JMOC: Paying for Value

The Governor’s Office of Health Transformation (OHT) has made the transition to value-based payment its main focus since it was created in the beginning of the Kasich Administration. Now, before the budgetary swan song for this governor, many of the seeds planted in those early stages are starting to bear fruit and OHT is ramping up its Medicaid work in value. This was not only the subject of recent presentations on Comprehensive Primary Care (CPC) and episodic based payments by OHT, but was also the subject of the most recent Joint Medicaid Oversight Committee (JMOC).

Often, the “transition to value” as a term can lose its meaning in the ever-changing vocabulary and jargon of health care policy and reform. This is why the JMOC meeting was particularly useful to help illuminate what “transition to value” means both theoretically and operationally. First, Sukey Barnum, from Health Management Associates, explained that this shift to value is not just the “policy du jour” and is instead a trend that is here to stay. Medicaid and payers generally, she explained, are moving away from reimbursement that pays providers for each discrete service (fee for service, or FFS). Instead, payments will start reflecting the outcomes associated with the services provided and, eventually, be aggregated to cover entire populations. To be successful, there needs to be well-networked providers with the appropriately connected health record data, empowered consumers, and easily accessible information to help providers and consumers be successful in this new paradigm of care.

Ms. Barnum received a few questions, including one from Representative Sprague about if consumers are price sensitive in this new world and whether price transparency for health services helps alleviate that sensitivity. As Ms. Barnum explained, there are many studies that suggest that consumers, even in systems with transparency, may not be the most effective way to address that sensitivity. Given the recent focus of the legislature on improving transparency through the last budget, it will be interesting to see if and how the legislature revisits this topic as they seek to increase more market-based, personal responsibility measures in Ohio’s Medicaid delivery system.

In addition to Ms. Barnum, Dr. James Misak[1] and Susan Mego from MetroHealth presented on their total cost of care contract with CareSource, one of the most apparent operationalized examples of this shift to value. The basis of this contract includes a performance-based system of reimbursement built on savings produced from the difference between the expected costs and the actual expenses. The savings, then, are distributed between the plan and the providers, which incentivizes collaboration, common case management, and higher quality. This contract is not yet “full risk”, so providers are protected and do not lose reimbursement even if costs increase. However, the MetroHealth presenters expressed a hope to move in that direction, stressed how important it was to support OHT’s work, and made a number of recommendations, including streamlining reporting obligations, maintaining coverage for Medicaid populations, and supporting better data sharing between payers and providers.

So what does all this mean and where are we going, especially since we are nearing the end of one administration? First, this transition transcends the political context of the Kasich administration, meaning value-based design will be a part of the future. Second, it also points to a current tension that exists in the market about who “owns” the most value-creating activity of healthcare – care coordination.

On the one hand, the health plans have a number of tools, data systems, clinicians, and contractual obligations that help to standardize quality and simplify the oversight of this shift to value. On the other hand, provider networks, who have been traditionally incentivized to perform the most expensive service, want complete discretion over the care delivery in order to control their costs and, through shared savings, benefit from doing so. The state is moving forward in implementing a system based on value through the proliferation of coordinated models of care and episodic payments. But it is the last piece of continuum that should grab your attention – Accountable Care Organizations (ACOs).

As MetroHealth alluded, owning the risk and the discretion to determine when and how patients utilize care is where they believe they achieve value. But if hospital systems and provider organizations want the responsibility over the data, patients, administration, and coordination involved, where does that leave Ohio’s Managed Care system? [EC1] In any scenario, value is here to stay and the world of reimbursement is shifting beneath our feet.

Source: OHT

[1] Dr. Misak serves on the Board of the Center for Community Solutions