Care Redesign

A Collaborative Model to Expand Medicaid Treatment Coverage for Chronic Hepatitis C Virus

Case Study · February 13, 2019

Key Takeaways

  1. Strong leadership and vision from Medicaid program leaders is an essential element to bring about rapid change in hepatitis C virus (HCV) treatment coverage.

  2. Broad and meaningful collaboration is needed. Key stakeholders include the Medicaid program, managed care organization contractors, HCV advocacy groups, and medical providers.

  3. Resources or models that improve access to best practices for rural and underserved populations — such as Project ECHO® (Extension for Community Healthcare Outcomes) — can support rapid expansion in treatment coverage.

  4. Explicit, evidence-based treatment guidelines must be developed and followed.

  5. Realignment of financial incentives for managed care organization contractors to promote treatment is necessary.

The Challenge

The advent of curative oral treatments for chronic hepatitis C virus (HCV) infection has fundamentally altered the landscape of treatment. However, Medicaid programs have faced major challenges in defining affordable treatment plans. These challenges include the high prevalence of infection among those enrolled in Medicaid expansion plans, the high cost of treatment, and legal challenges to limitations in coverage. We describe a collaborative model in New Mexico that expanded the treatment benefit over a 2-year period, from individuals with advanced fibrosis to all individuals with chronic HCV infection, with a resultant eightfold increase in members treated annually.

The Changing Landscape

The advent of new direct-acting antiviral (DAA) treatments for chronic hepatitis C virus infection has fundamentally altered the landscape of treatment. However, Medicaid programs in the United States have struggled over the past 5 years to find ways to absorb the very high cost of DAA therapies — initially greater than $100,000 per treatment course. Chronic HCV infection can be stratified into several categories, from early disease with no or early fibrosis of the liver (F0, F1, F2) to advanced fibrosis and cirrhosis (F3, F4), decompensated cirrhosis, and hepatocellular carcinoma. Table 1 shows the distribution of these categories in the U.S. and the expected number of New Mexico Medicaid recipients who were projected to fall into each category.

As recently as 2015, the American Association for the Study of Liver Diseases and the Infectious Diseases Society of America (AASLD/IDSA) recommended treatment of all chronic HCV, with prioritization of those with more advanced liver disease when treatment resources are limited. In keeping with these recommendations, many state Medicaid programs have provided coverage for HCV treatment only for those individuals with F3 and/or F4 levels of fibrosis, representing an estimated 20% of all those with HCV infection. However, this approach has been met with legal challenges in several states.

With an estimated prevalence of HCV infection of 2.50% to 2.76%, New Mexico is among the three highest-prevalence states. Nationally, while the traditional Medicaid population of women and children has a lower-than-average prevalence of chronic HCV (0.87% vs. 1.05% overall in the U.S. population), those without health insurance may have a prevalence twice as high as the U.S. population (2.08%) and dual-eligible individuals covered by Medicaid and Medicare, almost three times higher (2.91%). In New Mexico, more than 250,000 previously uninsured adults enrolled in our Medicaid expansion plans between 2014 and 2017. Similar expansion plans were active in 31 states and Washington, D.C., as of January 1, 2017, as a provision of the Patient Protection and Affordable Care Act of 2010.

Planning a state Medicaid budget for the treatment of chronic hepatitis C virus remains a complex challenge but was particularly difficult in New Mexico in 2014–2015 given an uncertain prevalence of chronic infection in both our traditional Medicaid population and our expansion population, the uncertainty of enrollment projections in the expansion group, and the high cost of treatment. In 2015, a 1% variance in the number of members treated would have been equivalent to a $14 million variance for our Medicaid program budget.

The New Mexico Medicaid agency contracted with four managed care organizations (MCOs) in 2014 to administer its managed care program (renamed Centennial Care) to more than 700,000 members. The four MCOs included: Health Care Service Corporation Insurance Services Company, operating as Blue Cross and Blue Shield of New Mexico; Molina Healthcare of New Mexico; Presbyterian Health Plan; and UnitedHealthcare Insurance Company, Inc.

