The group formed by Gov. Gina Raimondo to transform the Medicaid system recommended paying health care providers for the quality of their services in its final report, which was released Wednesday.
Most Medicaid payments in Rhode Island are made based on the amount of services provided. That can incentivize providers to focus on volume rather than value.
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Raimondo's working group issued a strategic plan for Medicaid in Rhode Island for the first-term Democrat's tenure as governor. Tying payments to value is one of the main goals so that by 2018, at least 80 percent of Medicaid payments are based on value.
"We need to be supporting quality," Health and Human Services Secretary Elizabeth Roberts said. "We need to be doing things in an affordable, sustainable way."
The federal government is shifting toward reimbursing Medicare providers for value and supporting states in transforming Medicaid.
The other strategic goals in the report include coordinating physical, behavioral and long-term health care, particularly for patients with the most needs, and moving away from high-cost settings, such as spending more on behavioral health services at community providers instead of at hospitals. The group says the system should be more efficient, transparent and flexible.
It wants to offer financial incentives for physicians, hospitals and other providers to keep people healthy and reduce unnecessary services.
Raimondo praised the group for its "progressive vision."
There are set metrics to measure progress. By 2020, half of the Medicaid long-term care spending for the elderly and disabled should be for home and community-based services, for example, instead of the current rate of about 20 percent, according to the report. In general, the group recommends aligning these targets with other parts of the health care system, such as the goals set by the state health insurance commissioner.
"This is a document that is not supposed to have us all pat ourselves on the back and then move on," Roberts said. "It is a document we will work from during this administration."
Raimondo formed the group in February as she was putting together her budget proposal, since Rhode Island was spending more than 30 cents of every dollar in the budget on Medicaid. About 250,000 in Rhode Island use Medicaid.
The group's first report recommended ways to reduce costs.
Many of the reforms were implemented through the fiscal 2016 budget that Raimondo signed last week, to save the state more than $70 million and establish incentive programs to reward hospitals and nursing homes for lowering utilization rates and meeting other quality and cost-saving goals.
There isn't a target cost savings with the new report since it's a strategic plan, Roberts said, but the reforms will lead to savings over time.
The state is working to get federal approval for Medicaid changes in the budget and federal matching funds available to states that are changing the way Medicaid is delivered, Roberts added.