Strategic Priorities For The Centers For Medicare And Medicaid Services To Advance Medicaid Reform

This article first appeared in It is co-authored with Amol S. Navathe, Mark B. McClellan, Christopher Chen, Judy Zerzan, and Julian Harris.

In the months and years ahead, a key priority for the Centers for Medicare and Medicaid Services (CMS) will be supporting and stabilizing states in their provision of Medicaid. This will require reversing some Trump administration policies such as allowing work requirements and restoring the integrity of Medicaid. But there is a need to go beyond reversing policy, to focus instead on improving Medicaid for Americans in need. The COVID-19 public health emergency (PHE) has further stretched state budgets as more individuals became unemployed and lost private health insurance, thus experiencing a double hit that grew Medicaid enrollment. This strains an already stressed system—despite advances made possible through the Affordable Care Act (ACA), which enabled waiver programs that resulted in Medicaid expansion and greater innovation in health delivery.

The PHE has made access to care and outcome disparities more visible. Compared to patients with Medicare and private insurance, patients on Medicaid have had less consistency (across states) in access to COVID-19 testing; treatments such as antibodies infusions; and less consistent access to new technologies such as remote patient monitoring, telemedicine, virtual diabetes care, and behavioral health that have been critical for individuals with chronic disease during the PHE. Although some states’ Medicaid programs are ahead of Medicare for telehealth and behavioral health.

The issues with chronic disease care in particular compound perennial limits on Medicaid recipients’ access to primary care. This is especially true when it comes to advanced “next-generation” primary care models (such as the ChenMed, Oak Street, Iora, and similar models) that require prospective payments, and specialty care. Access to similar Medicaid-focused programs such as CityBlock is not widespread. To address these troubling disparities for Medicaid patients, frequently driven by social risk factors, and close the gap relative to those covered by Medicare fee-for-service and Medicare Advantage, we believe it is critical to create attractive opportunities for innovation in Medicaid.

Fortunately, there is tremendous opportunity to improve the health and well-being of Medicaid beneficiaries while improving health care outcomes, equity, and the stability of state budgets. There are several reasons, described below, why CMS should be assertive in supporting greater Medicaid reform. What is more, the agency should not and cannot rely on its considerable efforts and experimentation in the Medicare program to improve care for Medicaid beneficiaries, close disparities, and catalyze systemwide changes for the entire nation.

Core Factors

Health Care Organization And Clinician Factors

The health delivery system—including physician practices and hospitals—that serves Medicaid beneficiaries often differs from the network of providers serving Medicare beneficiaries and private insurance enrollees. Those clinicians and practices who do care for Medicaid beneficiaries have patient rolls composed overwhelmingly of Medicaid beneficiaries—even dual-eligible individuals are a small minority. Because Medicaid rates are lower and safety-net organizations tend to be more financially strapped, this lack of payer diversity hinders innovation because it mitigates the impact of reforms driven by Medicare and commercial payer programs and prevents more generous payments that may “cross-subsidize” quality investments.

Social Factors

Medicaid beneficiaries have greater social needs, and there is little coordination between the social and health care safety nets, particularly with respect to infrastructure investments at the health care organization. Without addressing lower financial attractiveness of Medicaid beneficiaries for health care organizations and physician practices, making progress against health care inequity is impossible.  


Medicaid cares for relatively distinct populations (while some of them are transiently enrolled, most are enrolled and re-enrolled frequently) many of whom face health inequities:

  • Pregnant women;
  • Children;
  • Elderly low-income individuals also eligible for Medicare (duals);
  • Nursing-home residents;
  • Individuals with disabilities;
  • Low-income adults via ACA expansion; and
  • American Indians and Alaska Natives.