Built into the contracted capitation rates paid from Medicaid to the MCOs were estimates for the high cost of the treatment of chronic hepatitis C virus infection, as described above, and the number of patients to be treated in each of three cohort populations. For example, projected counts for calendar year 2015 were as follows: traditional Medicaid (n=506), Medicaid expansion (n=1,217), and a smaller long-term care population (n=27) for a total of 1,750 members to be treated in 2015.

Although financial arrangements, including risk corridors by product line, limited MCOs’ ability to profit from any restriction of treatment authorization, the MCOs’ somewhat complex approval processes were perceived by providers requesting treatment for HCV patients to be difficult and variable among MCOs. In 2014, most MCOs were approving treatment only for those patients who had a demonstrated fibrosis level of F3 or F4. Only 150 individuals received approval for treatment in that year — less than 10% of those for whom treatment was budgeted. In addition, at that time, most MCOs considered a patient’s active drug use or excessive consumption of alcohol to be exclusionary criteria and approved requests only from a gastroenterology or infectious disease specialist. Similar approaches were seen in many other states. Further, some plans required liver biopsy to confirm fibrosis levels, a common diagnostic approach at that time.

The Execution

In September of 2015, after noting only a modest increase in the number of Medicaid members treated compared to 2014, the Director of the Medical Assistance Division (MAD Director) of the New Mexico Human Services Department initiated an action plan to increase the number of patients treated for chronic hepatitis C virus in the state, working in collaboration with the interim Medicaid Medical Director. Here, we describe the elements and outcomes of this initiative, including factors critical to its success.

Representatives from each of the four MCOs, as well as staff from Medicaid, including the new interim Medicaid Medical Director, met to discuss approaches to HCV treatment in the state’s Medicaid program. The MAD Director and her staff outlined a clear vision for the Medicaid program: “By 2020, to reduce morbidity and mortality by providing evidence-based treatment for all of our identifiable members with chronic hepatitis C infection, while being responsible fiscal stewards.” This vision was a critical first step and was communicated in a series of presentations to MCOs, providers, the New Mexico Medical Society, and the state HCV advocacy groups.

Next, the New Mexico Medical Assistance Division decided to develop a uniform and explicit set of criteria for the treatment of HCV in the Medicaid program, in order to establish uniform treatment guidelines and reduce variable practices in treatment approvals among the four MCOs. Steps to identify a common approach included:

  • Individual 4-hour site visits by the interim Medicaid Medical Director to each of the four MCOs to discuss the Medicaid vision statement with MCO medical directors and pharmacists, chief financial officers, and chief executive officers; to understand the MCOs’ interpretation of existing and potential future financial incentive models; and to inventory each health plan’s best practices and barriers to treatment authorization.
  • A series of joint meetings with Medicaid staff and MCO pharmacists and medical directors to discuss benefit plan changes and clear definitions of each fibrosis category. Most of our nationally based MCOs had their HCV experts attend the majority of these meetings by telephone or in person.
  • Joint development among MCOs, an HCV advocacy group, and Medicaid staff, of a common prior authorization checklist, named the “Uniform New Mexico HCV Checklist for Centennial Care,” clearly outlining all of the required testing and criteria for approval of DAA agents for chronic HCV treatment. The focus of this effort was to provide an evidence base for each of the treatment criteria.
  • Development of a common monthly reporting system that required MCOs to assess and report the HCV genotype, staging information (F0–F4, decompensated cirrhosis, hepatocellular carcinoma), and coexisting conditions such as extrahepatic manifestations of HCV or human immunodeficiency virus coinfection for each patient, whether treatment was authorized or not.

Table 1 shows the estimated number of Medicaid patients affected by different categories of chronic HCV infection at the start of the program, based on estimates available from the National Health and Nutrition Examination Survey (NHANES). These initial estimates demonstrated the estimated case volume for the program, including planned extensions of treatment to earlier infection categories, such as F0–F3, over time.

