Improving Medicaid with Value-Based Care: The Future is Here

State Medicaid programs are increasingly interested in adopting various value-based payment (VBP) models with the aim of fostering efficiency and enhancing health outcomes within the system. Unlike Medicaid’s traditional fee-for-service payment model, which relies on the quantity of care delivered, value-based payment models incentivize providers to meet quality objectives and generate cost savings. Some models also incentivize improving the patient experience and addressing disparities in health equity.

While states have always possessed the authority to implement different types of value-based payment models in Medicaid, interest and utilization of VBP has seen a surge in recent years due to new options made available through the Patient Protection and Affordable Care Act and a desire to align with the strategies of other payers.

But as many states have discovered, while the transition to value-based payment presents an excellent opportunity to modernize and improve the Medicaid system and the clinical and financial outcomes for states, the transition to value-based payment is not without its challenges. This article will explore the top trends, issues, and opportunities that are shaping the future of value-based payment with Medicaid.

Integrating Physical and Behavioral Health

While most VBP arrangements in Medicaid currently support the delivery of physical health services, there’s increasing recognition of the need to extend these models to behavioral health services. Medicaid is the largest payer for behavioral health services, with spending on individuals with a behavioral health diagnosis nearly four times higher than those without. However, the adoption of VBP strategies in Medicaid behavioral health programs has been slow to emerge.

To address this gap, innovative states and Medicaid managed care organizations (MCOs) are developing VBP arrangements for behavioral health care services. They’re building on models developed for physical health services and incorporating VBP attributes into behavioral health programs. This includes implementing payment levers to improve provider practices and using the payment to enhance MCOs' delivery and coordination of behavioral health services.

However, shifts to value-based payment arrangements for behavioral health has been challenging for many states. A lack of true outcome measures and quality assessments, a dearth of funding for electronic data exchange, and concerns about clinician readiness to transform have been roadblocks to widespread adoption of value-based arrangements. Key areas of concern include quality measurement, provider capacity, oversight considerations, and privacy and data-sharing constraints.

Despite these challenges, states are starting to prioritize the development of initiatives to encourage physical-behavioral health integration via value-based models. That includes outcome payments based on performance for quality measures (e.g., psychiatric hospital readmission rates), incentives to promote integrated care coordination (e.grequirements that members with behavioral health diagnoses receive an integrated care plan), and incorporating behavioral health spend into shared savings arrangements (e.g., including behavioral health spending in a total cost of care benchmark).

States need to consider several factors before they can implement these models, however. They should redouble their efforts to invest in access to the most timely, trustworthy, and accurate data, as data and the analytics it enables are absolutely essential for assessing, understanding, and implementing measures to improve the quality and reduce the cost of care.

This includes traditional analytics as well as the more advanced, AI-enhanced predictive and prescriptive analytics now at the forefront of supporting decision-making with populations managed under value-based models. Additionally, investment in analytic capacity is necessary to support data-driven decision-making in value-based care design and oversight.

Collaboration and alignment among Medicaid programs, providers, health plans, and community-based organizations is also crucial to ensure the delivery of coordinated and patient-centered care. Lastly, embracing community-based care, and using contemporary tools and technologies to enable that cost efficiency, is essential to addressing social determinants of health and promoting patient engagement to improve health equity among populations.

Telemedicine and Remote Patient Monitoring

The COVID-19 pandemic brought about a seismic shift in healthcare, prompting the rapid adoption of telemedicine and remote patient monitoring. These innovative technologies have emerged as critical pillars of care delivery, particularly in overcoming barriers such as limited access to care in rural areas and the stigma surrounding behavioral health. Telemedicine empowers patients to receive medical consultations and treatment from the safety and comfort of their own homes, while remote patient monitoring (RPM) enables healthcare providers to monitor patients in real time, virtually. These transformative technologies have proven their potential to enhance patient access to care, data-driven decision-making, and ultimately improve health outcomes at lower costs. However, there have been historical concerns regarding potential over-utilization and the perceived advantages of in-person models.

In the wake of the pandemic, it's evident that telemedicine and RPM are here to stay. Value-based models can benefit from the capabilities of these technologies. Nevertheless, significant challenges lie ahead. It’s still early days for both technologies, and that calls for the establishment of robust infrastructure to measure clinical and patient-centered outcomes accurately, as well as delivery costs of care. Moreover, both technologies’ reliance on phone and internet access raises the specter of unintended socio-economic barriers to care, potentially exacerbating disparities in outcomes and efforts to improve health equity. States must diligently monitor the clinical and financial impact of telemedicine and RPM to ensure equitable advancements in healthcare for all.

Despite these challenges, it is undeniable that telemedicine and RPM will continue to influence the future of healthcare. They will assume a more prominent role in risk-bearing models, such as population- or episode-based payment approaches, enabling Medicaid providers to achieve desired outcomes while optimizing care delivery.

