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DHHS details new Medicaid care‑management contract features; ties payments to primary care, polypharmacy review and community behavioral health funding
Summary
State officials described the Medicaid Care Management 3 procurement and accompanying quality strategy on April 25, saying the contract shifts more payment to providers for prevention and care coordination, expands polypharmacy medication reviews, creates a shared high‑cost drug risk pool, and directs additional funding to community mental health
Department of Health and Human Services officials presented the newly procured Medicaid care‑management contract and associated quality strategy to the House Health and Human Services Oversight Committee on April 25, outlining changes intended to strengthen primary care, behavioral health integration and medication management.
Henry Littman, who led the procurement overview, said the new contract (referred to as MCM‑3) begins Sept. 1 and moves more funds toward providers to create “authentic patient relationships” and reimburse primary care teams for prevention, care coordination and medication management activities. “A lot of it is in primary care and prevention,” Littman said, adding that shifting dollars closer to providers aims to reduce hospitalizations and long‑term costs.
The nut graf: The procurement ties quality and payment through several levers: a mandatory quality withhold (2% of capitation) that MCOs can earn back by meeting CMS Core Set and HEDIS measures; a voluntary performance‑based auto‑assignment program that awards new unassigned members to high performers; liquidated damages for contract noncompliance; and required performance improvement projects (PIPs) for MCOs, including substance use disorder and low‑performing HEDIS measures.
Littman and other officials described pharmacy initiatives intended to control rising medication costs and increase safety: expanded polypharmacy reviews (triggered at specified medication counts), reimbursement to providers for medication reviews, enrollee incentives to participate in reviews, and a shared high‑cost pharmacy risk pool so MCOs jointly manage very expensive biologic and gene therapies.
The contract also creates a DHHS‑directed payment model for community mental health centers (CMHCs) to ensure more stable funding. Littman said the department expects the standard contract language to produce up to $6 million more for community mental health centers by preventing “leakage” of funds through MCO negotiations and by capturing enhanced federal match where eligible.
On program oversight, Susan Drown, director of the Bureau of Program Quality, and Erin Metcalfe described the department’s Medicaid quality strategy — a federal requirement — and the four main levers the department will use with MCOs: the quality withhold and incentive program, performance‑based auto assignment, liquidated damages for contract violations, and required quality improvement projects. “We can use one or multiple levers across those six priority areas,” Drown said, listing priorities that include a PCP‑based model, care management for priority populations, polypharmacy review, behavioral health integration, program integrity and non‑emergency medical transportation oversight.
Committee members asked for clarification on how the “levers” work in practice. Drown and Littman explained that the withhold is an annual measurement tied to national standardized measures; the performance‑based auto assignment is a monthly award of newly enrolled members who did not choose a plan; liquidated damages address contract compliance; and PIPs are 18‑month projects that can recoup withheld funds if statistically significant improvements occur.
Representative Woods and other members raised concerns about administrative burden on primary care providers, noting that physicians are already pressed for time. Littman acknowledged that some data collection relies on claims but said the department prioritized strengthening primary care relationships and compensating providers for coordination work.
Ending: Officials said procurement and quality changes aim to shift reimbursements to support primary care and behavioral health integration, strengthen medication safety and create more stable support for community mental health centers; DHHS will monitor MCOs’ performance using the new levers and report updates to the committee.
