This report examines four payment and purchasing strategies that states have at their disposal to drive health equity in Medicaid: (1) managed care contracting, (2) benefits and care delivery model design, (3) payment reforms, and (4) Section 1115 waiver demonstrations. We identify key considerations, limitations, and lessons to inform Medicaid policy and practice based on examples from Minnesota, North Carolina, Ohio, and Oregon.

WHY THIS MATTERS

Regardless of socioeconomic status or type of insurance coverage, people from racial and ethnic minority groups are more likely to have less access to health care, experience poor-quality care, and have worse health outcomes than white Americans. Medicaid is an important player in advancing health equity because of its large footprint in the US health care system and importance as a source of coverage for people experiencing disparities. As Medicaid programs increasingly articulate health equity and disparity reductions among their goals, careful consideration of how health equity can be incorporated into purchasing and payment decisions is warranted.

KEY TAKEAWAYS

While Ohio and Minnesota explicitly center health equity goals in their recently developed payment and purchasing initiatives, featured strategies in Oregon and North Carolina have the potential to advance equity by addressing systemic barriers to health. Across these four states, we identified several common themes and key considerations in developing effective purchasing and payment approaches for reducing health disparities in Medicaid:

• Payment and purchasing strategies may not always have an explicit health equity focus, but strategies that support holistic care and direct resources to the most underserved Medicaid members hold promise for reducing disparities.
• Advances in Medicaid health equity interventions may be supported by clearly defining roles and expectations while allowing sufficient flexibility to promote innovation.
• Stakeholder engagement, including meaningful Medicaid member engagement, is increasingly prioritized in facilitating collaboration and developing and continuously improving interventions that effectively identify and address disparities.
• Infrastructure investments—including adequate provider payments and support for capacity building, effective information exchange, and improvements to Medicaid operations and data systems—are fundamental to operationalizing and sustaining health equity interventions.
• Though often not prioritized, evaluation of Medicaid health equity initiatives is essential given the gaps in evidence for which interventions effectively reduce disparities.

HOW WE DID IT

We analyzed policy documents and published literature and interviewed Medicaid policy experts and stakeholders in Minnesota, North Carolina, Ohio, and Oregon to understand how the select payment and purchasing strategies are developed and implemented and how these strategies could promote equity in Medicaid.