Colorado and Michigan have joined Oklahoma to become the nation’s pioneering states with approved State Plan Amendments (SPAs) that enable Medicaid alternative payment models (APMs) for prescription drugs in the form of outcome-based contracts with pharmaceutical manufacturers.
In early May, state experts from Oklahoma, Colorado, and Michigan shared their experiences implementing their APMs during a NASHP webinar. A recording of the webinar is available here.
The SPAs enable states to negotiate contracts based on agreed-upon outcome measures tailored for specific drugs. Outcomes measures vary but may include measures such as patient adherence or reduced hospitalizations. If the drug’s performance fails to meet agreed-upon outcomes and triggers the need for additional manufacturer payments to the state, those payments are made in the form of supplemental rebates. The contract template was developed with the support of the State Medicaid Alternative Reimbursement and Purchasing Test for High-cost Drugs (SMART-D).
Though these outcomes-based APMs are valuable tools for states to manage escalating drug costs, APMs are best understood as “one more tool in our toolbox,” which are most effective when used in tandem with other strategies rather than in isolation, explained Cathy Traugott, pharmacy office director of the Colorado Department of Health Care Policy and Financing. Though these APMs may help states manage payment for high-cost drugs, the high-list prices themselves remain a problem that states are also attempting to address head on. During this year’s state legislative session alone, 47 states have filed 254 drug-cost-related bills (as of May 22, 2019).
Executing and implementing outcome-based contracting can be a time-consuming endeavor for states because of the necessity for state officials to engage with multiple manufacturers in exploratory discussions to identify drug candidates, followed by the data analysis necessary to design, and then track the outcome-based measures.
Oklahoma, whose work NASHP supported through a subgrant from the Laura and John Arnold Foundation, found that the process took longer than anticipated. Terry Cothran, director of the University of Oklahoma’s College of Pharmacy, advised states that pursue outcomes-based contracting to consider dedicating a project coordinator to execute the work most effectively.
To date, these contracts are with state Medicaid agencies only, and have not included inter-agency efforts. Rita Subhedar, state assistant administrator for Michigan’s Department of Health and Human Services, stressed the importance of broad engagement within a Medicaid department to effectively implement these APMs, including pharmacy, medical, and behavioral health staff. A separate, subscription-based payment approach, known as the “Netflix” model, utilizes a cross-agency approach engaging both Medicaid and a state corrections department. This approach was explored in another NASHP webinar, How States Pay for Hep C Drugs Using a “Netflix-style” Subscription Model.
The first results from outcome-based contracting will come from Oklahoma, whose first, one-year contract is scheduled to end July 2019, with three other contracts concluding soon after. Colorado and Michigan have not yet executed contracts.
Escalating drug prices are forcing state Medicaid agencies to explore new payment models. According to Burl Beasley, director of Pharmacy Services for Oklahoma’s Medicaid program, older Medicaid payment strategies, such as negotiating enhanced rebates and multi-state purchase agreements, are not keeping pace with rising drug expenditures.
Beasley cited the strain prescription drug costs were putting on Oklahoma’s Medicaid budget as a driver behind the decision to pursue alternative payment models (APMs) during a Dec. 12, 2018 National Academy for State Health Policy (NASHP) webinar. The webinar featured Beasley, Terry Cothran, director of Pharmacy Management Consultants at the University of Oklahoma College of Pharmacy, and Russell Knoth, director of Health Economics and Outcomes Research at Eisai, a drug manufacturer that entered into an APM agreement with Oklahoma. Since committing to APMs, Oklahoma’s Medicaid agency has become a national leader, with four separate Medicaid APM agreements executed with drug manufacturers.
