Delaware Medicaid Pens Value-Based Contracts

Value Based Contracting….. the great hope for fixing many of the disparities in access and payment for pharmaceuticals, especially those that cost a boat load of bucks!

Our curiosity was piqued by the article below detailing a major value-based contracting initiative by Delaware Medicaid. The program will target a quarter million lives in the state. It will include three payor organizations – . AmeriHealth Caritas, Highmark Health Options and Centene Corp.’s Delaware First Health.  Selection was based on each payor’s willingness to implement reforms to migrate the system away from traditional fee-for-service (FFS)/volume-based care to a system that focuses on rewarding and incentivizing improved outcomes, quality improvement and reduced expenditures.

Unfortunately no detailed terms of the VBC terms were disclosed. What is noteworthy, however, is the fact that a major account like Delaware Medicaid has made the leap to try a VBC program. Hopefully some proofs of concept will be forthcoming over the first year of implementation. 

Specialty pharmacies may want to follow VBC development as they can play a key role in the administration of these contracts….. something that we’ve said many times over the past couple of years.

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Centene Will Join Delaware in Value-Based Medicaid Revamp

With a focus on value-based care, health equity and social determinants of health, Delaware recently selected three managed care organizations to serve some 280,000 Medicaid and CHIP recipients through the statewide Diamond State Health Plan and DSHP Plus managed care programs. Incumbents AmeriHealth Caritas and Highmark Health Options Blue Cross Blue Shield were both chosen for the new pacts, while Centene Corp.’s Delaware First Health will round out the trio of plans. 

New contracts mark state’s shift to value-based care 

•            Delaware’s Medicaid managed care program is currently operating under the authority of a Section 1115 demonstration waiver that was most recently extended through Dec. 31, 2023. It provides integrated physical health, behavioral health and long-term services and supports (LTSS) to eligible Medicaid and CHIP enrollees. 

• According to AIS’s Directory of Health Plans, Highmark Health has the largest share of lives (55.6%) with 156,267 enrollees. AmeriHealth Caritas serves 84,144 lives, while the remaining 40,395 Medicaid/CHIP beneficiaries are in fee-for-service Medicaid. The new five-year pacts will be effective Jan. 1, 2023, with three optional one-year extensions. 

• In its December request for proposals, the Delaware Dept. of Health and Social Services’ Division of Medicaid and Medical Assistance asked bidders to describe how they plan to implement a value-based purchasing model in the first year of the contract. The state in its RFP said it intends to “accelerate the implementation of reforms and innovation within Delaware’s health care delivery system to migrate the system away from traditional fee-for-service (FFS)/volume-based care to a system that focuses on rewarding and incentivizing improved outcomes, quality improvement and reduced expenditures.” 

Win supports Centene’s growth story 

• The award will mark the 30th state where Centene has Medicaid plans; its Ambetter Affordable Care Act exchange product is available in 25 of its current 29 Medicaid states. 

• Assuming Centene will serve one-third of the total population, the new contracts will contribute approximately 2 cents to Centene’s earnings per share and add more than $700 million to the company’s revenues, estimated Oppenheimer & Co., Inc. 

•  “Although the contribution is modest, we believe this represents incremental growth and reflects favorably on the positioning of the business,” wrote securities analyst Michael Wiederhorn in a July 12 note to investors. “Overall, we continue to believe Centene is deploying the correct strategy with its value creation plan by focusing on its core strengths.” The firm maintained an outperform rating for Centene. 

•  The state plans to hold an open-enrollment period for the new program starting on Oct. 1. For individuals who are required to enroll in a DSHP or DSHP Plus MCO and fail to voluntarily choose one, they will be automatically assigned to an MCO and be informed of their auto-assignment, according to the RFP. 

by Lauren Flynn Kelly, AIS Health

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