Matt Salo Discusses Medicaid's Move to Value-Based Payments

As Medicaid shifts toward value-based payments, it needs to transform the delivery and payment systems to reward positive outcomes, said Matt Salo, executive director of the National Association of Medicaid Directors.

Transcript (slightly modified)

What is the biggest challenge Medicaid is facing in the move to value-based payments?

I think the biggest challenge that Medicaid faces in moving towards a value-based purchasing world is the fact that it essentially requires a fundamental reorganization and transformation of the entire business model of healthcare in this country.

The National Association of Medicaid Directors released a report about linking healthcare service delivery and reimbursement. What are the key takeaways from this report?

What we’re clearly seeing in Medicaid programs across the country—big state, small state; urban, rural; blue, red, purple—is a desire to both transform the delivery system and transform the payment models. And what we’re trying to do is essentially take an historical system that has rewarded volume of services delivered and instead try to reward for improved healthcare outcomes. And there’s a couple of different ways that we can do that.

We can either look at a kind of capitated managed care model, where we go to an insurance company and we say, "Here’s a set amount of money, for a set amount of patients, for a set amount of time. And figure out the best way that you can to innovate and to try to get these folks healthy and keep them that way."

You can also take a much more individualized approach, where some states are doing something we call bundled episodes of care, where you’re taking a much more discrete issue, say for example an appendectomy or a hip replacement surgery, and saying that for this particular condition or this particular service, there will be a set of payments.

That’s kind of 2 different ways of looking at it, but no matter what you’re doing, what you’re essentially saying is we want there to be not just the financial incentives to think about doing things very differently, but empowering people to actually bring about that change.