Reimbursement Models for Medicaid Agencies and MCOs
The information below about cost and reimbursement for the National Diabetes Prevention Program (National DPP) lifestyle change program can inform Medicaid Agency and Medicaid managed care organizations (MCO) rate-setting and design delivery. See the Cost and Value page for more information about analyzing the cost of covering the program. This Reimbursement page also outlines how the National DPP lifestyle change program can be accounted for in insurers’ Medical Loss Ratio calculation.
According to CDC, $500 is the approximate direct delivery cost of administering the National DPP lifestyle change program to a participant who completes all 22 sessions of the year-long program (16 weekly sessions during the first six months and six monthly sessions during the second six months). In addition to the $500 per participant cost of delivering the program, it may cost as much as an additional $500 per participant for program costs related to removing barriers to participation, providing incentives, addressing social determinants of health, etc. Organizations interested in offering the program can use the American Medical Association’s National DPP Lifestyle Change Program Budget Considerations Tool to estimate the cost implications of offering the program.
Activities that drive program costs include facility fees and direct program delivery costs such as staffing costs. Some of these delivery costs may be higher in a Medicaid context than in other populations. For example, because the population can be more transient, it may be more time- and labor-intensive to reach potential participants and determine their eligibility. In addition, transportation is more likely to be a barrier to participation and program retention than for other populations, and lifestyle coaches may need to spend more time outside of actual classes to follow up with participants and to ensure that they continue to participate.
For most Medicaid agencies and Medicaid MCOs, staying within budget is critical, so determining accurate cost projections for covering the National DPP lifestyle change program is important. The Medicaid Budget Projection Template and accompanying Workbook (click the icons below to access) have been developed to assist Medicaid Agencies and Medicaid MCOs in estimating the cost of providing the National DPP lifestyle change program at a basic level. In order to produce those budget projections, data will need to be gathered on the eligible population, program adoption statistics, and costs.
Information & Instructions
This Medicaid Budget Projection Template (click the icon to open) explains the process and can help guide you in the development of state-specific estimates.
Budget Projection Workbook
This Budget Projection Workbook (click the icon to download) allows you to run calculations to test your estimates.
This video walks you through how to use the Medicaid Budget Projection Template and the Budget Projection Workbook:
Costs in Practice
A program manager from the Montana Department of Public Health and Human Services (Montana DPHHS) indicated the following about their reimbursement rate relative to actual cost:
“The $500 covers the basic education, the facility cost, and interactions between the coach and the participants. It may not cover some extra services which may be financed by in-kind contributions or donations. A lot of the DPP provider organizations add different value-added services such as a gym membership. Montana Medicaid has a benefit so that a beneficiary can call to get a ride or can secure reimbursement for gas. To address child care needs, we have not yet found a universal solution, but some facilities have onsite child care (e.g., YMCA). A few sites have provided incentives.”
Direct medical costs for the original DPP clinical trial were $2,780 per participant over three years. However, this featured an individual (rather than group) coaching model facilitated by case managers.
During the Medicaid Coverage for the National DPP Demonstration Project, a cost study of state agency, managed care organization (MCO) or coordinated care organization (CCO), and CDC-recognized organization costs were completed. A breakdown of the percentage of costs that were associated with administrative, recruitment, retention, data collection, and delivery activities for the National DPP lifestyle change program can be found here. The average cost to established CDC-recognized organizations to deliver the program was $1,529 per program participant and the average cost to new CDC-recognized organizations was $1,704 per program participant. The average cost to online CDC-recognized organizations to deliver the program was $556 per program participant.
The YMCA program fee is $429 for the yearlong program. Consumers pay in a variety of ways, and YMCAs work with them if financial assistance is needed. Some payers pay a flat $429 fee regardless of how much of the program a participant completes. For claims-based reimbursement, a performance-based fee schedule is used, and payers pay claims based on the achievement of specific milestones. Average cost for the program are comprised of fixed and variable costs. When there are more participants in the program to absorb the fixed costs, the average cost can be substantially lower, but volume is key.
