NASHVILLE - Gov. Bill Haslam and TennCare officials say shifting the basis of Tennessee Medicaid payments from the volume of service provided to patients by doctors and hospitals over to the quality value of care is, well, paying off.
It's already saved Tennessee government at least $11.1 million during the change's first year of implementation, Haslam and TennCare Director Dr. Wendy Long said today in a news release.
At the same time, officials said, the program maintained good quality of services from doctors and hospitals under the new "episodes of care value-based payment strategy."
"We launched the Health Care Innovation Initiative in February 2013 to make health care in Tennessee a value-based system focused on efficiency, quality of care and the patient experience," Haslam said.
The governor added that Tennessee "has established itself as a leader in paying for value in health care, and these results are an early and exciting indication of the promise of our approach."
The episodes of care change is one of several "value-based" strategies that the multi-billion-dollar TennCare program for the poor has pushed in the last few years as officials seek to keep a lid on provider cost increases, a prime drive of expenses along with drugs.
TennCare and major health insurers in Tennessee have been pushing to move the treatment system's financial incentives from paying for volume to paying for "value."
As a result, Long said, health care providers are being financially rewarded increasingly for positive patient outcomes, including high quality and efficient treatment of medical conditions.
"Episodes of care are helping us achieve low trends and reductions in costs, which is great news for Tennessee taxpayers," Long said in the news release. "We achieved these reductions while continuing to provide high-quality care for TennCare members."
In an episode of care, providers can receive financial rewards if the services a patient received meet certain quality measures that are also cost effective.
TennCare and its insurers moved the Medicaid to that system in three areas with, officials say, good results. Here's how that's worked in the program's first year:
* There was a 3.4 percent reduction in costs associated with perinatal care relating to the time before and after birth.
* Officials saw an 8.8 percent drop in asthma exacerbation, which consists of acute or sub-acute episodes of progressively worsening shortness of breath, coughing, wheezing and chest tightness or any combination of these.
* There was a 6.7 percent reduction in total joint hip/knee replacement surgeries.
Officials said that overall, the cost for services in just these three types of episodes was $6.3 million less than the previous year, even though medical costs were projected to increase by 5.5 percent nationally.
Conservatively assuming a 3 percent increase would have taken place in the absence of this initiative, Tennessee's changes in just the three areas reduced costs by $11.1 million, officials said.
This year, five more types of health care services have been added to the episodes list: chronic obstructive pulmonary disease exacerbation, colonoscopy, acute and non-acute percutaneous coronary intervention, and cholecystectomy.
The state plans to have 75 episodes designed by 2020.
State officials say the episodes of care are becoming a more common approach to payment in Tennessee and nationally.
Some providers have already engaged in episodes of care agreements for commercial insurance and for Medicare. More commercial insurers are expected to ramp up episodes programs in Tennessee next year.
Medicare recently made a joint replacement episode payment mandatory for 75 cities across the country including Memphis and Nashville. Medicare further announced that it plans to implement a mandatory episode program for all care associated with bypass surgery and heart attacks in July 2017.