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NAMD Releases New Report on How Medicaid is Reengineering the Link Between Service Delivery and Payment

March 24, 2016

Washington, DC – Today the National Association of Medicaid Directors (NAMD) released a report which describes state Medicaid strategies to reengineer the link between healthcare service delivery and reimbursement. This new report, which was conducted in partnership with Bailit Health Purchasing and The Commonwealth Fund, comes at a critical time as the highest levels of the Department of Health and Human Services (HHS) are prioritizing parallel efforts in Medicare.

The Role of State Medicaid Programs in Improving the Value of the Health Care System” highlights Medicaid’s path to transform provider payment away from the traditional fee-for-service system into alternative models that reward high-value services. It examines this work in 34 states and finds that nearly two-thirds of the states participating in the study implemented or are planning state-designed programs to transform payment at the provider level.

“Value-based purchasing is quickly becoming the new paradigm in Medicaid,” said Tom Betlach, NAMD’s President and Director of the Arizona’s Medicaid program. “States recognize that we must sever the link that has historically tied reimbursement to the quantity of services delivered, not the outcomes we want for Medicaid consumers. This will be a multi-year progression as states and providers evaluate and refine these models.”

In a letter to HHS Secretary Burwell, NAMD discusses the opportunity to accelerate the innovations occurring in Medicaid by further aligning state-based work with value-based purchasing activities at the federal level. According to NAMD’s Executive Director Matt Salo, “As our report shows, Medicaid Directors strongly support HHS’s efforts to move to a healthcare system that rewards quality and improved health outcomes. Medicaid programs are a critical component of those efforts, and bring a breadth and depth of experiences to the national conversation on delivery system reform. Directors across the country, while moving forward with innovation in their states, look forward to further collaboration between HHS and state Medicaid agencies.”

The report also reveals the unique challenges Medicaid programs face in transforming provider payment. For example, it identifies a need to address the policy conflict between the prospective payment system for safety net clinics and the objectives of value-based purchasing. Medicaid Directors are also exploring how to sustain transformation and quality improvement by reinvesting savings, including in social determinants of health.

“We are excited about what the future holds for Medicaid and the individuals we serve,” Betlach noted, “And we are hopeful that strengthening our collaboration with HHS will expedite the innovation already happening in state Medicaid programs.”


The National Association of Medicaid Directors (NAMD) is a bipartisan, nonprofit, professional organization representing leaders of state Medicaid agencies across the country. NAMD members drive major innovations in health care while overseeing Medicaid, one of the nation’s most vital health care safety net programs, which covers more than 72 million Americans. NAMD serves as the voice for state Medicaid directors in national policy discussions, supports state-driven policies and practices that strengthen the efficiency and effectiveness of Medicaid and actively monitors emerging issues in Medicaid and health care policy. Learn more at and follow NAMD on Twitter @statemedicaid.

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