Health Care Delivery Patterns

The different, largely younger, population covered by Medicaid compared to Medicare means that the “opportunity” for health improvement and cost savings differ as well. Medicare innovations will not automatically translate to sensible models for Medicaid. Furthermore, the time horizon for savings in the younger Medicaid population may take longer to generate cost savings, particularly for preventive care. For example, postacute variation is a huge problem in Medicare, but it is not for Medicaid. Conversely, high-risk pregnancies and maternity carebehavioral health, and substance use dependence are big issues for Medicaid and not Medicare. 

Market Concentration

Most states use managed care organizations (MCOs) to mitigate budget uncertainty and manage Medicaid populations. Nevertheless, this structure can be very fragmented across the health services and long-term services and supports. MCOs are subject to market power dynamics and thus frequently fail to negotiate value-based contracts or pay high enough rates to make value-based contracts attractive. This weakness is exacerbated by MCOs’ fragmentation in many states, short one-year term contracting for value-based contracts, and high beneficiary turnover.

Key Priorities

The priorities—laid out in this exhibit of major recommendations—can be organized into two groups: new models, demonstrations, and programs developed by CMS that could be adapted and implemented by states, and waivers and other investments led by CMS. The goal would be to have major priorities and investments led by the federal government with opportunities for customization and adaptation to local environments, markets, and communities.

New Models, Demonstrations, And Programs Developed By CMS That Could Roll Out To States

Create Templated Payment Models To Spur New Care Models

Model design templates—developed with input from MCOs to overcome implementation challenges—could be customized for states’ specific populations. These models would also need to address issues with access due to lower Medicaid payment rates—using innovations to care for Medicaid populations through financially attractive and rapidly advancing lower-cost care models—such as telemedicine for behavioral health, for example. Importantly, adopting these models should come with automatic authority for implementation rather than requiring additional administrative steps for CMS to allow implementation, within fee-for-service or MCO programs, to create administrative efficiencies for states (along with technical assistance, program evaluation, and data support from CMS).

For example, CMS should explore the following potential primary care innovations and specialized care reforms targeted at Medicaid, all with a focus on equity (in order of priority):

  1. Population-based prospective (capitated) primary care models, particularly for children. This could include advanced primary care home models in coordination with MCOs.
  2. Maternity bundled payment models that include prenatal care, delivery, postnatal care for mother, and a defined (for example, 3–6 months) period of neonatal care including the neonatal intensive care unit;
  3. Substance use dependence payment models that support novel care models for medication-assisted treatment (that is, suboxone or methadone);
  4. Behavioral health integration into primary and specialty care;
  5. Chronic disease episode models around type I diabetes, asthma care, and autism spectrum disorders or developmental delay;
  6. Demonstrations to reduce administrative burden under value-based payments, improving payment speed to reduce accounts receivable days (that is, reduce overhead);
  7. Telehealth care models for routine care where possible (behavioral health, postpartum screening for pregnancy-induced hypertension or preeclampsia) and low acuity urgent care; and
  8. Specialized clinic models including federally qualified health centers (FQHCs) and rural health clinics. CMS could work with the Health Resources and Services Administration to make value-based payment programs targeted toward FQHCs (and other safety-net clinics) as part of an effort to further strengthen them financially but improve upon the current cost-plus system.

Develop And Implement A New State Innovation Model Program

Under such a program, CMS should provide guidance on multiyear benchmarks, multipayer alignment, infrastructure enhancements, and other critical success factors.

Incentivize Equity Directly As A Requirement In Payment Reforms

Include measurement, with standards on data categories and collection as well as measures, and financial incentives for equity improvements by Medicaid population segment in each relevant model. Many states have already started down the path of measuring and reporting quality metrics by population segment. Going forward, reforms should prioritize direct financial incentives for closing outcome gaps that exist by Medicaid population segment and by other key dimensions such as race/ethnicity and socioeconomic status.