During October and November of 2015, two very important additional changes occurred in the “external” environment. First, the AASLD/IDSA recommended treatment of all patients with chronic HCV infection, regardless of fibrosis stage, although acknowledging that prioritization of treatment to those with advanced stages of fibrosis may still be needed where resources were limited. Second, shortly thereafter, the Centers for Medicare and Medicaid Services (CMS) sent a letter to state Medicaid programs that prohibited the use of active drug or alcohol use as an exclusionary criterion for treatment, further prohibited the restriction of prescribing to certain specialties, and identified that “several state Medicaid programs are limiting treatment to those beneficiaries whose extent of liver damage has progressed to the Metavir fibrosis score F3, while a number of states are requiring Metavir fibrosis scores of F4.” CMS stated in its letter, “Services covered under Medicaid managed care contracts . . . must be furnished in an amount, duration, and scope for the same services for beneficiaries under fee-for-service Medicaid.” The New Mexico Medicaid program responded to the National Association of Medicaid Directors’ request for assistance in developing uniform state policy recommendations to CMS about HCV treatment and explained its proposed plan going forward and its vision to treat all beneficiaries in a fiscally responsible manner.

The interim Medicaid Medical Director met several times with the New Mexico Hepatitis C Coalition, which was in the process of developing a comprehensive statewide plan to address HCV. This statewide advocacy organization consists of provider organizations, community advocates, and New Mexico Department of Health officials. The Coalition also included members of Project ECHO® (Extension for Community Healthcare Outcomes), a model developed at the University of New Mexico Health Sciences Center to improve access to HCV treatment and best-practice HCV care in rural and underserved populations. Detailed information regarding the efforts being taken by New Mexico Medicaid toward universal treatment access was presented. The plan to reach the goal of universal treatment access for all stages of chronic HCV by 2020 within current financial constraints was provided, and stakeholders had the opportunity to voice concerns. Ultimately, New Mexico Medicaid’s plan received the support of this group.

Based on the results of the process outlined above, and effective December 1, 2015, the Medicaid program issued a 6-page “Letter of Direction” to the MCOs, with major provisions. According to the contracts between the Medicaid program and the MCOs, Letters of Direction are amendments to the contract and are legally binding. The most important change was the expansion of coverage to include those with fibrosis levels F2, F3, and F4, those with decompensated cirrhosis and hepatocellular carcinoma, as well as those with extrahepatic manifestations of HCV. This revision was expected to expand the treatment benefit from 20% of chronic HCV patients (F3 and F4) to 48% (F2, F3, F4, decompensated cirrhosis, and hepatocellular carcinoma), based on our population estimates (Table 1). The MCOs were also directed to go back through their records and reach out to patients and their providers who met the new benefit guidelines but had not been authorized for treatment in the past. In addition, beginning in January of 2016, a substantial financial incentive was put in place to reward those health plans who reached their HCV member treatment target for the calendar year. Medicaid allocated a total of $12 million across the four MCOs as an incentive for the MCOs to reach HCV treatment targets.

Estimated Distribution of Chronic Hepatitis C Virus Infection and Estimated Nubmer of Cases in the new Mexico Medicaid Program in 2015

Table 1. Click To Enlarge.

With the release of the Letter of Direction, the Uniform Checklist was distributed, including publication on the Medicaid program’s website. For the first time, a single form was now available for all providers requesting treatment for chronic HCV that was accepted by all four MCOs.

The Team

The core team consisted of Medicaid staff, including the Medicaid Medical Director; representatives from each MCO, including each of their Medicaid medical directors and lead pharmacists; and the Project ECHO® HCV Program Medical Director. The group met quarterly to review authorization data and discuss methods for identifying and treating greater numbers of patients with chronic HCV infection.


Going from 150 patients treated in 2014 to 1,264 in 2017 represents a more than eightfold increase in members treated. As Figure 1 illustrates, the number of patients for whom treatment was authorized also increased. This figure, we believe, represents the ultimate success of our collaborative efforts.

Treatment Authorization Increases and Rapid Boost in New Mexico Medicaid Members Treated for Chronic HCV

Figure 1. Click To Enlarge.

We also measured the distribution of the various stages of HCV in the New Mexico population for those patients for whom treatment authorization was requested, based on data submitted monthly from MCOs to New Mexico Medicaid between 2014 and 2017 and compared to national NHANES prevalence data (Figure 2). In New Mexico, the prevalence of Metavir stage F4 (cirrhosis) is much higher than NHANES data in each year from 2014 to 2017, although the proportion of F4 declines from 2016 to 2017.

