Accountable Care Organizations in Medicaid Programs

Arlington, Virginia—Each day, Naomi Wyatt receives e-mails from Amazon.com with suggestions on what she should buy based on her preferences and previous purchases. She likes that the company utilizes its data to help her find books and other items that she may not have found otherwise.

When it comes to physicians, however, she said many do not know their patients’ names or their medical records or medical histories. Ms. Wyatt, deputy executive director at the Camden Coalition of Healthcare Providers, relayed her frustrations with the lack of communication in the healthcare industry at the Leadership Summit on Medicaid Managed Care.

“Can we conceive a future where a doctor’s office is like Amazon?,” said Ms. Wyatt, who spoke during a session titled The Role of Medicaid in Reform and Non-Reform Based Accountable Care Models Nationwide. “If a doctor’s office thought about their patients like customers, you may have different outcomes. That is my dream.”

The Camden Coalition of Healthcare Providers, founded in 2002, is a grant-funded, nonprofit corporation focused on increasing access to care and improving the quality of care for residents of Camden, New Jersey. The organization received worldwide attention after Atul Gawande, MD, wrote a profile in the January 24, 2011, edition of The New Yorker.

No country spends more on healthcare as a percentage of gross domestic product than the United States, according to Ms. Wyatt, but the outcomes are not better. She said approximately $8000 per year is spent on healthcare per person in the United States compared with approximately $4000 in Japan. However, the average life expectancy is 79 years in the United States and 83 years in Japan.

“We have to do something about that,” Ms. Wyatt said.

With the passage of the Patient Protection and Affordable Care Act in March 2010, the federal government is attempting to provide health insurance for all Americans through industry reforms, the introduction of health insurance exchanges, and an expansion of Medicaid. At the same time, President Barack Obama’s administration is hoping to reduce the growth in healthcare spending via numerous methods including widespread adoption of electronic health records and integrated delivery models such as accountable care organizations (ACOs). Ms. Wyatt noted that Medicare and Medicaid overspend by $30 billion each year, mainly due to uncoordinated care.

The federal ACO model is voluntary for providers and beneficiaries, all of whom are on Medicare. If participants such as organizations and physician groups can achieve quality standards and decrease costs, they can get increased payments through a shared savings program.

In New Jersey, the ACO model for Medicaid is community-based and covers >5000 lives. Ms. Wyatt said providers are required to participate, but there is no upfront investment for them and their Medicaid payments remain the same as before the model began.

All parties involved were interested in changing the system, according to Ms. Wyatt. The state wanted to save money and change from fee-for-service reimbursement to managed care. Meanwhile, providers were facing rising costs and increasing time spent with patients and accepted a sustainable care model that the state’s leaders proposed.

The Camden Coalition of Healthcare Providers created its ACO because it noticed that although only a small percentage of patients visit hospitals several times per year, they account for a disproportionate amount of costs. For example, Ms. Wyatt noted that 620 people in Camden are admitted to the hospital >3 times per year and their hospital costs are $27.5 million, or $44,354 per patient.

Ms. Wyatt discussed the case of a woman who had been admitted to the hospital 8 times in 12 months at a cost of $96,000. When she joined the Camden ACO, she received a scooter and an in-home respirator, and the organization trained family members to help with her care. In the next 6 months, she did not have any inpatient admissions.

Among the initiatives the Camden Coalition of Healthcare Providers has implemented are care management programs, physician education, diabetes classes, and patient registries. Ms. Wyatt said the organization is working with partners in the community to identify additional interventions and hopes to become the first city in the United States to decrease healthcare costs while improving the quality of care.

Tricia McGinnis, director of delivery system reform for the Center for Health Care Strategies, Inc. (CHCS), joined Ms. Wyatt during the discussion. CHCS works with state and federal agencies, health plans, providers, and consumer groups to improve healthcare quality for low-income children and adults, people with chronic illnesses and disabilities, frail elderly, and racially and ethnically diverse populations. Its priorities include providing more access to Medicaid patients, reforming delivery systems, and integrating care.

The nonprofit organization has been involved with several Medicaid ACO initiatives funded by organizations such as The Commonwealth Fund, the Center for Medicare & Medicaid Innovation, and the Robert Wood Johnson Foundation.

Ms. McGinnis defined ACOs as integrated care delivery models focused on quality and cost improvements through data sharing, provider and community collaboration, changing payment incentives, and utilizing other methods. She noted that developing an ACO for Medicaid beneficiaries is different than for other patient populations because they require care management beyond physical health.

When establishing Medicaid ACOs, states are utilizing existing care management programs as models, but the ACOs have different structures, according to Ms. McGinnis. Maine and Minnesota have provider-driven Medicaid ACOs in which providers establish networks, assume some financial risk, and oversee patient stratification and care management. In Oregon, there is an ACO driven by managed care organizations, which have a large role in supporting patient care management, assume some financial risk, and implement new payment models. Finally, Colorado and New Jersey have regional partnership ACOs, where community organizations partner to develop teams to manage patients and receive increased payments through shared savings.

States have recognized that providers must learn about care management and collaboration. They have spent money on training physicians and other healthcare professionals in areas such as data infrastructure and analytics.

Ms. McGinnis said it is also important for states to align payment methods with quality reporting and performance metrics. States have selected certain measures that are consistent with the goals of their ACOs, although meeting all of their criteria is challenging, according to Ms. McGinnis.

“The state of quality measurement is not what we want it to be,” she said. “It is a struggle.”