2013 Year of Transition for NJ Healthcare Consumers, Providers

Andrew Kitchenman | January 2, 2013 | Health Care
Twelve-month countdown to federal ACA will keep health sector moving ahead on key issues, like Medicaid eligibility and waiver, insurance exchange

There is at least one certainty for New Jersey’s healthcare environment in 2013 — it will be very different a year from now.

The major pieces of the federal Affordable Care Act will be rolled out on January 1, 2014, but preparations for those changes are already underway and will dominate the healthcare landscape in New Jersey and across the country this year.

A set of related issues are at the forefront of those changes: whether the state expands Medicaid eligibility; whether it forms a partnership with the federal government to operate a health benefit exchange or allows the feds to be the sole operator; how a wide-ranging state Medicaid waiver is implemented; and how New Jersey’s providers expand new models for healthcare delivery.

Each of these issues have the potential to make a difference in how New Jersey residents receive healthcare, as well as how doctors, hospitals, and other providers are paid.

Medicaid Expansion

When 2012 began, the major question hanging over healthcare was whether the U.S. Supreme Court would allow the Affordable Care Act to stand. While ACA supporters praised Chief Justice John Roberts’ crucial vote to uphold the law, Roberts opened up a major possibility that hadn’t been foreseen. By preventing the federal government from severely penalizing states from expanding Medicaid eligibility, Roberts opened up a possibility that could have major consequences for low-income New Jerseyans.

Gov. Chris Christie said soon after the decision that there is little room for the state to expand Medicaid. He has joined other Republican governors in asking federal officials to answer a series of questions about both Medicaid expansion and health benefit exchanges before deciding his next step.

If the expansion occurs, it would cover an estimated 291,000 additional New Jersey residents. The expansion would affect those with incomes up to 138 percent of the federal poverty line, currently $15,415 for a single person. It would do so at little initial cost to the state, with the federal government committed to picking up all of the additional cost through 2016, before the state share of the added cost would gradually rise to 10 percent by 2020.

While the federal government hasn’t set a deadline for states to opt in to the expansion, Christie may signal his decision on February 26, the scheduled date of his 2013-2014 budget address.

The expansion has garnered support among healthcare advocates and providers, with everyone from Healthcare Quality Institute of New Jersey President David Knowlton to Senate Majority Leader Loretta Weinberg (D-Bergen) describing it as a “no brainer.” But employer groups have been skeptical about its long-term costs, which they see falling on them if the federal government doesn’t uphold its funding commitment.

Along with residents who could receive coverage, another group with a major interest in Christie’s decision is the state’s hospitals. Federal funding for unreimbursed care such as charity care is disappearing under the ACA, and Medicaid expansion was expected to soften the impact.

“Roughly a quarter million covered lives are at stake and the potential financial impact on healthcare providers — including hospitals — could be huge,” said Joel Cantor, director of Rutgers University’s Center for State Health Policy.

Health Benefit Exchange

While Christie vetoed a bill that would have established a state-run health benefit exchange, the door remains open for the state to play a major role in operating an exchange.

The state has until February 15 to decide whether to join in a partnership with the federal government to operate the state exchange, an online marketplace allowing individuals and employers to buy insurance, as well determine whether they’re eligible for federal insurance subsidies.

Under a partnership, the state could oversee plan management and consumer assistance, while the federal government would handle other functions. If the state doesn’t move forward on a partnership, then the federal government would oversee all exchange functions.

Cost could become the determining factor in whether Christie opts for a partnership exchange. In the statement announcing the veto of the state bill, administration officials raised questions about whether the state share of partnership exchange costs would be paid through a federal fee on policies purchased through the exchange. As with Medicaid expansion, Christie wants a series of questions posed by Republican governors to be answered by federal officials before making a decision.

Policy experts are raising questions about how smoothly the exchange will function if the state doesn’t pursue a partnership.

“If we choose not to do the plan management function, then the next challenge will be how to coordinate the state regulatory function with the federal regulations,” Cantor said, adding that it will be more effective and efficient if a partnership is in place. He also noted that the state has experience reaching out to low-income residents for existing healthcare programs, an area in which the federal government doesn’t have “a lot of experience.”

Regardless of whether the exchange is a partnership or federally operated, the state’s insurers face a less than nine-month sprint to begin enrolling residents, since the ACA requires that exchange enrollment begin on October 1 for the January 1, 2014, launch.

Horizon Blue Cross Blue Shield of New Jersey spokesman Thomas Vincz said insurers would be ready.

“It’s a challenging time but it’s also exciting,” Vincz said, adding that Horizon has been experimenting with new models of retail outreach in advance of the exchange.

Medicaid Waiver Implementation

Many New Jersey residents receive healthcare funded by Medicaid and the five-year waiver granted by federal officials in October is affecting all of them.

The waiver gives the state more flexibility — as well as more federal funding — to provide healthcare to low-income residents.

The waiver includes a controversial provision that shifts the focus of long-term care toward managed care and away from a fee-for-service model. This is intended to help seniors stay at home as long as possible before moving to a nursing home. How this will affect both seniors and nursing homes remains unclear, with nursing home advocates raising concern about the future.

This change is part an overall shift toward managed care in the provision of Medicaid services in the state. From behavioral health services for those with mental illnesses to housing for residents with intellectual or developmental disabilities, managed care is becoming the focus of health services, A potential advantage of this change is an increased ability for providers to coordinate mental and physical healthcare.

In addition, the model of how hospitals and other providers are compensated for providing Medicaid services will be shifted toward one based on patient outcomes. This will have an unknown impact on hospitals, which are used to receiving Medicaid payments based on the number of Medicaid recipients they serve.

With an overall budget of more than $11 million serving 1.3 million New Jerseyans, Medicaid will remain a crucial part of the state’s healthcare landscape, even if Christie decides against expanding eligibility.

New Models for Healthcare Delivery

While many of the health policy changes in recent years have focused on increasing health insurance coverage for more New Jersey residents, rapid changes also are occurring in the delivery of healthcare.

Two related models figure to become even more prominent in the coming year — patient centered medical homes (PCMH) and accountable care organizations (ACO).

In a PCMH, patient care is coordinated through a team-based approach, led by the patient’s primary care provider. Insurance companies pay providers in part for the time they spend coordinating care, rather than solely for the services they render to patients. Similarly, in an ACO, providers are held accountable for the cost and quality of the care provided to patients. Both of these models depend on patient care coordinators, employees who
follow up with patients to ensure they get necessary care, something particularly needed for patients with chronic conditions like diabetes.

These similar approaches are expected to become increasingly common as the ACA is implemented. Vincz noted that Horizon has been expanding both programs.

Horizon now has 360 PCMH primary care practice locations throughout the state, which works out to more than 1,000 providers serving 250,000 residents.

The state’s major insurance companies have also been signing ACO agreements steadily, a trend that is expected to continue in 2013.

“We will be building on these programs, expanding the benefits to more of our membership, and really looking to take better integrated primary care to the next level,” said Vincz.

A landmark in expanding the ACO model is expected in the early weeks of the year, as the state unveils its plans for implementing a Medicaid ACO demonstration program, which was signed into law by Christie in 2011. The program is intended to demonstrate the effectiveness of the ACO model in providing services to Medicaid recipients.