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Tennessee Health Care Innovation Initiative

Governor Haslam

“Over the next 5 years, the Tennessee Health Care Innovation Initiative will shift a majority of health care spending, both public and private away from fee for service to three outcomes based payment strategies…With these efforts, it’s our hope that Tennessee will be at the forefront of a national trend that is expected to gain momentum in the coming years.”

-Governor Haslam’s address to the National Governors Association, July 2014

The Strategic Planning and Innovation Group is working to change the way that health care is paid for in Tennessee, to move from paying for volume to paying for value. Our mission is to reward health care providers for the outcomes we want:

  • High quality and efficient treatment of our medical conditions, and
  • Help maintaining our health.

We are bringing together health care providers and clinicians, employers who purchase health insurance for their employees, major insurance companies, and patients and family members to reform the health care payment system in our state. Tennessee will lead by example with our TennCare program and our state employees benefits administration, and we are asking other stakeholders to join us.

Contact us at payment.reform@tn.gov for more information.

Three strategies

The Tennessee Health Care Innovation Initiative has three strategies –primary care transformation, episodes of care, and long-term services and supports.

  • Primary care transformation focuses on the role of the primary care provider in promoting the delivery of preventive services and managing chronic illnesses over a continuum of time. The initiative is developing an aligned model for patient centered medical homes (PCMH), health homes for Serious and Persistent Mental Illness, and hospital and ED admission/discharge/ transfer provider alerts to be implemented statewide.

  • Episodes of care focus on the health care delivered in association with acute healthcare events such as a surgical procedure or an inpatient hospitalization. Episodes encompass care delivered by multiple providers in relation to a specific health care event. More information on episodes of care is available below.

  • The long-term services and supports (LTSS) component focuses on improving quality and shifting payment to outcomes-based measures for the QuILTSS program and for enhanced respiratory care. More information on LTSS reform is available here

To read our White Paper describing the Tennessee Health Care Innovation Initiative in more detail, click here. Or, to access our introductory presentation and learn more about the Tennessee Health Care Innovation Initiative click here.

Episodes of Care

Episode-based payment seeks to align incentives with successfully achieving a patient’s desired outcome during an “episode of care”, a clinical situation with predictable start and end points. Episodes reward high-quality care, promote the use of clinical pathways and evidence-based guidelines, encourage coordination, and reduce ineffective and/or inappropriate care. Episode-based payment is applicable for most procedures, hospitalizations, acute outpatient care (e.g., broken bones), as well as some forms of treatment for cancer and behavioral health conditions (e.g., ADHD). Under the initiative, episode-based payment will be rolled out in waves every six months with the goal of implementing 75 episodes by the end of 2019.

Wave 1: In May 2014, the initiative launched three episodes of care: acute asthma exacerbation, perinatal, and total joint replacement. Over 500 providers statewide received reports from TennCare and commercial payers. For more information about the first three episode-based models designed under the initiative, click the links below:

The design of each episode was  developed with input from key stakeholders, including Tennessee clinicians and insurance companies. The design is consistent across all TennCare Managed Care Organizations, but there may be some variation in commercial payer episode definitions.

Wave 2: The state is currently designing the next 5 episodes of care for implementation in Tennessee: acute COPD exacerbation, colonoscopy, cholecystectomy, acute percutaneous coronary intervention (PCI) and non-acute PCI. The state will convene technical advisory groups of Tennessee clinicians to inform the design each episode. The initiative plans to report on these episodes in mid-2015.

Other information:


Meeting materials

The Tennessee Health Care Innovation Initiative continues to engage with Tennessee providers on health care delivery system transformation. To access materials presented to providers, employers, and the public on the initiative, click here.