Oklahoma Medicaid Alternative Payment Models for Prescription Drugs
|Drug Name||Manufacturer||Therapeutic Class||Outcome Measured|
|Aripiprazole lauroxil (Aristada)||Alkermes||Long-acting, injectable antipsychotic||Patient adherence to medication|
|Oritavancin (Orbativ)||Melinta||IV antibiotic for bacterial skin infections||Net costs to the state|
|Invega Trinza and Sustenna||Janssen/Johnson & Johnson||Long-acting, injectable antipsychotic||Overall population adherence|
Beasley drew an important distinction between the two main types of APMs — financial APMs and health outcome-based APMs. Financial APMs are essentially price/volume agreements and may include target measures such as adherence. Financial APMs, which can be managed with claims data, are easier to administer than health outcomes-based APMs, which often require clinical data. The four contracts that Oklahoma has executed to date are all financial APMs, though Oklahoma continues to explore potential health outcomes-based APMs. Oklahoma’s fee-for-service Medicaid payment model helped expedite the execution of APMs, which otherwise may have required additional negotiation and coordination with managed care organizations.
To enable Medicaid APMs, Oklahoma submitted a Medicaid State Plan Amendment (SPA) to the Centers for Medicare & Medicaid Services, and received approval for the amendment on June 27, 2018. The SPA allows Oklahoma to negotiate supplemental rebate agreements that could produce extra rebates for the state depending on a drug’s performance against outcomes agreed upon in the contract with the drug manufacturer. The extra rebates are excluded from “best price” implications, an important consideration to encourage manufacturer participation in APMs.
Michigan has since followed Oklahoma’s lead, receiving approval in November 2018 for a SPA to enable APMs there. Both states received support from SMART-D, the State Medicaid Alternative Reimbursement and Purchasing Test for High-Cost Drugs, including development of a contract template. NASHP provided a grant to Oklahoma to support the extensive data analysis necessary to explore potential drugs and outcomes for measurement in order to execute contracts. NASHP provided the grant through its Center for State Rx Drug Pricing, supported by the Laura and John Arnold Foundation.
Results, including assessments of potential cost savings, are not expected for any of Oklahoma’s APMs until 2019. In the meantime, Cothran was able to share some lessons learned from Oklahoma’s successful efforts to pursue and finalize contracts with manufacturers.
- Building a strong relationship and trust between the state and a manufacturer is necessary.
- Smaller manufacturers may have greater flexibility than larger manufacturers to enter into APMs more quickly.
- Manufacturers are new to Medicaid APMs and are generally not yet ready to take on high-risk contracts.
- State Medicaid programs should be willing to pull initial data on drug utilization to get manufacturers to the table.
Knoth shared the manufacturer’s perspective on APMs, which he believes can be a win-win for payers and manufacturers. He stressed that though the concept of an APM is easy to grasp, transitioning from the concept to a signed contract can be challenge because it requires designing an agreement with the power to measure a real effect. Eisai’s contract with the Oklahoma Health Care Authority measures reductions in hospitalizations following initiation of its epilepsy drug Fycompa, and is Eisai’s first APM.
- Read a Q&A about how Oklahoma implemented its APM and how it plans to evaluate and expand this innovative model here.
- Listen to the Dec. 12, 2019 webinar Medicaid Alternative Payment Models for Prescription Drugs: Do They Add Value for States? here.
- Listen to the May 9, 2019, webinar Medicaid Alternative Payment Models for Prescription Drugs: A Look at Three States here.
On the heels of Oklahoma’s first-in-the-nation, value-based purchasing deal to improve adherence to an antipsychotic drug, the state’s Medicaid agency just signed its second value-based contract for a prescription drug used to treat serious bacterial skin infections.
While several private insurers have initiated value-based contracting, which links payments to a drug’s effectiveness and outcome, Oklahoma is the first state Medicaid program to initiate this payment reform innovation.
Oklahoma’s second contract, finalized this month, is with the pharmaceutical company Melinta for oritavancin (Orbativ), a drug used primarily to treat bacterial skin infections. Because oritavancin costs more than other treatments, the state Medicaid program had required prior authorization before paying for the drug. However, under the new value-based contract, prior authorization will no longer be required.
In return for having the drug listed as a first-line treatment, Melinta ensures that oritavancin will not result in a net increase in costs. While other drugs used to treat bacterial skin infections may require hospitalization for administration, oritavancin does not. While its purchase price is higher, oritavancin is not expected to cost the state Medicaid program more because it is expected to eliminate costly hospitalizations required by other drug options.
