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New Jersey to Test How to Reduce Healthcare Costs, Improve Quality

New Jersey will be one of the test sites for a major new public-private initiative to overhaul the way doctors, nurses, other providers deliver services and are paid


For a second time, New Jersey has been chosen as one of a select set of testing grounds for a massive, national public-private partnership designed to improve primary care for patients and reduce the cost of healthcare for society at large.

The federal Centers for Medicare & Medicaid Services (CMS) announced Monday that the Garden State would be one of 14 regions to participate in a five-year project which will overhaul the way government and some commercial health insurance companies pay participating doctors, nurses and other providers for their services.

In New Jersey, the program will impact dozens of providers who treat tens of thousands of patients covered either by Medicare or one of four private insurance companies that agreed to work with CMS to reward those who provide better, more coordinated care.

By offering doctors lump sum payments in advance of patient treatments, financial incentives for quality outcomes, and other support, CMS said the new program will give healthcare providers more flexibility to meet five key goals for better primary care: supporting patients with serious or chronic diseases; giving patients 24-hour access to care and information; focusing on preventative care; engaging patients and families in the process; and improving coordination with hospitals, specialists, and other providers.

The funding allows primary care practices to hire additional clinical and support staff, invest in new technology, and develop new ways of working with other providers. Including private payers – instead of limiting it to government programs -- creates a much wider impact, experts said. It also generates a larger pool of upfront and flexible funding for providers, which makes it more attractive for them to participate. Government and private insurers benefit over time, as providers create more efficient systems and healthier patients.

The Comprehensive Primary Care Plus (CPC+) program builds upon an existing pilot project, launched in 2012, that included New Jersey and a half-dozen other states or regions. According to CMS, the new program – operating in twice as many regions as the pilot - could include 20,000 physicians and reach up to 3.5 million patients nationwide.

The news pleased Garden State advocates for healthcare reform and drew praise from several insurance industry leaders. Primary care providers who want to participate in CPC+ must sign up with CMS by September 15. Experts believe that most of the 68 practices – with more than 140,000 patients -- that participated in the pilot program are likely to apply. The new program will launch in January.

Linda Schwimmer, leader of the New Jersey Health Care Quality Institute, which has worked to bring together providers, payers and policy makers around healthcare reform, said changes brought about by the pilot project have been a challenge for some providers and payers. “But overall, it has been revolutionary for primary care and the best model to come out of the CMS Innovation Center,” she said.

New Jersey’s inclusion in the new program is good news for patients and providers, Schwimmer said, but it would be even stronger if it could be expanded to include patients covered by Medicaid. While CMS has invited states to include Medicaid in these reform efforts, New Jersey was the only region in the pilot program that declined to do so. (Unlike Medicare, which is a fully federal program, Medicaid is administered by states and funded by a mix of state and federal dollars.)

“We need to make sure that the patients with the highest need for this kind of comprehensive primary care have access to it,” Schwimmer said. While the vast majority of Medicaid plans here are administered by managed care organizations – and may not be a fit for the CMS pilot – the Department of Human Services, which administers the program, did not respond to a request for comment Tuesday about the state’s participation in the pilot or the new CPC+ program.

CPC+ is the latest federal effort to support healthcare’s transformation from a system that has traditionally rewarded providers for the quantity of treatments they provide, not the quality of care. Reforms in recent years have led to a growing number of programs that reimburse doctors and hospitals for keeping patients healthy, as opposed to the traditional fee-for-service model in which they could bill more for each extra test and treatment. In some cases, CMS can also withhold Medicare payments to some providers that don’t meet key wellness targets.

Despite growing pains, early results from the pilot program suggest patients are satisfied and savings are possible. While the pilot continues through December, findings released this spring suggest it will save Medicare alone more than $90 million overall.

CPC+ will be much larger and more nuanced in how it tests new payment models. In this round, providers will sign up for one of two tracks. For those in Track 1, CMS will pay a risk-adjusted monthly care-management fee for each Medicare patient (from $15 to $28, depending on the level of care needed) and can collect traditional fee-for-service reimbursements for their treatments.

Doctors in Track 2 will get the same monthly fee, but will also collect an up-front payment for each patient; their practices will also submit bills for services, but these reimbursements will be reduced, offset by the advanced payments.

In this model, practices in both tracks have additional capital to expand their staff and improve their operations. Doctors in Track 2 have more money to spend up front, giving them greater freedom to hire staff or otherwise invest in their practices. But the lower reimbursement rates they receive create an incentive to keep patients healthy and avoid unnecessary tests and procedures.

The CPC+ program includes private payers, including four companies in New Jersey: Horizon Blue Cross Blue Shield, Anthem, UnitedHealthcare and Delaware Valley ACO, a Philadelphia based accountable care organization relatively unknown in New Jersey. While these companies will not follow exactly the same rate structure that CMS created for Medicare patients, they will sign agreements with the federal government that require them to employ similar models that provide physicians with flexibility to invest upfront in ways that advance the same five goals designed to improve primary care.

Wardell Sanders, president and CEO of the New Jersey Association of Health Plans, an insurance trade group that rallied stakeholders to get involved in the pilot project, called the Garden State’s inclusion in CPC+ “a reflection of the leadership role played by payers in New Jersey.”

CMS said it selected each region for the program based largely on the interest and ability of insurance companies to operate plans that reward quality, not quantity, of care. “The CMS designation is good for New Jersey patients and good for forward-thinking primary care practices that have embraced the patient-centered medical home model,” Sanders added.

Officials at Horizon, the state’s largest insurer, with some 3.8 million members, said the program was a natural fit for them. Horizon is participating in the current pilot program and operates a number of patient-centered plans that cover more than one million members.

“CPC+ is a another bold commitment from CMS to accelerate the transition to a health care delivery system that rewards doctors when they achieve improved quality outcomes that keep their patients well while better controlling costs,” said Allen Karp, a senior vice president at Horizon. Karp said the company has already invested tens of millions of dollars in value-based payments over the past six years, adding, “CPC+ will help infuse millions more in payer dollars so that additional practices can bring this improved care delivery approach to their patients.”

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