Volume 4 Issue 20, September 26, 2017
Created in 1965, the Federal Medicaid program today covers 74 million people in the US, with expenditures of over $500 billion each year. Within this population are five million people with an intellectual/developmental disability (I/DD), 700,000 of which are receiving financial support through the Home and Community-Based Services (HCBS) waiver. The price tag of these I/DD services is nearly $70 billion, not including physical, behavioral, or other related healthcare expenses. At the same time, states and the Federal government have come under increased pressure to control the seemingly inexorable growth of these costs.
To address this “perfect storm,” states are increasingly turning to private managed care organizations (MCOs) to control costs, oversee quality, and assess recipient progress in acute health care, behavioral health interventions, and more recently, the HCBS component of Medicaid. Individuals with I/DD have been the only long-term care population routinely “carved out” of MCO contracts historically, but that is changing. Now they are being “carved in” and there is an increasing insistence on value-based reimbursement with demonstrated outcomes.
To balance the economic emphasis, Medicaid regulates MCOs and provides comprehensive protections for the consumer. This rigorous Medicaid policy is designed to strengthen program integrity by mandating clear measures of success around health and quality of life that reflect accountability, transparency, and stakeholder engagement. MCOs need to demonstrate compliance with the Olmstead Act and the ADA, as well as have a fair appeals process in place.
With these parameters in mind, value-based reimbursement is clearly increasing in the I/DD market. The following silver linings offer the following opportunities for consumers and providers despite the apparent challenges:
Being flexible and creative leads to good outcomes - In the archaic fee-for-service environment, HCBS providers are often inhibited, and consumers limited, to a general list of standardized services with little flexibility. In a capitated, risk-based model, payers and service providers can use the resources holistically and creatively, paying for things that a person may need versus a predetermined set of options. For example, a person may need a home modification to remain in the community (e.g. a simple ramp costing $5,000) but this option is not on “the approved list” of the funding agency and the person may be offered a $75,000/month “slot” in a group or nursing home instead. Tailor-made solutions, versus a “one size fits all approach,”increases the likelihood of value for all parties.
Aligning incentives and shared savings adds value - Providers who operate within an HCBS waiver focused on social determinants of health, currently do so in a bubble, with little visibility into the physical and behavioral health care verticals and vice-versa. Subsequently, providers do not have incentives to find efficiencies and develop proactive and preventative healthcare strategies for long term health and cost control. When quality of life improves, health outcomes generally improve yielding reduced expenses, with savings realized at all levels of operation. Creative MCO and I/DD provider contracting can use a shared savings approach, with savings passed on to the providers for enhancing value. This can be seen in the Independence At Home Project which has resulted in financial incentives paid to the provider along with high customer satisfaction and improved health status.
Managed care increases provider opportunities - Currently, I/DD providers often are limited to a specific geographic catchment area since Medicaid contracts have historically been locally managed and delivered. MCOs often have a national footprint and rely on a robust network of high performing providers. Entrepreneurial HCBS providers will have an increased opportunity to develop strategic partnerships, joint ventures and expand into other markets where the MCOs exist. MCOs often have “national contracts” with high performing providers and will welcome adding “results-driven” providers to their network. In addition to geographic expansion, HCBS providers will experience greater options for expanding their services to support other covered populations (i.e., child welfare, behavioral health, ABI, etc.).
Increasing access can improve the value proposition -The percentage of primary care physicians and other medical providers not accepting Medicaid-funded I/DD patients is significantly higher than the national average for other populations. In some markets, it is almost impossible to find doctors, psychiatrists and other medical professionals who accept Medicaid. One of the contractual requirements for Medicaid-funded MCOs is “network adequacy.” The onus of finding medical HCBS providers who accept Medicaid shifts to the MCOs, who will be penalized if they do not address these care gaps, especially in rural areas. This also creates a new opportunity for providers to diversify and become better integrated with the larger healthcare community.
Whole-person consumerism enhances value - A new system that begins to cost-effectively integrate funding streams into a “whole-life” approach provides a significant opportunity to move the needle on quality and cost. Silos are eliminated and consumer needs are prioritized, starting with quality healthcare and preventative services, extending to gainful employment and meaningful community integration. A fragmented system creates a fragmented person. Fragmented people are often in crisis. Crisis is expensive.
The good news is that HCBS Providers who have the courage to accept change head on and think creatively will experience tremendous success. Those providers who develop fresh strategy, invest in innovation, relationships and “outside of the box thinking” will see their businesses flourish. Most importantly, the people receiving support will be the ultimate winner as we focus on what’s truly important, which is quality of life, outcomes and a true sense of community and citizenship.
Josh is a healthcare entrepreneur, executive, and consultant with over 20 years of successful national leadership in the I/DD, behavioral healthcare, and child welfare verticals, as well as managed care organizations (MCOs). He began his career with the founding of LifeShare, an innovative organization that continues to support people of all abilities. LifeShare became a multi-state, multi-million-dollar provider that was ultimately sold to Centene, one of the leading MCOs in the country. This collective experience gives him unique insights about our healthcare landscape and M+A transactions, as well as strong national relationships. Josh's business background includes recognition in 2009 as one of Business NH Magazine’s 25 leaders to watch in the next 25 years and he was appointed by Governor Lynch as a Commissioner for the NH Commission on Human Rights. At VERTESS, he was actively involved as an M+A advisor and consultant, with a focus on new opportunities in our rapidly evolving healthcare system.