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States’ roles in the value-based care revolution

In their book “The Solution Revolution,” William D. Eggers and Paul Macmillan describe the growing trend of public and private convergence. Working together, partnerships between the two are starting to “trade solutions instead of dollars to fill the gap between what government can provide and what citizens need.”

This type of collaboration is being emulated through the State Innovation Models (SIM) initiative, which the Innovation Center at the Centers for Medicare and Medicaid Services (CMS) created and funded with more than $300 million.2 With the help of SIM grants, states are working to build on and develop new payer-provider relationships and are altering payment mechanisms to improve quality of care, reduce costs and achieve better health outcomes.

These public-private initiatives hold great potential for system transformation, raising the question: Can the move to value-based care happen without involvement from the states?

Twenty-five states are more than a year into designing, pre-testing, or testing their State Health Care Innovation Plans (SHIP). Many states are using SIM grants to move forward with value-based care initiatives. True to form, each is pursuing its own combination of strategies. Their strategies are far-reaching, running the gamut of value-based purchasing arrangements also being developed in the private sector and Medicare: accountable care organizations, performance/outcome-based payment systems, shared savings/risk arrangements and bundled payment arrangements, as well as patient-centered medical homes and population-based care.

Through these initiatives, states are primarily focused on enrollees in Medicaid and the Children’s Health Insurance Program (CHIP). But, as required by the grants, they must also incorporate strategies so they impact 80 percent of their residents within five years. The more commercial payers who sign on to these models, the greater the potential reach.

Many states recognize that as payers (for Medicaid and state employees) and regulators, they hold considerable leverage to improve the value of care for all state residents. And, they could be in a good position to:

Establish public-private, multi-payer/multi-provider partnerships to test innovative value-based care and payment models. Historical market dynamics often pit providers and health plans against each other. States (especially their governors) could drive consensus among the relevant stakeholders and achieve long-term, sustainable change in a delivery system centered on outcomes and value.

Collect, integrate and analyze the data needed to target initiatives and measure value. States – particularly those with all payer claims databases – can use data to understand where to target interventions and to evaluate their success or need for midterm correction. These databases have the potential to support risk adjustment and the related analytics capabilities that are needed to identify population outcomes and quality and cost patterns – the foundations of many value-based care and payment models.

However, in moving forward, it’s likely these initiatives could face some uncertainties and challenges:

  • Relationship management: It is no easy task to bring multiple stakeholders with competing interests to the same table. This is especially true when trying to alter already established relationships such as those with patients and transactions via new payment models. But, that’s just what states are trying to do―will it work?
  • Funding: So far, CMS has invested nearly $300 million in federal grant assistance to this initiative. However, the second round of funding has yet to be announced. Continuation or planned expansion may not be an option for all states if federal funding is scaled back in the midst of competing investment priorities.
  • Plan development and testing: Navigating the requirements of the complex design and testing grants can be challenging. A strong, evidence-based evaluation component to determine which initiatives should be successfully imported or more broadly adopted will be a key to success moving forward.

So, can we move to value-based care without the involvement of states? Many health plans and providers are pursuing value-based care models on their own. But, the collaborative public-private efforts of some states could be more effective at reaching system transformation. States – especially their governors – are often leaders of reform. Without their leadership, reform could continue on a fragmented basis, unable to reach critical mass.

SIM grants are helping states work with payers and providers to move toward improved quality of care and better health outcomes, as well as shared savings and lower overall costs for everyone. As Eggers and Macmillan argue in their book, government alone can’t handle some of the biggest challenges facing society; public-private partnerships that watch for and build on early wins and successes may have the greatest success in moving health care to a value-based system.

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Author bio

Jessica has spent more than 25 years of her career helping government develop and implement strategies for large-scale transformation. As a Deloitte board member for the past 10 years, she was at the table helping to drive Deloitte’s evolution into the world’s largest professional services organization. In retirement she will continue to focus her energies on serving both public, private and non-profit organizations through advisory council or board roles.