How Massachusetts Medicaid Is Paying for Primary Care Teams to Take Care of People, Not Doctors to Deliver Services  

Last April, MassHealth, Massachusetts’ Medicaid agency, launched a value-based payment model for primary care providers participating in its accountable care organization (ACO) program. The program is supported through a five-year Center for Medicare and Medicaid Services (CMS) 1115 demonstration and builds on many years of work by the state to help plans and providers prepare for value-based payment. 

MassHealth requires participating primary care providers to meet standards for access and team-based, integrated care, while providing more flexibility in the delivery of care to meet their patients’ needs. The demonstration uses a “sub-capitation” payment model that shifts practice reimbursement for primary care services from fee-for-service to a per-member, per-month (PMPM) payment. (“Sub-capitation” is used because the program exists within the capitated ACO model.) Practices receive additional funding to support new care delivery expectations. This model is consistent with the lead recommendation of 2021 National Academy of Sciences Engineering and Medicine report on implementing high-quality primary care, which called for paying more and differently for team-based primary care. In this Q&A, Martha Farlow, director of policy for the Office of Payment and Care Delivery Innovation at MassHealth, and Ryan Schwarz, chief of the Office of Payment and Care Delivery Innovation, discuss the first three months of the program, which began in April 2023. 

What was the status of value-based payment in MassHealth prior to this demonstration? 

Martha: In 2018, we launched an 1115 demonstration creating accountable care organizations (ACOs) in MassHealth for the first time. While the ACOs were a big shift toward value-based payment, in some cases the incentives weren’t making it all the way down to the provider level. We had health plans and provider systems that were acting in accordance with some of these new incentives, but individual providers and practices were often still operating in a fee-for-service framework. Engagement around value-based care at the practice level was one of the driving goals of the primary care sub-capitation program. 

In Massachusetts and around the country, there is a movement toward value-based payment. We have private insurers here in Massachusetts who are making changes. CMS just announced the Making Care Primary program, which focuses on value-based payment and primary care, and which Massachusetts has signed on for. We’re at a well-aligned inflection point for value-based care.  

What problems are you hoping to address?  

Martha: The pandemic highlighted a number of the issues that we wanted to address. First and foremost, health equity. At its best, value-based payment incentivizes practices to address not just the health of the patient in front of them, but of a population, including those individuals who need more support or relationship-building to get engaged in care. We also are responding to workforce supply constraints, and we want to be able to empower providers to act at the top of their license and be able to deliver flexible team-based care. The best care doesn’t always happen in 15-minute in-person visits with a physician. We’re looking at panels at a practice level, with participation not just from MDs, nurse practitioners and physician assistants, but also nurse care managers, community health workers, and social workers, as well as integrated behavioral health care providers.  

Ryan: In traditional fee-for-service payment, we don’t have a mechanism, for example, for practices to support a community health worker to do a nutrition class with one of our Medicaid members. But having a reliable, consistent revenue stream based on a PMPM rate enables practices to say: We know that these are the team members we want involved and we can pay for them in a capitated world, so we can plan around that to provide the right care to our members, with the right care team members, which won’t always be a 15-minute visit with an MD.  

How have you addressed barriers to implementation so far? 

Martha: This is a very large-scale implementation, so we’ve certainly hit some bumps in the road. The biggest one is that our entire health care system is built on a fee-for-service chassis. We are trying to take a system that was designed to do one thing and asking it to do something quite different. That means there’s a need to provide practices with education and support to manage panel-based payment.  

We also see challenges with the fee-for-service chassis in the regulatory framework. The CMS requirements that are meant to safeguard members and make sure that we are all being good stewards of taxpayer dollars are built around the assumption that care is being delivered in 15-minute increments. We’ve had a lot of discussions with our federal partners around making sure that we keep those safeguards, and also have the ability to alter our processes to do what makes the most sense for patients. 

Ryan: The last six years [since Massachusetts launched ACOs] have underscored that we need to support providers as they build out this infrastructure. And sometimes these builds take one, two, or three years. We have delivery system providers who have told us that it takes a minimum of six months just to change the electronic health record’s demographic fields to capture race, ethnicity, language, disability, sexual orientation, and gender identity. States, but also our federal partners, need to anticipate these timelines as well as the importance of investment in these systems as we plan for these delivery system reforms and work together to address health disparities.  

How many practices have joined so far? 

Martha: We have about 1,000 practices that are participating, representing about 400 different provider organizations. 

Ryan: We in Medicaid made the policy decision to require participation in the primary care sub-capitation program as a part of our ACO program. So that’s how we have such expansive participation across the state. The 400 provider organizations include every major health system and federally qualified health center in the state. It’s 85% to 90% of primary care practices across the state. 

Please describe the three tiers of participation in the model.  

Martha: There are three clinical tiers, with increasing levels of expectations from Tier 1 to Tier 3. We designed it this way explicitly because we have such a breadth of practices of various sizes with different levels of experience with value-based payment. Tier 1 is focused on foundational excellent primary care, which includes good communication, access, prevention, screenings, and referrals. Moving all the way up through Tier 3, we have expectations about integrated behavioral health, health-related social needs, reproductive care, and the ability to keep more moderately complex patients “in-house.” We hope that many practices that are currently Tier 1 and Tier 2 will add capacity over time to be able to deliver Tier 3 level of service, but it’s not a requirement. There are some practices for which staying at Tier 1 may be the most appropriate decision. Higher tiers receive higher payment rates.  

How do you pay for care? 

Martha: We tried to define a set of services that are “core” primary care—the basic set of services that has a fair amount of similarity across practices—for which we set a rate based on historic utilization and member acuity for each practice. We pay ACOs prospectively, and then ACOs pay each practice prospectively for their empaneled members each month. In addition to the rate, there’s also an enhanced tier add-on to support additional services and also to incentivize practices to move up tiers over time. 

Ryan: We left some services, which are sometimes delivered in primary care and sometimes not, explicitly fee for service. You can imagine, if you’re a family medicine practice who historically has done 5 knee injections a week, and that suddenly gets rolled into the cap, it would disincentivize you from continuing those knee injections, which we certainly don’t want to do.  

Why is there an additional investment in pediatric care? 

There’s been a historic underinvestment in pediatrics, which we are trying in part to counter with the primary care sub-capitation program. With kids, a lot of important outcomes may not show up quickly enough to create the kind of incentives that providers are readily able to act on. This enhanced investment is a way to incentivize preventative care and upstream care. This might include having a “family partner,” a staff member trained to support parents, who is meeting with parents, making sure that they have support for housing, nutrition, and school interventions. All of these things we know have huge impacts not only on health outcomes, but also graduation rates and incarceration rates. 

What’s next in implementation? 

We’re very pleased overall with how the rollout is progressing. We’re in the process of hosting a number of engagements with providers and plans about improvements and updates to the program for 2024. In parallel, we hope to work with other payers to increase participation in primary care capitation, as multi-payer alignment will be critical to enabling practices to pursue the type of integrated, team-based primary care we know will improve care for our members. 

This discussion was a follow-up to a MassHealth presentation to the Milbank Memorial Fund’s Medicaid Transformation Network, which includes officials from state Medicaid agencies committed to transforming primary care in their programs, in alignment with the NASEM primary care report recommendations.