The CHI Weekly Legislative Update: March 16

The Joint Budget Committee, which reviewed the annual budget request from the Department of Health Care Policy and Financing on Wednesday, approved the majority of HCPF’s requests but disagreed on one of its major initiatives.

The committee delayed a decision on a package of Medicaid fee-for-service reform proposals, instead asking for more information on HB12-1281, a bill that proposes different payment reforms.

HCPF’s proposed fee-for-service reforms would pay financial rewards, called gainsharing incentives, to providers participating in an Medicaid Accountable Care Collaborative (ACC).  The ACC is a patient-centered approach that hopes to improve quality and reduce costs by coordinating the care from primary care providers. Seven Regional Care Coordination Organizations (RCCOs) oversee the programs.

In addition to the traditional fee-for-service payments, RCCOs and the primary care medical providers receive a per-member, per-month (PMPM) care-coordination payment.  Under the gainsharing system, RCCOs and primary care medical providers would receive a share of any savings.

Pending JBC approval, HCPF plans to implement a gainsharing program for federally qualified health centers (FQHCs), rural health centers (RHCs) and behavioral health organizations (BHOs) in FY 2012-2013.  HCPF projects a five percent reduction in generic drug utilization, hospital readmissions, outpatient hospital visits, and emergency department visits by Medicaid clients assigned to the clinics. Half of those savings would be paid to the clinics.  JBC staff estimates the general fund savings for these three groups would be $536,000 in the first year.

HB 12-1281, sponsored by Rep. Dave Young (D) instead directs HCPF to create a process for RCCOs to submit proposals for pilot programs that use global payments, risk adjustment, risk sharing and aligned payment incentives. Preference would be given to proposals using global payments.

Global payments are fixed-dollar payments for the care that patients receive for a given time period – a month or a year, for example. The provider assumes more risk for managing the care of a patient’s medical conditions. The amounts may include risk adjustments for the acuity of the patient population and pay-for–performance quality measures.  This system is intended to encourage integration and coordination of services and to contain costs.

Care-coordination payments and gainsharing incentives are incremental steps in providing better managed care and reducing costs.  Global payments may be a few steps further along the continuum.  The transition from fee-for-service to global payments needs to be monitored carefully to ensure providers have the expertise to manage the financial risk and to maintain the quality of care.

The two payment reform approaches are not mutually exclusive.   They provide different tools in the toolbox for providers.  The HCPF reform proposals and HB12-1281 together give options for RCCOs throughout the state to find the right level of reform for each region.

The JBC will reconsider the HCPF payment reform proposals the week of March 19th, after they review HB12-1281 and have a better understanding of the differences between the two proposals.

Allison Summerton is a legislative liaison and research analyst at CHI.