Medicaid alternative payment models: How they're faring and how payers can capitalize

Despite how prevalent Medicaid alternative payment models are becoming, there have been relatively few—and mostly limited—evaluations of these initiatives compared to Medicare and commercial payment initiatives. (Getty/juststock)

Multiple states are turning to Medicaid alternative payment models to improve care quality and lower costs, but these initiatives might have to evolve in order to maximize their impact, a new report concludes.

The report, from the Deloitte Center for Health Solutions, notes that insurers in particular should pay attention to the trend, as Medicaid managed care organizations with APM experience may have a competitive advantage when bidding on state contracts.

In addition, health plans may be able to design their own Medicaid APMs or take advantage of new business opportunities to provide infrastructure or analytic support for existing ones.

But despite how prevalent Medicaid APMs are becoming, there have been relatively few—and mostly limited—evaluations of these initiatives compared to Medicare and commercial payment initiatives. One of the reasons is that some of the programs are still in their early stages.

RELATED: CMS touts growth of APMs as move continues to value-based payment

Still, based on reviews of research and interviews with industry experts and stakeholders, Deloitte made some key observations of the four main types of Medicaid APMs. Here’s a breakdown:

  • Patient-centered medical home initiatives: Multiple reports indicate they have helped primary care practices reach process milestones like implementing risk-stratified care management. Yet most quantitative evaluations of PCMH models have found limited measurable impact on claims-based measures of quality, utilization and cost of care for Medicaid beneficiaries.
  • Medicaid Health Homes: Quantitative analyses on patient and cost outcomes were not yet available from the federal government, but a qualitative analysis found that the model has led to improved care coordination, behavioral and physical health integration and member engagement. States that conducted their own evaluations reported positive impacts on cost and quality.
  • Episode of care payments: The only published results available are from the Arkansas Payment Improvement Initiative. It has achieved improvements in certain cost and quality measures—like reducing the costs of treating ADHD patients by 15%—but had mixed results on others. For example, post-operation complication rates worsened for patients in its knee/hip replacement bundled payment model.
  • Accountable care organizations: Overall findings suggest that Medicaid ACO models are maturing more slowly than anticipated. Colorado’s program made some gains in cost reduction, but didn’t have a significant impact on key performance, quality or access measures. Oregon credits its program for reducing overall Medicaid spending in the state.

Looking toward the future, Deloitte notes that the potential impact of Medicaid APMs on care delivery can depend considerably on how much of a provider’s revenue comes from Medicaid. Thus, alignment with other payers may be necessary to effectively support and incentivize providers to participate in APMs.

To that end, the Medicare Access and CHIP Reauthorization Act (MACRA) helps by creating an incentive for Medicaid clinicians who also treat Medicare patients to participate in APMs. For Medicaid managed care plans specifically, if they want to have their models qualify as an other-payer advanced APM for MACRA purposes, they will likely have to work with their state Medicaid agency to get a determination from the Centers for Medicare & Medicaid Services.