The National Academy for State Health Policy tracked 35 bills on care delivery and payment transformation (introduced and enacted) across 17 states during their 2023 legislative sessions. These state legislative efforts focused on the goals of improving access and equity, reducing costs for patients, improving health outcomes, and using state levers to drive multi-payer or all-payer alignment. Other reform efforts included state public options or universal state financing systems.
With the launch of the Making Care Primary and States Advancing All-Payer Health Equity Approaches and Development (AHEAD) transformation models by the Centers for Medicare & Medicaid (CMS) Innovation Center, states may be encouraged to accelerate their health transformation legislative efforts on global budget strategies or other alternative payment arrangements like primary care payment reform. These are key components of the federal models and there may be states seeking to align their efforts to help enable their participation in these programs.
State Enacted Legislation on Care Delivery and Payment Transformation in 2023
Comprehensive Financing or Payment Reforms
Maryland, Oklahoma, and Pennsylvania enacted legislation on care delivery and payment reform.
- Maryland established a Behavioral Health Care Coordination Value-Based Purchasing Pilot Program to be operated by Maryland’s Department of Health. The legislation requires “value-based purchasing” to incentivize providers to meet specified outcome measures.
- Oklahoma authorized contracted entities to offer optional value-based arrangements for all providers in the Medicaid program that requires provider incentives and reimbursements aligned with Oklahoma Health Care Authority’s quality measures. The legislation updated reimbursements for rural health clinics and set reimbursement for certified community behavioral health clinic providers in alternative payment arrangements.
- Pennsylvania reauthorized the Rural Health Redesign Center Authority that administers Pennsylvania’s global budget model for rural hospitals.
Minnesota enacted legislation that requires Minnesota’s Department of Health to analyze total public and private health care spending, including all medical care, dental, vision and hearing, mental health, prescription drugs, etc., for a universal health care financing system. The commissioner of commerce, in consultation with other agencies, must report to the legislature by February 1, 2024, on specific analyses and the recommendation for a public option, and factors affecting a 1332 waiver targeted for implementation by January 1, 2027.
A Focus on Primary Care
Colorado enacted legislation to cement the state’s regional health connector program within the Department of Public Health and Environment with budget support. The program convenes and engages local primary care practices and other providers and partners to address health-related social needs in communities around the state.
A Snapshot of 2023 State Legislative Efforts to Promote Health System Transformation
Introduced State Legislation on Care Delivery and Payment Transformation in 2023
Comprehensive Financing or Payment Reform
Colorado, Illinois, Maryland, Michigan, New Hampshire, Vermont, and Washington proposed legislation to study the creation of or to establish universal health care financing systems or single payer systems.
Colorado would have required analysis of model legislation for implementing a publicly financed and privately delivered universal health care payment system that directly compensates providers. In one bill, Illinois would have created the Health Care for All Illinois Act, providing that all individuals residing in the state would be covered under the Illinois Health Services Program for health insurance. The measure would have established the Illinois Health Services Trust to provide funds for the general operating budget of the program and certain non-patient care expenses. In a second bill, Illinois would have created a Medicare for All Health Care Act and an Illinois Health Services Trust.
Maryland proposed a Commission on Universal Health Care, tasked with development of a plan for the state to establish a universal health care program to provide health benefits to all residents of the state through a single-payer system. Michigan legislators proposed a universal and unified health care program through a single payment system aimed at coverage for people who would be covered by Medicaid, Medicare, MIChild (a health insurance program for uninsured children of Michigan’s working families), employers that choose to participate, and state and local government employees. New Hampshire proposed an interstate compact for universal health care, while Vermont proposed incremental implementation of a publicly financed health care program for all health residents. Washington proposed a trust with the purpose of providing coverage for a set of essential health benefits for all residents of the state.
Indiana, Massachusetts, New Hampshire, Oregon, Rhode Island, Vermont, and Washington introduced legislation to transform payment to drive more affordable, equitable care that results in better health outcomes. Indiana would have required state a plan to, among other provisions, implement a flexible hospital all-payer global budget system for hospitals, and expand by July 2030 an equalized all-payer reimbursement model and the flexible all-payer global budget system to all health care provider services, and implement a patient-centered total cost of care model of reimbursement rates and standards for all providers.