This may be due to three factors. First, the warehousing phenomenon, in which a substantial backlog of patients in more advanced stages of fibrosis were not seeking treatment prior to the advent of DAAs due to the toxicity of prior treatment regimens. Second, the AASLD/IDSA guidelines recommended prioritization of treatment of more advanced stages of fibrosis in 2014 and most of 2015, and so most providers were not initially submitting treatment authorization requests for patients with lower levels of fibrosis (F0, F1, and F2). Similarly, third, in 2014 and 2015, the New Mexico Medicaid MCOs were approving treatment for only those patients with F3 and/or F4 fibrosis, so it is logical that these groups would have treatment more frequently requested.

Distribution of HCV Categories Among Treated Patients, Demonstrating Extension of Treatment to Earlier Fibrosis Stages Over Time and Comparing Treated Population in New Mexico to Projected Distribution Based on National Estimates

Figure 2. Click To Enlarge.

Figure 3 compares the HCV genotypes for patients for whom treatment authorization was requested from 2014 to 2017. Of significant importance to our state was the overrepresentation of genotype 3, which was more difficult to treat until more recent pangenotypic therapies became available. We believe this higher prevalence is related to the higher prevalence of drug use in our state, which has been associated with more viral heterogeneity than in older non-injecting populations.

Genotype Distribution Among Treated HCV Patients with New Mexico Medicaid

Figure 3. Click To Enlarge.

Based on enthusiasm for the new system and the alignment of incentives, individual MCOs began to expand their benefit plan in 2016 to treat patients with F1 fibrosis, and a new Letter of Direction was issued, effective January 2017, officially expanding Medicaid HCV benefit coverage to F1 and above. The benefit was further expanded at that time to include all high-risk groups, as recommended by the AASLD/IDSA. Based on the collaborative work between the MCOs, Project ECHO®, and the Medicaid program, guidance regarding HCV resistance testing was also provided to clarify for providers the specific situations in which this was indicated.

By September of 2017, all four MCOs had voluntarily expanded their coverage to include all members with chronic HCV infection, regardless of fibrosis level, active substance use, or prescriber type (e.g., primary versus subspecialty provider), thereby reaching our goal of universal access to treatment 3 years ahead of the identified target. A final letter was issued by the Medicaid program in November of 2017, clarifying the Medicaid benefit coverage to include all adult members with evidence of chronic HCV infection.

Where to Start

In New Mexico, our initial approach was to define the Medicaid vision for the effort (see above), and then to convene the four managed care contractors and charge them with developing recommendations for a single system for approving treatment for HCV. In our case, we had already gathered input from members and providers that allowed us to establish some ground rules for the collaborative effort. Such expectations included the development of a single prior authorization form and a uniform approach to the benefit plan (e.g., which stages of fibrosis would be covered by all plans), which applied external sources of evidence for decision-making, including the AASLD/IDSA guidelines.

Lessons Learned — Four Critical Success Factors

Managing the expansion of the benefit coverage for the treatment of HCV in New Mexico was highly successful, with full coverage achieved after less than 2 years, against a predicted 5-year period. Below, we outline four critical factors during this process that we believe produced such rapid and dramatic success.

First, any important change in public policy requires strong leadership. In our case, the willingness of the MAD Director to create and articulate a clear vision was the critical first step.  Combining an aggressive goal with the caveat of a fiscally responsible approach was appropriate given that the immediate treatment of all possible Medicaid members with chronic HCV in New Mexico in late 2015 would have predictably cost over $1 billion, an amount that the program’s budget could not absorb. The presence of the stated vision to make HCV treatment available to all Medicaid members with chronic HCV infection by 2020 was instrumental in achieving the strong support of the provider and advocacy communities.

Second, broad and meaningful collaboration among the Medicaid program, the managed care contractors, health care providers, Project ECHO®, and HCV advocacy groups was crucial to the success of the initiative. Pharmacists and medical directors in the four MCOs, and in some cases, their national organizations, had substantial expertise in DAA treatment, process improvement, case management, and screening. Including them in our efforts to improve the process of treatment substantially enhanced the clarity of the Medicaid benefit plan and guidance for treatment and case management of these patients.

