Summary of the Final Medicaid Redesign Team (MRT) Report A Plan to Transform The Empire State s Medicaid Program

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1 Summary of the Final Medicaid Redesign Team (MRT) Report A Plan to Transform The Empire State s Medicaid Program May 2012 This document summarizes the key points contained in the MRT final report, A Plan to Transform the Empire State s Medicaid Program, and all statements below represent the state s multi-year plan for reform Waiver To fully implement the MRT recommendations, New York will pursue a new Medicaid 1115 waiver, with the following goals: allowing New York to reduce costs, improve outcomes, and decrease disparities through the MRT reform actions; replacing the state s current Medicaid fee-for-service system with a comprehensive, highquality and integrated care management system; and implementing the program changes called for in the Affordable Care Act (ACA). Triple Aim Approach To achieve comprehensive reform, the Plan embraces the Centers for Medicare and Medicaid Services (CMS) triple aim approach to health care redesign: improving the quality of care by focusing on safety, effectiveness, patient centeredness, timeliness, efficiency, and equity; improving health by addressing root causes of poor health; and reducing costs. This summary outlines the state s action plan for achieving CMS triple aim of improving care, improving health, and lowering cost, as well as the state s plans to use performance measurement tools to drive policy making. 1

2 Improving the Quality of Care Care management for all patients is a key component of the MRT recommendations, with the state now on a path to eliminate the fee-for-service payment system within three years. The report states that replacing fee-for-service with high-quality care management is New York s primary strategy to achieve this goal. New York s approach will integrate patient-centered medical homes, health plans (including special needs plans), and health homes into a single system of care management, with a long-term goal of ensuring access to fully-integrated care management for all Medicaid enrollees. Care Management for All New York s vision of care management for all means enrolling every Medicaid beneficiary in some type of care management organization, which may be traditional insurance companies or providerbased plans designed to address special populations. New York views capitation as the preferred arrangement, but is open to other financing systems, especially for special populations. While it may take more than three years for care management organizations to achieve full integration, New York in the interim will use other care management tools such as behavioral health organizations, existing health plans, managed-long term care plans, and special needs plans to ensure fee-for-service is eliminated in three years. Full integration means a care management organization responsible for managing the complete needs of a member, including acute, long-term, and behavioral care. For care management to succeed, the proper alignment of Medicare and Medicaid is essential. New York is currently working with the federal Medicare-Medicaid Coordination Office to blend Medicaid and Medicare financing streams to promote efficiency and eliminate cost-shifting, while bending the cost curve for both programs. The move to full integration for dual eligibles will likely begin in 2014, but the exact pace and scale of transition will be subject to federal approval and stakeholder feedback. Ensure Universal Access to High-Quality Primary Care An important component to creating high quality primary care is achieved by promoting advanced Patient-Centered Medical Homes (PCMHs). The plan is to expand access to PCMHs to an additional one million Medicaid recipients over the next year; there are currently 1.4 million Medicaid recipients utilizing primary care from a National Committee for Quality Assurance-recognized medical home. To achieve the goal of ensuring every Medicaid enrollee access to a Level 3 PCMH, the following must be accomplished: Maintain and expand the current Medicaid incentive payment for achieving PCMH recognition. Eliminate barriers to Level 3 recognition for all types of eligible providers through technical assistance and grants, and have tools and support to improve the delivery of care and meaningfully participate in care integration activities with other providers and in other settings, including health homes and accountable care organizations. Recruit and retain more primary care physicians and nurse practitioners, especially accesschallenged regions. Expand the physical plant of primary care providers such as Federally Qualified Health Centers (FQHCs) and rural clinics. 2

3 New York s vision is a system in which state employee plans, exchange plans, and other commercial plans adopt Medicaid reimbursement strategies for PCMHs and, as a result, virtually all primary care providers become Level 3 PCMHs within five to seven years. Health Homes ACA created new opportunities for states to manage the health, behavioral health, and long-term care needs of complex, high-cost patients. New York views health homes a new tool created by the ACA, as the care coordination vehicle for many of the most challenging populations, including dual eligibles. Health homes will be led by providers, health plans, and community-based organizations and will be integrated into current managed care provider networks. A key challenge for health homes will be the implementation of health information technology (HIT) and health information exchange (HIE). The goal is for every health home to eventually have a method to electronically share vital information (including care plans) among contracted providers, in real time. As an essential component of the care management for all strategy, health homes will act as providers administering a benefit within a care management network. Care management organizations will be required by contract to connect challenged populations with health homes that are certified by the state (unless the health plan serves as the health home). Health Care Workforce for the 21 st Century With ACA adding hundreds of thousands of new Medicaid beneficiaries and more individuals gaining private insurance, the system will require restructuring and expansion, including training additional clinical and non-clinical workers. The Workforce Flexibility/Scope of Practice MRT Work Group approved a series of recommendations to recalibrate the workforce, with a key theme of ensuring that mid-level providers are allowed to work at the top of their licenses. The Work Group also recommended the creation of a new advisory committee to assist the Office of the Professions within the Department of Education with assessments of proposals designed to improve health workforce flexibility. HIT Interoperable EMR for All New Yorkers To achieve universal provider-to-provider communication, a statewide HIT system must be developed, through which providers can share information about patients in ways that protect patient confidentiality. While MRT did not have an HIT Work Group, many of the MRT initiatives are dependent upon a high functioning HIT system in New York. Strategic investments will help lead to a statewide HIT infrastructure to allow patient records to be shared. While some investments have been made in recent years, there are still gaps in HIT capabilities. Additional resources and assistance are segmented into the following categories: eligible professionals and hospitals that may qualify for Medicaid utilization but are not served by the Regional Extension Center program because of limited resources or categorical restrictions; professionals and hospitals that serve large numbers of Medicaid beneficiaries that would otherwise meet the appropriate definitions, but do not hit the 30% patient volume threshold; additional health care providers mental health, long-term care, and substance abuse who were not included in the meaningful use incentive program; and 3

