I. Background and Overview
On September 28, 2022, Center for Medicare & Medicaid Services ("CMS") and the Massachusetts Executive Office of Health and Human Services ("EOHHS") announced the approval of the Commonwealth's latest 1115 Medicaid waiver amendment ("Waiver"). The Waiver is a significant milestone in Massachusetts' Medicaid program and will impact every aspect of care delivery in the Commonwealth. The Waiver also serves as a harbinger for the types of investments CMS and the state Medicaid program will be making for years to come. The multibillion-dollar Waiver is effective October 1, 2022 through December 31, 2027, but many critical details—including the total incremental federal funding available—remain subject to further clarification, development and negotiation between EOHHS and CMS.
Key takeaways from the waiver include:
- ACOs and Value-Based Care Are Here to Stay. CMS has verified the early success of the unique Accountable Care Organization ("ACO") structure in Massachusetts, which has been a hallmark of the Commonwealth's Medicaid-managed care program since approval of the prior Waiver in 2017. ACOs will be the pathway through which Massachusetts integrates other new components of the Waiver, including Health-Related Social Needs ("HRSN"), expanded value-based care models, and new behavioral health interventions, into the delivery system.
- Funding for Health-Related Social Needs. No longer called the "social determinants of health," CMS is making significant new investments in HRSN services, building on prior waiver approvals in other states like California, North Carolina, and Oregon, which demonstrates a willingness to reimburse for nontraditional Medicaid services and providers, particularly as it relates to food, housing insecurity, and enhanced care management.
- New Hospital Funding. The Waiver continues to serve as a critical authority for the funding of safety net hospitals in Massachusetts, with substantial incremental funding being directed to private acute care hospitals in the Commonwealth that serve Medicaid and uninsured populations and achieve incentive targets for quality and health outcomes on measures that are focused on reducing disparities and promoting health equity. Additional funding will be made available to hospitals under the balance of the Delivery System Reform Incentive Payment ("DSRIP") program to further previous investments to transition hospitals to value-based care made under the prior waiver.
- Direct Investments of Workforce. Given the impact of the COVID-19 pandemic on staffing within the health care industry, the Waiver includes a number of novel investments in workforce development initiatives, including loan repayment, residency training, and similar initiatives that diversify and expand the provider community, especially in primary care and behavioral health.
- Needed Details Are Coming. Scant details on implementation are included in the Waiver, with most attachments being "reserved" for future development, which will tell ACOs, managed care organizations, providers, and others how these new investments and programs will be operationalized, including funds flows, data reporting, and quality measures. As protocol development continues in the coming months, investors and service providers should contemplate how new and existing technologies can create the necessary infrastructure for HRSN-related services including data interoperability, social care provider networks, fee schedule development for HRSN services, and health care staffing.
II. Components of the 1115 Waiver Amendment
Massachusetts submitted the Waiver application to CMS in June 2021; funds will be reinvested and distributed, in part, as follows:
- Hospital Quality and Equity Initiative
("HQEI"): Each year for the next five years,
Massachusetts private acute care hospitals and Cambridge Health
Alliance will receive $400 million and $90 million, respectively,
to reduce health inequities by strengthening and improving quality
and health outcomes. Participating hospitals can earn
performance-based incentive payments for meeting data collection
requirements and certain standards tailored to improvement in
health care quality and equity. CMS must approve the
Commonwealth's HQEI Implementation Plan describing activities
to occur during 2022 and 2023. More details on performance
expectations and incentive payments will be further specified in
the HQEI Implementation Plan when it is released.
HQEI Funds will be used for the following purposes:- Data Collection Incentive (25%): Participating
hospitals are incentivized to improve completeness of demographic
data pertaining to their beneficiary populations, screening for
health-related social needs, and improving health outcomes.
Hospitals will be assessed on the completeness of data. This
component is significant as accurate demographic data has been
challenging for states to collect—as self-reported data is
often incomplete or inaccurate—but critical as demographic
information, especially on race and ethnicity, is necessary to
stratify quality measures, which is contemplated by other parts of
the program.
- Equitable Access and Quality Performance-Based
Incentives (50%): Participating hospitals are eligible to
earn performance-based incentive payments based upon improvement on
measures identified jointly by Massachusetts and CMS. Hospitals
will be assessed on performance and demonstrated improvements on
access and quality metrics, including associated reductions in
disparities. Metrics will focus on overall access including access
for individuals with disabilities and/or limited English
proficiency; access to preventive, perinatal, and pediatric care
services; access to care for chronic diseases and behavioral
health; and care coordination.
