Ohio Receives Federal Grant to Accelerate PCMH Development and Payment Reform


Ohio has received a $3 million State Innovation Model (SIM) design grant to accelerate its efforts to improve health system performance through payment innovation and service delivery improvements.

Ohio is one of 16 states to receive a SIM grant from the Federal government's Center for Medicare and Medicaid Innovation. Ohio will use its award to develop a comprehensive plan for expanding the use of patient-centered medical homes (PCMH) and episode-based payments for acute medical events. The design phase will last six months and conclude with a plan to implement both models statewide for most Ohioans who are covered by Medicaid, Medicare and commercial health plans.

Ohio has already taken significant steps to increase the use of PCMH, a primary-care-based model that stresses patient-centered care, care coordination and integration, quality and safety and enhanced access. Cleveland, Columbus and Cincinnati have all developed multi-payer PCMH pilots.  In addition, the state is providing technical assistant through an Education Pilot Project to help convert 50 practices associated with the Ohio University Heritage College of Osteopathic Medicine and several other medical and nursing schools to PCMH status and use those sites for training in advanced primary care.

“In many ways, health care payment systems are designed to reward volume and not value,” said Gregg Moody, director of the Governor’s Office of Health Transformation, in announcing the grant. “Rather than letting our current health care payment systems continue to drain the value out of the care we buy, Ohio is working to implement innovative payment models that will create expectations of better care and deliver improved health outcomes.”

The Governor’s Office of Health Transformation will lead the design team in partnership with the Governor’s Advisory Council on Payment Innovation.  The state and its partners, which includes employers, health plans, health systems and consumer advocates, will contribute $4.1 million in funding and in-kind resources for the design phase of the SIM project. 

Episode-based payments, in which payment is based on an individual’s acute medical event rather than a series of services linked to treating that event, directly reward providers for high-quality, patient-centered, cost-effective care in the right setting. The payment methodology promotes care coordination, evidence-based approaches, appropriate settings of care and value-conscious use of diagnostics. Governor Kasich’s Budget (HB 153) authorized the state to update diagnosis-related groups for Medicaid payments to hospitals, which will lay the groundwork for future episode-based payment reforms.

Created by Governor Kasich in January of 2011, the Office of Health Transformation has launched a series of payment reform initiatives, including a multi-payer care delivery system for Medicare-Medicaid enrollees, health homes for Ohioans with a severe mental illness and a 10 percent set-aside within the Ohio Medicaid nursing home rate that links payment to person-centered outcomes. In January 2012, Ohio joined Catalyst for Payment Reform, an independent, national non-profit organization that leverages the collective strength of private- and public-sector health-care purchasers to achieve better value and quality in health care.

 New contracts with Ohio’s Medicaid managed care plans will increase expectations regarding the national performance standards that managed care plans must meet to receive financial incentive payments, and plans will be required to develop incentives for providers that are tied to improving quality and health outcomes for enrollees. Click here for more information.


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