The Community Epidemiology and Program Evaluation Group conducted a cost analysis of the National DPP lifestyle change program at Denver Health in 2015, which was compiled in a report prepared for the State of Colorado. Micro-costing and program information for the Denver Health National DPP lifestyle change program was provided by Denver Health for costs incurred from October 2012 to the end of calendar year 2014. Nearly half of the program participants were Medicaid beneficiaries. Component costs included the following:
- Community health worker (CHW)/lifestyle coach staffing
- Program management and supervision
- Other program support staff
- HR costs
- Other direct costs
- Facility and other indirect costs
- Program development costs
The evaluation authors estimated that costs equaled $552 per participant who attended at least one session, and $1,428 per participant who attended at least nine sessions. About 50% of the cost was attributable to coach staffing, and another 19% to program management and supervision. The remaining 25% was attributable to facility and other indirect costs. Program development costs constituted a relatively small percentage.
To date, payers covering (or proposing coverage) of the National DPP lifestyle change program have provided reimbursement using one or a combination of the following methods:
- Fee-for-service: reimbursement on a per session basis
- Attendance Milestone: variable reimbursement provided after multiple sessions have been completed (eg. 1st session, 4th session, 9th session, 16th session)
- Performance-based model: offering different reimbursement levels based on outcomes, such as weight loss and weight loss maintenance.
- Combination: using a combination of the fee-for-service, attendance milestone, and/or performance-based models.
Reimbursement Models in Practice
In the fee-for-service and managed care delivery systems of Medi-Cal, Californa uses a combination of an attendance milestone and performance-based approach to reimburse for the National DPP lifestyle change program as outlined below. The Healthcare Common Procedure Coding System (HCPCS) codes are listed in parenthesis (for more information about HCPCS codes, see the Coding and Billing page). California also covers the program in Medi-Cal through the managed care delivery system. For more information, see the California State Story.
For a Medi-Cal eligible participant in the National DPP lifestyle change program that attends all sessions for the two-year program and attains all the weight loss goals, the CDC-recognized organization would receive a total reimbursement of $536.
- Core Sessions Months 1-6:
- (G9873) 1st session attended – $20
- (G9874) 4 sessions attended – $40
- (G9875) 9 sessions attended – $72
- Core Maintenance with 5% weight loss:
- (G9878) 2 sessions attended in months 7-9 – $48
- (G9879) 2 sessions attended in months 10-12 – $48
- Core Maintenance without 5% weight loss:
- (G9876) 2 sessions attended in months 7-9 – $12
- (G9877) 2 sessions attended in months 10-12 – $12
- Ongoing Maintenance Months 13-24: Maintained 5% weight loss and attended 2 sessions every 3 months
- (G9882) Months 13-15 – $40
- (G9883) Months 16-18 – $40
- (G9884) Months 19-21 – $40
- (G9885) Months 22-24 – $40
Weight Loss Performance:
- (G9880) achieved 5% weight loss OR had absolute reduction of waist circumference by 3.2 cm during months 1-12 – $128
- (G9881) achieved 9% weight loss during months 1-24 – $20
Bridge Payment for Transitioning from a Different DPP Provider:
- (G9890) Months 1-24 for first DPP core session, core maintenance session, or ongoing maintenance session – $20
Effective September 1, 2019 the National DPP lifestyle change program is available through the HealthChoice Diabetes Prevention Program for Medicaid managed care members in Maryland. To learn more about their benefit please visit the HealthChoice Diabetes Prevention Program site.
Two reimbursement models are available to MCOs in Maryland.
- Session and Performance Based Reimbursement Methodology – Available when the program is delivered in-person, online, or through distance learning.
- Milestone/Bundled Reimbursement Methodology (only available when the program is delivered online, or through distance learning).