Include Medicaid Explicitly As A Required Partner In CMS Multipayer Initiatives

Overcoming behavioral and financial inertia is critical to creating system change. Many health care organizations and physician practices serve Medicaid alongside Medicare beneficiaries and privately insured individuals. Including Medicaid will often create stronger alignment with private payer populations, both of which experience maternity care as the top driver of acute hospitalization and spending. This should include engaging MCOs in a state alongside multiyear contracts. States such as Washington and Maine have created multipayer efforts around primary care, although in these cases in which states did take leadership, Medicare has not been uniformly included and aligned. Bringing Medicare to state-led multipayer efforts would also be a step forward.

Similarly, all federally developed Medicaid models should require multipayer collaboration, multiyear benchmarks, and state innovation model (SIM)/delivery system reform incentive payment (DSRIP)-like funding for data sharing and infrastructure enhancements to create alignment and administrative simplicity for the health delivery system.

Use Innovative Payment Models To Test Integration Of Social Services With Health Services

Medicaid beneficiaries often face outsize social challenges alongside health risks. There is substantive evidence that investments in social services return financial benefits to health services. Demonstration projects that explicitly link social services such as housing, access to food/food security, supported employment, and othershave shown benefits on individual/household well-being and concomitant savings on health expenditures. States should test explicit integration, while protecting against providing social services to reduce health expenditures only and redundant spending. Furthermore, enrollment in Medicaid could automatically trigger standardized assessments and enrollment in social services (including accountability for this assessment/enrollment at the health care organization).

Waivers And Other Investments Led By CMS Plus Enhancements/Clarifications On Programs Covered Under Medicaid State Plan Benefits

While waivers can enable programmatic innovation, CMS should also enable new programs and interventions by expansively clarifying what can be covered directly under Medicaid state plan benefits.

Target Bold, Transformative Goals

One “big idea” could be to make a commitment to rapidly improve customer service, patient experience, and provider experience within Medicaid participation. “Value” in value-based reforms does not translate to value for the patient-consumer-beneficiary. Medicaid could make a transformative statement to change this approach to drive value to the individual member level. This would include revamping quality and performance measures to reflect beneficiary concerns, with greater emphasis on access (to in-office and telehealth services) and patient experience (for example, Consumer Assessment of Healthcare Providers and Systems survey or perhaps better, enable an SMS-based, rapid mechanism for feedback).  

This would enable innovative program designs, including subsidies or provision of internet access and higher bandwidth, ensuring better access to more easily accessible, lower-cost telehealth and text-based care services.

States could be held accountable for standards and encouraged, enabled, and subsidized to make investments that drive up customer choice and satisfaction, provider satisfaction, and enhance ways to use technology to lower administrative costs and improve the ability of providers to manage care and costs.

The federal government could help address churn in the Medicaid program by creating standards for minimum enrollment. This could start with one year of minimum enrollment for children, where cost is not very high.

Pursue Bipartisan Efforts To Integrate Social And Health Services And Consider Expansion To More Low-Income Adults

A systematic plan could include combining and simplifying social and human services programs. The Medicaid program could be a central enrollment hub or participate in one, enabling enrollment in social services and creating accountability for health care providers around it. Examine opportunities such as combining programs run through the US Department of Agriculture (Special Supplemental Nutrition Program for Women, Infants, and Children and Supplemental Nutrition Assistance Program); Internal Revenue Service (earned income tax credit); and Department of Housing and Urban Development. This work could build on common data infrastructure and move toward implementation of community information exchanges (CIEs), which are similar to health information exchanges but include additional non-health data attributes related to social and human services (for example, social factors). A CIE would be a critical step toward a central enrollment hub and ensure that the Medicaid program can appropriately align with other social service programs. This would supplement changes to health services requiring Medicaid fee-for-service providers or those contracted with MCOs to build the capabilities of advanced medical homes, specialized care models, and also pursue partnerships with other community stakeholders such as employers. This could follow models such as North Carolina.

Standardize Extended Duration Of Managed Care Contracts

Current yearly updates to rates remove incentives for organizations to invest in infrastructure and capabilities to better manage spending. This is also a major headwind for value-based payment adoptions.

