In 2011, officials from the State of Ohio performed a cost-benefit analysis of the state’s spending on health and human services, and the results were alarming. On the one hand, per capita healthcare spending in Ohio was higher than all but 17 other states. On the other hand, Ohio had one of the least healthy workforces in the country (it ranked in the bottom third of states in a national health assessment). “We were spending plenty of money,” lamented Rex Plouck, who would soon take a leading role in the Governor’s Office of Health Transformation (OHT). “[But] we weren’t getting the outcomes we wanted for it.”
As dismaying as this situation was, newly-elected Governor John Kasich also realized that the state’s limited return on its health and human services investment created a powerful case for change. Shortly after taking office, he therefore announced a multi-pronged transformation plan focused on modernizing Medicaid, streamlining health and human services, and paying for value. In a comment that illustrated how much he wanted to alter the status quo, Kasich said, “We’re going to practice outcome-based medicine, period, across the board.”
Kasich’s transformation plan had the potential to help Ohio reach the upper echelons of the Health and Human Services Value Curve. However, in order to get there, the state would first have to address a number of difficult dilemmas. How would it create an institutional engine for reform? How would it facilitate cooperation among agencies and programs accustomed to operating in silos? Would it be able to leverage technology and more efficient operating models to modernize Medicaid and streamline health and human services? Finally, once the state had completed these foundational reform efforts, would it be able to persuade providers and payers to participate in an outcomes-based system, and would the state be able to craft data analysis tools to help all of the stakeholders obtain the positive results they desired?
One of the biggest obstacles to reform was that the state’s existing health and human services framework was extremely fragmented, with more than ten agencies, 88 counties, and a number of privately run service providers that dealt with those realms. This setup was extremely inefficient. It also made it difficult to enact far-reaching reform. “There was very little coordination,” Plouck recalled. “That prevents big strategic initiatives from getting done because it’s hard to coordinate across all of those agencies.”
To remedy this problem, Kasich issued an executive order creating OHT, a seven-person team that was tasked with transforming the state’s health and human services systems. More specifically, the group was expected to spearhead strategic change involving Information Technology, budgets, and policy across health and human services. Of the group’s high-level mission, Plouck explained, “It’s ‘hit the home run.’ It’s ‘go for the big wins.’ It’s ‘address something that’s really big….’ Everything that we do, we do it very strategically to say this is going statewide or just as big as you can go.”
Although OHT did not have an enormous team, it possessed significant clout. This was in part because its Executive Director, Greg Moody, had played an integral role in recruiting the health and human services cabinet members with whom he would be working. The group also benefitted from a modification to state law that facilitated efforts to increase collaboration between agencies and programs working in the health and human services field. In the status quo, most of the agencies and programs were operating in isolation from one another. As Plouck lamented, Ohio “not only had lots of silos; it had silos inside of silos.” What’s more, there were myriad provisions that required detailed and lengthy legal agreements for agencies to share data and other resources. Consequently, working with state legal advisors, OHT modified state law and created operating protocols that stipulated that, “if there’s an initiative that is an OHT-sponsored initiative, that we can supersede state law and we can move monies, people, and data from agency to agency.”
Thus, in his first year in office, Kasich and his team had created and empowered an institutional engine for reform—a key first step in its aim to help Ohio scale the Health and Human Services Value Curve.
While establishing OHT represented a significant step, Moody, Plouck, and the rest of their team still had a long way to go before they could realize their long-term goal of creating an outcomes-based environment. To begin with, they needed to define more clearly what their strategy would be. As a result, OHT produced a one-page “Innovation Plan” that laid out in chronological order how the state would first modernize Medicaid and streamline health and human services before creating a system in which Ohioans “paid for value.” OHT officials nicknamed the one-page strategy document—which also highlighted the relevant executive orders, policy priorities, and governance structures for each objective—“the placemat” because they began (and have continued) to position it on peoples’ desks at every OHT meeting.
