Timely Guidance on Payment and Coverage Reform

Overview

There is substantial activity in health policy, especially around new payment models and health programs that states oversee. States, in particular, face specific cost challenges, and they will likely have more flexibility to customize their programs in the next few years. To help these policies achieve better healthcare quality and value, stakeholders need timely evidence on their overall impact, guidance on how policies can be tailored for a state’s unique context, and solutions to implementation challenges.  

The Duke-Margolis Center for Health Policy is developing six issue briefs that address pressing payment and coverage issues at the federal and state levels. These briefs will survey existing evidence, translate it to the specific policy context today, and identify implications for policy makers.

Issue Briefs

Novel State Payment Models for Prescription Drugs: Early Implementation Successes and Challenges

Nicholas Fiore, Mathew Alexander, Meril Pothen, Marianne Hamilton Lopez, Gregory Daniel, Mark McClellan, Robert Saunders

While more stable in recent years, health care expenditures continue to be one of the fastest growing areas of state budgets.As a result, a growing number of states are exploring the use of alternative payment arrangements for prescription drugs to address cost concerns while achieving public health goals. This brief examines new payment models for prescription drugs being implemented or considered by states, including value-based payment models that tie drug payments to observed outcomes (i.e., outcomes-based contracts) and those that are population-based payment models. The primary challenges for states in launching new payment models are operational factors, including limited data capacity for tracking people's health outcomes and the lack of well-established contracting models. The brief also identifies potential policy options for moving ahead. For example, drug payment reforms could spread if there was more clarity around what is allowed by current law and regulations, and further regulatory flexibility or CMS guidance could allow for states to implement advanced reforms that fully shift payment from utilization to broader individual or population health improvement. 

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Novel State Payment Models for Prescription Drugs: Early Implementation Successes and Challenges

Value Innovations by Employers: Examples Beyond Cost Sharing

Andrew Olson, Mark Japinga, Hannah Crook, Robert Saunders, Donald H. Taylor, Jr.

Employer-sponsored health insurance plans face rising costs that impact firms’ bottom lines and employee wages. In response, many employers have adopted cost-sharing strategies, such as high deductible health plans, but there may be limits to how well these designs can contain costs and improve health outcomes. Many employers are seeking new ways to increase the value of care they purchase through their plans, such as by managing population health, implementing payment reforms, and helping patients navigate the health system to high-value providers. We examine innovative models of value-based insurance design that have been developed within the employer-sponsored market, consider how they may continue to spread and expand, and explore the implications for broader transformation of the health care system.

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Innovations in Medicare Advantage to Improve Care for Seriously Ill Patients

Andrew Olson, Matthew Harker, Robert Saunders, Donald H. Taylor, Jr.

Medicare Advantage’s financing structure, combined with recent statutory and regulatory changes that will allow greater flexibility for delivering non-medical services, make it a fertile testing ground for new models of delivering care to patients with serious and advanced illness. To learn more about new approaches that have been piloted in the Medicare Advantage space, we examined three models developed by third party firms that contract with Medicare Advantage plans: Aspire Health, Landmark Health, and Turn-Key Health. These models are designed to improve care quality and reduce emergency department visits and hospitalizations by providing care management and high-touch, non-medical services that are poorly reimbursed in a traditional fee-for-service environment. The design and functions of these models inform key steps that can be taken to accelerate the spread of these approaches throughout the broader health system, including encouraging payment reforms in traditional Medicare; rigorously studying the impact of serious illness models to expand the evidence of their impact on utilization, quality, and cost; and supporting workforce development initiatives to prepare providers for participation in value-based models.  

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Are Carrots Good for Your Health? Current Evidence on Health Behavior Incentives in the Medicaid Program

Robert Saunders, Madhu Vulimiri, Mark Japinga, William Bleser, Charlene Wong 

Medicaid beneficiary incentives for health behaviors have become popular in recent years, with multiple states and Medicaid managed care organizations designing incentives to target various health conditions and populations. Yet, there is limited evidence on how well these programs work, and the overall impact is mixed on whether they improve people’s health and reduce health care costs. Some incentive programs, like those targeting one-time behaviors and smoking cessation, have stronger evidence on improving health outcomes.

There are multiple operational challenges to implementing these incentive programs. Nearly every state and Medicaid managed care plan administering an incentive program underestimated the time and resources needed to establish it. These administrative challenges affect whether states are able to enroll Medicaid beneficiaries in the programs and whether the program meets its goals of improved health and lower cost.

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Gauging Payment Reform Progress in Medicare Advantage:  Current State and Opportunities for Improvement

Mark Japinga, William Bleser, Andrew Olson, Robert Saunders

Medicare Advantage plans are well-positioned to lead the transition from fee-for-service to alternative payment models. The program currently enrolls more than 1/3 of all Medicare beneficiaries and the flexibility given to plans makes it ideal for testing new models. However, the limited amount of publicly available information means little is known about what payment models are working well and why.

Maximizing the potential of Medicare Advantage to lead this transition requires better evidence that can help determine which reforms are promising and which ones to avoid. CMS can also play a critical role by releasing more data and finding ways to reduce provider burden to make it easier to participate in new payment models.

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Managed Care Reform and Prospects for Medicaid Expansion in North Carolina

Andrew Olson, Matthew Harker, Donald H. Taylor, Jr.

North Carolina is poised to undertake significant reforms to its $12.4 billion Medicaid program that serves two million of its residents, even as the political landscape has shifted in Raleigh and in Washington, DC. Divided government at the state level has jump-started reform in North Carolina as the newly elected Democratic Governor has invigorated the Medicaid managed care reform begun by Republicans. The lingering question is whether the state will also expand its Medicaid program. Using the key issues of rural health disparities, value-based payment arrangements, and behavioral health integration, which managed care reform aims to address, we consider how Medicaid expansion could impact the realization of managed care reform goals.

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State Employee Health Plans Can Lead Value-based Initiatives

Mark Japinga, William Bleser, Daniel Feingold, Robert Saunders

With a large market share, a statewide pool of enrollees, and long-term relationships with employees and retirees—state employee health plans have a unique ability to address rising costs through new payment and delivery reforms, according to a new report prepared by experts at the Duke-Margolis Center for Health Policy with funding from the Robert Wood Johnson Foundation. Plans in 18 states cover more than 10 percent of their state’s privately insured population, and all states are well-positioned to carry out new initiatives. States are implementing a variety of new payment reforms, incentivizing use of high-value insurance plans, and taking leadership roles in state-wide stakeholder health collaboratives. The team provides guidance about which techniques have been used successfully and identifies factors affecting implementation. The breadth of initiatives shows that regardless of a state employee health plan’s priorities, administrators can find and develop the best initiative to meet their needs and collaborate with large payers and purchasers to achieve broader health system change.

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Duke-Margolis Project Team

Donald H. Taylor, Jr, PhD, MPA
Principal Investigator

Robert Saunders, PhD
Research Director, Payment and Delivery Reform

Matthew Harker, MPH, MBA
Associate Director, Health Policy Hub within Health Services Research at Duke Clinical Research Institute

David Anderson, MS
Research Associate, Health Policy Evidence Hub

Will Bleser, PhD, MSPH
Research Associate

Mark Japinga, MPaff
Senior Research Assistant

Andrew Olson, MPP
Project Leader, Health Policy Hub, Duke Clinical Research Institute

Funding

Support for these briefs was provided by the Robert Wood Johnson Foundation. The views expressed here do not necessarily reflect the views of the Foundation.