However, under the terms of the value-based contract, if the state does incur higher costs from oritavancin – despite the avoided hospitalizations — Melinta will be on the hook to cover those costs through additional rebates to the state.
Oklahoma’s contract with Melinta builds on its first-in-the-nation, value-based prescription drug contract signed in July, 2018. That contract is with the drug manufacturer Alkermes for the long-acting injectable, anti-psychotic drug aripiprazole lauroxil (Aristada). The contract is designed to reward increased patient adherence. Under the contract’s terms, as adherence targets are met – which result in greater drug usage, sales, and improved outcomes — the price the state pays for the drug decreases.
Each of these two value-based contracts is a unique, negotiated agreement that required time and trust between the state and drug manufacturer to execute. While Oklahoma initially approached larger drug manufacturers to enter into value-based contracting for high-priced, higher-profile drugs, such as those used to treat hepatitis C, Oklahoma to date has found success with smaller companies, which had greater flexibility to enter into innovative agreements with the state.
Each contract requires extensive data analysis to explore the relevant patient population characteristics and potential, measureable outcomes in order to design a viable agreement. Oklahoma’s groundbreaking work in Medicaid value-based contracting for prescription drugs is expected to pave the way for other states to pursue similar initiatives.
The National Academy for State Health Policy (NASHP) supported Oklahoma’s data analysis to build its contracts through a sub-grant from the Laura and John Arnold Foundation, which also supports NASHP’s Center for State Rx Drug Pricing.
SMART-D, the State Medicaid Alternative Reimbursement and Purchasing Test for High-Cost Drugs, also helped Oklahoma by supporting its successful application to the federal government for a state plan amendment that enabled it to enter into value-based contracts under its Medicaid Drug Rebate Program.
Earlier this year, more than 50 state leaders joined a session exploring Oklahoma’s value-based contracting at NASHP’s 31st Annual Health Policy Conference. In the coming months, NASHP will write more about value-based purchasing and sponsor a webinar to enable a national discussion on state value-based contracting for prescription drugs.
State Medicaid agencies, which fund half of all births in the United States, are increasingly looking for ways to improve birth outcomes and maternal health while reducing costs by improving medical care and avoiding medically unnecessary cesarean sections. Two case studies from Wisconsin and Oklahoma show how these states successfully improved health care access and quality by creating pregnancy-focused medical homes and developing provider education and incentives to reduce unnecessary C-sections. The studies were developed in partnership with the National Institute for Children’s Health Quality with support from the Health Resources and Services Administration’s Maternal and Child Health Bureau.
Case Study: Oklahoma’s Cesarean Section Quality Initiative Promotes Improved Birth Outcomes
Case Study: Wisconsin’s Obstetric Medical Home Program Promotes Improved Birth Outcomes
- As of July 1, 2011, there were 684,387 individuals enrolled in the state’s Medicaid program, SoonerCare; 591,850 of these individuals were enrolled in a prepaid ambulatory health plan (PAHP) that provides transportation benefits.
- 439,228 Medicaid enrollees receive physical, behavioral, and dental services through the state’s primary care case management (PCCM) program, known as SoonerCare Choice. Medicaid beneficiaries who reside in an institution, receive home- and community-based waiver services, qualify for Medicare, or who are in an HMO are not eligible for SoonerCare Choice.
- Children with special health care needs may be eligible for one of the state’s several waiver programs, including:
- In-Home Supports for Children, which provides family training, habilitation training specialists, and respite services, among others, to children ages 3-17 with mental retardation who would otherwise require placement in an ICF/MR; and
- Developmental Disabilities Services Division Home and Community-Based Services Waiver, which provides individuals 3 and older with services such as home health care, family training, daily living supports, and specialized foster care.
