Medicaid Health Plans and ACOs

Arlington, Virginia—Medicaid health plans and providers could benefit with the formation and potential proliferation of accountable care organizations (ACOs) in the next few years, according to Bob Wychulis, chief executive officer of Amerigroup Community Care of New York. ACOs could help providers by providing payment incentives, enhancing their practices with improved data utilization and care coordination, and assisting with capital and information technology infrastructure needs. Health plans may benefit with a strengthened primary care network, healthier members, decreased emergency department use, and increased loyalty from providers. Mr. Wychulis discussed ACOs at the Medicaid Managed Care Summit during a session titled Accountable Care Organizations and their Relationship with Medicaid Health Plans. Amerigroup Community Care of New York serves 109,000 members in the Medicaid, Children’s Health Insurance Program (CHIP), managed long-term care, and Medicare Advantage programs in Putnam County and the 5 boroughs of New York City. Mr. Wychulis defined an ACO as a network of doctors and hospitals sharing responsibility for patient care and being held accountable for the quality and efficiency of the care they provide. ACOs were included as a component of the Patient Protection and Affordable Care Act. Although the final rules concerning the requirements of an ACO were not finalized when Mr. Wychulis spoke in early March, he indicated that an ACO would receive reimbursement for reducing costs and meeting quality improvement milestones. During the 1990s, healthcare professionals touted ACOs as a new model for the industry, according to Mr. Wychulis. However, ACOs never became popular for several reasons, including not enough planning, infrastructure, or experienced management; a lack of reliable and timely cost information and data tools; and too much of an emphasis on short-term profits rather than health outcomes and quality. Mr. Wychulis said ACOs again became a hot topic after the Deficit Reduction Act of 2005 required that the Medicare Payment Advisory Commission (MedPAC) examine various scenarios for paying physicians under Medicare. He added that after a MedPAC meeting in 2009, ACOs were included in the US Senate and House of Representatives healthcare reform legislation. The Affordable Care Act includes a few provisions related to ACOs, including the Medicare shared savings program and the pediatric ACO demonstration project. Mr. Wychulis said the Medicare shared savings program, a 5-year demonstration project that will encourage Medicare providers to become ACOs, will be operational by 2012 and will be an alternative to the current payment and service delivery models for >5000 Medicare beneficiaries. The pediatric ACO demonstration project also has a 5-year time line and will recognize pediatric providers as ACOs under Medicaid and CHIP. Mr. Wychulis said states must agree to participate for 3 years; Department of Health and Human Services Secretary Kathleen Sebelius will provide further performance guidelines for quality as well as minimum program savings that ACOs will achieve. Mr. Wychulis had several questions and lingering issues concerning ACOs, such as whether patients will be able to choose their ACOs, what the reimbursement model will look like, what the quality measures will be, and how the shared savings will be distributed. States will play a major role in promoting, establishing, and developing ACOs, according to Mr. Wychulis, who discussed a few states’ ACO initiatives. In 2009, Colorado developed an Accountable Care Collaborative that would combine with other programs to establish an ACO model. Other steps that the state took were developing a data and analytics organization, establishing regional community care organizations, and demonstrating a medical home initiative for children enrolled in Medicaid and CHIP. In 2008, Massachusetts established a Special Commission on the Health Care Payment System, which recommended developing ACOs. To support ACOs, the state established the Massachusetts eHealth Institute for healthcare technology and electronic health records, investigated the risk-sharing agreements between ACOs and payers, and had all major commercial and Medicaid payers involved in patient-centered medical home efforts. Mr. Wychulis said Oregon does not have any ACOs, but the state has taken steps to support ACOs, including developing an all-payer healthcare claims data reporting program, conducting 2 medical home pilots, and consolidating the state’s purchasing power into one entity. In addition, Washington’s state legislature passed legislation in June 2010 for 2 ACO pilot projects (an integrated care system and another for affiliated providers). The state is planning for an all-payer claims database and educating providers on the ACO model, according to Mr. Wychulis. ACO pilot programs can help Medicaid health plans grow, according to Mr. Wychulis. They will help plans reduce costs, improve performance, and attract more dual-eligible (Medicare-Medicaid) patients and long-term care beneficiaries, provide an effective way for plans to benefit from the expected Medicaid expansion and the development of state health insurance exchanges in 2014, and ensure that the plans are valued partners in the states that they serve. Mr. Wychulis recommended that Medicaid health plans be selective in choosing providers when developing ACO partnerships. He said primary care physicians may be good partners, but they may also not have the money or organizational capabilities to succeed. However, the Medicaid health plan could help by providing money for the start-up costs and also lend expertise in organizing and running a business. For instance, Mr. Wychulis said health plans can offer efficient systems, timely access to data, and enhanced care coordination. If the partnership is successful, Mr. Wychulis said that it could lead to healthier members, a decrease in preventable emergency department visits, and better relations between plans and providers. Mr. Wychulis was not certain where ACOs would flourish or where health plans would embrace ACOs in the United States. However, he predicted that areas where providers serve a large number of members, markets where there are not a lot of organized delivery systems, and regions where integrated care could help dual-eligible patients may adopt ACOs and benefit from their creation. He added that ACOs may become popular in markets at risk for significant provider consolidation, which could result in increased healthcare costs for all payers. With Medicaid expansion and the creation of health exchanges in 2014, Mr. Wychulis said there is an increased emphasis on cost drivers, quality improvement, and healthcare utilization. He mentioned that states will have a major impact on any reform and on the success of ACOs because they are major healthcare purchasers and spenders and are always looking for the most cost-effective, quality delivery systems. In the evolving healthcare environment, Mr. Wychulis said Medicaid health plans remain important. By collaborating with providers to develop ACOs, Medicaid health plans will be on the forefront of providing cost savings and improving quality, according to Mr. Wychulis.