Maryland Department of Health intends to require MCOs to pay contracted CDC-recognized organizations that administer the National DPP lifestyle change at least the minimum rates listed below, which are outlined in the Policy Transmittal and the HealthChoice Diabetes Prevention Program Manual. The HCPCS codes are listed in parenthesis (for more information about HCPCS codes, see the Coding and Billing page).
Under the minimum rates for both reimbursement models in Maryland, if a participant in the National DPP lifestyle change program attended all sessions and met all performance outcomes, the total reimbursement the CDC-recognized organization would receive is $670.
Session and Performance Based Reimbursement Methodology (available when the program is delivered in-person, online, or through distance learning)
- (G9873) Session 1, 1st core session attended: $100
- (G9874) Sessions 2-4, 4 total core sessions attended: $120
- (G9875) Sessions 5-9, 9 total core sessions attended: $140
- Sessions 10-19, 2 core maintenance sessions attended in months 7-9:
- (G9876) Reimbursement if 5% weight loss goal is not achieved or maintained: $40
- (G9878) Enhanced reimbursement for performance if 5% weight loss goal is achieved or maintained: $80
- Sessions 20-22, 2 core maintenance sessions attended in months 10-12:
- (G9877) Reimbursement if 5% weight loss goal is not achieved or maintained: $40
- (G9879) Enhanced reimbursement for performance if 5% weight loss goal is achieved or maintained: $80
Weight loss performance:
- (G9880) 5% weight loss from baseline achieved: $100
- (G9881) 9% weight loss from baseline achieved: $50
Milestone/Bundled Reimbursement Methodology (only available when the program is delivered online, or through distance learning)
Maryland Department of Health permits flexibility in bundled payment distribution across milestones 1-3 and the 5% and 9% performance payouts under this methodology, so long as the total payment per enrollee meets or exceeds $670. Below lists the recommended payment distributions.
- Milestone 1: May be billed at enrollment or initiation into program (0488T); scale is issued (E1639); or 1st core session attended (G9873): $220
- Milestone 2: Billed at 4 core sessions attended (G9874): $160
- Milestone 3: Billed at 9 core sessions attended (G9875): $140
Weight loss performance:
- (G9880) 5% weight loss from baseline achieved: $125
- (G9881) 9% weight loss from baseline achieved: $25
The Minnesota Department of Human Services reimburses for the National DPP lifestyle change program for fee-for-service beneficiaries according to the following schedule:
$13.62/session (core and maintenance) ($300 for 22 sessions)
Montana Medicaid reimburses for the National DPP lifestyle change program according to the following schedule:
- $29.10 per weekly session in first six months ($465.60 total for completion of all 16 weekly sessions)
- $29.10 per monthly session in last six months ($174.60 total for completion of all 6 monthly sessions)
For a Medicaid eligible participant that attended all sessions, the CDC-recognized organization would be reimbursed $640.20. To learn more about Montana’s approach to coverage of the National DPP lifestyle change program, visit the Montana State Story page.
Effective January 1, 2019 the National DPP lifestyle change program is a Medicaid covered benefit in Oregon. To learn more about their benefit please visit the Oregon Medicaid National DPP benefit site.
Oregon’s Health Authority (OHA) reimburses for the in-person or online delivery of the National DPP lifestyle change program in fee-for-service Medicaid according to the fee schedules below. The maximum reimbursement the CDC-recognized organization would receive using either delivery method over a two-year period is $1,196, and over a one-year period it is $644.
*Payment includes provider payment for required FDA-approved Bluetooth weight scale and fitness tracker for member
OHA also produced a guide for coordinated care organizations (CCOs) to implement the National DPP lifestyle change program, which includes recommendations for determining a reimbursement methodology for CCOs (see pages 34-35).
MDPP Expanded Model
The Medicare Diabetes Prevention Program (MDPP) expanded model allows Medicare beneficiaries to access evidence-based diabetes prevention services with the goal of a lower rate of progression to type 2 diabetes, improved health, and reduced spending. To learn more, please visit the Center for Medicare and Medicaid Innovation MDPP site.
