Pay-for-Performance in the Massachusetts Medicaid Delivery System Transformation Initiative

Abstract

Pay-for-performance (P4P) is among the alternative payment models (APMs) that are designed to incentivize enhancements to healthcare efficiency and quality. Massachusetts' Office of Medicaid implemented a delivery system transformation initiative (DSTI) through an 1115(a) Demonstration Waiver to support and incentivize seven safety net hospitals to implement clinical care changes and transition to risk-based APMs. Comparative case study design was used to describe achievement of hospital-specific clinical and operational measures. Qualifying hospitals implemented 47 projects across three categories: (1) development of a fully integrated delivery system, (2) health outcomes and quality, and (3) ability to respond to statewide transformation to value-based purchasing and to accept alternatives to fee-for-service payments that promote system sustainability. Projects commonly focused on care transitions improvements, physical and behavioral healthcare integration, and chronic disease care management interventions. Collectively, the hospitals met all or most of 60 population-focused improvement measures and 10 common measures' targets, indicative of the progress. Some hospitals achieved substantial positive gains; however, missed targets suggest substantial organizational and workflow changes over a longer timeframe as well as consistent patient engagement may be necessary. Overall, the P4P structure of DSTI was effective in encouraging organizational change and supporting the transition of these hospitals towards APMs.