Center for Health Care Strategies, Inc.: Early State Efforts to Advance Value in Medicaid Managed Long-Term Services and Supports Programs

By Michelle Herman Soper, MHS and Leah Smith and Debra Lipson

State Medicaid programs are beginning to adopt value-based payment (VBP) models to reward value — or high quality, cost-effective care — for the long-term services and supports (LTSS) they provide to beneficiaries. Medicaid managed long-term services and supports (MLTSS) programs — which operate in more than 20 states — are a promising platform to test these models because they seek to: (1) rebalance care toward home- and community-based services (HCBS); (2) provide incentives for high quality care; and (3) control cost growth.

Unique Considerations for Developing a VBP Model for HCBS

Most states’ Medicaid VBP strategies focus on primary and acute care services. Only a few include LTSS, despite the fact that LTSS comprises one-third of Medicaid budgets. Most of the current LTSS VBP models involve nursing facilities rather than HCBS providers. This is likely due to nursing facilities’ greater financial capacity, better data and reporting systems, and more defined populations for quality measurement. But the majority of people receiving LTSS use HCBS, so it is important to extend VBP models to community-based providers.  Several unique characteristics of HCBS require states and health plans to be innovative to adopt VBP models for these services, including:

•Limited consensus on performance metrics. Unlike Medicaid core quality measure sets for adults and children, there is little consensus on commonly accepted measures of HCBS quality. To add to the complexity, they span multiple domains: physical health outcomes; maintenance of functional status or slowing the pace of decline; transitions across settings; rebalancing targets and levels of community integration; and quality of life, satisfaction and person-centeredness. Consequently, states need to decide which measures to link to financial incentives.

•Ability to collect and report performance data. HCBS providers often have more limited capacity to collect and report data than acute and primary care providers or even nursing facilities. Many HCBS providers do not maintain electronic assessment, care planning, and service delivery records that can be easily transmitted to health plans and states. Also, self-reported data on quality of life, choice, and control may be subjective and thus more difficult to link to payment.

•Cost saving targets. Although HCBS efficiencies may be achieved by reducing service hours in some cases, it is critical to protect beneficiaries from cuts in services driven solely by the need to reduce costs. MLTSS programs may need to increase personal care services — hands-on help with activities of daily living — to reduce nursing facility use. In some cases, slowing cost growth may be a more realistic goal.

•Financial and workforce capacity to participate in alternative payment models (APMs). Many APM arrangements described in the most commonly used framework by payers, the Health Care Payment Learning and Action Network, have downside risk components, but HCBS providers may have less capital and reserves to manage financial risk than large health systems. Payment rates for direct care workers who provide HCBS are usually very low, and these providers and organizations may not be able to sustain cuts to their revenue associated with missing performance benchmarks. HCBS provider agencies have not yet developed other capacities important for success in APMs, including technology for reporting, information sharing and data analysis, service pricing, and experience with managed care.

•Source of potential savings. More than half of Medicaid LTSS users are dually eligible beneficiaries whose acute care services like hospitalizations and emergency department visits are paid for by Medicare. Savings from improving the quality of Medicaid-covered HCBS tend to accrue to Medicare. Without some sort of integration mechanism, there is limited opportunity for state Medicaid-only programs to access shared savings.