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March 2015 St@teside

Payment and Delivery System Reform: State Efforts to Reduce Costs and Improve Health Outcomes

While payment and delivery system reform efforts have been ongoing in many states, there continue to be innovative activities worth highlighting that focus on improving outcomes for Medicaid enrollees. Many of these state efforts have initially focused on implementing changes at the local level. For instance,Alabama recently announced the expansion of its Health Home program, with six Regional Care Organizations (RCOs) across the state that will provide coordination of care for Medicaid enrollees with chronic conditions. RCOs, which serve specific regions of the state, will eventually bear the risk of providing care for their region. The state continues to work toward fully implementing these community-led systems statewide under Alabama’s Medicaid program.

Alabama follows the efforts of states including Colorado and Oregon, which have led the way. Colorado’s Accountable Care Collaborative, launched in 2011 and currently serving more than 600,000 clients, includes seven Regional Care Collaborative Organizations (RCCOs) that work to connect Medicaid enrollees to both traditional health care and community and social services. Oregon initially launched their locally based Coordinated Care Organizations (CCOs) in 2012. Now there are 16 CCOs in operation across the state, focusing on prevention and chronic condition management for around 90 percent of the enrollees in the Oregon Health Plan (the state’s Medicaid program).

The federal government also has established several programs to accelerate payment and delivery system at the state level. Delivery System Reform Incentive Payment (DSRIP) programs, as part of Section 1115 waivers, give states funding to support hospitals and providers that are transforming care delivery for Medicaid beneficiaries. To date, seven states are implementing DSRIP programs: California, Texas, Massachusetts, New Jersey, Kansas, New Mexico and New York. In addition to these payment reforms, SIM (State Innovation Model) grants have been awarded to more than half of states to either design or test new health care delivery and payment models, particularly to move to improve care, enhance performance, and lower costs for Medicare, Medicaid and CHIP recipients.  While they are still very much in nascent stage, there is optimism regarding what states will learn from testing these models.

Beyond Medicaid, the Section 1332 waiver program, or State Innovation Waivers, included in the Affordable Care Act will provide states with the opportunity to further transform their health insurance and health care delivery systems. These waivers can go into effect beginning January 1, 2017, and give states the opportunity to holistically redesign and improve their health system while still fulfilling the goals of the ACA.