Big Push to Make Medicaid in New Jersey More Effective and Efficient

State officials, policy experts and philanthropists team up to make changes that have been under discussion for a long time

medicaid patients
Experts largely agree on steps New Jersey should take to create a more effective and efficient Medicaid system and reform plans have already been drafted for some changes, like reforming how doctors are paid for their care and improving services for those with complex needs.

Now state officials have launched an office whose specific job will be to institute some of these changes, which have been long under discussion. And the project will have the support of independent policy experts backed by a foundation dedicated to improving care for those in underserved communities.

New Jersey’s Department of Human Services announced Thursday that it has created the Office of Medicaid Innovation to “improve quality, delivery and cost of care” within the massive system, which provides health insurance for nearly one in five state residents. Advocates have long said that it would take a dedicated effort — independent of daily operations and focused on change — to achieve real reform.

And on Friday, the New Jersey Health Care Quality Institute, a nonprofit advocate for safety and cost control, said it had created its own Medicaid Policy Center to pursue similar goals. That program is funded by The Nicholson Foundation, which has backed several studies and planning initiatives focused on improving Medicaid.

The DHS said the state’s Medicaid innovation office will lead efforts to implement changes like a shift to value-based payments, in which physicians and other healthcare providers are reimbursed based on patient outcomes, not the number or type of procedures they perform. It will also look to improve the system of care for patients covered by Medicaid and Medicare, who often have complex and costly healthcare needs.

Payment reforms

Carole Johnson, commissioner of the Department of Human Services
DHS Commissioner Carole Johnson told NJ Spotlight that one opportunity for payment reform involves addiction treatment; the innovation office will build on new efforts to expand access to the most effective techniques, like medication assisted treatment, through the primary-care system, she said. The model involves new financial incentives for community-based providers to expand treatment services where people need it most.

“As it begins its work, the new Innovation Office’s immediate goal is to look for opportunities to use our available levers to drive the best possible care and value,” Johnson said, and the new addiction treatment model “is an example of how we are thinking anew about what we pay for, where, and when, so that we can better leverage our dollars to drive the best possible health outcomes.”

To lead the state’s efforts — which will also focus on creating a more sustainable system — the DHS hired Gregory Woods, who recently led a federal initiative to reform Medicaid in Baltimore. Woods, who will be paid $122,000 a year, will lead a staff of 11 for the program.

“With Greg’s extensive background on issues and policies directly impacting (our Medicaid program) we look forward to this new office helping to expand on our work to date and opportunities to transform our health care delivery system,” said Meghan Davey, the DHS division director who oversees Medicaid.

At the quality institute, Matthew D’Oria, a former deputy commissioner at the DHS, will lead the Medicaid reform work, along with Kate Shamszad, a former clinical director at Cincinnati Children’s Hospital Medical Center. The team will work in consultation with the state’s Medicaid innovation office helping government officials behind the scenes to implement shared strategies, D’Oria explained.

Medicaid covers more than 1.8M NJ residents

“We’re really trying to work in partnership with [the state] and not trying to duplicate efforts,” D’Oria said. While the quality institute program will continue to identify new strategies for improving the Medicaid system, most of its work will be focused on implementing existing plans, he explained, adding, “We want to help get to the finish line.”

After expanding significantly in recent years, New Jersey’s Medicaid program — also known as FamilyCare — covers more than 1.8 million residents, including roughly 40 percent of the state’s children. Funded by a mix of federal and state dollars, Medicaid is slated to cost $17 billion this year and absorbs nearly 20 percent of the state’s total spending, according to the quality institute.

For policy experts, the aim is to improve care while better controlling costs. To do so, Medicaid reform plans call for expanding preventive care and instituting best clinical practices, changes that many want to see applied to benefit maternity care in particular. (New Jersey has a comparatively high rate of maternal mortality, especially among black women.)

The quality institute identified dozens of opportunities for change in its Medicaid 2.0 report, published nearly two years ago with funding from Nicholson. As a blueprint for reform, the document recommended testing value-based payment models for maternity care and other services, greater integration of mental and physical health systems, and administrative efficiencies, like streamlining the credentialing process for doctors who participate in multiple Medicaid managed-care plans.

Some of the changes, recommended in that report and in other forums, have been implemented or are underway in the Garden State. The DHS has significantly expanded Medicaid coverage for preventive care — like smoking cessation, diabetes care and family planning — and also created a Medicaid data dashboard, a step toward greater transparency that is also a priority for reformers.

Changes made in other states

Other states, like Ohio, have institutionalized these quests for change by establishing healthcare or Medicaid transformation programs within the government structure. In New York, a charitable organization, the United Hospital Fund, formed the state Medicaid Institute in 2005 in an effort to build a more effective healthcare system for low-income residents.

Now New Jersey will join the ranks of these organized Medicaid reform efforts. The state’s innovation office demonstrates the administration’s commitment to long-term change and the use of evidence-based models for care, DHS said, and will also allow officials to identify new opportunities for improvements and savings.

“This new office will prove beneficial to consumers and providers alike,” said DHS’s Johnson. She said the department is “delighted” by the creation of the quality institute’s reform program, which she said, “will create opportunities for us to collaborate and advance the best health care outcomes.”

D’Oria explained that the quality institute’s center will assist the state with certain “administrative and infrastructure-type work,” like collaborating with insurance providers to iron out changes to managed-care contracts, or to set up new value-based payment programs. The state will always have the sign-off, he said, but the institute’s team can help with legwork — and quickly hire contractors to conduct key tasks, without going through the same complicated contracting process required for state agencies.

Linda Schwimmer, president and CEO of the quality institute — a collaborative effort involving healthcare providers, payers and other stakeholders — said the Medicaid center will also serve as a resource to private institutions. The institute recruited national healthcare leaders to serve as an advisory committee to the new program, including a vice president from the New York Medicaid Institute.

“Medicaid is a vital part of New Jersey’s healthcare safety net,” said Arturo Brito, Nicholson’s executive director. “By bringing to light the best policy ideas and research, the policy center will help New Jersey make the structural changes necessary to strengthen and sustain Medicaid for the future.”