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Coordinated-care effort likely to win backing from state's biggest insurers

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New Jersey will soon launch a Medicaid accountable-care organization pilot that will demonstrate whether getting doctors, hospitals and other professionals working together can both improve patient health and rein in millions of dollars in avoidable hospital admissions and emergency room visits.

Experts said Medicaid ACOs now taking shape in Camden, Trenton, Newark and Atlantic City could achieve more efficient spending by the state's huge Medicaid program, which serves about 1.3 million low-income New Jersey adults and children with an annual $12 billion state and federal budget.

Accountable-care organizations represent a new approach to health care delivery that seeks to coordinate medical care, engage patients in their own wellness, and improve health and control costs.

"Medicaid ACOs will provide a model for intensive community-based care coordination and case management, which will improve members' health care experience and outcomes while reducing Medicaid costs," said Valerie Harr, the state official who oversees Medicaid.

The state issued regulations for the ACOs earlier this month, and once they're final, local consortiums of health care providers are likely to be certified by the state Department of Human Services early next year, according to Joel Cantor, director of the Center for State Health Policy at Rutgers University.

Cantor is helping ACOs implement the three-year pilot's central "gain-sharing" feature: If the ACO saves the government money, some of those gains flow back to the ACO, to be reinvested in better services. Cantor said a recent study by the center identified "millions in potential savings."

Dr. Jeffrey Brenner is medical director of the Urban Health Institute at Cooper University Hospital, in Camden, and executive director of the Camden Coalition of Healthcare Providers. For more than a decade, the coalition has run pilots to improve care and lower excessive hospital use.

The ACO's gain-sharing component "creates a business model for doing the right thing," he said. With a population of about 79,000, Camden spends $108 million a year on hospital and emergency room care. "If we save $1 million a year — less than 1 percent — we could hire four primary-care doctors, and have money left over to hire health coaches," Brenner said, because money saved in the hospital goes farther on the outpatient side.

Brenner is optimistic savings could exceed 5 percent, though. "The system is so broken that if we fix how health care is delivered, there will be a huge payoff for Camden," he said.

New Jerseyans join Medicaid by signing up with one of four state-contracted managed-care companies, whose participation in the Medicaid ACO is voluntary. The largest is Horizon NJ Health, with 566,000 Medicaid members; Dr. Philip Bonaparte, its chief medical officer, said he expects to participate in the Medicaid ACO.

Bonaparte said he'll want to partner with ACOs whose primary-care doctors are transforming their practices toward the patient-centered medical home model. In this model, patients with chronic medical conditions, like diabetes, get intensive monitoring, education and follow up to avoid complications that land them in the hospital.

An ACO built with patient-centered medical home practices "would give me some comfort," he said, "because at a minimum, I will know that a transformation has occurred at the primary physician level."

He said a Medicaid ACO should provide patients with easy access to clinicians by phone, at night and on weekends, to avoid overusing hospitals.

"We have a high ER rate for Medicaid recipients, especially in places like Camden," Bonaparte said. "There is no way our children should be admitted (to the hospital) for asthma; diabetes should be an ambulatory illness; people should not go into the hospital with skyrocketing high blood pressure." But there are daunting challenges to overcome, he said: "Fifty percent of patients do not consistently take their medications — our chronic medical management system in this country has not done well."

John Koehn is CEO of Amerigroup New Jersey, a Medicaid managed-care company with 150,000 members, about 14,000 of whom are in medical homes or other programs that incentivize higher quality. He said Amerigroup would likely contract with ACOs in northern New Jersey, where its membership is concentrated.

Amerigroup is working on several projects "to help our members get the right care at the right place at the right time — but there's a lot of work to be done, and the ACO is one potential tool." His data show that Medicaid patients use the ER for low-acuity services, even though they also see primary-care doctors. Some hospitals advertise short ER wait times on billboards, "and that isn't helping," Koehn said.

The state Chamber of Commerce provided critical support to help pass 2011 legislation that authorized Medicaid ACOs. Tom Bracken, president of the chamber, said if ACOs both lower the cost of health care and improve the quality, "it makes the entire state more competitive."

E-mail to: beth@njbiz.com
On Twitter: @bethfitzgerald8


Beth Fitzgerald

Beth Fitzgerald

Beth Fitzgerald reports on health care, small business and higher education. She joined NJBIZ in 2008 after a 34-year career at the Star-Ledger and has been reporting on business in New Jersey since 1978. Her email is beth@njbiz.com and she is @bethfitzgerald8 on Twitter.

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