High-Performance Health Care for Vulnerable Populations: A Policy Framework for Promoting Accountable Care in Medicaid

The Affordable Care Act and state Medicaid reform efforts present opportunities to reengineer health care payment and delivery systems to promote higher performance. This opportunity will be squandered, however, unless Medicare and Medicaid work collaboratively to develop a common framework for providers. This report explores how state Medicaid agencies might align with and build on the Medicare Shared Savings Program, which rewards groups of providers that meet cost and quality benchmarks by working together to coordinate patients' care in accountable care organizations. While the Shared Savings Program applies only to fee-for-service Medicare beneficiaries, federal policymakers recognize that the ACO infrastructure can be leveraged to other populations. Indeed, ACOs are most likely to succeed if they deploy care management strategies across all patient populations. Medicaid beneficiaries could benefit from payment and delivery system reform initiatives aligned with the Shared Savings Program, and state Medicaid programs could reap considerable savings.

The Affordable Care Act and state Medicaid reform efforts present opportunities to reengineer health care payment and delivery systems to promote higher performance. This opportunity will be squandered, however, unless Medicare and Medicaid work collaboratively to develop a common framework for providers. This report explores how state Medicaid agencies might align with and build on the Medicare Shared Savings Program, which rewards groups of providers that meet cost and quality benchmarks by working together to coordinate patients' care in accountable care organizations. While the Shared Savings Program applies only to fee-for-service Medicare beneficiaries, federal policymakers recognize that the ACO infrastructure can be leveraged to other populations. Indeed, ACOs are most likely to succeed if they deploy care management strategies across all patient populations. Medicaid beneficiaries could benefit from payment and delivery system reform initiatives aligned with the Shared Savings Program, and state Medicaid programs could reap considerable savings.

Executive Summary
Both the federal and state governments are adopting new payment and delivery system models aimed at improving the quality of health care services and reining in costs. In addition to a wide range of reforms enacted in the Patient Protection and Affordable Care Act, there are several state policies supporting these goals. An emerging challenge for policymakers is to create alignment among these initiatives so that the proliferation of payment and delivery system models does not lead to conflicting financial incentives and burdensome reporting requirements for providers, thus undermining the goal of achieving coordinated, effective and efficient care.

Medicaid could play a significant role in harmonizing the various delivery system reform initiatives and driving change that fosters greater accountability and improved performance across the health system and across payers. First, the sheer size of Medicaid—by 2019, up to 25 percent of Americans could receive coverage through the program, and it could account for as much as 20 percent of national health care spending—makes it vitally important to the success of any initiative. Second, states have a financial imperative to contain Medicaid costs: Medicaid accounts for over 70 percent of states' health care expenditures, and is the first- or second-largest item in every state's budget. Implementing coordinated, accountable delivery systems could help contain costs and achieve better outcomes for Medicaid beneficiaries.

The Centers for Medicare and Medicaid Services recognizes the importance of having state Medicaid programs align with other payment and delivery system reform efforts, as evidenced by the recent Center for Medicare and Medicaid Innovation State Innovation Models initiative, which provides funding for states to design and test multipayer delivery system and payment reforms. Medicare and Medicaid must articulate a shared vision and adopt policies that are aligned in their support of providers working together to maximize the value of care they deliver to their patients and communities.

This report focuses on the Medicare Shared Savings Program (MSSP) as an example of how Medicaid might build on delivery system and payment reform programs in Medicare. While the MSSP program is designed to create accountable care organizations (ACOs) for fee-for-service Medicare beneficiaries, CMS has explicitly recognized that the ACO infrastructure can be leveraged to care for Medicaid populations, and that ACOs will be most successful if they deploy their infrastructure across all of their patient populations. In this report, we propose a policy framework for states to create ACOs for their Medicaid populations.

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