Hospital Association of Pennsylvania > Advocacy > Health Insurance Coverage Expansion > HAP Comments on DHS Proposed Changes to the HealthChoices Program


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HAP Comment Letter to DHS on Proposed Changes to the HealthChoices Program

August 10, 2015

Secretary Theodore Dallas
Pennsylvania Department of Human Services
333 Health and Welfare Building
P.O. Box 2675
Harrisburg, PA 17110-2675

SUBJECT: Response to Department of Human Services (DHS) Proposed Changes to the HealthChoices Program

Dear Secretary Dallas:

On behalf of The Hospital & Healthsystem Association of Pennsylvania (HAP), which represents approximately 240 member institutions, we appreciate the opportunity to provide comments relating to the document issued on July 20, 2015, that summarized some of the changes that the Department of Human Services (DHS) is considering for the new procurement of the provision of managed care services for physical health.

This letter supplements HAP’s correspondence responding to the Request for Information (RFI) dated June 26, 2015.

We commend DHS for issuing a summary of the major themes from the RFI comments, as well as outlining the proposed changes DHS intends to make to the Medicaid and HealthChoices program.

As noted in our June 26 comment letter, HAP is supportive of incorporating the goals of the Triple Aim in HealthChoices, as well as promoting the use of value-based purchasing and expanding team-based approaches to health care.    Below, this letter will briefly (1) summarize our understanding of DHS’ proposed changes to the HealthChoices program; (2) outline HAP’s position relating to payment reform and provide some general observations relating to DHS’s approach; and (3) provide some specific recommendations relating to the implementation of payment reform initiatives moving forward.

(1)  DHS Proposed Changes to the HealthChoices Program

DHS is considering a number of forward-thinking changes to the physical health HealthChoices program relating to payment reform and other topics. Specifically, DHS is considering:

  • Setting targets for value-based payments as a percentage of total contract value, which would be phased in over time and increase over the terms of the contract.
  • Instituting a requirement that managed care organizations (MCO) develop value-based contracts with large volume health systems to move towards becoming accountable care organizations (ACO) that focus on key efficiency and quality metrics.
  • Increasing value-based purchasing and pay for performance programs such as gain sharing, risk sharing, episodes of care, centers of excellence, and bundled payments.
  • Encouraging physical health MCOs to make use of alternative contracting strategies, such as the use of traditional, primary care provider-led, primary care medical homes (PCMH) and health homes (HH).
  • Improving access to quality care through the expanded use or incentives to increase use of telemedicine and telehealth.

(2)  HAP’s Observations Relating to Payment Reform Initiatives

HAP supports the Triple Aim and DHS’ objective to promote payment models that shift the focus from fee-for-service (FFS) reimbursement and toward payment methodologies that motivate and reward value or outcomes.

That said, it is important that any Medicaid managed care reform initiative be consistent with the following high-level “principles:”

  • Performance measures for which payment is based should be meaningful, consistent with health system quality initiatives and, to the extent possible, align with existing measures.
  • Value-based purchasing approaches should be consistent among Medicaid health plans and the FFS program and, to the extent feasible, align with existing Medicare payment reform initiatives.
  • Value-based purchasing approaches should be designed in a manner that promotes a focus on care delivery and minimizes the administrative burden for both HealthChoices plans and their providers.

In states where most Medicaid services are provided by managed care plans under contract with the state to deliver services, it is difficult to determine how to best incorporate delivery or payment reforms (e.g. medical homes, ACOs, bundled or episode-based payment) into managed care contracts.

This challenge may be even more difficult in Pennsylvania, where these proposed reforms must be integrated with existing program initiatives such as the MCO pay-for-performance (P4P) program, the provider P4P program embedded within the HealthChoices contracts, and the new MCO Community-Based Care Management Program (CBCM).

There is a significant risk that these initiatives, if not properly designed and implemented in a coherent fashion, could foster fragmented delivery and payment reform that will lead to inefficiencies, confusion for providers, and delays in progress.

(3)  Recommendations to Ensure HealthChoices Program Reform

To help ensure that Pennsylvania’s approach to implement payment reform and value-based purchasing is successful and supports quality outcomes, HAP recommends:

  • DHS incorporate provisions to enhance integration of physical and behavioral health care for HealthChoices beneficiaries. HAP encourages DHS to build on its experience in piloting a program to improve the integration of physical and behavioral health care for adult beneficiaries.
    This could include incorporating strategies for both adults and children that integrate physical and behavioral health care and identifying aligned measures for both the physical and behavioral health care HealthChoices plans to foster and financially reward better integration.
  • DHS release a draft HealthChoices Request for Proposal (RFP) for public comment prior to its final release to enable stakeholders and consumers to provide effective feedback. The release of a draft RFP is common practice where, as here, DHS is contemplating significant program changes.
    Providing a short window of opportunity for comments may lead to important program changes that could avoid future difficulties.
  • The RFP provisions be drafted in a way that provides an opportunity for the commonwealth, the MCOs, and the provider community to engage in an appropriate dialogue to finalize the approach. DHS should convene and facilitate meetings that address the following questions, among many others, prior to implementation of final program requirements during January 2017.
       –  What payment reform initiatives have been successful in other state Medicaid Medicaid programs?
       –  How can payment reform initiatives be made consistent with existing payment methodologies, including recent Medicare initiatives?
       –  How can consistency be achieved by MCOs to create the best opportunity for success?
       –  What measures should be chosen to avoid duplication and ensure a focus on quality outcomes that improve population health?          
  • Any final value-based purchasing reform initiatives should be generally consistent among HealthChoices Plans to maximize the overall effectiveness of these efforts. DHS should set the overall parameters, while allowing a certain flexibility in how plans approach value-based purchasing to address patient population health needs and offer plan-provider flexibility in addressing payment approaches to meet those needs.
    Areas of consistency should include performance measure sets, incentive structures, and reporting requirements to reduce fragmentation and provider administrative costs.
  • Any HealthChoices payment reform changes be designed to ensure that the financial rewards for delivery improvement to be shared with individual providers. In order for payment reform to be successful and sustainable over time, it is important that the benefits be shared by the state and federal governments, the MCOs, and providers.
  • DHS establish an ongoing mechanism to ensure that the programs are re-evaluated and improved over time. DHS should convene regularly scheduled meetings with providers and the MCOs to identify areas of concern, overcome barriers, evaluate program performance, and ensure consistency.
    These meetings will promote a culture of learning moving forward and increase the likelihood that the reforms will successfully improve quality outcomes.

Thank you for your consideration of HAP’s comments. If you have any questions, please contact me at (717) 561-5325.


Jeffrey W. Bechtel
Senior Vice President, Health Economics and Policy

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