Address Lower Medicaid Rates To The Extent Possible

Establishing stronger access and network adequacy regulatory standards may lead to more equitable payment rates as a complementary approach to cross-payer initiatives. The Center for Medicare and Medicaid Innovation (the Innovation Center) could also be a vehicle for testing programs with higher rates or through SIMs or the DSRIP program.

If the federal government were to help states achieve Medicaid provider reimbursement that is more on par with Medicare, it would further accelerate improvements to access and expand the number of providers who participate in the Medicaid networks.

Infrastructure Enhancements

There are several areas, such as data exchange between health and social service programs and reliable insurance claims information systems, in which core infrastructure needs hinder health reforms in Medicaid. Waivers could be an important mechanism to make targeted investments to improve key areas of infrastructure.

Expand programs such as the 90/10 match for health information exchanges to continue investments at the state level. Medicaid data are less accessible (slower to get) than Medicare, and this makes developing and implementing non-fee-for-service payment models in Medicaid challenging. Beneficiary data are usually missing mobile numbers and email addresses. Beneficiaries are often auto-assigned to plans and have suboptimal onboarding and customer service. Waiver programs that invest in these infrastructure developments tied to key performance indicators could unlock tremendous value for states and serve as enablers for future payment reforms. This could build on existing state efforts to implement Master Person Index initiatives and integrated eligibility. Washington State, for example, is working on both.

Investments could also cut across health and social services, creating a unified data exchange that allows for incorporation of social data into health programs and vice versa. This will be critical to make risk-adjustment system enhancements. Tying data collection efforts to payment reforms or waivers may be a critical path forward, either as part of value-based payments (counted under medical loss ratio as in Washington state), housing services, or other community investments (such as North Carolina). This would benefit from coordination with states and the Office of the National Coordinator for Health Information Technology (ONC) on the Health Information Technology for Economic and Clinical Health Act of 2009 implementation and interoperability.

Some states already use select social factors in risk-adjustment. For example, payment rates to MCOs are risk-adjusted by Z-codes for homelessness in the state of Washington. Other factors have also been shown to be important, such as debt burden and food insecurity, with states such as Minnesota, Massachusettsand Rhode Island as leading exemplars.

State-based waivers could require enhanced collection of social determinants of health (SDOH) data and expanded systems to share systematic data across social and health service networks. States could place interoperability requirements to align with those of CMS following ONC standards. This may also include generating more robust evidence on how to most effectively make investments in SDOH and expectations on timing and drivers of health and economic benefits.

Restoring And Improving The Social Safety Net

The Biden-Harris administration faces daunting challenges with COVID-19 but also has an opportunity to restore and improve how our health insurance and social safety nets work at the state level. Both dimensions are underscored by the increasing numbers of Americans relying on Medicaid for health insurance. By supporting states through CMS, using avenues such as the Innovation Center, waivers, and other means, the federal government can reform Medicaid to better serve its beneficiaries.

Authors’ Note  

The authors thank Maura Boughter-Dornfeld for research assistance. This blog post has benefited from discussions with Cindy Mann, Elizabeth Fowler, and Mandy Cohen. Dr. Navathe reports grants from Hawaii Medical Service Association, Anthem Public Policy Institute, the Commonwealth Fund, Oscar Health, Cigna Corporation, Robert Wood Johnson Foundation, Donaghue Foundation, Pennsylvania Department of Health, Ochsner Health System, United Healthcare, Blue Cross Blue Shield of North Carolina, Blue Shield of California; personal fees from Navvis Healthcare, Agathos, Inc., personal fees and equity from Navahealth, YNHHSC/CORE, Maine Health Accountable Care Organization, Maine Department of Health and Human Services, National University Health System–Singapore, Ministry of Health–Singapore, Elsevier Press, Medicare Payment Advisory Commission, Cleveland Clinic, Analysis Group, and equity from Embedded Healthcare, and other from Integrated Services, Inc., outside the submitted work.

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