Effect of Primary Care Value-Based Payment Implementation on Low-Value Care Among Medicaid Beneficiaries in North...

To assess the impact of primary care value-based payment implementation on low-value service use among Medicaid beneficiaries.

On July 1, 2021, North Carolina Medicaid launched the Advanced Medical Home (AMH) program to improve care quality and coordination under managed care. Health plans are now required to include financial incentives for care coordination and performance in contracts with the highest-tier primary care practices (Tier 3 AMHs). Leveraging the tiered structure of the program and using a difference-in-differences design, we compared changes in low-value care utilization before and after the AMH rollout among beneficiaries attributed to Tier 3 AMHs versus those in lower-tier or non-AMH practices.

We used North Carolina Medicaid institutional and professional claims, managed care encounters, and enrollment and provider files, supplemented with information on provider characteristics. The analytic sample included 33.6 million beneficiary-months, representing 1.34 million nonelderly adult beneficiaries and 7903 primary care practices.

Beneficiaries attributed to Tier 3 AMH practices and comparison practices had similar baseline rates of low-value care, with imaging for plantar fasciitis (31.2% vs. 28.9%), head imaging for uncomplicated headache (14.8% vs. 14.5%), and back imaging for nonspecific low back pain (13.8% vs. 13.8%) being the most commonly used low-value care services. Although rates for many low-value services declined over time, adjusted difference-in-differences estimates were small in magnitude and not statistically significant for low-value care outcomes included in the study.

The results suggest limited effectiveness of value-based payment reform in curbing low-value service use among Medicaid beneficiaries in North Carolina. However, more time may be needed to observe substantial effects, given the gradual nature of practice transformation. Strengthening financial and quality-based incentives, including specific low-value care benchmarks, also could enhance the program's effectiveness in reducing unnecessary care.