Explaining the New MassHealth 1115 Waiver Proposal

The article below — Baker’s Big Health Care Move — was published in the October 2016 issue of Commonwealth Magazine:

FOR THE THIRD time since 1996, the Massachusetts Medicaid program, called MassHealth, is preparing for transformation. After submitting a final proposal in July, state officials are anxiously awaiting a decision on the plan from the US Centers for Medicaid & Medicare Services. The goals are to: first, transform how medical services are delivered to many of MassHealth’s 1.86 million enrollees (including 40 percent of Massachusetts children); second, guarantee a five-year flow of nearly $8 billion in extra federal dollars into the state’s health care system; and third, better integrate substance abuse, mental health, and long-term services and supports into traditional medical care.

Chances are you have heard nothing about this plan that contains many worthy and some controversial changes. For state leaders, the stakes are high. Between 1997 and 2015, MassHealth’s share of the overall state budget doubled from 18 percent to 36 percent—with federal dollars accounting for more than half of the total share. At $16.4 billion in fiscal year 2017, MassHealth is the state’s biggest budget buster and most important lifeline for the state’s neediest populations. The new federal proposal represents Gov. Charlie Baker’s attempt to slow the growth rate while improving medical care and the health of enrollees.

For those who have been awaiting the Baker administration’s big health policy move, this may be it.

WHY IS THIS HAPPENING?

Since 1965, Medicaid has been a federal-state partnership that provides health coverage for low-income Americans. Originally just for poor mothers and kids on public assistance, today it is America’s largest health insurance program, covering more than 70 million people. The federal government provides most of the money, and sets tight rules governing how states run their programs. States can get flexibility from those rules by obtaining waivers from the federal government, the most pliable being the “Section 1115 research & demonstration waiver,” generally granted for 3-5 year terms. Even though federal rules require waivers to be “budget neutral,” states use creative medical and insurance redesigns to obtain substantial and desirable financial flexibility. Massachusetts Medicaid entered the 1115 game in 1997 with a major coverage expansion that transformed it into today’s MassHealth. Baker, then secretary of administration and finance under Gov. Bill Weld, was a key architect.

Since that time, Massachusetts’s 1115 waiver, now in its sixth iteration, has brought flexibility and extra dollars to support the state’s medical infrastructure for disadvantaged populations, chiefly through Boston Medical Center, Cambridge Health Alliance, and the state’s community health centers. It was the threatened loss of those extra federal dollars ($385 million in 2004) that jolted then-Gov. Mitt Romney and Sen. Ted Kennedy to formulate the plan leading to passage of the landmark 2006 Massachusetts Universal Health Care law, which in turn helped spark passage of the 2010 federal Affordable Care Act.

The state’s current 1115 funding ends in June 2017, and Baker administration officials, especially Secretary of Health and Human Services Marylou Sudders and MassHealth chief Daniel Tsai, are eager to lock in the next waiver—and the nearly $8 billion over five years—before Team Obama departs in January. Since arriving on Beacon Hill in January 2015, Team Baker has engaged in intensive planning with stakeholders, including consumer advocates, hospitals, physicians, insurers, and more. State leaders want federal approval by early fall. If federal officials like their plan—and Team Baker is hitting notes Team Obama wants to hear—they may get their wish.

WHAT’S THE PLAN?

The state’s application outlines five goals for the new five-year waiver that would begin in 2017:

  1. Enact payment and delivery system reforms that promote integrated, coordinated care and hold providers accountable for the quality and total cost of care.
  2. Improve integration of physical health, behavioral health, long-term services and supports, and health-related social services.
  3. Maintain near-universal coverage.
  4. Sustainably support safety net providers to ensure continued access to care for Medicaid and low-income uninsured individuals.
  5. Address the opioid addiction crisis by expanding access to a broad spectrum of recovery-focused substance abuse disorder services.

The most controversial goal is the first: inducing Mass-Health medical providers (hospitals, physician groups, home health agencies, community providers, and post-acute providers such as rehabilitation hospitals and nursing homes) to form or expand “accountable care organizations” (ACOs) to assume responsibility for the total cost of care for their MassHealth members.

ACOs were invented in the Affordable Care Act to push providers away from fee-for-service payments that tend to reward volume over quality and efficiency. Since 2010, more than 800 ACOs have formed across the nation in Medicare, private coverage, and, increasingly, Medicaid, with 17 states now using ACOs or looking to do so. In 2012, in that year’s health care cost control law signed by then-Gov. Deval Patrick, the Legislature directed MassHealth to move quickly to adopt “alternative payment models” such as ACOs. So the new waiver will enable MassHealth to meet both federal objectives as well as its legislative mandate.