4 other categories of providers such as case managers who need to access information through HIE but may not have or need full electronic health record capabilities. The report notes that additional work is needed to quantify the implementation gap and develop criteria to prioritize needs in the context of broader MRT programmatic objectives. Improving Behavioral Health The Behavioral Health MRT Work Group embraced the concept of effective care management for patients with serious mental illness and substance abuse disorders and identified design elements needed for a managed and coordinated behavioral health system. The report states that savings on behavioral and physical health care attributable to improved care coordination should be focused on high priority areas including housing, employment services, peer services, and family support. A key recommendation of the Work Group is to establish risk-bearing special needs plans (SNPs) and integrated delivery system (IDS) models to provide fully-integrated and comprehensive care management. Additionally, the Work Group supported the MRT recommendation of a behavioral health organization (BHO) option that would be a carved out service working in tandem with a health plan to achieve service integration. The Work Group also provided recommendations for implementing BHOs, created a special team to focus on the behavioral health needs of children, and recommended expanding access to peer services. Discussion also focused on the need for integration of behavioral health into primary care settings covered under mainstream plans. The full recommendations provide a roadmap for creating an effective behavioral system that is integrated with other health sectors to ensure that the complete needs of complex patients are addressed. Improving Health To achieve the second goal of CMS triple aim approach, New York must implement powerful new health and public health strategies to eliminate health disparities, significantly expand access to supportive housing, and re-invent the Medicaid benefit to improve population health. As the largest insurer in the state, Medicaid has a vested interest in addressing preventable conditions and promoting health to ensure a healthy population and to reduce expenditures. Eliminating Health Disparities Medicaid and overall health system reform must focus on population health and addressing the significant disparities in health outcomes existing in New York State. The Health Disparities MRT Work Group developed 14 priority recommendations aimed to reduce or eliminate disparities based on race, ethnicity, gender, age, disability, sexual orientation, and gender expression. Specific recommendations focus on collecting data to measure disparities, improving access to certain treatments and services to address disparities, and providing Medicaid coverage for particular activities. While the hope is that these recommendations can be implemented within existing financial constraints, new funding sources may be necessary, with the MRT waiver as a possible option. 4

5 Affordable and Supportive Housing There is growing evidence that a lack of stable housing can drive unnecessary Medicaid spending, especially in urban areas, through patients who cannot be discharged, repeated emergency room visits, and inpatient admissions for individuals with chronic conditions. MRT looked at how housing can lead to a reduction in overall Medicaid spending and made an annual investment of $75 million as part of MRT Phase 1. The Affordable Housing MRT Work Group identified seven proposals for investments in new affordable housing capacity as well as five collaboration/coordination recommendations designed to ensure that state and local agencies are working together. The Work Group also provided recommendations regarding expanded access to the assisted living program. An 1115 Medicaid waiver is a possible funding source for significant new investment, with New York hoping to invest as much as millions per year to fully implement the Affordable Housing Work Group recommendations. The Work Group also made recommendations regarding improving access to housing and health care, including: co-locate behavioral and health services in housing, expand and improve independent senior housing, evaluate ways to create opportunities for diversion from hospitals, ensure coordination with health homes, streamline community siting processes, ensure the viability of existing housing resources, and design a Moving On initiative to help move individuals to more independent settings. Redesigning New York s Medicaid Benefit With New York preparing for ACA implementation, the Basic Benefit Review MRT Work Group engaged in a comprehensive discussion regarding how the Medicaid benefit should be structured to ensure delivery of clinically-effective services while implementing reform consistent with value-based benefit design. The Work Group stressed the importance of treating all Medicaid patients equitably while acknowledging that the use of finite public resources requires use of empirical evidence regarding the benefits, harms, and costs of benefits/services in making benefit design decisions. The Work Group recommended creating an expert advisory panel to provide guidance to the Medicaid program regarding ongoing benefit design. It also recommended specific benefit changes, many of which were approved in the recently adopted state fiscal year budget, to improve Medicaid s cost-effectiveness and demonstrate how medical evidence can improve benefit design. Reducing Costs While instituting a global Medicaid spending cap was an important first step toward achieving lower costs, more can be done, including payment reform that shifts the system away from a volume-based payment structure, improving the efficiency of the safety net system, and controlling medical malpractice costs. Global Medicaid Spending Cap Current estimates of the MRT Phase 1 initiatives, coupled with the global cap, suggest that the federal government will save $18.3 billion over the next five years, ensuring that any proposed 1115 waiver is budget neutral. To function within the statutory cap, New York needs the other elements of its comprehensive plan to be implemented. 5

