In the wake of a three-year overhaul that saved $17.1 billion on Medicaid, officials have gotten CMS permission to use $8 billion of those savings to transform the state's health care system. Projects will include reinvestment in community hospitals in New York City, notably Brooklyn hospitals that are on the verge of closure and endangered safety net hospitals across the state.
Specifically, the final agreement with CMS includes $500 million in short-term assistance for financially sick health care providers, $6.42 billion to help hospitals and other facilities around the state develop longer-term reforms, and another $1.08 billion to develop further Medicaid reforms for complex cases, including mental health and substance abuse, according to the New York Daily News.
New York received permission by applying for and receiving a Medicaid 1115 waiver from the federal government, an effort which took 18 months of campaigning to get the approval of outgoing HHS Secretary Kathleen Sebelius.
New York is not the only state having received a Medicaid waiver to experiment with the program—there are 96 state Medicaid waivers in place at present—but it is perhaps the most visible participant, given its ambitious plans and willingness to experiment. New York’s spending on the health program for the poor is among the highest in the country, Reuters reports. According to data from the Kaiser Family Foundation, a nonprofit group that focuses on health care policy, New York spent $8,910 per patient in 2010, compared with the national average of $5,563.
It remains to be seen whether New York can continue to operate economically over the next five years as it goes forward with its $8 billion dollar haul. Its goals are ambitious—for example, the state wants to achieve a 25% reduction in avoidable hospital use of the five years—but given the success of past programs (specifically the Medicaid Redesign Team projects), there may be some hope.
What's sure is that New York can no longer afford the cost of its antiquated Medicaid system, and that providers need to be paid for value and give chances to experiment with useful interventions like patient centered medical homes.
The history: redesigning Medicaid in New York
New York's Medicaid bonanza came from a project that began in January 2011. The Medicaid Redesign Team (MRT) called on stakeholders and experts throughout the state to reform the state's health care system and reduce costs. Officials also held a series of public meetings across the state to solicit ideas from New Yorkers; through this initiative, the MRT received more than 4,000 reform ideas from citizens.
The MRT pursued 78 projects intended to bend the Medicaid cost curve and improve the program's quality of care. Projects undertaken as part of the MRT included:
- Redesign and evaluation of quality measures and population indicators: As part of the Medicaid redesign program, the Team has begun (and plans to continue over the next decade) to evaluate quality measures and health indicators to see if Medicaid beneficiaries' health improves, stays the same or has been negatively impacted.
- Care coordination for dual-eligible patients: In summer 2013, CMS and the state of New York kicked off a program to test a new model for providing dual eligible patients (on both Medicare and Medicaid) with more coordinated, patient-centered care. Participating providers have the choice to be paid either on a managed fee-for-service model or a capitated model offering a prospective, blended payment to offer dual-eligibles coordinated care.
- Dossier-based coverage decisions: The Dossier Process is an evidence-based program which NY Medicaid will use to determine whether services of uncertain value will be covered. If an individual or entity wants to pursue coverage for one of these services or products, they may submit an evidence dossier, which must be comprehensive and include the most current research available on the relevant coverage request.
- Patient-Centered Medical Home: In an effort to increase the number of New York state medical practices that are recognized as patient-centered medical homes, Gov. Cuomo signed three laws that allow for the development of the incentive programs in New York's Medicaid program. The MRT chose NCQH's PCMH recognition program as a basis for making larger payments to PCMH providers.
Implications for other states
While New York has a particularly heavy burden, many other states are struggling with the same issues. The Kaiser Family Foundation estimates that as of 2010, the most recent year available, Medicaid spending primarily averaged $5,555, a big enough number; it also estimates that California, Massachusetts, Vermont, Alabama are particularly big spenders on the Medicaid program.
As things stand across the U.S., Medicaid fee-for-service is slowly being replaced by value-based payment models. New York isn't the first and won't be the last to try and turn the aging Medicaid program into something that gives good value for the dollar—all will have to change their Medicaid programs to align with paying providers for quality and useful population health projects. The shift is integral to survival, said Kip Piper, a Washington DC-based consultant who formerly served as Medicaid director in Wisconsin.
"With cuts in payments and everything tightening up, that requires transformation of an old delivery system," Piper said. "It's like turning a battleship around in a bathtub, but it has to be done. The current version is in unsustainable."