Medicaid Value-Based Payments Require Precision Accuracy – Or Risk Losing Money

Learn how the proliferation of value-based payments is affecting Medicaid today

Jodi JohnsonJune 27, 2017

Download Data Sheet

Managed Care in Medicaid

Since the early 1990s, managed care has been an increasingly popular method for controlling costs across the healthcare industry, and Medicaid has been no exception. In a ten-year span from 2004 to 2014, the Government Accountability Office reported an increase in federal spending for Medicaid managed care from $27 billion to $107 billion. This trend has continued unabated since, with the expansion of Medicaid under the Affordable Care Act (ACA). In its 2016 report, consulting firm PwC noted that 73% of Medicaid beneficiaries nationwide, or 54.7 of the 75.2 million enrollees, were covered under managed care arrangements.

The Emergence of Medicaid Value-Based Payments

Managed care has not only offered fertile ground to reap cost savings, it has also represented the best place to cultivate innovation in Medicaid. So it is no great surprise that the next logical step in the expansion of Medicaid managed care includes the proliferation of Value-Based Payments (VBP). We sit on the cusp of perhaps foundational change in the Medicaid program, with ACA replacement legislation now winding its way through Congress. Republican lawmakers seem resolved to not only roll back the Medicaid expansion under the Affordable Care Act, but also convert Medicaid from its current entitlement structure to a per capita funded program largely administered on a state-by-state basis.

These two factors—the gradual elimination of Medicaid expansion funding in the 31 states and the District of Columbia, combined with a projected $834 billion cut to Medicaid (this according to the latest Congressional Business Office estimate), could make the potential cost savings of VBP in Medicaid managed care that much more appealing for already cash-strapped states.

The fact is, value-based payments have already been making a significant impact in Medicaid across the nation. And just as there are as many flavors of Medicaid as there are states that have it, there is wide-ranging variety in the types of VBP models and arrangements that states have been implementing.

Increasing Medicaid Innovation

Let’s take a high-level look at what Medicaid VBP is today. Value-based payments, alternatively referred to as value-based care or value-based reimbursements, shift the focus on payments from volume to value. The traditional fee for service model simply paid providers a set amount for a given service, test, or treatment. It didn’t take into consideration the whole health of the patient, coordination of care with other providers, and could potentially encourage over-treatment. More services meant more money spent, potentially unnecessary care, and didn’t provide value in either dollars or good health. Value-based payments, on the other hand, reward providers for providing quality, cost-effective care, through a number of different mechanisms.

The most widespread value-based initiatives in Medicaid still use a foundation of fee for service architecture, but add some component around quality, value, or patient outcomes. In Medicaid, we see three main categories of VBP programs, according to the National Association of Medicaid Directors (NAMD) 2016 State Medicaid Operations Survey. These include:

  • Per Member Per Month (PMPM) VBP, in which primary care providers are paid a pre-defined monthly rate to provide treatment and coordinate care for their assigned patients.
  • Population-based VBP, in which a provider group or Accountable Care Organization (ACO) provides care for a defined patient population for a pre-defined fee. These models may include both shared risk and shared rewards components.
  • Bundled Episode of Care VBP, in which providers (typically multiple providers) receive a pre-defined rate for providing and coordinating all care for a given condition or surgical treatment.

Within these broad definitions, Medicaid Managed Care Organizations (MCOs) have implemented a number of pilot or nascent programs at the direction of, or with the approval of, individual states. But as the variety of value-based payment models has grown in recent years, so has the complexity of Medicaid managed care administration.

Membership Accuracy is Key to Value-Based Payment Success

The fee for service model was comparatively simple to administer, because it did not require the same level of oversight for managing populations, defining quality, and tracking outcomes. In the VBP effort to increase the quality and cost-effectiveness of care, however, we’ve also greatly increased the complexities in a Medicaid system already rife with them.

Payer data accuracy is more critical than ever, because the success of these value-based payment models depends on it. For example, under fee for service, there was no direct correlation between membership data and provider reimbursement. With VBP, however, accurate payments often depend on it. That’s why today, payers need to pay careful attention to the accuracy of all of their data—whether membership, premium, or claims.

In this complex environment, membership reconciliation can be a foundational step towards accuracy in VBP. A solution that can capture data from any gateway for automated reconciliation and workflow management can quickly identify any missing members, data-level discrepancies, and duplicate member records. It ensures accuracy in both PMPM and population-based VBP models, and minimizes financial, operational, and compliance risk. Inaccurate data is immediately flagged, and exception workflows triggered, so payers can:

  • Reconcile data between membership portals and internal systems
  • Reconcile between the issuer’s and government’s membership data
  • Flag incomplete data submissions
  • Detect duplicate file submissions

To learn more about how an enterprise data intelligence platform can handle reconciliation, download the data sheet below.

Get Insights

For a deeper dive into this topic, visit our resource center. Here you will find a broad selection of content that represents the compiled wisdom, experience, and advice of our seasoned data experts and thought leaders.

Download Data Sheet