New Care Models: New York State’s Medicaid reforms

New Care Models: New York State’s Medicaid reforms

New York State has set up a nine-year programme (2011-2020) to improve health outcomes, efficiency of service delivery and value for money for the state’s six million Medicaid beneficiaries.

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New York

The New York State’s medical spending was growing at an unsustainable rate of 10% year-on-year, while quality outcomes were worsening. In 2011, New York implemented its nine-year (2011 – 2020) Medicaid Redesign Team (MRT) action plan aiming at improving health outcomes, efficiency of service delivery and value for money for the state’s six million Medicaid beneficiaries.

Following the introduction of the MRT transformation programme, which included the global spending cap and a series of recommendations to create improvement opportunities, Medicaid spending fell successfully for the following two years despite a 12% increase in demand. By sticking to the MRT plan, the state was estimated to be able to avoid $17bn in future expenditures over the next five years, allowing to  reinvest nearly half of this back into the system in the form of the Delivery System Reform Incentive Payment (DSRIP) program, aimed at creating new models of provider integration. Through the $8bn investment, New York will aim to implement changes that will fundamentally transform the way healthcare is delivered and paid for.  

KPMG in the US is New York State’s strategic advisor for the transformation journey. Working with New York State officials and with local provider networks, they have helped to design key programmes of work that underpin the change and are providing local support to aid implementation.

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Four programmes of work

• Care system redesign – Support for provider networks 

• Data and analytics 

• Payment reform 

• Workforce transformation

The Medicaid Redesign Team (MRT) crucially introduced a global spending cap, which fundamentally changed how healthcare expenditure was managed. Everything had to be viewed in terms of its impact on finite Medicaid resources, with the state healthcare commissioner being granted new ‘super powers’ to change reimbursement rates and implement utilisation controls. By sticking to the MRT action plan, the state was able to curb Medicaid Spending growth and generate shared savings of approximately $2.2bn in FY11/12. [Source: A Plan to transform the Empire State’s Medicaid Program] Under a waiver from the federal government, New York State was able to build the foundations of a transformation journey in the form of the Delivery System Reform Incentive Payment (DSRIP) Program, that will fundamentally transform the way healthcare is delivered and paid for, focusing on provider integration and implementing value-based payments. 

New York State total spend Medicaid services

Source: New York State - Department of Health

New York State spend Medicaid per beneficiary

Source: New York State - Department of Health

New York State’s objectives for the payment reform are about aligning incentives and payment mechanisms so that providers deliver care to meet patients’ needs, thereby improving population health, quality of care and reducing avoidable hospital utilisation. To do so, the state has set a clear long-term direction to move towards capitation-based payments, away from a ‘fee for service‘ model. By incrementally shifting greater downside risks to providers through reformed and flexible financial incentives, the programme is aiming to develop a system that delivers greater patient value in the long term. 

Four pillars of the payment reform strategy

• Capping growth in total payments 

• Paying for integration and transformation 

• Rewarding outcomes and sharing savings 

• Transferring risk incrementally 

Healthcare employment is a vital component of New York’s economy with over 1 million people of the state’s workforce being employed in the sector and it continuing to grow faster than most other employment sectors. Yet, to implement DSRIP reforms, the state will have to overcome key workforce challenges relating to workforce gaps, education needs and roles and responsibilities. New strategies are required to better prepare the state’s health workforce to implement the DSRIP programme and deliver the triple aim. Traditional silos will need to be broken down, staff will need to work more collaboratively in multi-disciplinary teams, and better information on the workforce will be required. 

What changes is New York State making?

• Improving data and information 

• Improving workforce training

• Encouraging collaboration among providers

• Assisting providers by providing technical support 

• Increasing the workforce capacity to cater for the growing demand 

Analytics play a pivotal role in the DSRIP programme – without the right data and relevant insights, realising the triple aim would be impossible. Measuring and monitoring the data at the medical condition level is critical to the delivery of value-based and patient-centred care. As part of the New York DSRIP analytics programme, KPMG in the US has supported the New York State to develop an agile analytics platform using HCI3 grouper technology that integrates a massive dataset across all care settings, covering three years of activity for millions of patients. This allows the New York State to understand the quality and total cost of care and provides a single analytics infrastructure enabling consistent reporting and facilitating sophisticated benchmarking for all, helping to achieve the triple aim of better health, better care and lower cost. 

How does it work?

This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.

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