Abstract for: Assessing a value-based payment arrangement in PA HealthChoices using SD modeling

Value-based payment (VBP) has become an important concept to reform healthcare delivery by changing incentive structures that shift incentives away from fee-for-service, or volume, to “value”, measured as some function of both quality of care and cost. A central problem for VBP is how to attribute quality and cost performance to the various parts of a healthcare system. Designers of VBP arrangements must balance optimization requirements with the need for resilience. The project builds an SD model of an actual VBP arrangement in the HealthChoices program, a Medicaid Managed Care program in Pennsylvania. The model centers on one part of the arrangement, namely: the provision of family-based mental health services to children at risk of out-of-home placement. The research project seeks to answer three questions. First, how effective is the current arrangement in reducing OOH placements, compared to baseline, under a range of spending-versus-investing scenarios and environmental conditions? Second, how do overall network expenditures and, by extension, value, vary across these scenarios and conditions? Finally, which VBP design considerations such as shared loss- and savings allocation rules and even which VBP metrics to use, seem to be the more important determinants of success for the VBP arrangement being studied?