States Encouraging Value‐Based Payment: Lessons From CMS's State Innovation Models Initiative

Abstract

Six states received $250 million under the federal State Innovation Models (SIM) Initiative Round 1 to increase the proportion of care delivered under value‐based payment (VBP) models aligned across multiple payers. Multipayer alignment around a common VBP model occurred within the context of state regulatory and purchasing policies and in states with few commercial payers, not through engaging many stakeholders to act voluntarily. States that made targeted infrastructure investments in performance data and electronic hospital event notifications, and offered grants and technical assistance to providers, produced delivery system changes to enhance care coordination even where VBP models were not multipayer. Context In 2013, six states (Arkansas, Massachusetts, Maine, Minnesota, Oregon, and Vermont) received $250 million in Round 1 State Innovation Models (SIM) awards to test how regulatory, policy, purchasing, and other levers available to state governments could transform their health care system by implementing value‐based payment (VBP) models that shift away from fee‐for‐service toward payment based on quality and cost. Methods We gathered and analyzed qualitative data on states’ implementation of their SIM Initiatives between 2014 and 2018, including interviews with state officials and other stakeholders; consumer and provider focus groups; and review of relevant state‐produced documents. Findings State policymakers leveraged existing state law, new policy development, and federal SIM Initiative funds to implement new VBP models in Medicaid. States’ investments promoted electronic health information going from hospitals to primary care providers and collaboration across care team members within practices to enhance care coordination. Multipayer alignment occurred where there were few commercial insurers in a state, or where a state law or state contracting compelled commercial insurer participation. Challenges to health system change included commercial payer reluctance to coordinate on VBP models, cost and policy barriers to establishing bidirectional data exchange among all providers, preexisting quality measurement requirements across payers that impede total alignment of measures, providers’ perception of their limited ability to influence patients’ behavior that puts them at financial risk, and consumer concerns with changes in care delivery. Conclusions The SIM Initiative's test of the power of state governments to shape health care policy demonstrated that strong state regulatory and purchasing policy levers make a difference in multipayer alignment around VBP models. In contrast, targeted financial investments in health information technology, data analytics, technical assistance, and workforce development are more effective than policy alone in encouraging care delivery change beyond that which VBP model participation might manifest.

The CMS State Innovation Models Initiative and Improved Health Information Technology and Care Management Capabilities of Physician Practices

“…The adoption of HIT and CMPs are important for the transformation of physician practices and was a central goal of SIM, but we find no evidence that SIM accelerated the expansion of select practice capabilities. It is possible that SIM funds were directed at improving practice capabilities and programs that were not assessed in the current study, such as the use of community health workers, behavioral health and primary care integration, and investments in improving the capabilities of small practices, which continue to account for the majority of physician practices in the country (Beil et al, 2019; Kissam et al, 2019; Rittenhouse et al, 2019). Indeed, HITECH technical assistance efforts focused on supporting the adoption of HIT in small physician practices (Rittenhouse et al, 2017).…”

“…Indeed, HITECH technical assistance efforts focused on supporting the adoption of HIT in small physician practices (Rittenhouse et al, 2017). Alternatively, SIM states may have focused most of their efforts on payment reforms, such as aligning payers (Kissam et al, 2019), and thus expended relatively less effort on delivery system reforms, such as improved HIT functions and CMPs.…”

“…Finally, SIM may not have accelerated practice adoption of HIT functions and CMPs because the infusion of SIM funds was too small to impact practice capabilities in SIM states. Recently published mixed-method evaluations of SIM demonstrate the challenges Round 1 states encountered when engaging in multipayer alignment for value-based payment and integrating behavioral health into primary care (Beil et al, 2019; Kissam et al, 2019). SIM deliberately allowed states great flexibility in designing their own approaches to improve health system performance; however, the resulting variation made it difficult to generate implementation guidance and support relevant across states.…”

“…The Patient Protection and Affordable Care Act (ACA) established the Center for Medicare and Medicaid Services (CMS) Innovation Center to test innovations in health care delivery and payment models to improve health system performance, improve the quality of patient care, and decrease health care costs for all residents, irrespective of payer (Beil et al, 2019; Kissam et al, 2019). The CMS Innovation Center launched the State Innovation Models (SIMs) initiative to facilitate state-based innovations.…”

Value-based Payment Reform in a Managed Care Environment

“…Tennessee, Ohio, and Arkansas have each implemented a multi-payer, episode-based payment reform with support from the State Innovation Models (SIM) program facilitated by the Centers for Medicare and Medicaid Service (CMS) [4]. SIM is a state-federal partnership for developing and disseminating promising state-based payment and care delivery models, and as a high-profile innovation model program, the design and implementation experiences for participating states have been studied and reported publicly by CMS's independent evaluators, other independent analysts, and researchers [5][6][7][8][9][10][11].…”