In the past few years, a growing number of state health agencies have formed partnerships with large, private employers and/or commercial health plans to realign efforts and resources and change how we pay for health care. The ultimate goal of these partnerships is to shift from volume-based health care payment models to value-based models to improve the quality and cost of care.
Public-private alignment is important for a number of reasons. Alignment allows both state and commercial payers to send clear messages to providers about the expectations they have in moving to a more value-based health care payment and delivery system. This gives providers direction when it comes to deciding what to target and invest in to improve the care they offer. It also can help streamline quality measures and reduce providers’ administrative burden.
Because of the crucial role that these new public-private partnerships can play in improving health care systems, we need to look at them more closely to understand where they are working and how they have achieved success. What are the “lessons learned” for other states, and how can we spread best practices?
South Carolina
In South Carolina, the Department of Health and Human Services has led a multi-stakeholder collaborative called the Birth Outcomes Initiative (BOI) that focuses on improving birth outcomes, including reducing early-elective deliveries. The payment reform approach in the BOI is to not pay for early elective deliveries. In its first few years, the state has seen substantial success as the number of early-elective deliveries dropped by 50 percent from 2011 to 2013, with millions of dollars in savings for the state. The BOI has also helped reduce the use of neonatal intensive care units.
The BOI has been successful in part because the Department of Health and Human Services teamed up with Blue Cross Blue Shield of South Carolina to implement the nonpayment policy. Together, the two pay for 85 percent of births in the state.
Arkansas
In 2011, with the help of State Innovation Model (SIM) funding, Arkansas launched the Health Care Payment Improvement Initiative to transition the state to a patient-centered, cost-efficient health care system. Led by the Arkansas Medicaid program within the Department of Human Services, the initiative focuses on patient-centered medical homes and bundled payments designed to reward physicians, hospitals, and other providers who give patients high-quality care at a reasonable cost. The effort involves a partnership with the two largest private payers in the state (Arkansas Blue Cross and Blue Shield and QualChoice of Arkansas), as well as other stakeholders.
Arkansas has also been successful at bringing self-insured companies to the table, including Walmart, the largest private employer in the U.S. Since joining the effort in 2013, Walmart executives have become an integral part of the initiative, providing input as part of an employer advisory council. Walmart has also provided funding to help cover the cost of an annual statewide tracking report that will evaluate the impact and effectiveness of the new payment models.
The initiative has had a promising start, as reported in Health Affairs Blog. First-year results show more winners than losers among participating providers (gain-sharing recipients versus penalty payers). However, even assuming providers meet all quality standards, providers will pay out nearly $200,000 more in penalties than they could receive in gain-sharing payments. The hope is that over time the financial model will offer appropriate incentives to change provider behavior and reduce costs.
Results from the first year also indicate that the quality of care has improved. Arkansas Medicaid saw a 19 percent decrease in antibiotic prescriptions for upper respiratory infections; an increase in guideline-concordant care in attention deficit/hyperactivity disorder with a dramatic reduction in therapy visits; cost stabilization in hip and knee replacement and congestive heart failure; and a greater number of pregnant women who were screened for Hepatitis B, HIV, and diabetes.
Tennessee
With the help of a SIM grant, Tennessee launched its Health Care Innovation Initiative in 2013 to change how the state pays for health care services, rewarding high-quality care. The state’s Medicaid agency, TennCare, and the State Employees Benefits Administration are taking the lead for the public sector. The state has put together webinars and a toolkit called “An Introduction to Episode Based Payment for Employers” to educate employers and help bring them on board. Tennessee ultimately hopes to implement 75 episode-based payment models by the end of 2019.
Lessons Learned
All three of these examples offer useful lessons on public-private partnership. First, it can be very powerful when state and commercial payers align, as we saw in South Carolina. And to get the commercial payers on board, it helps to have private employers engaged. My own experience, however, has taught me that large employers have many concerns on their plate, and there may be little bandwidth or appetite for a new initiative.
Public entities that want employer support must make it easy for employers to get involved. Tennessee and Arkansas provide good examples, with Tennessee going the extra mile to educate and engage employers. Arkansas found a willing partner in Walmart. Sometimes efforts to engage employers must start with senior leaders in the state calling company CEOs, or heads of human resources or health benefits, to ask for their participation.
The road to payment reform, along the avenue of partnership and alignment across sectors, can be long and difficult. That difficulty is compounded by a lack of evidence about which reforms are likely to succeed. But in the end, we know there is strength in numbers, and we likely won’t have the success we want without both the public and private sectors participating, coordinating and, at least, not working at cross purposes.
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