Driving Innovation on the Ground: Key Issues for State Medicaid Agencies in Payment and Delivery System Reform

Executive Summary

State Medicaid programs have taken on a number of different reforms in order to improve quality and enhance program efficiency. State reforms span incremental changes in payment to large scale health system reorganizations and occur across a number of existing delivery system models. Driving innovation through fee-for-service (FFS) or managed care, or through accountable care organizations (ACO) or payment innovations like episodes of care, requires different functions and responsibilities on the part of the Medicaid agency during implementation. However, across different reform strategies, three elements stand out as major issues for state agencies designing and implementing reforms:

  • Incorporating the perspectives and priorities of providers into reform design and implementation;
  • Finding adequate resources – notably staff with the necessary skills – to develop and oversee reforms; and
  • Supporting reform “infrastructure” at all levels that allows realigned incentives to work effectively.

While many facets of reform are determined by each state’s specific circumstances, states in general have demonstrated a strong interest in pushing for change at the provider-level. These changes require a range of new capabilities, including the capacity to engage and support providers in delivering on these reforms.

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