With a strategy in place, OHT officials started initiating changes to the health and human services landscape. This began with an effort to modernize Medicaid, which involved (among other things) extending Medicaid benefits, prioritizing home- and community-based services, integrating Medicare and Medicaid, and rebuilding the state’s community behavioral health system capacity. OHT also made a major push to streamline health and human services by making Medicaid a standalone agency and merging agencies that had previously dealt separately with mental health and drug addiction. In short, the state combined programmatic restructuring and service improvements and expansion to begin to seed change.
Still, the highlight of these early reform efforts was the creation of an integrated eligibility system for the state’s health and human services programs. In the past, there had been separate (and largely paper-based) application and program management functions for the state’s health and human services systems. This meant that beneficiaries often had to come in to local offices to apply for assistance. It also resulted in case managers devoting a significant amount of time to “pushing paper” instead of caring for their clients. OHT therefore introduced a new integrated electronic eligibility system that combined the previously disparate legacy systems, allowed beneficiaries to apply for services online, and enabled providers to focus more time on leveraging their expertise to help people in need.
Thus, by the end of Governor Kasich’s first term, OHT had introduced structural, policy, and technological changes that enabled Ohio’s health and human services system to make significant progress along the Health and Human Services Value Curve.
While modernizing Medicaid and streamlining health and human services helped Ohio to progress, OHT’s overarching goal was to move towards an outcomes-based system. In the past, the state’s health and human services providers had employed a mix of a fee-for-service model (i.e., an approach in which consumers paid for the services that providers rendered) as well as a managed care setup (i.e., a system in which a company oversees the cost). However, in 2015 and 2016, OHT sought to take the state to the next level of the Health and Human Services Value Curve and began implementing ways for Ohioans to pay for the value they received, rather than just the services that health and human services providers delivered.
A key part of OHT’s strategy for moving to an outcomes-based system has been introducing episode-based payments—an approach in which “payment [is] based on performance in outcomes or cost for all services needed by a patient, across multiple providers for a specific condition.” OHT began this effort in early 2015 with an initial wave of reform focused on a limited set of conditions (e.g., asthma exacerbation and total joint replacement). Since then, it has gradually expanded the conditions to which episode-based payments apply. In fact, by the end of 2016, the setup was used for over a dozen treatments.
At the same time, OHT officials have worked extensively to ensure that payers and providers are enthusiastically participating in the system and that they have the tools they need to achieve the desired results. To establish buy-in, Plouck and his colleagues have engaged in an expansive dialogue with both payers and providers. The approach has paid dividends: more than 90 percent of payers are participating in the system, and, as Plouck explained, OHT has developed a “robust partnership plan where they engage providers in meetings and strategy sessions.” “Without this engagement,” Plouck emphasized, “it [the use of episode-based payments] would all be a waste of time.”
OHT has also developed reporting and data analysis tools to help providers gauge their progress and discern ways to improve. Every provider receives a quarterly performance report that highlights the number of treatments they provided, the risk-adjusted spending for each episode, key performance indicators, and quality and utilization efforts compared to other providers. What’s more, OHT has given providers the tools to drill down into any metric and examine the raw data upon which it is based. Consequently, providers—who, as Plouck emphasized, want to maximize the time and attention that they devote to their patients—are able to analyze quickly on a case-by-case basis what is affecting their ability to achieve the outcomes they need.
Six years since taking office, Kasich, Moody, and the rest of the OHT team still see opportunities for improvement. For example, Plouck and his colleagues would like to introduce more sophisticated data and predictive analytics models so that providers can uncover new and more creative ways to achieve the desired health outcomes and contain costs. Nonetheless, the state can take pride in the fact that it has already transformed Ohio’s health and human services landscape. Among other signs of progress, the state recently initiated a strategy to apply the episode-based payment system to behavioral health outcomes.
Reflecting on the state’s improvement to date, Plouck highlighted a number of important factors that have contributed to the group’s upward trajectory along the Health and Human Services Value Curve. These include being prepared for the unexpected and having strong communication. However, he emphasized that none was more important than OHT’s initial creation of a comprehensive strategy and the team’s disciplined devotion to implementing that strategy. Plouck explained, “The best thing about a strategy is it doesn’t say what you’re doing: it says what you’re not doing. There’s never enough time, enough people, enough money to do everything and so you stay focused on what’s in your strategy and that’s how you get the stuff done.”
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