Medicaid ACOs in New Jersey: At the Starting Line at Last

Kate Greenwood_high res 2011 comp

Cross-Posted at Bill of Health

Nearly three years ago, in July of 2011, Tara Adams Ragone wrote a blog post for Seton Hall Law’s Health Reform Watch blog entitled “Community Based Medicaid ACOs in New Jersey: A Signature Away”. As Professor Ragone explained, a month earlier the New Jersey legislature had passed Senate Bill 2443, which established a Medicaid accountable care organization (ACO) demonstration project, but Governor Chris Christie had not yet signed it. “It’s an exciting time for growth and innovation in the Garden State,” Professor Ragone wrote, “if we just get that signature.”

Governor Christie did go on to sign Senate Bill 2443 into law, in August of 2011, but the implementation process has been protracted. The act required the Department of Human Services to “adopt rules and regulations” that provided for oversight of the quality of care delivered to Medicaid recipients in the ACOs’ designated geographic areas and set standards for the gainsharing plans that participating ACOs must develop. The deadline for adopting the regulations was in June of 2012, but they were first issued, in draft form, in May of 2013. The final regulations were not adopted until earlier this week, one day before the proposed regulations were due to expire.

As Andrew Kitchenman reports here, with the regulations in place, the three community-based organizations that have been preparing to launch Medicaid ACOs, one in Camden, one in Trenton, and one in Newark, can finally get started. Unlike the State, they will have to move quickly; the deadline for applying to participate in the three-year demonstration is July 7th.

There is, in Kitchenman’s words, “a final piece to the puzzle”—the participation of managed care organizations (MCOs). In 2011, when New Jersey’s Medicaid ACO statute was passed, many of the State’s Medicaid beneficiaries were covered on a fee-for-service basis. The expectation was that ACOs’ efforts to coordinate care and reduce waste would be rewarded with a share of any resulting savings to the State. In 2014, however, the landscape has changed.  Nearly all of New Jersey’s Medicaid beneficiaries are now enrolled in Medicaid MCOs, and it is uncertain whether Medicaid MCOs will be willing to enter into shared savings arrangements with Medicaid ACOs.

Recently-released data from the second year of operations of Colorado’s Accountable Care Collaborative Program suggest that, if New Jersey’s MCOs can be persuaded, incentivized, or required to work with its nascent ACOs, there are both cost savings and quality gains to be had. Colorado has not yet enrolled individuals with disabilities or those who are dually eligible for Medicaid and Medicare in its Program, but the Program nonetheless achieved gross savings of $30 per member per month in its second year, adding up to $44 million. The State’s net savings were $6 million, after paying the Program’s regional ACOs and participating primary care providers for care coordination and other services, as well as a contractor charged with providing “actionable data at both the population level and the client level”.

The quality gains Colorado achieved in the Program’s second year were substantial, including a 20% reduction in hospital readmissions, a 22% reduction in hospital admissions among members with chronic obstructive pulmonary disease, and “[l]ower rates of exacerbated chronic health conditions such as hypertension (5%) and diabetes (9%)[.]” Emergency room utilization, on the other hand, increased, albeit at a slower rate than for Medicaid enrollees not participating in the Program.

As Diana Rodin and Sharon Silow-Carroll explained in a March 2013 report on Colorado’s approach to Medicaid accountable care, the State wanted to move away from fee-for-service but did not want to return to traditional capitated managed care, which had led to “nearly all Medicaid managed care plans [leaving] the state as a result of conflict over rates.” Colorado currently makes a portion of the payments it makes to the regional ACOs and to participating providers contingent on the achievement of certain quality improvements. Eventually, the State intends “to increase the portion of the monthly fee that is at risk, as well to pilot payment reforms that test alternatives to the fee-for-service component.”

It will be interesting to see if Colorado succeeds at moving away from fee-for-service without returning to traditional capitated managed care, and if New Jersey succeeds at moving towards accountable care within a managed care environment.


Monday Morning Recap: The Week (3.31.14-4.6.14) in Drug & Device Law & Policy

Picture3What follows is a weekly feature here at Health Reform Watch.  Each Monday, we provide a recap of the drug and device law and policy developments over the previous week that caught our eye and made us think.  Credit for the format goes to Seton Hall Law alum Jordan T. Cohen, who used it to great effect in his series of Reform Rodeo posts.

1. This week the New York Times published the seventh part  of Elisabeth Rosenthal’s gripping series Paying Till It Hurts, this one on the increasingly-costly drugs and devices relied on by Type I diabetics.

