Delaware Shifts Managed Medicaid Contracts to Value-Based Agreements

February 2018 ~

In an effort to improve outcomes, increase quality, and lower healthcare costs within Medicaid populations, Delaware says it will move its managed Medicaid contracts to value-based agreements.

The Delaware Department of Health and Social Services (DHSS) made the announcement in January that it had entered into a value-based purchasing care initiative through contracts in its Medicaid Managed Care Program which applies to all managed care organizations participating in the state’s Medicaid program.

According to DHSS Secretary Dr. Kara Odom Walker, the purpose of the new agreement is to transition the system away from traditional fee-for-service, volume-based care to a system that focuses on rewarding and incentivizing improved patient outcomes, value, quality improvements and reduced expenditures. The state is hopeful that the initiative will align the incentives of the managed care organizations, providers and members through innovative value-based strategies.

The initiative is comprised of two major components: quality performance measures and value-based purchasing strategies.

Through quality performance measures, Medicaid will select measures that relate to care quality, access, utilization, long-term services and supports, provider participation, spending, and member satisfaction ratings of providers. The measures build on Delaware’s Common Scorecard which was created in collaboration with the Statewide Innovation Model (SIM) Award and the Delaware Center for Health Innovation.

DHSS will monitor seven key performance measures during the first three years of the new contract, including management of diabetes cases, asthma management, cervical cancer screening, breast cancer screening, obesity management, timeliness of prenatal care and 30-day hospital readmission rates. The measures are also tied to provider penalties if performance goals are not achieved.

As well, the new initiative restructures value-based purchasing strategies within managed Medicaid organizations. Through the value-based purchasing strategies, the managed care organizations will be required to implement provider payment and contracting strategies that promote value over volume and reach minimum payment threshold levels. Providers would be subject to penalties if they fail to meet minimum payment thresholds. The payment changes are subject to approval by CMS.

According to CMS, Delaware has some of the nation’s highest healthcare costs and spending totals with per capita health care costs more than 27% above the U.S. average, ranking the state third-highest in the country in 2014. An analysis of all insurance payers, conducted by CMS, suggests that without major administrative or purchasing changes, Delaware’s total healthcare spending per year will more than double from $9.5 billion in 2014 to $21.5 billion by 2025.

Secretary Walker says the value-based purchasing initiative within Medicaid’s Managed Care Program is another step forward in embracing Governor John Carney’s goal of lowering health care costs while improving patient outcomes. “Through this historic initiative, we will reward our Medicaid managed care partners for embracing innovation and for providing our clients with high-quality care that focuses on improved outcomes and reduced expenditures,” said Walker. “Rather than paying solely for volume of care – hospital stays, tests and procedures, regardless of outcomes – we will pay for achieving optimal health for our Medicaid clients and give our MCO partners flexibility in meeting that goal.”

Source(s): HealthPayerIntelligence; Delaware.gov; Delaware Business Times; Leavitt Partners Weekly News Summary;