New Payment Reforms, Shared-Savings Initiatives Could Be Part of Waiver Plan

State health officials have big plans for next year.

The five-year “Bridge to Reform” federal 1115 Medicaid waiver expires at the end of October 2015 and state officials announced an ambitious lineup of new programs that could take its place.

The waiver program ideas are built on the concept of shared savings, which could reduce programmatic costs and allow savings to be split between federal and state coffers.

Those potentially large new programs would need to be submitted to CMS well in advance of the waiver expiration — most likely in early 2015, according to officials at the Department of Health Care Services.

DHCS officials, who said they need to act immediately, held their first stakeholder meeting on the subject last week. “Several hundred” stakeholders joined that meeting on relatively short notice, said Mari Cantwell, chief deputy director of health care programs at DHCS.   

“The Bridge to Reform waiver was a successful waiver for us,” Cantwell said.

The 1115 waiver established the Low Income Health Program (LIHP), which helped smooth the transition into Medi-Cal expansion. Medi-Cal is California’s Medicaid program. The Coordinated Care Initiative, the Community Based Adult Services program and the expansion of Medi-Cal itself (to include Californians up to 138% of federal poverty level) all were included in the original waiver starting in 2010.

On To the Next Waiver

State officials have laid out eight sections of their shared-savings ideas, ranging from better integration of care through models like the patient-centered medical home to payment reforms such as global payments.

The goal, Cantwell said, is to save money with cost efficiencies and to use that savings to invest in the delivery system.

“We are looking at the transformation of payment systems and delivery reform,” Cantwell said, “Both to improve outcomes but also to make sure we have a viable Medi-Cal system.”

Cantwell said the eight ideas outlined by DHCS are a starting point for a discussion, not the end point.

“We’re not limited to these ideas,” she said. “We’re open to other ideas, whether they fit in these categories or not.”

Cantwell said the costs of health care likely will continue to rise and if that’s the case, the viability of Medi-Cal itself is at risk. So cutting those costs is vital to survival of the safety net, she said.

State Itself May Get Capitated Payments

The first section of ideas is predicated on a proposal that California would get from CMS a per-beneficiary, per-year payment under Medi-Cal.

“It’s as if the state itself was receiving capitated payments,” Cantwell said.

The per-beneficiary payment levels would take cost-trend factors into account. And that would provide an incentive to the state to curb spending on health care, Cantwell said. If the state’s actual expenditures dipped below the per-beneficiary amounts from the federal government, the state would retain the federal funding for the difference between the actual expenditures and agreed-upon beneficiary costs.

It’s the idea of managed care on a statewide level, providing care that’s better integrated and coordinated, she said.

“This is key to support the other initiatives,” Cantwell said.

Bundled Payments, FQHC Reform

“We are interested in various types of payment and delivery system reforms,” Cantwell said of the other seven possible projects, all based on the shared-savings model.

“One concept is a global payment approach, a global or bundled payment so the public hospital system would receive a single payment for a certain type of treatment,” Cantwell said.

“We think that would support integrating care among the uninsured,” she said. “This is one approach worth pursuing to provide care for the remaining uninsured.”

The other ideas include:

  • Payment and delivery reform programs that would include patient-centered medical homes;
  • Payment and delivery reform of federally qualified health centers;
  • A successor program to the state’s Delivery System Reform Incentive Payment program for public hospitals and clinics;
  • Funding for shelters for especially vulnerable beneficiaries, such as those with behavioral health issues;
  • Changes to the California Children’s Services program, such as pay-for-performance incentives; and
  • Workforce development possibilities, such as subsidies for malpractice insurance premiums for physicians willing to devote a certain portion of their practice to Medi-Cal patients.

Still Taking First Steps

Cantwell said exploration of these ideas with federal officials is still in its infancy.

“We have had very limited conversations with CMS so far,” she said.

What California wants to do, though, she added, “is similar to some structures Vermont and Oregon did, but it’s not quite the same. It will be a challenging construct, but we think it’s appropriate.”

State officials have not yet decided on the total size of the waiver request that will be submitted, Cantwell said. “But I hope it would be the size of our existing waiver,” she said.

That might be a big sell, given how much federal officials spent on the first five-year waiver. “The need for waivers, in [federal officials’] minds, I’m sure, would be less,” Cantwell said.

She said anyone can provide input on the new ideas, and that DHCS will be launching a website soon, along with an email address dedicated to the 1115 waiver renewal and a series of stakeholder advisory meetings.

“We’re moving away from volume-based care to a more capitated structure,” Cantwell said. “That’s what we’re moving to. How do we utilize outcome measures, the total cost of care? What are the quality measures that could result in incentives to providers?”

All of that can be linked to shared savings, Cantwell said. It’s a proposal that could benefit everyone — at the federal level, the state level and the beneficiary level, she said. “It comes from the shared savings,” Cantwell said. “If we’re achieving savings for the federal government, then we’re also generating it for health plans and for the state.”

Related Topics

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