2. At The Atlantic, Clara Ritger summarizes “[a] new report from the Centers for Disease Control and Prevention find[ing] that states don’t offer many of the Health and Human Services Department’s recommended [tobacco cessation] treatments, and the services they do cover come with co-pays, limits on the duration of use, and other barriers to access for Medicaid patients.” Ritger explains that “[a]lthough more states increased the number of [tobacco cessation] treatments covered between 2008 and 2014, more states also added barriers to accessing those treatments. That trend can be attributed, in part, to the Affordable Care Act’s requirement that state Medicaid programs cover all FDA-approved tobacco cessation medications by January 2014. Not all states used to offer that benefit, so as some added it, they also added it with restrictions.”

3. The Philadelphia Inquirer ran a story about a campaign by Hooman Noorchashm, a cardiothoracic surgeon, and his wife, Amy Reed, an anesthesiologist, to end the use of electric tissue-cutting morcellators in gynecologic surgery. “Power morcellation, introduced in 1993, enables tissue removal through tiny abdominal incisions, but in rare cases it can also spread a hidden uterine cancer called leiomyosarcoma. Reed, a mother of six, has become the poster woman for that awful scenario. During a minimally invasive hysterectomy in October at Brigham and Women’s Hospital in Boston, the morcellator hurled uterine tumor fragments that were implanted in her abdominal cavity. She now has stage-four leiomyosarcoma, and the hospital acknowledges the procedure likely worsened her prognosis.”

4. Sachin Jain, Michael Rosenblatt, and Jon Duke published a piece in JAMA about a partnership between the Indiana University School of Medicine’s Regenstrief Institute and Merck to conduct research on electronic clinical data from the Indiana Network for Patient Care (INPC), a health information exchange. The authors write: “Neither industry nor academia can navigate this terrain alone—nor should they. Working together, governments, health plans, academic delivery systems, electronic medical record vendors, and private sector companies have the potential to analyze data to improve care and enhance the sophistication of this research.” That said, “[r]igorous controls on how the data are used and by whom, careful and considered alignment of interests, and focused investments in long-term capability-building are important starting points for this new and expanding frontier of collaboration.”

5. Finally, at the FCPA Professor Mike Koehler discusses the Foreign Corrupt Practices Act in light of the Supreme Court’s recent campaign finance decision, McCutcheon v. FEC.  He writes: “In the end, the double standard between the meaning of corruption as it relates to ‘foreign officials’ vs. U.S. ‘officials’ matters as it undermines the legitimacy and moral authority on which the U.S. government acts.”


Commonwealth Study Finds Access to Health Care for Low-Income Populations Varies by State

September 26, 2013 by · Leave a Comment
Filed under: Disparities, Health Reform, Medicaid 

Doctor's OfficeThe Commonwealth Fund (“Commonwealth”) has recently released its first-ever Scorecard, which provides a state-by-state comparison of the health care experiences of the 39 percent of Americans with incomes less than 200 percent of the federal poverty level. The report, titled Health Care in the Two Americas: Findings from the Scorecard on State Health System Performance for Low-Income Populations, finds striking disparities by income within and among states, and many news sources have quickly made these findings known to the public.

The purpose of the study was to identify opportunities for states to improve how their health systems serve their low-income populations and to provide benchmarks of achievement tied to the top-performing states. The report is based on thirty indicators of access, prevention and quality, potentially avoidable hospital use, and health outcomes, but does not analyze the potential effect of the 2010 healthcare law, the Patient Protection and Affordable Care Act (“ACA”). This law was designed, in part, to guarantee healthcare access for all Americans no matter where they live and the study’s lead author and Commonwealth’s senior vice president Cathy Schoen has suggested that “[w]e ought to be able to close the geographic divide … There is potential for a real leap forward.”

More specifically, the study finds that the poor in the highest-ranking states are more likely to be covered by health insurance, to have a regular source of medical care, and to get recommended preventative care. Health system performance for low-income populations in leading states is often better than the national average and better than it is for high-income populations in other states. Several news articles have pointed out that Texas is the state with the largest rate—55 percent—of uninsured low-income adults. Nine of the ten states at the bottom were in the South–other states at the bottom include Alaska, Florida, Georgia, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Virginia and Wyoming, all of which have refused to expand their Medicaid programs. New Jersey is ranked number 26. It is also among the states that will participate in the Affordable Care Act’s Medicaid expansion.

Significantly, Commonwealth notes that having low income does not have to mean below-average access, quality, or health outcomes. Further, the Scorecard finds much less state-to-state variation in health and health care experiences among people with higher incomes.

