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August 13, 2021

What Medicare Can Teach Medicaid About Value-Based Care: Putting the Care Back in Medicaid

Author Affiliations
  • 1Aledade Inc, Bethesda, Maryland
  • 2Health Care Services Division, Louisiana State University, New Orleans
JAMA Health Forum. 2021;2(8):e211513. doi:10.1001/jamahealthforum.2021.1513

Health care payments should reward the value of services delivered over volume. Private insurance companies and public payers are working to provide better incentives to move toward value for health care practices and clinicians across all lines of business. Medicare and Medicaid are the largest publicly funded programs in this country, covering 62.8 million and 76.5 million people in the US, respectively.1 It is clear that Medicare is more adaptable to value-based models than is Medicaid. Medicare started testing value-based payment models more than 15 years ago, with its progress accelerated by the Affordable Care Act. Medicaid has tried to implement value-based arrangements, particularly through managed care, but efforts have arguably stifled. We have identified 5 key features of Medicare that have been a catalyst for value-based care and highlight structural changes needed in Medicaid for value-based programs to thrive.

Continuity of Coverage

For payers and practitioners to make an investment in wellness and prevention on behalf of a beneficiary, they need to have clinical responsibility for that beneficiary for a period long enough to see a return on their investment. Medicare eligibility is largely tied to age (and disability), not factors that can change frequently, such as income; and once on Medicare, persons typically remain on Medicare. Beneficiaries who join a Medicare Advantage plan tend to stay with their plan for years (<10% switching plan each year).2 Medicaid programs may never have similar periods of coverage for their members, but they should systematically remove unnecessary obstacles to longer periods of continuous coverage. Medicaid eligibility is tied to income levels that vary widely. Because of income fluctuation, an estimated 14% to 24% of Medicaid enrollees have a disruption in coverage during a year, with the higher rates for adults and in nonexpansion states.3 The frequent patient turnover in Medicaid means it is more difficult for practitioners to paint an accurate picture of the clients in their practice or for health plans to make longer-term investments. Many states automatically assign patients to clinicians but have no effective mechanisms for notifying both the patient and the clinician of their assignment to one another. In addition, limited Medicaid reimbursement has many clinicians and medical practices limiting their Medicaid panel size, producing unique access challenges for these beneficiaries.

States can stabilize Medicaid coverage by simplifying its application and recertification procedures, limiting the frequency of income checks, offering a Medicaid waiver for “continuous eligibility,” and/or providing a full year of coverage regardless of changes in family income to both adult and child beneficiaries. States can streamline eligibility processes using data obtained from the Supplemental Nutrition Program to enroll residents, as pioneered by Louisiana (https://ldh.la.gov/index.cfm/newsroom/detail/3838). More recently, the American Rescue Plan Act allows states to provide women with 12 months of ongoing Medicaid coverage postpartum. Several states are considering expanding Medicaid coverage, and some have proposed a Medicaid public option, or Medicaid “buy in” to provide a continuous benefit for new employees formerly on Medicaid.

Low Payment Rates

The underinvestment in Medicaid has slowed the growth of value-based payment. Medicaid payment rates, especially for outpatient services, are much lower than Medicare rates, which means any reduced utilization generates a smaller amount of savings. For hospital services, where aggregate Medicaid payments are on par with Medicare, the role of supplemental payments in Medicaid can dilute the savings from an avoided admission. These financing characteristics of Medicaid render savings more difficult to measure and achieve, and population health investments and multiyear practitioner agreements more challenging.

A Culture of Customer Service

Because of the intense competition for new enrollees, Medicare Advantage plans are incentivized to invest in strong customer service. Medicare Advantage plans have benefits and services that are attractive to the beneficiaries, while monitoring customer satisfaction. The Centers for Medicare & Medicaid Services (CMS) helps beneficiaries choose the best plan through its Star Ratings and Plan Finder tool. By contrast, states often use third-party brokers to enroll beneficiaries in Medicaid-managed care, which can diminish the connection between a plan and its enrollees. States frequently rebid their Medicaid contracts, which can mean that enrollees lose the option of remaining with their health plan. Satisfaction with adult Medicaid programs, as measured by the Consumer Assessment of Healthcare Providers and Systems (https://www.ahrq.gov/cahps/index.html), is historically lower than satisfaction with Medicare. Rates paid by states to health plans and subsequently to practitioners for Medicaid are lower than the rates paid by the federal government for Medicare. Because of these lower payments, added-benefits for Medicaid health plans are more anemic and often lack the substantial differentiation more commonly seen in Medicare Advantage plans.

Data Liquidity

Access to timely clinical and health care utilization data is the linchpin of value-based care models. Medicare has required care continuity data sharing through regulations and enforcement. Medicare enjoys access to national data, which allows the program to set quality standards and benchmarks.

