Extra Point
Managed care plans and healthcare providers have been struggling of late to make value-based payments work, but this may be changing. Payers in more than 6 states serving Medicaid patients are now being told from the state that 25% of their premium must be spent on value and, under contracts with the state, 33% up to 50% in the near future, our sources say. But this isn’t so clear to define. Thankfully, a few of the MCOs, and a few in other managed Medicaid states we’ve interviewed, say they think the states will give them ‘wiggle room’ to define value on their terms. One Medicaid MCO in the south spends about 27 million annually on the speech, occupational and physical therapy bucket for Medicaid for instance, mostly speech, so they are going to develop a pay model that looks at each provider’s average cost per member and reward those who have less than the average with ‘preferred designation’ and continued volume, while ‘the rest have a year to get into compliance’ or be removed from the network. ‘Either way I save $7 million,’ a plan medical director told us. But these are the easy fixes, others aren’t. Take Texas, which has held out covering applied behavioral analysis for autism for its Medicaid population. Several Medicaid MCO directors here aren’t so sure this makes sense given the evidence on ABA. But some of these MCOs say were given the greenlight by the state to pay for ABA or other treatments for autism if under a value model. Even if the state doesn’t cover the service or code, the MCOs say they will be able to ‘justify’ it as value based and ‘can count it that way for the purposes of the plan’s financial services review, or FSR, or essentially their allowable rate. This is an early example of how value pay will shake out – state coverage matters, but maybe less so as the states put in these requirements, and as plans think creatively about spending.