Medicaid ACO Demonstration Projects
A broad coalition of stakeholders of business, hospital, healthcare provider, and consumer groups, led by the NJ Chamber of Commerce, has joined together to propose the creation of Medicaid Accountable Care Organizations (ACOs) in the State of New Jersey. New legislation (S2443 / A3636) was recently introduced in New Jersey to test the idea in a Medicaid ACO demonstration project. Aligned closely with the ACOs described in the federal Affordable Care Act, the legislation would create multi-stakeholder, geographic Medicaid ACOs.
A Geography-Based Medicaid ACO Demonstration Project
The proposed New Jersey law would authorize a three-year Medicaid ACO demonstration project whereby community-based, non-profit coalitions can apply for recognition by the State of New Jersey as a Medicaid ACO. The applicants must propose a geographic focus and will need 100% of the acute care hospitals, 75% of the primary care providers, two behavioral health providers, and two community residents from that geography on the board of the organization. The providers in the community will continue to receive their usual Medicaid payments and the ACO, if its providers meet quality benchmarks, would be eligible to receive shared savings payments, that can be distributed to participants based on a proposed gain sharing plan.
ACOs involve some complex legal issues, and the Legislature has declared its intent to exempt activities undertaken pursuant to the Medical ACO demonstration project that might otherwise be constrained by state antitrust laws and to provide immunity for such activities from federal antitrust laws through the state action immunity doctrine.
Why Medicaid Patients in New Jersey?
The concept of Medicaid ACOs in New Jersey makes particular sense because NJ has a very fragmented provider, hospital, and payer marketplace. Medicaid patients are highly concentrated in urban, impoverished cities, with a high percentage covered by government-sponsored health plans that will make implementation of an all-payer ACO model easier. Also, reducing unnecessary ER and hospital use for complex, Medicaid patients is less disruptive to the existing business model of New Jersey’s hospitals and healthcare providers.
The groundwork has already been laid through the work of the Camden Coalition of Healthcare Providers, a non-profit organization committed to improving the quality, capacity, and accessibility of the healthcare delivery system in Camden, New Jersey. Two similar citywide healthcare coalitions have been formed in the cities of Trenton and Newark.