MDPP services are paid for through a performance-based payment methodology (see table below) that is updated annually for inflation.
- A maximum of $702 per beneficiary will be paid for the set of MDPP services
- MDPP payments will not be risk-adjusted for social risk factors or geography
A one-time bridge payment of $26 is available for the first MDPP core session, core maintenance session, or ongoing maintenance session provided to a beneficiary during months 1–24 when a beneficiary has previously received his/her first core session from a different MDPP supplier.
Summary Cost and Reimbursement Table
In the course of implementing the National DPP lifestyle change program for Medicaid beneficiaries, states will need to fund the intervention and/or negotiate increases in rates paid to participating MCOs. Rates may need to account for the work MCOs will undertake in establishing and maintaining contracts with CDC-recognized organizations, cost reporting, as well as the uncertainty relative to programs costs within Medicaid.
States and their MCO partners may determine to make the rate for the National DPP lifestyle change program a per-member-per-month (PMPM) add-on to the total capitated rate for adults over 18. This may aid in creating visibility around the rate as it is refined over time. Rates may be negotiated in the context of discussions between the state’s actuarial subgroup, the health plan’s actuaries, and financial staff from the relevant CDC-recognized organizations. As noted above, some CDC-recognized organizations may be willing to accept payment contingent on participant outcomes such as weight loss.
An alternative would be to carve out the program from the capitation structure, and to pay for it on a pay-for-performance or fee-for-service model based on session attendance or other milestones.
In addition to the cost and reimbursement information presented above, see Statistics on Enrollment and retention in the Enrollment, Incentives, and Retention section.
Medical Loss Ratio
In view of recent Medicaid managed care regulations, it is anticipated that the National DPP lifestyle change program can be accounted for in the numerator of the Medical Loss Ratio (MLR).
The Medical Loss Ratio is the percentage of an insurer’s premium dollars that is spent on medical care and quality improvement activities. For example, if an insurer spends 85 cents of every premium dollar on medical care and quality improvement activities, its MLR is 85%. It is anticipated that the National DPP lifestyle change program can be accounted for in the medical care and quality improvement activity component of that calculation.
Per the Affordable Care Act, insurers must spend at least 85% of their Medicaid revenue on medical care and other activities that improve quality. The remaining 15% can be spent on administrative costs and profits.
Additional Detail About the Medical Loss Ratio
The final rule on Medicaid managed care regulations that CMS released in May 2016 addresses the calculation of the MLR. If the National DPP lifestyle change program is a Medicaid covered benefit, program expenditures can be included as incurred claims. If the National DPP lifestyle change program is not a covered benefit, it can still be counted as a quality improvement activity for purposes of the MLR calculation if administered in a way consistent with Title 45 of the Code of Federal Regulations (CFR). Title 45 addresses the rules and regulations regarding public welfare programs. The program must meet the requirements outlined in 45 CFR 158.150(b) and not be excluded under 45 CFR 158.150(c) (see 45 CFR 158.150(b)(1), (b)(2), and (c)).
Specifically, 45 CFR 158.150(b)(2)(iv)(A) includes the following language: “(2) Wellness/lifestyle coaching programs designed to achieve specific and measurable improvements; (3) Coaching programs designed to educate individuals on clinically effective methods for dealing with a specific chronic disease or condition; … (7) Coaching or education programs and health promotion activities designed to change member behavior and conditions (for example, smoking or obesity).”
45 CFR 158.150(c) lists exclusions to quality improvement activities and includes the following language: “(3) Those which otherwise meet the definitions for quality improvement activities but which were paid for with grant money or other funding separate from premium revenue; (4) Those activities that can be billed or allocated by a provider for care delivery and which are, therefore, reimbursed as clinical services [Note: these would count as incurred claims and be accounted for in the numerator of the MLR]; … (12) Costs associated with calculating and administering individual enrollee or employee incentives.”
Page content last updated: March 11, 2020