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Medicaid Concept: Medicaid Drug Discount Programs

This is part of our Medicaid Concepts series, in which we provide a high level overview of key concepts in the Medicaid industry today.

What do we mean by Medicaid Drug Discount Programs?

One of the main ways that Medicaid agencies can control spending on drug benefits is by entering into rebate agreements with drug manufacturers. These rebate agreements offer Medicaid programs a discount on drug pricing in exchange for allowing drug manufacturers access to the very large markets of Medicaid membership. States can participate in the national Medicaid Drug Rebate Program (MDRP) and receive the discounts.

The other major drug discount program in the Medicaid space is the 340B program. This program allows “covered entities” to purchase drugs at a discount, and then resell those drugs at normal prices (thus keeping the difference).

What role does Medicaid play?

The national MDRP is managed by federal HHS. When states choose to participate, they must allow all drugs that have been negotiated at the federal level. States can also enter into “supplemental agreements” with manufacturers, which in effect provide preferential placement on a state’s drug formulary.

While the 340B program was designed to allow smaller hospitals and other providers to purchase drugs more cheaply, it has evolved into a way to generate increased revenues. States have noticed this and have begun to “take back” management of the drug benefit from health plans in order for the state to obtain these revenues.

Explore further

https://www.macpac.gov/wp-content/uploads/2018/05/340B-Drug-Pricing-Program-and-Medicaid-Drug-Rebate-Program-How-They-Interact.pdf

https://www.hrsa.gov/opa/index.html

https://www.americanactionforum.org/research/primer-the-medicaid-drug-rebate-program/

https://www.whistleblowerllc.com/medicaid-drug-rebate-program/

https://www.kff.org/medicaid/issue-brief/understanding-the-medicaid-prescription-drug-rebate-program/

https://www.medicaid.gov/medicaid/prescription-drugs/medicaid-drug-rebate-program/index.html

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Medicaid Concepts: Transportation as a Social Determinant of Health

This is part of our Medicaid Concepts series, in which we provide a high level overview of key concepts in the Medicaid industry today.

What do we mean by transportation as a social determinant of health?

While most of the social determinants of health conversation focuses on various forms of food, clothing and shelter issues, lack of transportation is another area that is generally recognized as impacting healthcare. In places where public transportation is not available, the ability to get to health appointments can be especially limited.  If a Medicaid member cannot actually get to the doctor’s appointment, then few of the benefits of proper care can be realized. According to a report from the American Hospital Association, more than 3.6M Americans do not get the care they need because they did have a way to get to their visit.

from the AHA report

What role does Medicaid play?

Many Medicaid programs have operated optional non-emergency transportation (NET) programs for years. While these programs address the issue, there are long standing challenges with missed pickup appointments, overly complicated dispatch systems and legacy providers.

Several innovative Medicaid programs have emerged using rideshare vendors (like Uber and Lyft) to streamline the member experience and improve visit completion rates. Medicaid programs can partner with these vendors (or have their Medicaid managed care plans partner with them).

While these options can help meet gaps in urban environments, transportation challenges in rural areas for Medicaid members will likely require alternative solutions.

Explore further

https://nationalcenterformobilitymanagement.org/transportation-and-social-determinants-of-health-destinationss

https://www.aha.org/ahahret-guides/2017-11-15-social-determinants-health-series-transportation-and-role-hospitals

http://www.hpoe.org/resources/ahahret-guides/3078

http://www.hpoe.org/Reports-HPOE/2017/sdoh-transportation-role-of-hospitals.pdf

https://www.ruralhealthinfo.org/topics/transportation

https://populationhealth.humana.com/social-determinants-of-health/lack-of-transportation/

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Medicaid Concepts: Managed Long Term Services and Supports (MLTSS)

This is part of our Medicaid Concepts series, in which we provide a high level overview of key concepts in the Medicaid industry today.

What do we mean by Managed Long Term Services and Supports (MLTSS)?

These are the services provided to Medicaid members in a managed care model. Because of the unique member needs, the focus on care coordination and management,  and intense cost structure of this model many states have decided to use stand-alone managed care programs just for LTSS. The LTSS stands for long term services and supports. Add an “M” in front of it for “managed.”

CMS has encouraged states to use MLTSS models with an array of funding efforts and aspirational goals. These include the Money Follows the Person (MFP) inititiative and the Balancing Incentive Program (where states are encouraged to increase the percentage of LTSS provided in the home or community vs. in a facility).  These efforts have paid off- 25 states operate an MLTSS program as of November 2020 (compared to only 8 states in 2004).

Medicaid programs spent $167B on LTSS in 2016.

