As states, payers and oversight bodies continue to find new and innovative ways to improve quality, cost and efficiency of home- and community-based services (HCBS), many are looking to Value-Based Payments (VBP) as a reimbursement model that drives these goals. VBP is a reimbursement model that shifts away from compensating providers based on volume (fee-for-service), and towards a model which rewards providers based on their efficiency and quality of care. The idea behind this shift is to incentivize providers to create more value in the services that they provide, instead of incentivizing sheer volume of services.
VBP is most commonly implemented through one of four payment arrangements. States can implement a combination of these arrangements to create the VBP system that works best for that state. The common arrangements include:
This article provides a deep dive into Shared Savings, one of these VBP arrangements, and offers considerations for both states and payers when designing their VBP systems for the HCBS community.
States that want to utilize integrated care models authorized under the Affordable Care Act (ACA) have the opportunity to participate in a shared savings program with the Centers for Medicare and Medicaid Services (CMS).
The shared savings model allows providers “training-wheels” to move away from fee-for-service and towards a risk and capitated based payment model. It is also commonly known as pay-for-performance. Groups of providers can receive a baseline payment relating to a specific spending target (referred to as total cost of care (TCoC)) for a Medicaid population, and providers understand that actual spending can be higher or lower than this baseline. The essential idea is that when actual spending is below the baseline, providers are rewarded as they can receive additional payments based on the savings created by coming in under the baseline (additional payments can be based off a set of performance quality measures). This is designed to reward quality of care over quantity of service.
The shared savings model can be highly customized from state to state, but can generally be characterized into two forms: “upside-only” risk (“one-sided”), and “shared-risk” (“two-sided”). Shared savings arrangements generally start with upside-only, which allow providers to be rewarded for creating cost savings while meeting their quality measures, but does not penalize them for going over the spending baseline. Shared-risk is the more advanced form, which will actually penalize providers (through uncompensated services), for going over the spending baseline. The percentage of savings awarded to a provider group or provider is based on the amount of financial risk they are willing to assume.
To ensure required services are being provided to the HCBS population, a provider’s performance on quality measures also helps determines how much of a bonus it is eligible for. A key difference between pay-for-performance models (which target individual providers) and the shared savings model (which targets groups of similar-type providers) is that the performance measures for shared savings will reflect the quality of care a provider group provides for an entire population, as opposed to individual outcomes.
When participating states submit the VBP plan to CMS for approval, they must outline the entire structure of how their Medicaid Shared Savings model will operate. This includes detailed descriptions of different components and methodologies included in the model, including:
No matter the VBP arrangement or model chosen, states will need to design their VBP systems with many of the considerations above in mind. VBP represents an important shift in the industry, not just in how services are reimbursed but also how data, costs, and measures are tracked and reported on, including at the provider level. As states move closer and closer to implementing VBP in the HCBS space, it is important for providers to be educated regarding the possible VBP arrangements, and to have the necessary technology infrastructure in place to maximize their participation in that VBP arrangement.
MediSked is the trusted partner to human services organizations across the country, delivering integrated technology solutions and expertise to improve outcomes and cost efficacy in long term service and supports delivery for state and county oversight, payers, care coordination entities and provider agencies. Working collaboratively with its clients and partners, MediSked has developed a full-featured software ecosystem, which includes the statewide data aggregation tools necessary to support the data tracking and reporting that is required of state shared savings programs, and innovations to drive operational efficiencies and improve population outcomes.
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