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Ohio’s lessons for Medicaid transformation

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Here are some lessons learned from Ohio’s hospital-payment overhaul for patients under Medicaid. It’s all part of the state’s healthcare- reimbursement move to value from volume — a move that has been slower than expected to be implemented. Indeed, implementation isn’t expected until next July 1.

The Ohio Department of Medicaid (ODM), through its fee-for-service program and five Medicaid managed care plans, pays hospitals “about $4.3 billion a year, covering 62 percent of the cost of care provided to 3 million Medicaid beneficiaries. Ohio is one of 13 states that use or are planning an Enhanced Ambulatory Patient Grouping (EAPG) outpatient prospective payment system;  other Medicaid agencies and commercial payers will join soon.

Ryan Biles, senior vice president for health economics and policy at the Ohio Hospital Association, told FierceHealthcare that “Other states should follow Ohio’s lead in reforming Medicaid to expand coverage and modernize payment systems, but they would be wise to learn from our experience before undertaking similar payment systems reform.”

Mr. Biles lists these as things to watch for:

  • “Ensuring that paid claims databases are complete and consistent between providers and payers is paramount. The balance between the source data’s recency and accuracy is also crucial when forecasting the impact on various providers.
  • “Because Ohio expanded Medicaid coverage in 2014, the restructuring has to take into account the changing profile of Medicaid beneficiaries. But at the same time, the lag in dependable paid claims data from the post-expansion period has created issues with the reliability of provider impact forecasts.
  • “For states, Medicaid agencies and commercial payers adopting EAPG outpatient prospective payment systems, it is important to understand the 3M EAPG software covers a broader spectrum of diagnoses than the Medicare outpatient Ambulatory Payment Classification system, with 55 major categories and more than 550 severity-adjusted medical and surgical groupings. The software also employs 3M-created algorithms that deem when it is appropriate to package, consolidate and/or discount payments for related items, services and procedures.
  • “It is also key to outline as early as possible how new payment systems will be phased in, whether the use of temporary stop-loss and stop-gain benchmarks are appropriate, and how and when peer groups and prospective payment system rates and weights will again be rebased or repriced to maintain future parity between hospitals and within budget targets.”

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