SIM Round One Test States Expand Value-Based Payments in Medicaid, and in Some Cases, Beyond

The Centers for Medicare & Medicaid Services (CMS) recently released its third annual evaluation of the State Innovation Model (SIM) Round One Test States, which analyzes the ability of states to use policy and regulatory levers to drive statewide health care transformation. The evaluation, completed by a team of researchers from RTI International, the Urban Institute, and the National Academy for State Health Policy, arrives at a pivotal time. Many states are eager for information about their peers’ experiences transforming delivery systems to reward value over volume and be more consumer-centered.

  • Expanding value-based payments: In Year 3, SIM Round One Test States successfully expanded value-based payments through reforms such as accountable care organizations (ACOs), behavioral health homes, and patient-centered medical homes (PCMHs). Despite efforts to expand value-based payment models to private insurers, these reforms have, for the most part, been focused on Medicaid rather than multi-payer reforms.
  • Engaging commercial payers: Where multi-payer participation has been achieved (Arkansas and Vermont), regulatory and purchasing power (i.e. contract requirements) were effective levers. For example, in Arkansas, insurance regulations require all Qualified Health Plans certified to sell through the health insurance Marketplace to enroll their members in PCMHs and to make per member per month payments to PCMHs. Legislation was another important lever enabling multi-payer reforms by creating conditions under which commercial payers may be more likely to adopt value-based payment models. For example, Vermont’s Green Mountain Care Board used legislative authority to set standards for ACOs. Relying on the voluntary participation of commercial payers has had less success in expanding value-based payment from Medicaid to commercial payers.
  • Engaging providers: Multiple states have designed their payment reforms to allow for provider choice and flexibility in order to encourage participation. Maine, Minnesota, and Vermont allow providers to select the type of risk and/or the timing of the risk they take on when joining ACOs. This means a choice between one- or two-sided risk. One-sided risk is the opportunity to share in the reward of savings and two-sided risk includes both options of reward and the potential for financial penalties. States are also attempting to be responsive to providers’ feedback to their models. In Maine, for example, behavioral health home provider reimbursement rates were increased in response to provider concerns, and in Minnesota the model for attributing Medicaid beneficiaries to ACOs was changed to improve the model’s accuracy. Finally, in their third year, two SIM Round One Test took steps to convene and engage medical and nonmedical service providers, for example, through regional collaboratives in Vermont and through Accountable Communities for Health in Minnesota.
  • Building data analytic capacity and infrastructure: One notable area of focus for SIM Round One Test States is the development of in-state capacity for the data analytics and exchange necessary to drive and support value-based payment reform. These efforts are often foundational in order to enable payment reforms to succeed. This work includes a range of activity including generating reports on cost and quality measures, working with providers to interpret and act upon reports, connecting providers to health information exchanges, and developing notification systems to alert providers about their patients’ use of emergency rooms.

While 2016 was too early to assess the impact of SIM Round One on expenditures and utilization of services in test states, taken as a whole, these efforts are part of a national movement toward value-based payments and shed light on how states can effectively achieve these reforms. For more detailed information, read the complete third annual valuation.