Washington secures federal support to transform health system, improve behavioral health care and control costs

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OLYMPIA –Gov. Jay Inslee and the Washington State Health Care Authority (HCA) announced today a new state-federal partnership that will bolster state efforts to improve the physical and mental health of Washington families and transform the state’s Apple Health (Medicaid) program to control costs.

After months of detailed negotiations, the HCA—in partnership with the Department of Social and Health Services (DSHS)—and the federal Centers for Medicare & Medicaid Services (CMS) reached an agreement in-principle, on a five-year Medicaid demonstration waiver to continue implementing the governor’s Healthier Washington plan.

“This project is the result of months of discussion with President Obama’s administration and is a significant boost to our state’s health care reform efforts,” Inslee said. “I commend the teams at HCA and DSHS for designing this community-led and broadly supported plan to improve health and reduce costs for families and our state.”

The project is part of Washington state’s effort to focus on prevention and proactive management for conditions like diabetes and mental illness. It funds supported employment and housing services and long term care services and supports for unpaid family caregivers so they are able to keep caring for their loved ones. The result will be less use of high-cost services and better health outcomes.

The five-year demonstration provides up to $1.1 billion of incentives for delivery system reform and $375 million to support critical services for Apple Health clients over five years.

Significant stakeholder and community input, including multiple public comment periods and public meetings around the state, led to this demonstration plan that has four goals:

  • Reduce avoidable use of high-cost services such as acute care hospitals, psychiatric hospitals, and nursing home facilities.
  • Improve population health, with a focus on prevention and proactive management of diabetes and cardiovascular disease, pediatric obesity, smoking, mental illness, and substance abuse for Apple Health clients.
  • Accelerate Medicaid payment reform to pay providers for better health outcomes.
  • Bend the Medicaid cost curve below national trend.

Key initiatives under the demonstration are funded through reinvestment of past and future federal savings from Washington’s Medicaid reform efforts. Locally-led efforts will engage and support clients, providers, and communities through:

  • Delivery system transformation strategies led by regional Accountable Communities of Health
  • A broader array of service options to enable older adults and individuals with disabilities to stay at home and delay or avoid need for more intensive care.
  • Supportive housing and supported employment services for Medicaid clients with the most critical needs.

“This decision will allow Washington state to build on a tradition of leadership in health care with important reforms to improve the quality and efficiency of care in Medicaid,” Senator Patty Murray said. “The Medicaid waiver has been a crucial tool for many states—and I’m confident that with the right changes and improvements under the leadership of Governor Inslee and others, we’ll be able to continue to make important strides toward providing quality, affordable health care for all Washingtonians.”

“This agreement is one of the most powerful tools we have as we continue the work of improving health, improving the quality of care, and lowering costs,” said HCA Director Dorothy Frost Teeter.

“We have anchored our approach to local communities where real health transformation can occur,” said State Medicaid Director MaryAnne Lindeblad. “Our new targeted services will help keep individuals stably housed and employed and get them the care they need.”

“Every medical group and provider who serves Medicaid patients faces the same difficult choice between wanting to help all people of all income levels and maintaining the ability to provide care for patients long-term through a financially stable organization. We have advocated for these changes to allow for better outcomes for patients and sustainable health care in our community,” said Rick Cooper, northwest regional market president for HealthCare Partners, a DaVita Medical Group (recently CEO of The Everett Clinic) and co-chair of the Health Innovation Leadership Network.

“The rapid growth in the aging population means we either find a new innovative way of delivering services or come up with significant new Medicaid resources for the long-term care system,” said DSHS Assistant Secretary for Aging and Long-Term Support Bill Moss. “Washington will lead the nation to demonstrate how we can support unpaid family caregivers and offer targeted services that will actually avoid much more expensive utilization down the road.”

The demonstration waiver is an option to states under Section 1115 of the Social Security Act. The specific terms of the demonstration are still being finalized.

The letter from CMS can be found here. For more information about the demonstration, visit www.hca.wa.gov/about-hca/healthier-washington/medicaid-transformation.

Media Contacts

Tara Lee
Governor Inslee’s Communications Office

Amy Blondin
Health Care Authority