According to the Medicaid rules of the Oklahoma Health Care Authority, the following standards are considered when determining medical necessity:
Further, the Oklahoma EPSDT Provider Manual states “1905(a) services, deemed medically necessary and allowable under federal and Medicaid regulations, must be covered by the OHCA Child Health Checkup (EPSDT) program even though those services may not be part of the Medicaid State Plan. However, such services may require a prior authorization and must be allowable under federal or Medicaid regulations.”
|Initiatives to Improve Access
SoonerExcel: EPSDT Incentive Payments
As part of the Oklahoma Medicaid agency’s incentive program, SoonerExcel, the state pays an EPSDT incentive bonus to primary care providers (PCPs) in order to increase compliance with and access to initial and periodic screening services. A total pool of $1 million is made available to PCPs that meet or exceed the EPSDT compliance rate for medical home members; qualifying PCPs receive an additional 25% of the rate for the age appropriate procedure code according to the fee schedule.
The SoonerExcel program also rewards providers who immunize a child with the 4th DTaP prior to age 2. PCPs who achieve this goal are eligible to receive $3.00 per child, depending on available funding.
Oklahoma EPSDT staff work with the Department of Education and the Department of Health to increase access to services for SoonerCare members through school-based and early intervention services. School districts may contract with the state Medicaid agency to seek reimbursement for medically necessary services provided to SoonerCare members in accordance with the Individuals Disability Education Act. Services include speech therapy/evaluation, occupational therapy/evaluation, hearing and vision services, nursing services, and psychological services.
|Reporting & Data Collection||
The Oklahoma Medicaid agency reports on several HEDIS measures relating to EPSDT, including:
SoonerCare Choice providers receive Child Health Checkup provider profiles on a bi-annual basis. These profiles offer providers feedback to help them evaluate their performance compared to their peers, and contain information on the number of children on their panel for any part of a one-year review period and the number of Child Health Checkup screenings conducted during that period.
SoonerCare Choice medical home providers are required to complete a behavioral health screening on an annual basis for all children ages 5 and above. To assist with these screenings, the Oklahoma Medicaid Agency developed a 1 page pediatric screening tool and a behavioral health toolkit.
Providers completing medical home self evaluations for all three tiers of patient-centered medical home in Oklahoma must indicate that:
“During annual visits PROVIDER uses behavioral screening, brief intervention, and referral to treatment for members 5 and above. Through the use of these screening tools the provider will expedite treatment for members with positive screens with the goal of improving outcomes for members with mental health and/or alcohol or substance use disorders. “
|Support to Providers and Families||
Support to Providers
Information for providers on the Oklahoma EPSDT program can be found in the Child Health Checkup Provider Manual, which includes a program overview, billing codes, prior authorization processes, and periodicity schedules. Periodicity schedules and providers forms are also available on the Child Health Unit web page.
The state Medicaid agency operates a provider portal, which allows providers to access claims and prior authorization data, and receive messages from the Oklahoma Health Care Authority.
Support to Families
Providers participating in SoonerCare Choice, Oklahoma’s primary care case management program, serve as an individual’s “medical home.” Care coordination services provided through the medical home include coordinating and monitoring all medical care for members; specialty referrals; coordinating hospital admissions; referrals to the Women, Infants, and Children (WIC) program; coordinating with mental health services; and patient education.
Medicaid beneficiaries in the Tulsa region may also receive medical home services and coordinated care through the state’s Comprehensive Primary Care Initiative, which brings together state, federal, and commercial payers to strengthen primary care.
For more information on Oklahoma’s medical home initiatives, visit the NASHP medical homes map page.
Oklahoma Medicaid operates a dental services page that provides information on the importance of dental health, an FAQ, and a dental provider directory. Information on dental prior authorization, screening services, and dental reminder periodicity schedule is available in the Child Health Checkup Provider Manual.