- Workforce Competence Incentives (25%):
Participating hospitals are incentivized to improve workforce
competence to enhance their ability to provide accessible and
culturally appropriate services based upon health status and health
needs, and thereby more effectively address gaps in access to and
quality of care. This component includes improving service
capacity, workforce development, and health system collaboration to
improve quality and reduce disparities.
- Data Collection Incentive (25%): Participating
hospitals are incentivized to improve completeness of demographic
data pertaining to their beneficiary populations, screening for
health-related social needs, and improving health outcomes.
Hospitals will be assessed on the completeness of data. This
component is significant as accurate demographic data has been
challenging for states to collect—as self-reported data is
often incomplete or inaccurate—but critical as demographic
information, especially on race and ethnicity, is necessary to
stratify quality measures, which is contemplated by other parts of
the program.
- HRSN Services: MassHealth will broaden the
availability of HRSN services that promote coverage, access to and
quality of care, improve health outcomes, reduce health
disparities, and create long-term, more cost-effective alternatives
or supplements to traditional medical services. Expenditures are
limited to those for items and services not otherwise covered under
traditional Medicaid, but consistent with Medicaid demonstration
objectives. Services include housing support (e.g., security
deposits/rent, relocation expenses, furniture, air
conditioning/filtration, and home modifications), case management,
outreach, and education including linkages to other state and
federal benefit programs, nutrition support (e.g., counseling and
meals for up to six months) and transportation to housing and
nutrition support services. Those eligible for these services
include MassHealth ACO-enrolled members ages 0 to 64 who meet
certain clinical criteria and certain MassHealth beneficiaries
experiencing homelessness, individuals with justice involvement
(e.g., released from a correctional institution within one year),
and members with behavioral health needs who are facing eviction
due to a behavioral health condition. Individuals must have a
documented medical need for the services, and the services must be
determined to be medically appropriate. More details around HRSN
services will be set forth in a HRSN Implementation Plan. CMS
authorized up to $8 million in expenditure authority to
operationalize the services, but the total funding for these
services will be far more than the costs of implementation.
- DSRIP Funding: CMS authorized up to $1.8
billion in one-time DSRIP funding to support the transition to
accountable care. Approximately $1 billion in funding will be
distributed to ACOs, which will include:
- Primary Care. Investments in primary care including
capital investments (e.g., inter-operable EHR systems), trainings
and additional administrative staff calculated on a PMPM
basis.
- Discretionary. Discretionary spending (health
information technology, contracting/network development, project
management, and care coordination/management investment,
assessments for members with identified LTSS needs, workforce
capacity development and new or expanded telemedicine capability)
calculated on a PMPM basis.
- Flexible Services. Flexible services used to address
HRSN by providing supports that, subject to certain conditions, are
not currently reimbursed by MassHealth or other publicly funded
programs calculated on a PMPM basis.
- Safety Net Hospital Restructuring. Restructuring of
demonstration funding for safety net hospital systems to be more
sustainable and aligned with value-based care delivery and payment
incentives.1 Massachusetts will provide transitional
DSRIP funding to safety net hospitals to create a sustainable
transition from current funding levels to new, reduced levels. The
remainder of the DSRIP authorization is for behavioral health and
long-term services and supports community partnership.
- Primary Care. Investments in primary care including
capital investments (e.g., inter-operable EHR systems), trainings
and additional administrative staff calculated on a PMPM
basis.
- Value-Based Primary Care Structure: Providers
offering certain primary care services to Primary Care ACO-enrolled
beneficiaries will receive a prospective payment and will not
otherwise be eligible for a fee-for-service payment. Under this
model, primary care practices (PCPs) are expected, for example, to
work towards enhanced team-based care, behavioral health
integration, and a more integrated primary care system. The shared
savings payments to participating Primary Care ACOs may allow or
require the Primary Care ACOs to distribute some portion of shared
savings to or collect shared losses from select service providers
that span outside the rules for traditional value-based care and
managed care.2 Providers participating in either the PCC
Plan or a Primary Care ACO are also eligible to receive an
additional case management fee on top of the shared savings
payments. Additional details will be published in the Primary Care
Payment Protocol to be approved by CMS.