6 Strengthening and Transforming the Health Care Safety Net Maintaining a strong safety net system is critical to preserving services, including primary care services, for the Medicaid population. A special MRT work group was formed to assess the strength and viability of hospitals and the health system in Brooklyn and to make recommendations to strengthen and assure the stability of health care in the borough. The work group recommended the development and implementation of tools for change as well as a series of hospital-specific recommendations. The tools include: expanding Health Commissioner powers over health facility operators and board members, establishing local health planning entities and processes, providing financial support for restructuring, rationalizing the distribution of Disproportionate Share Hospital (DSH)/Indigent Care Pool funds, and others. Although not all of these tools were approved in the recently adopted budget, the Department of Health (DOH) will work with Brooklyn hospitals and other community stakeholders to build off of the recommendations. While the work group focused on Brooklyn, there are other communities facing health care delivery problems. The work group report recommends the statewide application of the analytic processes and tools created for use in Brooklyn. Payment Reform To permanently break out of the volume-driven, fee-for-service payment cycle, New York will aggressively pursue other payment models. The state will watch closely as Medicare and other payers pursue other innovative models and will encourage accountable care organizations and other arrangements such as sub-capitation. Real payment reform requires Medicare and Medicaid to align their purchasing strategies. The Payment Reform MRT Work Group recommended the state move forward with a new partnership with the federal government under which true integration would be achieved for dual eligible members. This partnership must ensure that providers and payers realize financial savings while at the same time outcomes improve. New York is confident that the combined impact of payment reform, effective care management, and a new state/federal partnership will lead to both lower costs and improved outcomes. Medical Malpractice Reform With medical malpractice costs becoming increasingly difficult for providers to sustain, MRT took a first step toward reform by establishing the Medical Indemnity Fund during Phase 1. An MRT Work Group on Medical Malpractice Reform was convened and explored further areas for potential action, but no formal recommendations were made. Additionally, New York will be looking to the federal government to help fund the Medical Indemnity Fund since Medicaid is a direct beneficiary. Refining the State/Local Relationship in Medicaid The Program Streamlining and State/Local Responsibilities MRT Work Group focused primarily on the need for the state to implement a health insurance exchange by January 1, The recommendations outline a path for successful implementation of the exchange while simultaneously centralizing the Medicaid eligibility determination process. While the Work Group also achieved consensus to direct the state to develop a multi-year Medicaid financing system that phases out reliance on local taxes, MRT members expressed concerns that 6

7 benefits and provider payments not be reduced to pay for the phase out. The recommendation was later amended to address those concerns. The most recent state budget made a major step toward addressing this concern by phasing out growth in the local share. The Work Group also provided a series of eligibility streamlining proposals to be implemented in concert with the state take-over of Medicaid administration. Measuring Success New York is creating a comprehensive system of performance measurement that will apply to the state s entire health care system and quantify the triple aim. Two sets of performance measures have been developed. The first set are the Medicaid core measures, which build off existing measures, fill the gaps in measurement for long-term care and behavioral health, and align efficiency measures like preventable hospitalizations across all payers. The second set are the population core measures, which will align with New York s public health goals, as well as monitor quality across all payers. New York s goal is that these measures will drive both policymaking and the focus of health care improvements. The state expects to finalize the set of measures, with assistance from United Hospital Fund, and release a comprehensive performance dashboard soon. New York currently has a pay for performance program in Medicaid managed care. The core set of measures that are ultimately adopted will be the basis for any quality incentives going forward. Conclusion To fully implement the MRT action plan, a new Medicaid 1115 waiver will be necessary. The waiver will allow the state to reinvest in its health care infrastructure, as well as provide the state with freedom to innovate. The new waiver will allow the state to prepare for implementation of national health care reform and effectively bend the cost curve for the state s overall health care system. The state is also committed to partnering with Medicare to establish a state-federal compact to allow for true cooperation and alignment, which is especially important to managing the care for dual eligibles. 7