State’s plan could serve as a national model for Medicaid payment reform
NEW YORK, NEW YORK, August 22, 2018—A redesign of the New York State Medicaid program’s payment system for children’s health care could encourage physicians to invest in strategies to promote lifelong health and well-being for their patients—and accrue long-term savings in the process—according to a case study released today by United Hospital Fund (UHF) and The Commonwealth Fund.
New York started redesigning its Medicaid program in 2015, focusing on a shift from fee-for-service (which reimburses based on the number of medical procedures and services provided), and toward value-based payments, which rewards quality of care based on improved patient outcomes. In 2016 the State formed a subcommittee to examine how this shift would work for the approximately 1.8 million children enrolled in Medicaid—two out of every five children living in New York State.
The case study, Reforming Payment for Children’s Long-Term Health: Lessons from New York’s Children’s Value-Based Payment Effort, outlines how New York’s value-based payment system for children is being designed in collaboration with a broad range of stakeholders to encourage a focus on prevention and the promotion of healthy lifestyles. The study also shows how the new system would address social determinants of health, such as insecure housing, lack of access to healthy food, and exposure to family stress.
The state subcommittee determined that, unlike value-based payments for adult care (which are usually designed to encourage immediate savings), a new measurement of success was needed for children, most of whom are in relatively good health and incur far lower short-term costs than adults. Savings in children’s health come from preventing chronic conditions that could develop later in adulthood and from better outcomes in non-health sectors, such as educational achievements. As such, it argued that New York needs to further refine its value-based payment system to account for these realities.
“By emphasizing prevention and promoting a child’s long-term development, improvements in child outcomes are likely to be detected in education, child welfare systems, and other sectors before becoming apparent in health care,” said Chad Shearer, Senior Vice President for Policy and Program at UHF and a co-author of the report. “That’s a very different model from the usual value-based payment contracts, designed to accrue near-term savings.”
For the past decade, the U.S. health care system has been shifting away from the standard fee-for-service structure and towards value-based payments. The case study identified key takeaways for other Medicaid programs considering child-centric, value-based payments:
• The goals and design of value-based payments should be tailored to the health needs of children, not adults.
• Value-based payments for children will pay off if they result in the prevention of chronic conditions in adulthood, leading to lower long-term health care costs.
• Payment models must incentivize pediatricians and primary care practices to improve quality, offer less fragmented services, and adopt relatively low-cost health interventions that promote better long-term outcomes.
• Value-based payment models should be designed with input from all the stakeholders involved in children’s health and be tested in combination with innovative primary care models to ensure the incentive structures are appropriate.
“Value-based payment approaches for children’s health care are urgently needed to overcome fragmented approaches to care and encourage providers to focus on a child’s long-term health,” said Suzanne C. Brundage, director of UHF’s Children’s Health Initiative and a co-author of the report. “New York’s commitment to designing child-centered, value-based payments in Medicaid could be a model for other states pursuing efforts to promote high-quality health care for children.”
New York has committed to testing the children’s value-based payment model, and the New York Medicaid program is seeking opportunities for a pilot program.
“The report makes clear that, although this work is challenging, it is critically important,” said UHF president Anthony Shih, MD, MPH. “Even though the process is ongoing, we have already seen notable progress in a strengthened commitment to New York Medicaid’s youngest beneficiaries.”
“This is an exciting step to incorporate children into value-based payment, enabling us to pay for what works,” said Melinda Abrams, senior vice president at The Commonwealth Fund. “Creating value-based payment models that are specific to children’s health care needs could allow states to intervene early in the life course, prevent long-term health issues, and ultimately curb costs. New York’s initiative and what we will learn from it, has the potential to give us the evidence we need to adopt and spread models like this nationwide.”
The report, produced by UHF with support from The Commonwealth Fund, can be downloaded from UHF’s website here.
About The Commonwealth Fund
The Commonwealth Fund is a private, nonprofit foundation supporting independent research on health policy reform and a high-performance health system.
About United Hospital Fund
United Hospital Fund works to build a more effective health care system for every New Yorker. An independent, nonprofit organization, we analyze public policy to inform decision-makers, find common ground among diverse stakeholders, and develop and support innovative programs that improve the quality, accessibility, affordability, and experience of patient care. For more on our initiatives and programs please visit our website at www.uhfnyc.org and follow us on Twitter.