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New Guidance on Advancing Value-Based Care

On Sept. 15, the Centers for Medicare & Medicaid Services (CMS) sent a letter to state Medicaid directors providing guidance on how to advance value-based care (VBC) across their health care systems.

The letter clarifies current options that exist for states to pursue VBC in Medicaid, as well as a new “advanced payment opportunity” through fee-for-service state plan authorities that requires downside financial risk for providers.

Lessons Learned from Previous VBC Initiatives

CMS describes important aspects of initiatives from the past that helped states implement VBC methodologies. Critical design elements include: level and scope of financial risk; benchmarking; payment operations; multipayer participation; delivery system readiness; health information exchange and technology; stakeholder engagement; quality measure selection; and sustainability.

Comprehensive Toolkit and Examples of VBC Models

CMS also includes a robust description of innovative payment strategies that achieve VBC. A table of these strategies is included and organized by payment strategy, key features, examples of specific state models, and the Social Security Act authority necessary for implementation. The models listed include  varying levels of complexity and risk.

Changes to Existing Flexibility

The letter goes on to explain new changes to existing flexibility; namely, CMS now will consider state plan payment methodologies that include downside risk for providers through advanced payment strategies outside of managed care plan payments. Additionally, CMS notes its flexibility in not requiring states to adhere to specific approaches or payment methodologies when moving toward VBC.

States can access various tools, resources, and webinar slides related to Medicaid payment and service delivery models on the Medicaid Innovation Accelerator Program website.

Contact Senior Director of Policy Erin O’Malley at or 202.585.0127 with questions.


About the Author

Abigail Painchaud is a policy associate at America's Essential Hospitals.

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