- Provider Workforce Recruitment and Retention:
In efforts to reduce shortages of qualified health care providers
and expand access to care, CMS authorized a primary care and
behavioral health provider student loan repayment program and a
family nurse practitioner residency program. Providers enrolled in
these programs must provide services in community-based settings
that serve substantial Medicaid and uninsured populations. The
student loan repayment programs range from $50,000 - $300,000 per
practitioner, depending on degree. The residency grant program
supports up to 10 family nurse practitioner residency slots for
four years in certain community health centers. Funding for these
workforce programs is capped at approximately $43 million over the
next five years.
- Funding for Serious Mental Illness ("SMI")
and Serious Emotional Disturbance ("SED") + SUD:
CMS authorized funding for SMI and SED services including for
short-term residents of facilities that are considered
"Institutions for Mental Diseases" ("IMD"), and
are otherwise carved out from the Medicaid program. Community
crisis stabilization will be available to most MassHealth members,
and community-based acute treatment will be available to all
children and adolescents enrolled in a managed care plan.
Massachusetts must achieve a statewide average length of stay of no
more than 30 days in an IMD treatment setting – these
services are subject to approval of an SMI/SED Implementation Plan.
CMS also authorized funding for expenditures for SUD and SMI
treatments services and ongoing recovery support.
- Eligibility Changes: Among other changes, CMS authorized (i) continuous eligibility for at least 12 months for members experiencing homelessness and members recently released from a correctional institution, and (ii) streamlining the CommonHealth adult eligibility process and eliminating the one-time deductible for certain individuals.
III. Commonwealth Requests Not Contained in the Waiver
- Improve and Strengthen Access to Care and Health
Outcomes for Individuals Enrolled in Medicaid.
Massachusetts requested coverage expansion for certain individuals
in juvenile justice facilities during their commitment and for
justice-involved adults 30 days prior to being released from
carceral settings. While CMS expressed general support for these
services, it did not approve the proposal. Massachusetts noted that
its proposal to provide pre-release transition supports for
justice-involved members is pending federal guidance for all states
and is expected in late 2022 or early 2023.
- Continued Authority to Operate Hospital at Home Programs. Massachusetts requested extension of CMS's Hospital at Home program, which permits payment for clinic services delivered via telehealth (when neither the provider nor member is at the clinic) and in other non-clinic locations. CMS declined this request but noted it will continue to review it.
Funding
Unlike waivers approved in other states, this Waiver does not expressly identify the incremental funding made available by CMS. Rather, EOHHS notes that the Waiver approval constitutes a $67.2 billion agreement between the Commonwealth and CMS; however, this number includes gross expenditures under the prior Waiver programs, including the entirety of ACO spending in the Commonwealth. Accordingly, the total incremental or "new" spending for this Waiver is more modest but will likely result in an increase of at least $4 billion of total new gross computable federal spending on MassHealth over the five-year term of the Waiver, and without counting any new investments in HRSN.
Conclusion
Overall, the Waiver suggests a collective desire for significant investment in HRSN services and aligns with recommendations identified in the State Attorney General's report on Racial Justice and Equity in Health and the EOHHS Roadmap to Behavioral Health Reform. However, many details around implementation are deferred to future negotiations between the state and CMS3 and will likely take place in the coming year by way of the state's budget negotiation process. Given the substantial new investments being made in all aspects of the delivery system, but especially in HRSN, behavioral health, primary care and value-based care, payors, providers, investors, service providers, and convenors in the health care industry should monitor and be engaged in the protocol development process over the coming year. Approval of this Waiver by CMS is a significant development for health systems, health plans, and investors in markets outside of Massachusetts, as it conveys a willingness by CMS to once again use its broad 1115 waiver authority to make new federal investments that support safety net and financially distressed hospitals, especially for health systems that operate in underserved, high-Medicaid areas, and expand Medicaid coverage to both new populations and new service offerings, such as HSRN and behavioral health. This Waiver also likely serves as strong indication that pending 1115 waiver amendments, including New York's waiver submitted in September 2022, will receive similar approvals from CMS in the near future and collectively represent an exciting new opportunity for health care innovation and the development of new care models.
Footnotes
1. The seven safety net hospitals currently receiving funding through the DSTI program will instead receive a reduced amount of ongoing operational support through Safety Net Provider payments authorized under the state's restructured Safety Net Care Pool.
2. See 42 C.F.R. § 438.
3. 18 of the 23 Waiver attachments, which provide specificity for implementation, are "Reserved," meaning, they are still being developed and are subject to additional approval by CMS.
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