Office of Medicaid (MassHealth)-Review of MassHealth's Progress to Implement Alternative Payment Methodologies

This is a state performance audit of MassHealth’s progress in changing how it pays for healthcare services.

“The purpose of this audit was to assess MassHealth’s progress in reaching the benchmarks established by Chapter 224 for transitioning to APMs.”

The audit was done because a 2012 Massachusetts law required MassHealth to shift eligible members into alternative payment methods and required the State Auditor to review the effects of that law.

“The Office of the State Auditor (OSA) is required by Chapter 224 of the Acts of 2012 (An Act Improving the Quality of Health Care and Reducing Costs through Increased Transparency, Efficiency and Innovation) to review financial and programmatic effects of this legislation and present findings and recommendations to the Legislature by March 31, 2017.”

This matters because Medicaid is a very large part of the state budget, and payment reform was intended to help improve care while controlling costs.

“Medicaid expenditures represent approximately 38% of the Commonwealth’s total annual budget.”

MassHealth beat the first target but fell far short of the second: 30% adoption in 2013, then 29% in 2014 when the law called for 50%.

“MassHealth’s reported alternative payment methodology (APM) adoption rate as of July 1, 2013 was 30%, which exceeded the 25% benchmark established by Chapter 224.”

The auditor said MassHealth should keep working toward the legal benchmarks, improve how it calculates adoption rates, and check the data it gets from managed-care organizations.

“MassHealth, in collaboration with its contractors, should continue its efforts to achieve the APM benchmarks established by Chapter 224.”

The audit found that missing the benchmark meant MassHealth was not fully meeting the Legislature’s mandate to improve care quality and control program costs.

“By missing the mandated July 1, 2014 APM benchmark, MassHealth is not achieving its mandate from the Legislature to improve the quality of healthcare services and effectively rein in the program’s costs.”

An alternative payment methodology means a payment approach that is not just fee-for-service; examples include shared savings, bundled payments, and global payments.

“Alternative payment methodologies (APMs) are alternatives to the more common method of paying for healthcare, the fee-for-service (FFS) method.”