U.S. States Accelerate Value-Based and Reference Pricing for Medicare/Medicaid

Financial pressure on Medicaid and Medicare programs is prompting U.S. states to adopt new payment models aimed at curbing costs while improving care quality. In nursing homes that serve dual‑eligible beneficiaries, experts warn that fragmented health systems and tight budgets make coordination difficult, but value‑based payment arrangements that reward better outcomes are gaining traction. Scott Leitz, a former Medicaid director, noted that states typically cut benefits, lower provider rates, or restrict eligibility, but increasingly they are turning to value‑based models that link reimbursement to performance. Allison Rizer expects states to increase financial pressure on managed‑care organizations, which could pass tighter requirements to providers. Rich Keller highlighted the ongoing challenge of coordinating care for dual‑eligible populations.

Separately, several states are implementing reference‑based pricing for hospital services, setting payment limits as a multiple of Medicare rates rather than relying on negotiated chargemaster prices. Indiana, Nevada and West Virginia are among those reviewing such initiatives. These reforms aim to align payments with actual costs and reduce the influence of market power on pricing, using tools like NASHP’s Hospital Cost Tool to calculate break‑even rates.