What role does Medicaid play?

States design the features of their MLTSS programs and contract with managed care companies to deliver the services. They also set eligibility requirements for members, which can include both functional and financial criteria.

States also work with plans and actuaries to set rates for these services.

States also have to manage the quality reporting process for these services, using measures selected by CMS. These measures generally focus on ensuring needs assessments and care plan requirements are met.

Explore further

https://www.medicaid.gov/medicaid/managed-care/managed-long-term-services-and-supports/index.html

https://www.macpac.gov/subtopic/managed-long-term-services-and-supports

https://www.medicaid.gov/medicaid/downloads/final-eval-dsgn-mltss.pdf

https://www.medicaid.gov/medicaid/downloads/eval-dsgn-mltss.pdf

https://www.michigan.gov/mdhhs/0,5885,7-339-71547_4860_78446_78448-474121–,00.html

https://www.medicaid.gov/medicaid/downloads/mltss_assess_care_plan_tech_specs.pdf

https://www.nj.gov/humanservices/dmahs/home/mltss.html

https://www.macpac.gov/subtopic/eligibility-for-long-term-services-and-supports/

http://mltss.org/wp-content/uploads/2019/12/MLTSS-Profile-12-9-19.pdf

https://www.medicaidinnovation.org/_images/content/2019-IMI-MLTSS_in_Medicaid-Report.pdf

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Medicaid Concepts: Value-Based Payment Models

This is part of our Medicaid Concepts series, in which we provide a high level overview of key concepts in the Medicaid industry today.

 
 

What do we mean by value-based payment?

 

Defining value-based care / payment remains one of the largest challenges in all of the healthcare space, and Medicaid is no different. While everyone agrees that the concept means something akin to “pay more for better outcomes,” providers and payers continue to struggle to arrive at agreement on definitions, how to adjust for population mix and what incentives actually work.

 
 

Some terms you may hear related to value-based payment include: shared savings, gain sharing, risk corridors, incentives, withholds and pay for performance.

 
 

A sub-industry of solution vendors leverages the focus on value-based payments to drive sales and growth. These range from care management companies and specialized provider groups that use HEDIS performance as core to their value proposition, all the way up to software companies that have emerged to help providers keep track of the complex set of requirements in their value based contracts.

 
 

On the Medicare side, CMS implemented several value based programs meant to change the way providers are paid (as part of ACA). The most recent ones were rolled out in 2019: Alternative Payment Models (APMs) and the Merit-based Incentive Payment System (MIPS).

 
 

 
 

 
 

What role does Medicaid play?

 
 

Medicaid programs have also invested significant effort in migrating from the legacy fee for service system to value-based payment models. Early efforts included health homes and patient-centered medical homes (PCMH).

 
 

More recent efforts have attempted to leverage managed care plans to hold providers accountable for quality. Most states use HEDIS-based incentive systems for managed care payments. Many states require health plans to place an increasing percentage of their provider payments in value-based contracts. In these arrangements, the Medicaid agency establishes benchmarks and contracts with an External Quality Review Organization (EQRO) to oversee the plan performance.

 
 

States also have implemented innovative solutions separate from their managed care arrangements. Tennessee has a mature episode-based payment program that rewards providers for better outcomes on comprehensive bundles.

 
 

A few states have attempted to use Medicaid Accountable Care Organizations (ACOs). Many states also participated in the CMS-funded State Innovation Models (SIM) program to pilot new ways to use value-based payment approaches.

 
 

 
 

Explore further

https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/Value-Based-Programs

https://www.medicaid.gov/Federal-Policy-Guidance/Downloads/smd20004.pdf

https://medicaiddirectors.org/publications/medicaid-value-based-purchasing-what-is-it-why-does-it-matter/

https://www.chcs.org/resource/value-based-payments-in-medicaid-managed-care-an-overview-of-state-approaches/

https://www.medicaid.gov/resources-for-states/mac-learning-collaboratives/value-based-purchasing/index.html

https://www.medicaid.gov/state-resource-center/innovation-accelerator-program/iap-downloads/functional-areas/vbp-benchmarking-brief.pdf

https://www.ama-assn.org/system/files/2019-04/medicaid-value-based-care-models.pdf

https://hhs.texas.gov/about-hhs/process-improvement/improving-services-texans/medicaid-chip-quality-efficiency-improvement/value-based-care

https://www.hrsa.gov/sites/default/files/hrsa/advisory-committees/nursing/meetings/2018/nacnep-sept2018-CMS-Value-Based-Care.pdf

https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/HVBP/Hospital-Value-Based-Purchasing