NJ Medicaid ACOs at Crucial Juncture for Funding, Insurance Contracts

Andrew Kitchenman | October 13, 2015 | Health Care
Foundation executive says insurers must take leadership role for the care-coordination efforts to succeed

Trenton Health Team Executive Director Gregory Paulson (left); Colleen Woods, interim executive director of the Healthy Greater Newark ACO; and Camden Coalition general counsel Mark Humowiecki.
The coming months could make the difference in whether or not New Jersey becomes a national leader in how healthcare is delivered to Medicaid recipients. But if it’s going to happen, according to advocates and experts, the state government and the health insurance industry are going to have to pull together.

And they’re going to have to set a smart pace.

By July, the state’s three Medicaid Accountable Care Organizations must have a plan in place for how they will share the savings that could result from their efforts to better coordinate the healthcare of residents in high-poverty areas of Camden, Newark, and Trenton.

The state is the first year of the three-year Medicaid ACO demonstration project, which seeks to coordinate care from local hospitals and other medical providers to ensure that patients receive effective treatment in their communities rather than in hospitals.

But this process depends on the ACOs — which are nonprofit partnerships supported by the providers — receiving funding from either the state or the insurers for tasks like hiring nurses to meet with patients in their homes to ensure that they’re taking the appropriate medication and making it to primary-care appointments. While the Camden Coalition of Healthcare Providers has contracts with Horizon NJ Health and UnitedHealthcare Community Plan, the Trenton Health Team and the Healthy Greater Newark ACO are still working to complete more contracts with insurers, which are known as Medicaid managed-care organizations, or MCOs.

A sense of urgency to find sustainable funding for the ACOs is being promulgated by Joan Randell, who as chief operating officer of the Nicholson Foundation has helped fund the launch of both the ACOs and similar organizations, known as “ACO lookalikes.”

“We recognize that Medicaid dollars or other government funds — either directly from the state or through the managed-care companies — must be made available for ACO activities,” Randell said, noting that the federal Centers for Medicare and Medicaid Services has given states broad latitude to support ACOs.

While her foundation will continue to support these organizations, without more outside funding the ACO model “is at risk of not thriving in the short term and not being sustainable in the long term.”

ACOs rely more on in-person meetings with patients than managed-care organizations typically provide. Unlike similar Medicaid programs in other states, which focus on single insurers or hospitals, New Jersey’s ACO project is focused on trying to improve the health of the entire population of patients within certain ZIP codes.

The state has five MCOs; in addition to Horizon and UnitedHealthcare, they are Aetna Better Health of New Jersey, Amerigroup New Jersey, and WellCare. Randell said they all have gained members thanks to the Medicaid eligibility expansion under the Affordable Care Act, noting that the ACO model holds promise for them lowering their costs and improving patient health.

“All the ACOs and the ACO lookalikes need the managed-care organizations to execute contracts with them either for care coordination for their high users or for other services to improve their members’ health outcomes,” Randell said. “To state it bluntly … to not offer the Medicaid ACOs and lookalikes contracts is to not offer them a chance at success.”

Randell raised these points at the annual conference on Medicaid payment reform sponsored by the New Jersey Health Care Quality Institute.

Trenton Health Team Executive Director Gregory Paulson noted that the ACOs build upon several years of work by the coalitions that founded them, which has allowed them to become better at identifying the patients with multiple chronic conditions who use hospitals the most. But he also emphasized the funding challenge raised by Randell.

“We can’t sustain that partnership and that resource sharing without the resources to continue, so that financial sustainability is a foremost challenge for us,” Paulson said. “One, frankly, that we need to move beyond to keep doing the work of the ACO, because the work of the ACO should not first and foremost be focused on sustaining it. It needs to be focused on achieving the outcomes.”

Colleen Woods, the interim executive director of the Healthy Greater Newark ACO, said her organization is focused on developing the plan for sharing any savings that result from the ACO’s work. That involves measuring the quality of the care provided, and developing the health information exchange that allows the different providers to share patient data.

Camden Coalition general counsel Mark Humowiecki emphasized that the work involved in developing these “gain-sharing plans,” isn’t just financial; it requires the ACOs to develop strategic plans that will guide them in future years. That also requires working out agreements with the insurers, a process that Humowiecki said is challenging but allows for substantial progress.

Humowiecki noted that UnitedHealthcare has applied lessons that it learned in a small, 25-patient project in Camden that preceded its work nationally.

While other states require insurers to participate in their versions of Medicaid ACOs, New Jersey didn’t. While this may have delayed the ACOs signing insurance contracts, conference participants also said there’s an advantage. Once the insurers agree to sign on, they’re invested in the ACOs’ success.

Funding and insurance contracts aren’t the only obstacles that ACOs face.

Woods said she would like to see the state make it easier for Medicaid-related patient data, such as immunization records, to be shared with the ACOs. And Paulson said that it’s important for Medicaid data to be available quickly. Waiting six months can defeat the purpose of sharing the data to help patients.

Similar work is being done by nonprofits that weren’t designated as ACOs by the state. Cindy Johnson, administrative director for business development at St. Joseph’s Regional Medical Center in Paterson, said that work being done by the “ACO lookalike” in Paterson. That is making it possible for the organization to move beyond regulatory barriers that make it difficult for hospitals to directly provide transportation to patients.

But Johnson added that other regulatory barriers remain, particularly those that separate behavioral healthcare — treatment for mental health and addiction — from other medical care.

Humowiecki emphasized a related point; Medicaid in New Jersey pays for physical and behavioral healthcare separately, which is an obstacle to coordinating care for patients who have multiple problems like diabetes and depression.

“If we can’t get them mental-health services, you can’t solve these physical health problems and they’re going to keep coming in and out” of hospitals, he said.

Dr. Jürgen Unützer, a University of Washington professor, emphasized the importance of treating these patients. He pointed to national data showing that the cost of treating the 21 percent of Medicaid patients with behavioral health diagnoses was more than three times that of other Medicaid patients.

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