January 31, 2013

State to Partner with Health Providers to Deliver Better Care at a Lower Cost

Governor Mark Dayton announced today a new reform initiative that will provide better health care for 100,000 Minnesotans and lower costs for taxpayers. In an effort to further improve the state’s Medicaid program, the Minnesota Department of Human Services (DHS) is partnering with six health care providers to test a new payment model that prioritizes quality, preventive care and rewards providers for achieving mutually-agreed upon health goals.

New initiative builds on $1 billion in savings to Minnesota taxpayers
“Minnesota is the first state in the nation to implement this results-based payment model,” said Governor Dayton. “This new payment system will deliver better health care at a better price. By changing the way we pay health care providers we can incentivize reform, help Minnesotans live healthier lives, and slow the rising cost of health care in our state.”
The reform measure announced today makes needed changes to Minnesota’s payment system for publicly-funded health care programs, including Medicaid. The current system pays providers for the volume of care they deliver, rather than the quality of care they provide. This results in misguided incentives for providers, rewarding them for the number of procedures they deliver rather than the preventive care Minnesotans need to live healthy lives.
Under the new payment system announced today, participating providers would instead receive financial incentives for reducing the total cost of care for Medicaid enrollees while maintaining or improving the quality of care they receive. Each year, their total cost of care will be compared to a mutually-agreed upon targets for cost and quality. If quality targets are met, any “shared savings” will be divided between providers and the state. In later years, both providers and the state will share the responsibility for any losses as well. This will encourage providers to be innovative in how they deliver care, and sets realistic goals for improving the cost and quality of care delivered.
Six major health care providers have contracted with DHS under the new payment model, including: Children’s Hospitals and Clinics of Minnesota, Essentia Health, CentraCare Health System, North Memorial Health Care, Federally Qualified Health Center Urban Health Network (FUHN), and Northwest Metro Alliance (a partnership between Allina Health and HealthPartners). Combined, these providers will serve over 100,000 Minnesotans enrolled in publicly-funded programs.
“I want to commend these six health care providers for joining DHS as leaders in this critical reform effort,” said Human Services Commissioner Lucinda Jesson. “This model changes the incentive from doing more to achieving better health for Minnesotans. As we consider expanding our public programs under the Affordable Care Act, it is imperative that we move to better models of care that improve quality and reduce cost.”
This new care model is being implemented as Minnesota’s Medicaid population is expected to expand. Governor Dayton’s budget proposal, released last week, includes expanding Medical Assistance (MA) coverage to an additional 145,000 Minnesotans, including 47,000 children and pregnant women and 98,000 low-income adults. The state will continue to work with other providers who may be interested in joining the new payment system. DHS recently issued a request for proposals from additional providers along with other organizations to join this program.
Building on Two Years of Significant Reform 

Today’s announcement builds on the state’s ongoing health care reform efforts. Health and human services are the fastest growing parts of Minnesota’s budget, with costs rising 8.5 percent each year. The state can do more to improve health and reduce costs. That is why this effort and the Governor’s budget proposal make crucial reforms to deliver better services at a better price for Minnesota taxpayers. Other examples of important DHS reform efforts include:
» Bending the Cost Curve. The Dayton Administration has saved taxpayers over $1 billion through managed care reforms including competitive bidding and a voluntary cap on profits. The Governor’s budget builds on these reforms to ensure Minnesotans receive the highest value for their public dollars, saving more than $59 million in 2014 and 2015.
» Reform 2020. The Governor’s budget changes how seniors and people with disabilities receive long-term care, delivering the right services at the right time. By providing more choice and helping people stay in their homes, Reform 2020 will save taxpayers $151 million over 5 years and change the program to make it even more sustainable by 2020, when the “age wave” hits (probably not right word) Minnesota
» Fighting Fraud, Waste and Abuse. The Governor’s budget increases the state’s capacity to root out fraud in public programs, including healthcare, childcare, and nursing home settings. 
This new initiative is in line with the recommendations of the Minnesota Health Care Reform Task Force which released its Road Map to a Healthier Minnesota in December. 

The full report can be read here http://mn.gov/health-reform/images/TaskForce-2012-12-14-Roadmap-Final.pdf