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Federalism in Health Care: Identifying Roles for Federal and State Partners

  • Mike Stanek

    Policy Analyst, National Academy for State Health Policy

  • Mike Stanek

    Policy Analyst, National Academy for State Health Policy

States and the federal government collectively manage billions of dollars through Medicare, Medicaid, and public employee benefit programs. Yet to bring about health care system change, state and federal policymakers will need to collaborate more often and more effectively. With the support of The Commonwealth Fund, the National Academy for State Health Policy (NASHP) convened small groups of high-level federal and state officials between May 2013 and February 2014 to discuss how to align their key policy goals.

These conversations — captured in a series of issue briefs on primary care transformation, integration of primary care and resources in communities, payment reform, and quality measurement — yielded valuable insights about how states and the federal government can formulate and implement cohesive health policy. The recommendations include:

Leverage existing infrastructure to support ongoing efforts to transform primary care delivery. Many primary care practices are already exploring approaches to building capacity to promote quality improvement, enhanced access to services, and more coordinated care. New Mexico, North Carolina, Oklahoma, and Pennsylvania have all taken advantage of an Agency for Healthcare Research and Quality–funded initiative to build infrastructure through practice facilitation, in which an external facilitator works with a primary care practice on improving quality. Other states are funding resources that can be shared across practices, such as a statewide data analytics contractor in Colorado and community health teams in Vermont.

These efforts, along with federal initiatives like the CMS Innovation Center’s Comprehensive Primary Care Initiative, provide an excellent starting point. To sustain this momentum, states should convene key stakeholders, such as universities, which can explore opportunities to build up locally trusted infrastructure. The federal government can build on the technical assistance it offers primary care practices, such as resources for practice facilitators. The federal government also can standardize the data it collects from practices to ease the reporting burden on providers.

Increase investment in community-based services to make lasting connections between primary care and other resources. Reform efforts at the federal and state level are building upon primary care redesigns to encourage more expansive delivery models that link providers across a range of care settings and across community-based resources such as social and behavioral health services. Michigan and Montana, for example, are using community health workers and care managers to connect Medicaid beneficiaries with nonmedical services. The federal government is requiring that hospitals perform community health needs assessments — multistakeholder appraisals of interventions required to improve health in the community served — while the SAMHSA-HRSA Center for Integrated Health Solutions is working to integrate primary care with community-based behavioral health services.

Despite the emergence of such models, the federal government and states have further work to do to ensure that communities can offer critical nonmedical supports. Federal partners can explore options for providing federal Medicaid funds to offset state costs of investing in community-based services and resources. The federal government also can consider allowing hospitals’ community-health-needs-assessment requirements and insurers’ medical loss ratio requirements (which stipulate that they spend a certain percentage of premium dollars on care and quality improvement) to encourage private sector investment in community-based resources.

Continue experimentation with new payment models. States and the federal government are developing new payment approaches that reward providers for better coordinating care and delivering higher-value care. Dozens of states, including Maryland and Rhode Island, are supporting patient-centered medical homes; Arkansas and Tennessee are moving toward episode-based payments in which a single payment covers a range of services; and states like California, Maine, and Minnesota are fostering accountable care models, where payers, hospitals, and practices work together to provide coordinated care.

While the federal government has moved to support new payment and delivery models within Medicaid, such as the new Medicaid Health Homes state plan option and participation in the Medicare Advanced Primary Care Practice Demonstration, more work is needed to align federal and state signals to the provider community. A streamlined Medicaid waiver approval process for states incorporating specified payment reform elements, and the inclusion of Medicare in more state-level reform initiatives, could help to align approaches. Both levels of government should foster a mix of payment models of different sizes with various degrees of federal and state leadership.

Support measurement strategies. To support new value-based payment models, public payers are devising quality measurement strategies to identify and reward value in health care. States like Massachusetts and Minnesota, for example, are relying on measure sets assembled by the state to measure performance of state-recognized accountable care organizations. The federal government could support state measurement strategies by routinely making state-level Medicare claims data available for state use, and by developing an informational guide to help states that are designing new initiatives to choose consistent, nationally recognized measures. States, in turn, can build on federal measure sets in their work to promote alignment between state and federal approaches.

While better federal–state communication is needed, there are also opportunities for greater alignment between federal and state health reform strategies. The eagerness of officials at both levels of government to adopt a shared vision and identify aligned paths forward bodes well for a transformed health system that meets the needs of patients and communities.

Publication Details



Mike Stanek, Policy Analyst, National Academy for State Health Policy

[email protected]


M. Stanek, "Federalism in Health Care: Identifying Roles for Federal and State Partners," The Commonwealth Fund Blog, Aug. 6, 2014.