– See more at: https://nashp.org/epsdt/Oklahoma#sthash.RGe7Lmlo.dpuf
Primary care practices transitioning to enhanced models of primary care require ongoing support to sustain their transformation efforts. Small and medium-sized practices in particular can benefit from shared resources facilitating care coordination and case management, use of data and technology, and ongoing practice improvement. This State Health Policy Briefing outlines key elements of a shared infrastructure to sustain primary care transformation, identifies policy levers available to federal and state policymakers to support these elements, and highlights relevant initiatives at both levels of government. It also summarizes key areas for policy improvement identified during a meeting of federal and state officials convened by NASHP.
|Click for the Publication||195.37 KB|
Primary care extension programs improve the quality of primary care services by educating providers on new and innovative practices in areas such as preventive medicine, health promotion, and chronic disease management. Section 5405 of the Affordable Care Act authorizes the establishment of a national primary care extension program. To pursue this goal, the Agency for Healthcare Research and Quality (AHRQ) established the Infrastructure for Maintaining Primary Care Transformation (IMPaCT) initiative as a pilot to build on states with strong existing extension programs to serve as a potential model for a national extension program.
This webinar will feature a high-level overview from each of the four lead IMPaCT states (New Mexico, North Carolina, Oklahoma and Pennsylvania) that highlights key components of their extension models. Following the overviews, a facilitated discussion with state officials from these states will illuminate the role of, and implications for, state agencies in this work. Following the discussion, participants will have the opportunity to ask questions of the speakers.
- Bob Mcnellis, Senior Advisor for Primary Care, Agency for Healthcare Research and Quality (AHRQ)
- Darren DeWalt, MD, MPH, Associate Professor of Medicine, Division of General Internal Medicine, University of North Carolina – Chapel Hill
- Robert Gabbay, MD, PHD, Chief Medical Officer and Senior Vice President, Joslin Diabetes Center
- Art Kaufman, MD, Vice Chancellor for Community Health; Distinguished Professor, Family & Community Medicine, University of New Mexico Health Sciences Center
- Jim Mold, MD, MPH, Director, Research Division, Department of Family and Preventive Medicine, University of Oklahoma Health Sciences Center
- Chris Collins, MSW, Director, Office of Rural Health and Community Care, North Carolina Department of Health and Human Services
- Marcela Myers, MD, Director of Pennsylvania Center for Practice Transformation and Innovation, Pennsylvania Department of Health
- Garth Splinter, Medicaid Director, Oklahoma Health Care Authority
|Download Webinar Slides||4.7 MB|
Under construction–NASHP is continuing to populate this resource so please check back!
If you have any resources about the Medicaid benefit for children and adolescents in your state that you would like to share, please email firstname.lastname@example.org.
The Oklahoma Health Care Authority (OHCA) provides medical homes to most Medicaid enrollees through SoonerCare Choice, a primary care case management (PCCM) program. In January 2009, using recommendations from the provider community, the program underwent extensive revisions and identified the following goals:
- Enhance patient choice and participation in health decisions;
- Assure all members receive all necessary preventive and primary care;
- Increase the provider network
- Reduce inappropriate emergency department visits and hospitalizations;
- Realign payment incentives to improve cost effectiveness and quality; and
- Promote the use of health information.
In 2008, the Oklahoma Legislature expressed their support for patient-centered medical homes (PCMH) by passing House Concurrent Resolution 1058, concurring with PCMH principles and encouraging their study and use. During the same session, the Oklahoma Legislature also enrolled Chapter 144 of the 2008 Session Laws, which encouraged a collaborative study of medical homes, and Chapter 166 of the 2008 Session Laws, which created a Medical Home Task Force.
OHCA also promulgated rules establishing a pilot program for Health Access Networks (HANs), non-profit, administrative entities that work with providers to coordinate and improve the quality of care.
- The greater Tulsa region is one of seven markets participating in CMS’s Comprehensive Primary Care Initiative (CPCi). In this multi-payer initiative, Medicare is collaborating with public and private insurers in the selected states or regions with the goal of strengthening primary care. In Oklahoma, CPCi launched in October 2012, bringing together four payers, as well as 68 participating primary care practices with 280 providers in the greater Tulsa region.
- Oklahoma has received a duals demonstration grant from the Centers for Medicare & Medicaid Services (CMS) to “coordinate care across primary, acute, behavioral health and long-term supports and services for dual eligible individuals,” who are currently unable to participate in SoonerCare Choice.
