new jersey chapter see page 7 see page 25

Transcription

1 new jersey chapter see page 7 see page 25

2 Proposal for a Demonstration Program for Accountable Care Organizations (ACOs) in Urban, Underserved Communities in New Jersey Jeffrey Brenner by Jeffrey C. Brenner, MD Background Our nation faces mounting and unsustainable increases in health care costs. Currently, the nation spends $2.2 trillion on health care or nearly 1 in every 5 dollars. These increases show no sign of slowing down and will likely accelerate in the years to come. Medicaid and Medicare, both public programs, will consume growing portions of State and Federal budgets. These increases in cost have been attributed to an aging population, the widespread availability of expensive medical technology, and a market-driven delivery system with a fee-forservice payment system. In a fee-for-service payment system, volume of care delivered is rewarded over quality. There is no incentive for independent providers and hospitals to collaborate to improve the quality and cost effectiveness of the services they are delivering. In fact, in many instances, they are rewarded for delivering poor quality of care. For example, unnecessary visits to IN BILLIONS National Health Spending, * National Health Spending as a Share of GDP, * the hospital and emergency room due to fragmented, disorganized, or poor quality service are reimbursable. It s important for policy makers to begin laying the groundwork for the new behaviors that need to emerge in the system. These behaviors include the ability to collaborate across institutions, coordinate care, improve safety/quality, share data, share resources, expand primary care, and conduct regional health planning. In most regions, organizations capable of conducting these activities do not exist. For far too long we have depended on the efforts of entities far removed from the point of care to change provider and hospital behavior. Health insurers have used preferred contracts, referrals/precerts, and remote nurse call centers. These efforts are blunt tools to alter behavior and the efforts have largely failed to lower health care costs. Providers and hospitals have figured out ways to subvert these efforts at cost control and continued on page 8 Focus 7

3 continued from page 7 high costs patients do not respond to remote nurse call centers with no face-to-face contact. Ultimately, all health care is local. Driving down cost and improving quality requires engaged health providers working together with hospitals at the community level. Instead of viewing their task as maximizing their individual market share, providers and hospitals must fundamentally redefine their mission to focus on the needs of their patients and community. Such a patient-centered delivery system would increase quality, expand access, and reduce costs. Evidence from the Dartmouth Atlas: The Challenge for New Jersey The Dartmouth Atlas, a well-established health services research project, has highlighted the importance of the local health care marketplace. The Dartmouth Atlas highlights unacceptable regional variations in cost and health care utilization for Medicare patients. It shows that costs in a state, region, city, or hospital are more tied to health care supply than patient need. For instance, high cost regions have an oversupply of specialists and hospitals and don t make effective use of primary care. They provide uncoordinated and often unnecessary services of no benefit to the patient. The behavior, costs, and utilization of the region are tied to the complex relationships and habits that develop between primary care physicians, hospitals, and specialists. New Jersey repeatedly tops the list in the Dartmouth Atlas data for high cost, intensive services for Medicare patients in their last two years of life, while it is at the bottom of the list for access to primary care. Making the Case for Payment Reform: Building ACO Pilots in New Jersey Researchers have documented that patients receiving their health care in highly integrated system like Kaiser, Geisinger, and Group Health Cooperative receive higher quality care at a lower cost. Elliot Fisher, the lead researcher for the Dartmouth Atlas, is calling for the creation of virtually integrated health delivery organizations, such as ACOs, that can mimic the behavior of these tightly integrated health care systems. These ACOs would use new payment arrangements to incentivize local providers and hospitals to provide high quality, efficient, cost effective, and integrated care. Payment reforms could include gain-sharing, bundled payments, no payment for readmissions, pay for performance, expanding primary care through the patient centered medical home, and global capitation payments. You need the security that comes from clear direction. Know you can depend on our team to get it right. With our depth and breadth, ParenteBeard s healthcare professionals are well positioned to offer insights into emerging healthcare industry issues, opportunities and best practices. Our singular mission is foster a client experience based on honesty, integrity and accountability that reflects and respects the privilege of serving you. Gene Korjeski Healthcare Industry Leader Gene.Korjeski@ParenteBeard.com Walter Brasch Walter.Brasch@ParenteBeard.com Albert Deana Al.Deana@ParenteBeard.com Lou Feuerstein Louis.Feuerstein@ParenteBeard.com Julius Green Julius.Green@ParenteBeard.com Mark Laccetti Mark.Laccetti@ParenteBeard.com PENNSYLVANIA NEW YORK NEW JERSEY DELAWARE MARYLAND TEXAS An Independent Member of Baker Tilly International ParenteBeard LLC Accountants & Business Consultants Steve Repko Steve.Repko@ParenteBeard.com Heather Weber Heather.Weber@ParenteBeard.com 8 Focus

