collaboration and misaligned strategies and policies across state child welfare, behavioral health, and Medicaid has contributed to unsatisfactory outcomes for children and youth in our communities. The COVID-19 public health emergency exacerbated these issues, as the rate of mental health and substance use disorders (SUD) increased and many families experienced traumatic events during this time. Increasingly, states and local jurisdictions are exposed to threats or actual class action lawsuits based on the inadequate care of children and youth involved in the child welfare settings.  

Fortunately, federal and state efforts and investments to address the youth systems of care—including schools, community, delivery systems, and community-based child placing agencies—are in motion. Though the diversity of efforts being implemented across local and state agencies are critical, these complex issues require collaboration across multiple systems, including Child Welfare, Behavioral Health authorities, Medicaid, and K-12 Education. A cross-sector strategic approach will enable comprehensive identification of gaps, policy solutions, and best practices, as well as highlight opportunities for cross-sector braided or blended funding to build a system of care that supports the needs of multi-system children, youth, and their families.  

Child Behavioral Policy Lab 

The current behavioral health crisis presents an opportunity to address long-term challenges and divisions and to build a truly comprehensive approach. This is why HMA sponsored the Children’s Behavioral Health State Policy Lab which convened key partners within a state and across states. The Annie E. Casey Foundation, Casey Family Programs, National Association of State Mental Health Program Directors (NASMHPD), the Child Welfare League of America (CWLA), the American Public Human Services Association (APHSA), National Association of Medicaid Directors (NAMD) and MITRE, a Children’s Behavioral Health (CBH) State Policy Lab, joined HMA in funding, organizing and providing consultation support for the meeting. 

The nine participating states—Georgia, Kansas, Kentucky, Maryland, Missouri, Pennsylvania, Texas, Utah, and Wisconsin—were selected through a competitive process based on the goals and commitment of the state and the thorough analysis of gaps and opportunities, demonstration of collaborative state interagency partnerships, and engagement of youth and adults. 

The participating states committed their leadership teams to join the Policy Lab in laying the foundational work of development of statewide plans that would advance their collective goal of creating a more united system of care. Participants learned about intergenerational trauma and resilience. The sessions also provided participants with data that helped provide context to the problems we are trying to solve. Presenters included Aliyah Zeien, a national child welfare policy advocate and youth ambassador, with lived experience who highlighted that 25 percent of foster youth will spend time in prison or other enforcement systems within two years of leaving the child welfare system. Her experience and reflections served as call for action to actively engage families and youth in all system planning, advocacy, and policy work.  

Key areas of focus 

Following these brief educational sessions, each state had substantial “team time” to develop a road map and set of next steps for continuing their work after the Policy Lab. Expert facilitators guided state teams through discussions on three key issues:  

  • Service array. State teams were challenged to define their array of services and develop collective agreements on how to develop enhanced treatment options for children and their families. With an emphasis on building a full continuum of care with community-based supports and fewer children in residential facilities, each team considered challenges such as eligibility, access, and workforce. Prevention, diversion, and engagement of people with lived experience to help with system development were common commitments in state action teams.  
  • Financing. The teams considered their statutory authority, funding streams, funding partners, contract vehicles, and financing mechanisms. They also worked on ideas for blending and braiding funding, with a focus on Medicaid and leveraging collective opportunities to develop staff and contractual resources.  
  • Governance. State teams worked through difficult conversations, including how to measure success, how to manage accountability and monitoring, how to collaboratively design services and case practice, while meaningfully sharing data and creating interoperability within their systems while respecting confidentiality and privacy concerns.  

What’s Next  

Since the Policy Lab program, most participating states have embarked on next steps identified during the workshop, such as vetting their plans with state leadership, creating an ongoing team for implementation, and identifying community partners. HMA and HMA Companies, including Leavitt Partners, are collaborating with our Policy Lab partners and the state agencies to further develop these plans and prepare for implementations that rethink our approach to services for youth and their families. 

For more information about the Policy Lab and follow-on work, please contact our experts below.

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Federal policymakers consider current and future spending measures on simultaneous tracks

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This week, our In Focus section covers Congress’s and the Administration’s parallel efforts to finalize fiscal year (FY) 2024 spending bills and begin the budget process for FY 2025.  

Congress approved a bipartisan package for some of the FY 2024 spending bills, and on March 9, 2024, President Biden signed the Consolidated Appropriations Act of 2024 into law (PL 118-42). Programs funded through this measure include the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and other federal nutrition supports, rental assistance for safe and affordable housing, and veterans medical care and benefits.  

Several mandatory funding extensions of public health programs and health-related policies also found their way into the 2024 consolidated appropriations package, including extending the Community Health Center Fund, delaying reductions in the disproportionate share hospital allotments, defining Certified Community Behavioral Health Centers (CCBHCs) as a Medicaid service, extending incentive payments for certain Medicare providers, and mitigating the impact of cuts to the Medicare physician fee schedule.  

These policies, however, addressed a narrower set of issues than the expansive and bipartisan legislation that has been moving through both chambers of Congress. For example, House and Senate members have worked on respective bipartisan policies affecting price transparency, pharmacy benefit managers, and Medicare site-neutral policies, among others.  

Meanwhile, President Biden released the FY 2025 Budget proposal March 11, 2024, kicking off the annual budget process. Like the administration’s FY 2024 budget proposal, the FY 2025 plan emphasizes deficit reduction and continues to make equity and Medicare solvency cornerstones of the budget. Health-related priorities include expanding access to affordable healthcare services, lowering drug costs, improving maternal health, addressing the mental health and substance use disorder crises, and enhancing biodefense and preparedness activities.  

Check out the FY 2025 budget analysis from Leavitt Partners, a Health Management Associates, Inc. (HMA), company, and a deeper dive into the Consolidated Appropriations Act of 2024.

What We’re Watching 

Congress is continuing negotiations on the outstanding spending bills, including the one that funds the Departments of Health and Human Services, Labor, and Education through September 2024. Lawmakers are working to reach an agreement before the next funding deadline of March 22.  

The administration’s FY 2025 budget proposals are generally being characterized as a blueprint for President Biden’s re-election campaign and, if successful, a policy agenda for his second term. Though Congress has already begun holding hearings on the budget request, members on both sides of the aisle will likely focus on issues that resonate in an election year.  

Regardless of the outcome of the November elections, Congress has an opportunity to address unfinished business during the lame duck session later this year.  

HMA and Leavitt Partners collaborate to monitor legislative and regulatory developments in healthcare and adjacent spaces and to assess the impact of policy changes on the healthcare industry. 

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