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Medicaid ACO Program Holds Promise, But Isn’t a Cure-All, Experts Say

Coalitions continue preparations as they await state rules allowing launch of new healthcare model

ACO second panel
Participants in a panel discussion on ACO initiatives in New Jersey included, from left, Joel Cantor, Dr. Ruth Perry, Michael Anne Kyle, Shabnam Salih, John Koehn, Frank Winter and Milly Silva.

A new model for providing healthcare to low-income New Jerseyans has the potential to achieve some of the savings called for by Gov. Chris Christie, but healthcare leaders also say there are significant limits to what it can achieve.

Medicaid Accountable Care Organizations aim to improve coordination of patient care and to realign the incentives that providers have so that they are more focused on improving patients’ health outside of visits to hospitals and doctors’ offices, according to panelists who participated in a recent NJ Spotlight conference.

Medicaid ACOs have been under development since a law creating a demonstration project was enacted in 2011. The final state regulations allowing the project to move forward are expected early this year, although state officials have said there isn’t a timeline for publishing these rules.

Like other ACOs, such as the Medicare Shared Savings program, the project is designed to reward providers by paying them in part based on their ability to achieve cost savings while still improving patients’ health. Unlike the other programs, the project will include all of the patients in a geographic area.

Dr. Ruth Perry, executive director of the Trenton Health Team, said ACOs help patients attain the tools they need to navigate the array of challenges that they face. Her team is one of three existing organizations -- along with the Camden Coalition of Healthcare Providers and the Greater Newark Healthcare Coalition -- that are preparing to apply for the Medicaid ACO project.

Many of the Medicaid patients who make the most visits to hospitals face various medical, behavioral health and social challenges. “Any one of them alone is extremely challenging – all three of them concurrently is extraordinarily difficult,” Perry said.

Therefore, Perry said, the ACOs must represent just one of a series of other efforts to address the social factors that affect patients’ health.

“If our streets are not safe, if people don’t have housing, if education is poor, if we cannot treat patients with cultural competency, if we have no income -- there are no jobs -- we’re still going to be very limited in our success,” said Perry, adding: “I don’t think we should look to ACOs as the panacea, but it is a key piece in improving overall health.”

Michael Anne Kyle, Perry’s counterpart with the Newark coalition, said the groups in Newark, Trenton and Camden have already made progress, laying the groundwork for the ACO project. For example, her coalition has been working to identify ZIP codes whose residents will participate in the project.

The Medicaid ACO is “really just the legal structure for a cultural shift, which really need to start doing before you even apply, because you need to build the trust and the partnerships and then you start thinking in a serious way about how you would deliver care differently,” Kyle said.

Some of the potential for the project has been identified by Joel Cantor and other researchers at the Rutgers Center for State Health Policy, which Cantor directs. He noted that Christie called on Rutgers to develop innovations in Medicaid to improve healthcare for the 5 percent of Medicaid recipients who generate half of the costs.

Cantor has done research that potentially avoidable hospital costs vary from community to community. “These variations to us suggest that there is room for improvement,” Cantor said.

The fact that all patients in an area will belong to the ACO is an advantage, making it easier to measure whether changes that occur due to the ACO lead to savings, Cantor said. But the project does face a potential obstacle – whether the insurers that manage the care for these patients will participate.

“Unless the managed care organizations, MCOs, come to the table, there’s virtually no opportunity for shared savings,” Cantor said.

John Koehn, CEO of Amerigroup New Jersey – one of the MCOs – said the Medicaid ACO is a model worth trying and that he expects insurers to participate. But he pointed out some potential stumbling blocks. For example, some patients may never interact with ACO nurses, but if they contribute to lowered healthcare costs, the savings may be inaccurately attributed to the ACO. He also pointed out that the project doesn’t include a provision to punish the ACO if it fails to lower costs.

Koehn also noted that there are areas where hospitals appear unlikely to collaborate, such as Hudson County. The program also will only work in areas where there is a higher density of Medicaid recipients.

“By its very nature (the ACO project) cannot be replicated in all 21 counties,” Koehn said.

Koehn and Shabnam Salih of the Camden Coalition of Healthcare Providers differed on the effectiveness of a major feature of the state’s current Medicaid program – the case management done by managed-care nurses through phone calls.

Koehn said the phone calls could be a useful way to reach many patients in a cost-efficient way.

“What I heard from Gov. Christie the other day was an executive who was frustrated that there were other priorities that were crowded out” by healthcare costs, Koehn said of Christie’s budget address.

But Salih, the Camden Coalition’s program manager for external affairs, said that there isn’t evidence that phone calls work for the most challenging patients, suggesting that the resources would be better spent on community-based case management done through organizations like ACOs.

“The New Jersey Medicaid system is unaffordable, unsustainable, and we’re at a point where it really needs to change,” Salih said.

The uniqueness of the New Jersey project was underscored by Frank Winter, regional partnership manager for the federal Centers for Medicare and Medicaid Services. He said it was an example of valuable experimentation in care delivery.

“We’re going to see who’s succeeding and who’s not succeeding as much over time,” opening up the potential for successes to be replicated, Winter said.

Winter emphasized that the federal government is trying to improve coordination between different programs that receive federal funding, adding that the Medicaid ACOs will likely work closely with these programs.

“When you’re working together, you’re going to see a lot better results,” Winter said, adding that he’s optimistic about the projects’ chances for success.

Another factor -- the importance of healthcare workers in contributing to the success of patients’ health -- shouldn’t be underestimated, said Milly Silva, executive vice president for Local 1199 of the Service Employees International Union – United Healthcare Workers East.

“Studies have shown that patient satisfaction and employee satisfaction are tied together,” Silva said.

She urged policymakers to resist spending cuts the impact the home health aides and other frontline caregivers her union represents.

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