State poised for Medicaid ACO pilots

Although mostly focused on Medicare savings thus far, accountable care organizations (ACO) in New Jersey are piloting demonstration projects for shared savings through Medicaid.

Inner city hospitals and physicians are waiting for federal regulations that will enable them to launch Medicaid ACOs, focused on reducing emergency visits and improving care for the poor, NJ Spotlight reported. The state last year enacted legislation that calls for creating ACOs in Camden, Trenton and Newark, among other cities, and for formalizing their alliances as government-sanctioned Medicaid ACOs. The ACOs would receive part of the Medicaid savings by reducing unnecessary emergency visits and reinvesting in public health, but the state is still waiting for federal approval. The state Department of Human Services is writing regulations, expected for late summer or early fall, the article noted.

"We are very interested in establishing either an ACO, or an ACO-like structure, for the provision of Medicaid services in Newark," Barry Ostrowsky, CEO of Barnabas Health, parent of Newark Beth Israel, said in the article.

The ACO approach may be especially appealing to hospitals because of the poor populations in the area.

"The concept of Medicaid ACOs in New Jersey makes particular sense because NJ has a very fragmented provider, hospital, and payer marketplace," the Camden Coalition of Healthcare Providers states on its website. "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."

State Sen. Joseph F. Vitale (D-Middlesex), who sponsored the Medicaid ACO legislation, said in the Spotlight article, "It's important that we move the process along. Medicaid ACOs are going to save the state and the federal government millions of dollars a year but also at the same time provide for care in an appropriate setting."

For more information:
- read the NJ Spotlight article
- here's the Camden Coalition website

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