The Medicaid program has data segmented by states, and access to timely data for comparison is not available. The effort by CMS to create a national Medicaid database, known as the Transformed Medicaid Statistical Information System or T-MSIS, has run into repeated issues.1 To date, CMS has not been able to use this database to evaluate the performance of any Medicaid models from its Innovation Center.

States lack the resources and/or availability of both staff and state-of-the-art data systems to maximize the potential of data to set goals or understand benchmarks for value-based payments. A preventive service helps avert costly health care utilization, but if averted services are underpriced, it is harder to justify a substantial level of investment in prevention. Medicaid payments to hospitals are on par with Medicare payments4-6; however, much of the Medicaid hospital payments are supplemental payments that are not paid through claims and can be totally unrelated to a care episode as is the case with the supplemental payment pools that some states employ. In addition, states do not have access to real-time comparison data on population health outcomes or claims data from other state Medicaid programs, so actionable comparative data is lacking. Multistate coordinated data infrastructure funding should be bolstered at the federal and/or regional levels. To allow for better data liquidity, investment should be made to centralize program operations by building on a common data chassis comprising eligibility and enrollment systems, claims administration, and drug and durable medical equipment purchasing.7

Accurate Patient Attribution

In value-based care models, practitioners accept accountability for the episodes or total cost of care for a defined population. In Medicare, CMS can use multiple years of claims to align patients to their regular source of care. Many Medicare Advantage health maintenance organizations have beneficiaries affirmatively select a primary care physician. Because of the frequent turnover of patients in the Medicaid program, it is more difficult for practitioners to have an accurate picture of the Medicaid clients in their practice. In addition, many states use auto-assignment techniques that link practitioners to patients and often do not have effective mechanisms in place to notify them of assignments. As a result, for Medicaid, there is more frequently a lack of clarity on the patient population served.

We firmly believe that value-based care is essential to providing better health care at a lower cost to all populations. Medicaid is now the largest single payer for health care in the US. While the country’s entire health care system is still in the early stages of the move to value, we can identify structural components of Medicare that facilitate the development of value-based payment models in its sister program, Medicaid.

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Article Information

Published: August 13, 2021. doi:10.1001/jamahealthforum.2021.1513

Open Access: This is an open access article distributed under the terms of the CC-BY License. © 2021 Cavanaugh S et al. JAMA Health Forum.

Corresponding Author: Rebekah E. Gee, MD, MPH, Health Care Services Division, Louisiana State University, 2000 Tulane Ave, New Orleans, LA 70130 (rgee@lsuhsc.edu).

Conflict of Interest Disclosures: Dr Cavanaugh reports being an adviser to Patient Ping and Omada Health outside the submitted work. Dr Mostashari reports being the chief executive officer of Aledade Inc, a physician enablement company, outside the submitted work. Dr Gee reports being an adviser to 8VC, TPN, Pomelo Care, SchoolCare, and Unite Us, and serving on the board of Ready Responders, all outside the submitted work.

US Centers for Medicare & Medicaid Services. Fast facts. February 2021. Accessed July 8, 2021. https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/CMS-Fast-Facts
Koma  W, Cubanski  J, Jacobson  G, Damico  A, Neuman  T. No itch to switch: few Medicare beneficiaries switch plans during the open enrollment period. Kaiser Family Foundation. December 2, 2019. Accessed July 9, 2021. https://www.kff.org/medicare/issue-brief/no-itch-to-switch-few-medicare-beneficiaries-switch-plans-during-the-open-enrollment-period/
Goldman  AL, Sommers  BD.  Among low-income adults enrolled in Medicaid, churning decreased after the Affordable Care Act.   Health Aff (Millwood). 2020;39(1):85-93. doi:10.1377/hlthaff.2019.00378 PubMedGoogle ScholarCrossref
Office of the Inspector General. Status update: TMSIS data not yet available for overseeing Medicaid. June 2017. Accessed July 10, 2021. https://oig.hhs.gov/oei/reports/oei-05-15-00050.asp
Medicaid and CHIP Payment and Access Commission. Medicaid hospital payment: a comparison across states and to Medicare. April 2017. Accessed July 8, 2021. https://www.macpac.gov/wp-content/uploads/2017/04/Medicaid-Hospital-Payment-A-Comparison-across-States-and-to-Medicare.pdf
Office of the Inspector General. Data on Medicaid managed care payments to providers are incomplete and inaccurate. March 2021. Accessed July 10, 2021. https://oig.hhs.gov/oei/reports/OEI-02-19-00180.asp
Gee  RE, Shulkin  D, Romm  I.  A blueprint for comprehensive Medicaid reform.   JAMA. 2021;325(7):619-620. doi:10.1001/jama.2021.0013 PubMedGoogle ScholarCrossref
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