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Explainer: Medicaid ACO's Try to Bring Better Healthcare to Low-Income Areas

Pilot project offers incentives for reducing costs while better coordinating patient care

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What it is: The Medicaid Accountable Care Organization demonstration project will provide incentives for healthcare providers and insurers to better coordinate patient care, particularly out in the community rather in doctors’ offices and hospitals.

How will it work: As with other ACOs, providers and insurers will have some of their payments based on whether they save Medicaid money while also improving people’s ’ health.

One way it does this is by having care coordinators such as nurses, visit people with chronic health conditions like diabetes and congestive heart failure in their homes. They will visit hospitalized patients and help them schedule follow-up appointments in order to reduce the risk of being hospitalized again.

Medicaid is the primary federally and state-funded healthcare program for low-income residents paying for acute care, such as visits to hospitals, and primary-care providers. The ACOs are new organizations that focus on coordinating care between different providers – such as hospitals, federally qualified health centers and private doctors’ offices – that traditionally worked separately.

Why New Jersey’s program is different: Unlike the Medicare Shared Savings ACO program, which was included in the 2010 Affordable Care Act, the Medicaid program will include all people who live in defined geographic areas, such as ZIP codes with dense concentrations of low-income residents. While Medicare Shared Savings ACOs are based around individual health systems, the Medicaid program is intended to include all hospitals that directly serve the area covered by the ACO.

How it started: The program actually won’t start until later this year. The Legislature established it through a 2011 law, but state officials have been writing the rules that will govern the program ever since then. The regulations were released on May 5, 2014, just before the deadline to publish them. They included few changes from their draft form.

Who is likely to participate: Three organizations have been preparing to apply for the program since it was enacted in 2011. They include the Camden Coalition of Healthcare Providers, the Trenton Health Team and the Greater Newark Healthcare Coalition. Each of them has been identifying areas most likely to benefit from Medicaid ACOs and all have been assembling provider coalitions.

However, other groups have talked about implementing ACOs or similar organizations focused on Medicaid recipients, including providers in New Brunswick and far southern New Jersey.

Jeffrey Brown, executive director of the Affiliated Accountable Care Organizations, which includes the organizations interested in the project, sees potential for being able to demonstrate savings that could have implications for healthcare throughout the state.

“It’s one of the most innovative payment models for Medicaid in the country,” Brown said. “Hopefully in three years there will be some good results to report.”

The stumbling block: The state stipulates that the project be completed in three years, which possible expansion if it’s successful.

In order to participate in the project, prospective ACOs must apply by July 7. That could prove to be too tall of an order for some of the potential applicants, who are still working on details of who would participate. Some groups asked the state to extend the two-month window in the draft regulations, but officials said that the applications must be completed quickly to give the organizations time to implement the projects and to give the state enough time to determine whether money has been saved by 2017.

Brown expressed hope that the state will be flexible in working with interested organizations.

*How the savings will be measured: The Rutgers Center for State Health Policy will be studying whether the project results in savings. Center Director Joel Cantor said he expects there to be enough participants to gain meaningful knowledge.

“We want the demonstration to be a vigorous examination of the model, but not necessarily to be statewide,” Cantor said. “If there are three to five serious attempts to implement the model, we’ll learn what we need to learn from the demonstration.”

The final piece to the puzzle: Currently, five managed care organizations (MCOs) manage the healthcare of Medicaid recipients: Amerigroup New Jersey, Healthfirst NJ, Horizon New Jersey Health, UnitedHealthcare Community Plan and WellCare.

The ACOs will be stronger if these insurance companies participate. At this point, only one agreement between an ACO and a managed care organization has been reached: the Camden Coalition of Healthcare Providers and UnitedHealthcare have agreed to work together. Camden Coalition legal counsel Mark Humowiecki said the agreement calls for an upfront payment that would allow for care coordination, as well as provisions to share savings.

However, policy experts expect more MCOs to sign on.

Brown noted that Gov. Chris Christie singled out the program in his State of the State address in February

“I really think the MCOs will heed that call to action and come to the table to develop partnerships with the Medicaid ACOs,” Brown said.

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