December 02, 2016

Massachusetts to Overhaul Its Medicaid Program

The Centers for Medicare & Medicaid Services (CMS) has approved a waiver allowing Massachusetts Governor Charlie Baker to overhaul his state’s Medicaid program in an effort to rein in soaring health care costs. The waiver authorizes $52.4 billion in spending over five years including $29.2 billion from CMS.

MassHealth, the state’s Medicaid program, covers about 1.8 million low-income people and is the largest single source of spending in the state budget. Baker’s proposed solution will steer MassHealth away from a fee-for-service reimbursement to an Accountable Care Organization (ACO) model where providers are paid set budgets to treat low-income patients.

Baker proposed the waiver to the CMS in June 2016 to help cope with an expected loss of $1 billion in federal funding in mid-2017. The program overhaul is intended to encourage improved patient care while curbing spending. The new MassHealth program will attempt to control costs through a closer alignment with private insurer payment policies and Medicare’s acceptance of ACO models.

State and federal leaders have voiced support for the waiver in the face of concerns expressed by hospitals and providers about MassHealth’s shortcomings including reimbursement rates that cover just 76 cents for every dollar of provided care.
Pursuant to the waiver, MassHealth will launch an ACO pilot program this month (December 2016) to facilitate MassHealth’s transition to the ACO model by creating an alternative payment methodology that includes shared savings and risk.