Currently, about 840,000 of MassHealth’s 1.86 million enrollees obtain care through one of the state’s Medicaid managed care organizations such as Neighborhood Health Plan or Boston Medical Center’s Health Net. About 383,000 others participate in the loosely managed Primary Care Clinician (PCC) program. The rest, especially seniors and persons with disabilities, are in fee-for-service. MassHealth officials want to push as many PCC enrollees as possible into managed care organizations or ACOs by curbing benefits such as eyeglasses, hearing aids, and chiropractic or orthotic care and imposing new out-of-pocket costs on unwilling enrollees who choose to stay with the PCC program.

This aspect concerns patients, advocates, and medical groups. Though ACOs have grown rapidly since 2010, their track record in reducing costs and in improving quality has been modest, and their future is a topic of urgent debate among health policy experts. Some data suggest that PCC enrollees are no more expensive than managed care enrollees. Many PCC enrollees have serious, complex medical needs that can be poorly served by Medicaid managed care organizations with exclusive provider networks.

On the other side, encouraging states to jump into ACO-style “value-based payment”—and away from uncoordinated and unmanaged fee-for-service care—is among the highest priorities of federal officials such as US Health and Human Services Secretary Sylvia Burwell. If Massachusetts wants any hope of keeping the $8 billion in extra federal dollars flowing, they need to excite federal officials with ambitious designs of this variety.

The second goal—integrating physical health, behavioral health (the combined term for mental health and substance abuse treatment), long-term services and supports (the new term of art for long-term care), and health-related social services—is a major health system improvement goal advocated nationally and in Massachusetts by many, especially Sudders, a former clinical social worker and state mental health commissioner who has long fought to demolish medical care siloes.

Under the new waiver, new MassHealth ACOs will be required to build partnerships with certified “community partner” organizations that provide behavioral health plus long-term services and supports while managing the total cost of care of their enrollees. Providers will operate with per-person capitated payments that require improving the health and well-being of enrollee populations rather than just treating sick patients, a paradigm-shift for providers trained to care—and bill—for one patient at a time.

In response to health care providers worried about adapting to this new system, state officials emphasize the five-year transition to an ACO-centered MassHealth set to launch October 1, 2017. They also note that the $8 billion in federal waiver money will include $1.8 billion in additional federal payments (called Delivery System Reform Incentive Payments) specifically to help providers undertake the transition.

LET THE GAMES BEGIN – OR NOT

Opaque is a word often applied to 1115 waivers, one the Obama administration has attempted to replace with “transparent.” States must now conduct open public hearings on new waiver applications and make public all sorts of information relating to 1115 applications. MassHealth’s information, including the application, is here.

Noteworthy are 94 stakeholder letters submitted in July, 400 pages of praise and criticism from organizations large (Massachusetts Hospital Association, Massachusetts Medical Society) and small (Home Care Aide Council, Autism Housing Pathways). One letter from Leann DiDomenico, the mother of a 12-year-old adopted foster child, caught my eye:

“My son…spent the first three years of his life in an abusive birth home followed by 18 months in three different foster homes leaving him with a number of behavioral health issues, including PTSD and reactive attachment disorder (RAD). Over the past seven years my husband and I have worked hard alongside [his] primary care provider and various therapists to help [him] to heal and develop the tools he needs to live a full, productive life in spite of his mental health issues. If/when [he] is transitioned to an ACO, I have no confidence that we will be able to keep the professionals we currently have in place that are working well for [him].”

Leann’s letter gives voice to the concerns advocates have raised about the waiver plan. In 2013, MassHealth launched another ambitious demonstration to move their disabled enrollees into a new managed care program called One Care. Though One Care has made substantial improvements in quality, only about 13,000 of 115,000 MassHealth eligible enrollees have signed up after a rocky implementation (see “No time to go wobbly on One Care,” CW, Fall 2015). The new 1115 waiver is even more ambitious and dicey. Many PCC enrollees and their families have painstakingly built personal provider networks to address their serious and unique needs. ACO implementation risks serious disruption for them. MassHealth should offer these individuals and families a no-penalty “opt-out” until this experiment proves itself.

Baker’s 1115 waiver plan includes major steps forward for Massachusetts health care that may pay important dividends well into the future. Until they have demonstrated the capacity to implement this without harming any of their enrollees, they should proceed with more caution.

About John McDonough

I offer insights and opinions on how to improve health care systems for everyone
This entry was posted in Health Policy, Massachusetts Health Care, National Health Policy and tagged , , . Bookmark the permalink.

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