As the ACA continues to take effect, the report is optimistic that the Act “represents a historic opportunity for states to provide better health care to economically vulnerable people by providing resources to overcome the geographic and income divide—especially for states with high rates of poverty.” In light of the Senate’s recent 100-0 vote to avert government shutdown, the date on which health care exchanges set up under the Affordable Care Act will go into effect, October 1, looms ahead.

Photo, of a doctor’s office in New Orleans, courtesy of Bart Everson.


Adventures in Health Care Cost Cutting

March 17, 2013 by · Leave a Comment
Filed under: Health Reform, Medicaid 


Expect to keep hearing more talk about health care cost cutting, despite charts like this. It’s an idee fixe of the Wall Street/Washington corridor, and will only be implemented more vigorously over time.  So perhaps we should take stock of a few cost cutting initiatives. Medicare Part D, it seems, is coming way under its projected budget.  But maybe that’s because of “a sharp fall in the number of breakthrough drugs,” a sign that innovation in pharma is stalling.  Cost cutting triumph, or logical outgrowth of a system that fails to reward actual contributions to health?

There’s also been a lot of pressure on skilled nursing facilities to hold the line on costs.  What are we getting in return? Here’s a summary from OIG:

Skilled nursing facilities (SNF) are required to develop a care plan for each beneficiary and provide services in accordance with the care plan, as well as to plan for each beneficiary’s discharge. . . For 37 percent of stays, SNFs did not develop care plans that met requirements or did not provide services in accordance with care plans. For 31 percent of stays, SNFs did not meet discharge planning requirements. . . . [R]eviewers found examples of poor quality care related to wound care, medication management, and therapy. These findings raise concerns about what Medicare is paying for. They also demonstrate that SNF oversight needs to be strengthened to ensure that SNFs perform appropriate care planning and discharge planning.

I’m sure the health care cost cutters will use this evidence to demand the SNFs be paid even less–rather than, say, investing real funding in proper training and pay in this vital service sector.  At some point, though, costs get cut so much that Medicaid will become little more than a meaningless plastic card, and “SNF” will stand for “Scarce Nursing Forever.”

This post first appeared on HealthLawProf Blog.

Tara Ragone in Modern Healthcare on potential impact of U.S. Supreme Court hospital antitrust decision

March 5, 2013 by · Leave a Comment
Filed under: Antitrust, Health Law 

tara-ragoneResearch Fellow & Lecturer in Law Tara Ragone appeared in Modern Healthcare on the potential impact of a recent U.S. Supreme Court decision which found a hospital not exempt from antitrust scrutiny, despite its claim to be protected from such through “state action immunity doctrine,” which, according to Modern Healthcare, “gives states wide latitude to regulate competition.”

The Court’s decision was unanimous, citing the fact that although the hospital system in question, Phoebe Putney Health System, “operates public hospitals under a $1-a-year lease from the Albany-Dougherty Hospital Authority,” it did not dispute that its latest hospital acquisition would give it “control of 86% of  a six county market after the sale.” The Court, according to Modern Healthcare, ruled that Phoebe Putney’s financial relationship with the state was not sufficient to render its state action immunity defense tenable, and that “states must expressly grant antitrust immunity to local entities.”

The Modern Healthcare article notes, however, that the decision may also have impact on Medicaid ACOs under the ACA.

Modern Healthcare writes:

And it also could affect Medicaid ACOs. “The state action doctrine has been expanded, expanded, expanded to essentially immunize them,” [Matthew] Cantor said. “The Supreme Court is going to look a bit wary about stark anti-competitive behavior.”

But Tara Adams Ragone, a research fellow and lecturer at Seton Hall University School of Law who has written about how to structure Medicaid ACOs to avoid antitrust scrutiny, noted that the laws in New Jersey, New York, Oregon and Washington do state that they intend to authorize anti-competitive behavior.

“It doesn’t change things from my analysis,” she said about the Phoebe Putney decision. Yet she added that states may have to review statutes that don’t contain that explicit language.

The Phoebe Putney decision also doesn’t address the second prong of the state action doctrine, which requires states to actively oversee the anti-competitive behavior. “That’s where there’s a lot of work to be done,” she said.

Ragone and Cantor pointed out that it’s still unclear whether the FTC and U.S. Justice Department even intend to challenge ACOs as anti-competitive. A classic antitrust case involves entities colluding to fix prices—but the whole goal of an ACO is to reduce costs.

Read the full Modern Healthcare article, “Phoebe Putney dealt legal blow by Supreme Court.”


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