Developing gain-sharing. There may be an opportunity to develop a gain-sharing demonstration to encourage hospital participation in Medi-Cal quality efforts.
CMS may make the argument that many quality initiatives could be pursued in the absence of a waiver. However, California should consider an approach that presents the state’s policy goals and requests for budget neutrality as a “package deal” that is best implemented using the Section 1115 waiver vehicle. Few of the state’s reform goals for the waiver will be possible without an increase in funding. An integral part of the strategy for increasing funding and still passing the budget neutrality test is to get credit for California’s relatively low historical provider payment rates. Since CMS will not want to grant such flexibility without getting something in return, a set of well thought out quality initiatives should be offered in exchange for this flexibility.
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