Medicaid payment reforms are desired, but states face obstacles

States are poised to take advantage of the payment reform approaches outlined by the Center for Medicare and Medicaid Innovation (CMMI) established by the Centers for Medicare & Medicaid Services (CMS), says Anne Gauthier, a senior fellow at the Washington, DC-based National Academy for State Health Policy (NASHP).

"The Center is able to offer a waiver, if you will, of budget neutrality," she says. "It offers funding to make an investment in payment and delivery system change, which is often needed for a number of these reforms." That is something that has not been available to states in the traditional Medicaid waiver process, says Ms. Gauthier.

On the other hand, Ms. Gauthier acknowledges that limited resources are a potential obstacle for states. "There are so many things they are concerned with — not only the day to day running of the program and the budget deficits, but implementing health reform," she says. "There is only limited bandwidth available to do some of the other changes available to them."

States have to figure out what they're going to do first, and when, says Neva Kaye, managing director for health system performance at NASHP, and consider whether they are going to work with the private sector.

"Whenever you are working with the private sector, it takes more time to reach the level of agreement to really do it well," says Ms. Kaye. "It can be difficult to capitalize on some of those opportunities, although once they get there, it could be fabulous."

Politics is another potential obstacle to states moving forward with payment reform, according to Ms. Kaye. "It's not just politics with a capital 'P,' as in 'We're not going to implement health reform,' but also what solutions are going to work within a state," she says. "Every state has its own set of resources and platform it's trying to move from." That simply makes some reforms viable in some states and not in others, explains Ms. Kaye.

Payment reform means you are making changes to the way providers are paid, says Ms. Gauthier, which means there are winners and losers. "That's what makes the politics so very difficult," she says. "It means some providers will get less money and other providers will get more money."

In other cases, states may simply need more time to implement payment reform approaches, says Ms. Kaye. "You have the law and you have the guidance that CMS releases. But states still have to figure how they are going to develop something that fits that guidance within that state," she says. "That simply takes time."

Contact Ms. Kaye at (207) 874-6524 or and Ms. Gauthier at (202) 507-7586 or