Tackling Medicaid In Massachusetts

Editor’s note: This post is part of a series stemming from the Third Annual Health Law Year in P/Review event held at Harvard Law School on Friday, January 30, 2015. The conference brought together leading experts to review major developments in health law over the previous year, and preview what is to come. A full agenda and links to video recordings of the panels are here.

The Affordable Care Act (ACA) provides a number of tools to address longstanding problems in our fragmented health care system. At the national level, the Centers for Medicare and Medicaid Services (CMS) are redefining Medicare through initiatives that promote payment and delivery reform, such as Shared Savings and Value-Based Purchasing. States are also seeking their own opportunities to move away from inefficient systems that reward volume over quality. In particular, state Medicaid programs have the potential to play a major role in these efforts.

Given the number of individuals Medicaid covers, it has the biggest potential impact in improving health care. Medicaid covers more than 1 in 5 Americans, funding more than 16 percent of total personal health spending in the United States. With ACA Medicaid expansion, enrollment increased in 2014 by 8.3 percent and led to an increased overall Medicaid spending growth of 10.2 percent. Total Medicaid spending growth in 2015 is expected to be 14.3 percent with a 13.2 percent enrollment growth. This is not an insignificant portion of both state and federal health care dollars. Thoughtful and concerted reforms to Medicaid have the potential to reduce spending and improve care quality.

Reforming MassHealth

In Massachusetts, we began our health reform efforts back in 2006 by expanding insurance coverage. In 2012, we in the legislature embarked on tackling the issue of cost containment by slowing the growth of total health expenditures through the creation of a statewide growth benchmark. We have seen some modest success that leads us to be optimistic, including a slowdown of health expenditures to 2.3 percent growth this past year, but we cannot be complacent.

Now we plan to address our Medicaid program, known as MassHealth. The MassHealth budget has reached 14 billion dollars, more than 30 percent of the state budget expenditures, and the program now serves one-quarter of the state population. MassHealth in its current form is financially unsustainable. If we are serious about improving the health of our residents and bending the cost growth curve, we need to address the state’s biggest provider of health care.

Massachusetts Governor Charlie Baker has announced his intentions to make significant changes to MassHealth within the coming year. He is conducting a series of community listening sessions to gather data on how the program operates and serves individuals. The legislature will certainly have an important role to play in any future reforms.

As House Chair of the Joint Committee on Health Care Financing, I am traveling around the state with my committee members and meeting with a variety of stakeholders to better understand the program and its impact. There is general agreement that the program needs to change, but the specific changes needed are up for debate. We need to go beyond just spending more money and truthfully evaluate the manner in which that money is spent and how it impacts patients.

SIM Project Shortcomings

Massachusetts was awarded more than $44 million from CMS to fund the state’s cost-containment efforts through the ACA’s State Innovation Model (SIM) Initiative. One of Massachusetts’ SIM goals was to increase the number of MassHealth lives covered by alternative payment methods (APMs) to 80 percent. The goal of the Primary Care Payment Reform Initiative (PCPRI) was to transition MassHealth primary care providers to APMs in an effort to augment the toolbox for providers to deliver care, improve quality, and cost effectiveness of said care. The impossibility of trying to straddle both the APM and fee-for-service worlds has inhibited any progress forward.

Unfortunately, few providers have adopted PCPRI and the MassHealth managed care organizations (MCOs) have elected not to participate. The original goal for PCPRI was for half of total members to be enrolled by July 2014 and 80 percent of members enrolled by July 2015. It is widely acknowledged that these benchmarks will not be met. Currently, only 3 percent of MassHealth Primary Care Clinician (PCC) practices have contracted for PCPRI and only 23 percent of PCC patient members are enrolled.

Providers who have contracted in PCPRI are frustrated with the lack of timely data and the complexity of the raw data they do receive. For many primary care practices and community health centers, the data is too complicated to distill on their own and hiring actuarial or analytic staff is prohibitively expensive. The lack of real-time, usable data has deterred providers from participating in risk sharing arrangements.

Further, there is a discrepancy in the goals that MassHealth seeks to achieve with SIM and what providers are prepared to do to contribute. This has constrained the uptake of APM and prevented the program from reaching its potential. To be effective in changing the way care is delivered and paid for, there needs to be honest dialogue about how much stakeholders are willing to do and in what timeframe. We will never accomplish any kind of meaningful reform without ensuring that all players are on the same page.

Promising Other Alternatives

The new Delivery System Reform Incentive Payment (DSRIP) program through CMS is a promising new initiative. A part of the Section 1115 waiver, DSRIP provides additional funding to providers attempting to change delivery of care for Medicaid beneficiaries with a focus on population health. These funds are tied to performance measures for both process and outcomes and require substantial data and reporting. Massachusetts is one of six states that have DSRIP as part of newly negotiated 1115 waivers.

Massachusetts’ initiative is known as the Delivery System Transformation Initiative (DSTI). DSTI is an early version of DSRIP in Massachusetts that was focused solely on safety net hospitals. CMS is encouraging the state to move to more expansive provider inclusion and more aggressive accountability measures by only funding DSTI for the first three years of a five-year waiver period. Massachusetts will have to come up with a new plan for years four and five of the waiver. While this re-design will be a serious challenge, it may provide Massachusetts with an opportunity to think more holistically about MassHealth and our safety-net care pool.

Massachusetts is on the right track with the design of our SIM Initiative, DSRIP/DSTI, and other Medicaid reforms. However, implementation of these policies has proved challenging. From our experience, real-time data and on-going communication between providers, payers, patients, and policymakers are essential for successful adoption of delivery and payment innovations.

As a state, we are taking these early experiences to improve implementation of existing policies and inform next steps for Massachusetts health reform. Other states can learn from Massachusetts’ efforts and ensure that stakeholder engagement, data synthesis, and real creativity are incorporated into any health reform endeavor. The next challenge for all states will be to move from scalable pilot programs, to effective state-wide efforts, and ultimately, to national success.