Bill Description: House Bill 201 requires value care arrangements in the state Medicaid program to contain certain minimum risk sharing levels.
Rating: +1
Analyst Note: For context, value-care arrangements are a new concept in Idaho, meant to save money in the state Medicaid program. In one of these, a primary care provider, known as value care organization, or VCO, cooperates with the state as it treats Medicaid patients. Idaho has used value-care arrangements for four years now.
VCOs get to select their risk level, which is their share of a patient's costs above the standard monthly payment they receive from the state. This risk level is between 25% and 80%, with the state picking up the remainder. As they accept more risk, VCOs can also keep more of the savings from instances where patient’s care costs less than the state’s monthly payment.
To promote efficiency instead of just cost consciousness, the savings a VCO gets to keep are also tied to how well they manage the health of their patients. Those that meet more of the state’s goals get a larger portion of the savings. In theory, this gives VCOs incentives to do things that improve the long-term health of Medicaid patients while also reducing costs to taxpayers.
Does it increase government spending (for objectionable purposes) or debt? Conversely, does it decrease government spending or debt?
House Bill 201 establishes certain minimum risk sharing levels for value-care arrangements. The bill would phase in a 70% risk sharing level over four years, starting from 40% in July 2026. Then, as now, VCOs will be able to choose to accept a risk-sharing percentage above these values.
Due to the COVID pandemic overlapping with the rollout of value-care arrangements, the Department of Health and Welfare gave VCOs increased leniency, letting them take on less risk. Unfortunately, the department may have been too lenient. Nine of the 11 VCOs took no risk in year two of the program, opting to take the 5% limit on shared savings instead. Since the vast majority of providers did not accept any stake in the health of their patients, this voids the original purpose of the program and changes it into a type of bonus payments scheme for providers. Directing value-care arrangements to impose more risk on VCOs restores incentives to improve the health of patients and offers more opportunities for taxpayers to see savings.
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