Background: In recent years, Medicaid supplemental payments have grown in importance as a way for states to support safety-net hospitals and compensate providers for low payment rates. However, because these payments are typically not tied to services or quality, they detract from states' efforts to support value-based purchasing. Goal: To review state and hospital reliance on these payments and describe how the funds might be redeployed. Methods: The authors held interviews and roundtables with current and former state Medicaid officials and hospital leadership; conducted a review of state Medicaid authorities to identify examples of supplemental payment methodologies; and analyzed relevant federal policies and datasets. Key findings: Change is coming for supplemental payments, prompted by state efforts to move to value-based Medicaid payment systems, growth in managed care, and new federal rules and oversight. Because of the way the nonfederal share of these payments is typically funded, reform may require a shift in both how these funds are distributed and how they are financed. Conclusions: While challenging, several options exist to redeploy Medicaid supplemental payments to align with states' efforts to promote high-quality, cost-effective care, ensure fair payment rates, and support safety-net hospitals.
Copyright:
Reproduced with permission of the copyright holder. Further use of the material is subject to CC BY license. (More information)