Virginia has a significant need to reduce the number of pre-term births and expenditure on neonatal intensive care. Home visitation programs have the potential to improve outcomes for families while reducing Medicaid costs. The Virginia Pay for Success Council (“Council”), partnering with the Virginia Department of Health (“VDH”) and Third Sector Capital Partners, Inc. (“Third Sector”), conducted a feasibility study to validate the impact of prenatal home visitation programs on birth outcomes (particularly low-birth weight and preterm delivery) and health care costs for mothers and their children in Virginia. The purpose of the study was to determine the feasibility of using outcomes-oriented contracting to expand prenatal home visitation programs for high-risk, low-income mothers.
Sub-Recipient: Virginia Department of Health and Virginia Pay for Success Council
Prenatal home visitation is a voluntary, relationship-based counseling program that includes regular visits by a trained professional to an expecting parent’s home. Virginia Home Visiting Consortium coordinates a strong system of state-supported home visiting programs. The programs address the social and economic factors contributing to poor birth outcomes with the goal of improving medical, social, and educational outcomes.
The Virginia Department of Health (VDH) is focused on addressing the healthcare needs of Virginia’s low-income populations and improving the delivery and financing of healthcare services. For many years, VDH has overseen and worked closely with nurse home visiting programs and led a statewide collaboration on home visiting.
The Virginia Pay for Success (PFS) Council was formed in 2013 by members of Virginia’s private industry, human service and government organizations and incorporated as a non-stock corporation in late 2014. The Council’s mission is to initiate a Virginia PFS financing model designed to implement proven early childhood programs that increase the life outlook for thousands of Virginia children, strengthen Virginia’s workforce development and competitiveness, and reduce taxpayer burden.
Motivation for Exploring Pay for Success
The Commonwealth has a strong interest in early childhood development and addressing neonatal outcomes. Governor McAuliffe formed a Children’s Cabinet, co-chaired by the Secretary of Health and Human Resources, William Hazel, to increase access to healthcare and cultivate a solid foundation for children and families.
Collaboration across the PFS Council and the Children’s Cabinet focused on using PFS to connect private funding sources to catalyze and address social issue areas of interest, specifically using the home visitation model. By leveraging PFS with an already successful intervention, the Commonwealth hoped to develop innovative public-private partnerships and funding approaches that increase the allocation of resources to evidence-based interventions. Through this realignment of funding, the Commonwealth aimed to realize cost savings to reduce taxpayer burden associated with government services while improving outcomes of children.
Findings and Insights
Several home visitation intervention models have been extensively evaluated nationally and have been found to be effective in improving a variety of outcomes for children and families. The targeted outcomes align incentives and create cost avoidance across multiple health and human resources agencies. The Council designed and conducted a retrospective study to analyze the impact of home visitation on reducing preterm births, incidences of low birth-weight, and Medicaid expenditures for low-income pregnant women and their infants.
Outcome Questions: Would scaling home visitation services improve birth and maternal health outcomes and reduce Medicaid outlays for women at high risk of preterm or low birth-weight infants?
Process Question: Can evaluators leverage existing administrative data systems to analyze birth outcomes and Medicaid funded healthcare costs?
The study revealed that home visitation likely has a positive impact on preterm birth and low birth weight rates. However, gaps in the current data infrastructure limited the ability to fully examine mother and child healthcare utilization and costs during and two-years after birth. Key activities and findings from the study include:
- Executed a data sharing agreement between the University of Virginia, CHIP of Virginia, Prevent Child Abuse Virginia (Healthy Families), VDH, and Department of Medical Assistance Services (DMAS). Collected data from 451 women who received prenatal home visitation services from CHIP and Healthy Families from 2009-2012. Matched data from home visitation providers with VDH electronic birth records.
- Identified a comparison group, utilizing propensity score matching based on VDH electronic birth records. The study found a 40% reduction in preterm birth rates and a 15% reduction in low-birth weight incidences, for individuals who received home visitation vs. the comparison group.
- Matched birth records for the treatment and comparison groups to Medicaid funded health expenditures for healthcare provided prenatally through the child’s second birthday. The analysis revealed a number of issues that made it difficult to reliably link birth records and Medicaid claims so as to identify cost savings.
Two critical gaps limited our ability to measure health and human services program outcomes and understand how that data could be shared to enable ongoing improvement of programs and services.
- Integrated Data System. The current system is not designed to easily or comprehensively link VDH birth records and DMAS claims. When birth records were linked to DMAS, only about 70% of the children in the treatment group had Medicaid claims. Within this group, only about 30% of the children with birth records had a corresponding mother with Medicaid claims. The study was able to identify some potential causes for this drop-off, including inaccuracies in self-reported Medicaid status and the complexities of the current four-part matching process between the VDH and DMAS databases. If comprehensive health data is included in the Virginia Longitudinal Data System (VLDS), many of these problems could be overcome.
- Technical Expertise and Partner Capacity. State agencies often do not have the time or expertise to thoroughly examine the data they collect. Agency regulation, lack of resource commitment, and communication challenges made it difficult to access databases and procure data to build the comprehensive dataset that would have facilitated a robust analysis. Capacity constraints prohibited DMAS from being able to provide specific utilization categories and actual paid cost for each of these utilizations. Instead, they could only provide the raw claim and encounter data and Fee-for-Service claim cost data.
To launch a traditional PFS project, the Commonwealth would need to reform standard service reimbursement contracts into outcomes-based payment contracts. The Commonwealth will also need to mitigate appropriation risk by establishing a mechanism to maintain funding for success payments beyond a biennial budget. State regulations restrict any funding to be carried over beyond a two-year budget. An explicit constitutional amendment would be required to enable a sufficient payment mechanism appropriate for this PFS structure. Options for contract structuring include:
- Partial PFS: Government and private funders provide upfront financing to cover project costs for a service provider. If the service provider achieves outcomes, they receive success payments from the government. Under this structure, as with the traditional PFS structure, the risk remains that any project requiring longer than two years of evaluation to determine outcomes will not have a feasible payment mechanism.
- Social Impact Guarantee (SIG): Government provides upfront financing to a service provider, and receives a re-payment from a bond or escrow account funded by private funders only if social service providers do not achieve target outcomes. The SIG structure presents the most promising pathway to address funder concerns and Virginia regulatory requirements.
- Performance-Based Contract with Bonus Payments: Government provides upfront financing to a service provider and makes bonus payments only if outcomes are achieved
Third Sector and the PFS Council have explored additional funding options with various foundations throughout the feasibility process and have secured resources to support continued development of the project. With these additional resources, we have:
- Evaluated conducting a pilot for targeted service delivery to test cost-benefit projection
- Completed retrospective data analysis and review findings with project stakeholders
- Conducted target population assessment and developed preliminary economic model
- Explored feasibility of budget amendment proposal for a pilot HV PFS project
- Started talking with local and national funders to establish a Funder’s Council and explore funding interest for follow on phase of PFS project development and pilot evaluation
Third Sector Capital Partners, Inc. led the feasibility assessment
University of Virginia - Virginia Pay For Success Lab led the data governance and data research
ReadyNation provided project support
Abt Associates, Third Sector’s SIF Partner provided technical support