Having the Project ECHO® HCV Program Medical Director in attendance at quarterly meetings provided us with access to additional expertise and allowed the Medicaid program to use, and in some cases require, the MCOs to consult with Project ECHO® for more difficult treatment decisions. The involvement of Project ECHO® became even more critical as we encountered the new complexities of DAA drug resistance and needed to revise our treatment checklist to guide our care providers about these changes.

Given the legal action that has occurred in other states where treatment access has been limited to patients with advanced fibrosis, to certain provider types, or to people without recent or current substance use, partnership with the advocacy community was critical. While policies did not result in immediate universal access to treatment for our Medicaid population, advocates from the New Mexico Hepatitis C Coalition were confident in the clear time line for achieving this goal without the need to resort to the difficult process of litigation, thus allowing for the implementation of a long-term plan that was fiscally responsible, sustainable, and could be supported by all New Mexicans.

The third critical success factor was the establishment of explicit benefit plan guidelines, which made prior authorization guidelines uniform across MCOs. While time consuming, having the MCOs work together to establish clear definitions for treatment eligibility, including a number of evidence-based options (e.g., specific laboratory and imaging criteria) for defining various levels of fibrosis and cirrhosis, resulted in a Uniform Checklist that each care provider could use for all four MCOs. Provider complaints to the MAD Director and interim Medicaid Medical Director declined precipitously within 30 days of the issuance of the initial Letter of Direction on December 1, 2015. We believe, based on direct feedback from care providers and MCOs, that the reduction of the administrative burden that resulted from the specificity of the Uniform Checklist created cost savings for both providers and MCOs, due to the time savings in submitting and processing the authorization request, as well as the elimination of most appeals for denials-of-treatment requests.

Finally, the alignment of incentives is an important component of any successful policy change. It is our belief that the fourth important driver of change was establishing a “financial reward” at a level that was perceived to be quite meaningful to the health plan administrators. Meeting HCV treatment targets was added as part of the Medicaid program’s delivery system improvement fund. In this fund, targets that expand access and services are set in five areas; if each target is not met by a given health plan, then a defined financial penalty is assessed by the Medicaid program. The addition of the HCV treatment target was an important motivation for change. It’s important to note that this incentive was applied among the stakeholders in New Mexico and did not directly impact the cost of therapy.

In 2016, MCOs were required to meet 50% of their share of the Medicaid annual target, and in 2017 the requirement was 70%, with the expectation that the goal will continue to increase to 100% over time. In both 2016 and 2017, these proved to be “stretch goals” for the MCOs, requiring far more innovation than simply treating all requests that met the new benefit plan definition. Each of the four MCOs began to expand their own benefit plans beyond the established Medicaid benefit plan, as was allowed by Medicaid with prior approval. All requests to expand coverage were immediately granted, as they enhanced Medicaid’s vision to treat all members in a fiscally responsible manner.

MCOs broadened their benefit plans to treat an increasing number of members and to meet treatment targets. All four MCOs independently moved their benefit from “F2 and above” to “F1 and above” by the fourth quarter of 2016, prior to the Medicaid program’s new Letter of Direction, effective January 1, 2017, covering treatment for the F1 level of fibrosis and above, representing an estimated 83% of those with chronic HCV infection. Likewise, by September 2017, all four MCOs had moved to treating all members with chronic HCV infection, again prior to the latest Letter of Direction expanding the benefit plan to all adults with chronic HCV infection. Because the MCOs have been required to record the fibrosis stage of HCV for each patient, it has been relatively easy to identify patients not previously authorized for treatment when the benefit plan expands.

As our four critical success factors propelled us to cover treatment for all chronic HCV patients, the significant reduction in the cost per treatment, a function of corresponding reductions in drug pricing and shorter lengths of required treatment for many genotypes, did allow us to advance coverage more rapidly than we could have were drug prices fixed at 2014 levels. We estimate that the reduced price of DAAs, resulting from a more competitive marketplace, will result in savings to the State of New Mexico of over $500 million by the time all infected members receive treatment. In addition, we believe that incentive alignment has provided support for further expansion of screening high-risk groups, as well as the exploration of incentives that MCOs can offer primary care providers to begin treating patients with chronic HCV themselves.