Investment in Analytic Capacity: Unleashing the Power of Data

Data analytics emerges as an indispensable tool in the pursuit of improved healthcare delivery. More than 50% of healthcare leaders recognize that the strategic use of advanced analytics technology holds the key to success with value-based models, according to a recent research report from Morning Consult.

Value-based models demand a collaborative effort from providers and payers, spanning the entire healthcare continuum, to engage patients in a manner that meets rigorous quality benchmarks, achieves optimal clinical outcomes, and reduces overall costs. Actionable analytics serves as a compass, steering the course to ensure patients receive vital preventive tests, embrace proactive care, bridge critical gaps in care; and help providers identify high-risk patients for proactive interventions, as well as ascertain the satisfaction around experiences of those under their care.

Analytics, far from being a mere accessory, is an essential business tool for payers, providers, and state Medicaid agencies embarking on using value-based payment models. States should harness the power of analytics to unearth population health trends, forging a path where value-based payment strategies can yield the greatest impact. Armed with data-driven benchmarks that can be used to incentivize performance at the point of care, states can set realistic targets so that providers make better decisions and take appropriate actions that drive success.

Understanding the crucial role of analytics in VBP, can help states' creases can be poised to amplify their investment in analytical solutions—ultimately bolstering their ability to make informed decisions in the design, delivery, and oversight of value-based models. By integrating comprehensive data and insights into providers’ existing clinical workflows, states can ensure all stakeholders are operating from a single source of patient truth, and secure the short-term viability and long-term sustainability of value-based arrangements.

Collaboration and Alignment

The transition to value requires a coordinated effort between Medicaid programs, providers, health plans, and community-based organizations. Collaboration is essential to ensure that beneficiaries receive the right care at the right time and achieve improved health outcomes, better access to care, and reduce cost of care. This was a challenge when value-based strategies were predominantly focused on physical health concerns and costs, and became more complex with the shift toward whole-person care that includes addressing social determinants of health and improving health equity.

One of the key benefits of collaboration and alignment is the enhancement of care management and coordination. By leveraging integrated, automated, data-driven workflows to work better together, stakeholders can ensure that patients receive streamlined, coordinated care that comprehensively addresses their physical, behavioral, and social needs. This can reduce costs, improve health outcomes, and enhance patient satisfaction with accurate, transparent, up-to-the-minute reporting that supports contract requirements, goals, and negotiations.

Another benefit of collaboration is the ability to share data and resources. Integrated technology enables stakeholders to share information and resources to best understand patient populations, track health outcomes, and develop targeted interventions to improve care. This type of real-time data sharing and resource coordination is essential to succeed with value-based models, as it enables stakeholders to make the most informed decisions for optimal care delivery.

Lastly, collaboration and alignment can help promote accountability and reduce waste. By working in lock-step, stakeholders can ensure that resources are used efficiently and effectively and that patient outcomes are tracked and measured over time. This type of transparency and accountability can’t be achieved without the proper data, analytics, and integrated workflow technologies in place, and is absolutely essential for driving value in healthcare and ensuring the transition to value-based models is successful.

Embracing Community-Based Care

An often overlooked and crucial aspect in the transition to value is community-based care, as it provides an opportunity to address social determinants of health, improve health equity, and enhance patient engagement. This approach recognizes that health is influenced by a range of factors beyond clinical care, including social, economic, and environmental factors.

By integrating community-based resources into care delivery, Medicaid programs can better meet the needs of beneficiaries and improve health outcomes. For example, community-based organizations (CBOs) can provide support for housing, transportation, and food security, all of which can have a significant impact on health. Additionally, community-based care can help enhance patient engagement and encourage individuals to take an active role in their care.

Another benefit of community-based care is the opportunity to reach patients in their own communities, where they feel most comfortable and connected. This can reduce barriers and improve access to care, particularly for underserved populations.

With State Medicaid programs increasingly interested in innovative ways to improve care and reduce costs, the future of moving Medicaid to value-based models is now. By embracing these trends and collaborating, Medicaid programs can provide higher-quality, more affordable care to beneficiaries that improve health outcomes and fundamentally modernize the US healthcare system.

Transformative pivots will be the deciding factor for Medicaid organizations. As noted earlier, an aspect of achieving success with value-based models is integrating data from EHRs and other IT silos into a unified (longitudinal) patient record that provides a 360-degree holistic picture of the patient. This enables providers to understand, report on, and facilitate the integration of clinical, claims, labs, pharmacy, telehealth, remote monitoring, social determinants, consumer-generated and third-party data—any data deemed essential to providing a holistic patient view. Now providers can drive better outcomes at lower costs and meet the program goals by using integrated, automated, analytics-driven workflows that support care management, risk stratification, patient engagement strategies, and more.

To be successful with value-based models and improving population health, it’s vital to begin with unifying the patient journey through the use of unified patient data. Once the entire care continuum is brought together on a common enterprise data platform, states can use that technology backbone to drive the transformation and continuous innovation that is essential for the industry’s transition to value. This is the path to the future of Medicaid, and the future of healthcare.