The Massachusetts bill would have established within the Health Policy Commission (HPC) a primary care board, tasked with developing and recommending a primary care prospective payment model that allows a primary care provider to opt in to receiving a monthly lump sum payment for all primary care services delivered.
In one bill, New Hampshire proposed a committee to study an all-payer system of insurance for hospital services, including the Maryland All-Payer model, and develop recommendations to establish a similar system in New Hampshire. In the other bill, tied to a proposed universal health care system, the state proposed a trust that would be used to reimburse independent physicians and practitioners equally to those who are not independent. Independent clinicians were to choose between a global budget, a capitation model based on risk-stratified covered lives, or fee-for-service payment. Hospitals and or other health care facilities were to be paid via a global operating budget from the trust. Hospitals and other facilities were not to be permitted to use operating budget funds for marketing, profit, excessive executive compensation, or major capital expenditures. Vermont and Washington also tied their universal payment bills to payment mechanisms recommended by the Green Mountain Care Board (Vermont) or via global budgets for hospitals and community providers (Washington).
Oregon proposed two pieces of legislation on payment and delivery reform. One bill proposed a pilot program to test alternative payment methods. The Oregon Health Authority (OHA) was to, among other provisions, phase in the implementation downside risk for safety net providers serving vulnerable populations consistent with OHA’s Value-Based Payment Compact. Payers in the program would have been required to sign on to the Value-Based Payment Compact and meet other conditions of the new payment methods, including shared risk and health outcome and quality measures. A second bill proposed that OHA adopt criteria for the eligibility for coordinated care organizations (CCOs) to receive funds from a newly established fund to pay for costs not accounted for in establishing a CCO’s global budget.
Rhode Island proposed an all-payer payment reform working group to develop the structure and terms of an advanced value-based payment model for all payers to use. By January 2026, the final recommendations were to be made for hospital global budgets for facilities and employed clinician professional services and prospective payment for at least two professional provider types.
Primary Care Efforts
Massachusetts, New York, North Carolina, Oregon, and Vermont introduced bills to establish or study the potential of setting primary care spending targets as a percentage of total health spending or to increase reimbursement to incentivize primary care resourcing and early intervention.
Massachusetts proposed an aggregate primary care expenditure target that increases primary care expenditure in steps from 8 percent of total health care expenditures to 12–15 percent from 2026 to 2029 and beyond. The bill also included a requirement that the HPC’s annual public hearings address the state’s ability to meet the new primary care spending targets and extended the performance improvement plan and HPC reporting provisions to the primary care targets. New York proposed a primary care reform commission to make recommendations on primary care spending by all payers relative to all health care spending and on increasing spending and strengthening primary care infrastructure in the state.
North Carolina proposed a primary care task force charged with evaluating spending on primary care in the Medicaid, commercial, and Medicare Advantage markets, studying other states with primary care targets, and identifying data collection needed to create a target in North Carolina for the Medicaid program, state health plan, and commercial markets. One Vermont bill would have required the state employee plan, certain insurers, and health plans to increase their percentage of primary care spending as a percentage of total health care spending by one percentage point per year until the target of 12 percent is reached and to maintain that 12 percent spending. The bill also required increased Medicaid primary care payments. A second Vermont bill would have established a primary care spending target of 15 percent and maintenance of the 15 percent spend for primary care for the same entities and required that any new agreement with CMS for a new all-payer model include the primary care target. The bill also included increased Medicaid primary care reimbursements.
An Oregon bill included increased minimum reimbursement to primary care providers, behavioral health providers, and dental providers with an increase each subsequent year. It also included a provision requiring CCOs to spend the portion allocated for primary care services, dental, and behavioral health services solely on those respective services.
Pennsylvania proposed a primary care task force to direct greater health care resources and investments toward health care innovation and care improvement in primary care.
Conclusion
Throughout 2024, NASHP will continue to monitor state policymakers’ efforts to transform their health systems through designing payment and delivery reforms that support their goals for ensuring access to quality care in consideration of rising health care costs.
