Medicaid’s state administration of federal funds allows for each state to have control and oversight of their individual Medicaid programs. This funding structure reinforces federalism, as the federal government distributes funding to more localized control. Some states have pursued Medicaid waiver programs as a method to address health equity. Many states, even before the COVID-19 pandemic, have begun innovating and prioritizing equity measures such as payer incentives and strategic investments in hopes of minimizing disparities. Still other states, in response to the COVID-19 pandemic, have begun to focus on equity in health care as a response to the inequality and disparities that have been highlighted during the pandemic. Medicaid’s state-federal partnership allows for health equity measures and innovation that are targeted to the specific disparities experienced in each state. This blog reviews proposals by a panel of state Medicaid experts during the Harnessing Medicaid to Improve Health Equity Conference, co-hosted by AcademyHealth’s Evidence-Informed State Health Policy Institute and partners.

Health Equity as a Medicaid Program Priority and Incentivization of Health Care Payers

Addressing health equity through Medicaid begins with state prioritization of health equity. Health equity and disparities look different in each state. For example, in states such as Pennsylvania and California, maternal health is a key indicator of health disparities.

However, state-administered programs allow for innovative solutions that fit the needs of each state. Some states, such as Oregon, plan to address health equity through Medicaid waiver programs. Others, such as Pennsylvania and North Carolina, are addressing issues of health equity by incentivizing providers and managed care organizations (MCOs) to prioritize health equity.

While health equity measures across states may look different, a common approach to address disparities is incentivization of payers. In Oregon, a Medicaid waiver program was used to transform the health system through coordinated care organizations (CCOs). Each CCO was required to produce plans addressing health equity issues. In the future, Medicaid waiver programs may be used to incentivize community investment collaboratives such as affordable, high-quality childcare and housing services. Pennsylvania is predominantly a managed care state. In order to incentivize the prioritization of health equity in their assessments on care delivery, MCOs are required to update accreditation and over-sample data on quality measures in order to drive quality improvement. MCOs then report on data-driven interventions intending to address key equity gaps. Benchmark goals on quality measures are set such that MCOs are able to earn a percentage of capitations. California requires disparity reports from their MCOs in which progress towards the benchmark goals are addressed and data on existing disparities is provided.

Payment Structures can Help Propel States Towards Meeting Health Equity Targets

Beyond incentives, financing plays a significant role in addressing health equity through state policy innovation. In North Carolina, $51 million is being invested in primary care providers in historically marginalized communities. In California, pay for reporting is used with the goal of moving towards pay for performance. Pay for reporting requires health care providers to submit data on patient populations in order to receive full reimbursement. In California’s pay for performance system, payment is proportional to progress towards health equity targets. In addition, managed care plans are encouraged to disperse pay for performance incentives to hospitals based on performance metrics, including those based on race and ethnicity. These managed care plans reward hospitals for addressing specific health disparities.

States Must Engage Communities to Meet Unique Needs

For each community to have their unique needs addressed, the community must be meaningfully engaged in the process. Medicaid working groups in California and Minnesota allow for the community to be including in health equity conversations. Pennsylvania has established Regional Accountable Healthcare Councils (RAHCs) that encourage community input with the inclusion of providers, participants, MCOs, and other stakeholders. North Carolina utilizes community engagement boards. State Medicaid departments refine their health equity goals with the aid of community engagement.

While some states have already reached the innovation stage, others are much earlier in the process. As states continue to innovate, their unique solutions can serve as templates for one another in hopes that Medicaid can lead the way, acting as an example for others in addressing disparities and achieving health equity.

This blog post highlights learnings from the panel “State Policy Innovation and Research: Case Studies” presented at the meeting “Harnessing Medicaid to Improve Health Equity: A Research and Policy Agenda” on Dec. 1 and 2, 2021 This meeting was co-hosted by Julie Donohue of the University of Pittsburgh, Susan Kennedy of AcademyHealth, Genevieve M. Kenney of the Urban Institute, Chima Ndumele of Yale University, and Kosali Simon of Indiana University.


Julianne Akard

Bachelor's Candidate - Indiana University

Julianne Akard is a senior at Indiana University studying chemistry, economics, and healthcare management and ... Read Bio

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