- The Greater Tulsa Health Access Network (Greater THAN), now known as MyHealth Access Network, has received a Beacon Community Grant.
Last updated: October 2013
SoonerCare Choice: In 2007, an 11-member Medical Advisory Task Force, comprised of provider organization representatives and staffed by Medicaid, was formed and recommended providing every SoonerCare Choice member with a patient-centered medical home model.
Chapter 166 of the 2008 Session Laws established a temporary 16-member Medical Home Task Force staffed by the Insurance Department to study implementation of patient-centered medical homes (PCMH) for private and public payers.
Town hall meetings were convened across the state in Fall 2008.
|Defining & Recognizing a Medical Home||
SoonerCare Choice: Oklahoma has developed a three-tiered recognition tool for Medicaid providers. The Physician’s Agreement Addendum (attachment B-MH) contains the entire list of requirements for each tier.
Comprehensive Primary Care Initiative (CPCi): Practices were selected for participation in CPCi through a competitive application process. Under CMS’s Comprehensive Primary Care Initiative, practices are not required to attain formal PCMH recognition; however, formal PCMH recognition through NCQA, AAHCC, the Joint Commissioner, URAC, or a state-based recognition program was viewed favorably in practice selection. Additional criteria included:
|Aligning Reimbursement & Purchasing||
SoonerCare Choice: SoonerCare Choice utilizes multiple payments to incentivize practice transformation. These payments include:
*Providers can use additional codes to bill for enhanced reimbursement when providing care outside of normal business hours.
Comprehensive Primary Care Initiative (CPCi): This four-year multi-payer initiative, launched in October 2012, includes four payers in the Tulsa market: Medicare, Oklahoma Health Care Authority, CommunityCare, Blue Cross and Blue Shield of Oklahoma.
Medicare pays selected practices a per-beneficiary per-month (PBPM) risk-adjusted care management fee, which ranges from $8 to $40. CMS has indicated that it expects care management fees to average $20 PBPM during the first two years of the initiative. In Years 3 and 4, care management fees will average $15 PBPM. Medicare will also introduce a shared savings component beginning in Year 2, calculated at the market level.
The CPCi solicitation for payers indicates that participating payers (non-Medicare) are expected to follow a similar framework, paying per-member per-month (PMPM) care management fees to participating practices on top of fee-for-service and incorporating a shared savings component. Payment amounts will be negotiated individually with participating practices to comply with anti-trust laws. Payments from the Oklahoma Health Care Authority for providers caring for Medicaid enrollees in CPCi are as for SoonerCare Choice mentioned above.
SoonerCare Choice: The SFY2010 Performance and Quality Reportstates that the Oklahoma Health Care Authority (OHCA) Quality Assurance and Improvement Department conducted 557 visits to educate providers on the medical home requirements from July 1, 2009 – June 30, 2010.
Oklahoma provides four profiles to selected providers biannually that give information about their patients’ utilization and health care needs. Also, SoonerExcel, a pay-for-performance program, provides practice feedback on targets for Child Health Exams (Early Periodic Screening, Diagnosis, and Treatment [EPSDT]) and Breast and Cervical Cancer screenings.
Oklahoma is currently piloting three non-profit, administrative Health Access Networks (HANs) to support care coordination and quality improvement. According to Oklahoma Health Care Authority’s 2012 Annual Report, the state’s three HANs served 382 practices and over 78,000 SoonerCare Choice members as of June 2012.
SoonerCare Choice: The Oklahoma Health Care Authority (OHCA) uses HEDIS measures to evaluate performance.
The SFY2010 Performance and Quality Report describes that the OHCA Quality Assurance and Improvement Department uses standardized audit tools to conducts on-site reviews of contracted SoonerCare Choice providers.
Following the redesign of SoonerCare Choice, the number of patients contacting the Oklahoma Health Care Authority (OHCA) for same/next day access issues in a year decreased from 1670 in 2008 to 13 in 2009 to 4 in 2010.
The program has demonstrated a $29 decrease in per capita member costs (per patient/per year) from 2008-2010 while increasing evidence-based primary care services (including breast and cervical cancer screening).