Remaining Challenges and Limitations for Covering Patients with Chronic HCV

It is important to note that there remain significant challenges in reaching our vision. Now that the benefit plan has been expanded to cover all patients with chronic HCV infection, significant and even more formidable challenges have emerged:

  • Incomplete data-sharing between stakeholders
  • Lack of training of primary care providers
  • Provider perceptions regarding the time it takes to treat HCV
  • Patient unawareness of HCV status or need for treatment

Despite the removal of specialty requirements for treatment in December of 2015, we have seen limited expansion of the primary care provider network to meet our need to treat more chronic HCV patients. Project ECHO® has been a very important partner in working with community providers in a teleconference format, providing medical, pharmacy, and behavioral health specialty expertise to any primary care provider willing to participate in a weekly 2-hour teleconference. The treating provider presents the case, with a visual display of all relevant (de-identified) patient data; a treatment and follow-up monitoring plan is then developed immediately, with subsequent implementation.

A provider survey was undertaken by our collaborative group in the summer of 2017 in an effort to identify and better understand the key barriers to expanding our treatment network. New Mexico providers identified the complexity of HCV treatment guidelines, lack of sufficient training, and their perceptions regarding the time it takes to treat HCV as critical barriers to beginning the process of treating chronic HCV patients. Our work group is now exploring specific interventions to address each of these barriers, with the MCOs taking the lead in terms of developing innovative solutions to each of these challenges. As a direct result of the provider survey, the most recent Letter of Direction requires the collaborative development of provider incentives, with the goal of significantly expanding the provider network treating HCV in New Mexico.

One remaining barrier is that there remains a small percentage of patients for whom treatment is approved within 14 days of request but who do not actually receive DAA treatment. The MCOs have implemented a number of creative solutions to reach out to these individuals, and this gap has closed substantially between 2014 and 2017.

Several limitations of our approach should be noted. While we believe that the four critical success factors described above could help any state to increase the number of chronic HCV patients treated, we acknowledge that our results may not be directly reproducible in other Medicaid programs. Factors that may be unique to New Mexico and that may have allowed us to achieve such results include having only four MCOs as contractors for Medicaid, being the home to Project ECHO®, and having a Medicaid enrollment that totals more than 40% of the state’s population. However, recent data suggests that the Project ECHO® model is being used with equal HCV treatment effectiveness in other states.

It should also be noted that, given New Mexico’s very high HCV prevalence, other states with lower prevalence may have a proportionally easier time expanding their Medicaid coverage plan for HCV. However, advocacy networks and stigmatization issues may differ in lower-prevalence areas, making statewide stakeholder engagement more challenging.

As other researchers have demonstrated, treatment of chronic HCV infection is a cost-effective approach. Treating as many patients with chronic HCV as quickly and effectively as possible will create long-lasting economic gains for any public entity patient enough to wait several decades to achieve the full return on investment. Such returns may take far longer than the usual tenure of state legislators, Medicaid program directors, and managed care executives.

However, the authors all believe that that these returns pay enormous and more immediate dividends in the lives of patients with chronic HCV who do not go on to develop cirrhosis, liver failure, and hepatocellular carcinoma, or in whom the cure of HCV represents a transformative life change that promotes other health-seeking behaviors. These benefits accrue due to the foresight and commitment of leaders who are willing to make these investments because they are simply the right thing to do for the people we are privileged to serve.


Acknowledgments: The authors would like to thank Darcie Robran-Marquez, MD; Benjamin Schatzman, PharmD; Frank Koronkiewicz, PharmD; Sneha Sharma, PharmD; Julie DiTucci-Reiter, PharmD; Adan A. Carriaga, BA, LADAC, CPSW; Louanne Cunico, PharmD; Chad Valdez, RPh; Norman White, MD; Frank Roland, PharmD; Duane Ross, MD; Kelly Flannigan, PharmD; Denise Leonardi, MD; Miranda Sedillo, MS; and Molina Healthcare Hepatitis C Virus Care Coordinators for their involvement in the program, as well as Juliet Hreha and Norma Sanchez for their help with the provider survey.

Disclosures: Data support was provided by Mercer Government Human Services Consulting. The Southwest CARE Center Hepatitis C Virus program receives grant funding from the Gilead Foundation. Dr. Page has received funding from Gilead Sciences for research unrelated to this project.

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