4 Moving from our current delivery system to a more tightly integrated delivery system will be incredibly challenging, especially in a state like New Jersey with a history of many small, private, independent practices and highly competitive hospitals. Building momentum for change will require opportunities to test and demonstrate new ideas. The federal health care reform legislation, the Patient Protection and Affordable Care Act, has many new pilots and demonstration projects including authorization for Medicare ACO Demonstration Projects. States with existing demonstration projects will have a better chance at participating in the proposed demonstration projects that will be launched by the Federal government. An ACO demonstration project focused exclusively on the urban, underserved community would be easier to launch, more likely to succeed, and a good place to start in New Jersey for several reasons: 1) New Jersey has a high penetration of ERISA plans These employer-funded and employer- controlled plans are very difficult to regulate at the State level, and it would be difficult to create the critical mass based on their voluntary participation to start an ACO pilot. In most instances, one employer doesn t have enough employees to drive the system-level changes needed for a successful ACO pilot. 2) Underserved communities are primarily covered by government-sponsored health plans The public, through Medicaid and Medicare, is the primary payer in undeserved marketplaces, which simplifies the implementation and management of an ACO pilot. 3) An urban ACO demonstration project would improve case mix and reduce exposure for hospitals Profits for stakeholders in the healthcare system are not tied to increasing the market share of Medicaid patients residing in underserved communities. It will be easier to get the cooperation of hospitals and providers to improve coordination of care, expand access, and reduce cost in underserved communities than in suburban communities in which hospitals and other providers vigorously compete for more patients. Hospitals are likely to view the project as an opportunity to improve case mix and reduce financial exposure associated with care delivery that is below cost. 4) The urban ACO demonstration project will have little impact on high margin, specialty driven services The value opportunity for ACOs in underserved communities is improvement to care coordination and expanded access to primary care, while the value opportunity in the suburbs is reduction in unnecessary, high margin, specialty services. Thus, Urban ACOs are less likely to get derailed by the contentious politics of reducing unnecessary specialty services. continued on page 10 Focus 9

5 continued from page 9 5) If an ACO succeeds in a poor community then it can succeed anywhere Changing the behavior of hospitals and providers has been incredibly difficult. Many attempts have failed or shown only limited success. A successful ACO in a poor, undeserved community would provide an important example for implementing similar ideas in the wider healthcare system. Quality of Care NJ is in the 99%ile for almost every category of cost for medicare for patients in last 2 years of life and last 6 months of life. Baicker K. Chandra A. Medicare spending, the physician workforce, and beneficiaries' quality of care. Health Aff (Millwood). 2004: Suppl Web Exclusive: W184-W197 6) In healthcare, success begets success Starting with a small, limited demonstration makes it easier to succeed with change statewide. Stories from the Field -- Building an ACO in Camden, New Jersey Local healthcare providers have been working for the last eight years to build the Camden Coalition of Healthcare Providers (CCHP or the Coalition ), a non-profit organization committed to improving the quality, capacity, and accessibility of the healthcare delivery system in Camden, New Jersey. The Coalition s work began with building a citywide health database using claims data from the three local hospitals. From these data, the organization learned that, in a single year, 50% of the city s residents use an emergency room or hospital -- twice the national rate. The leading utilizer had 113 visits in a year. The vast majority of these visits are for acute and chronic problems that could be prevented with better access to primary care. From 2002 to 2007, 13% of the patients accounted for 80% of the costs (mostly to Medicaid and Medicare) and 20% of the patients generated 90% of the costs. The most expensive patient had $3.5 million in receipts. The top 1% of patients (1,035 residents) went to the emergency room and hospital between 24 and 324 times. The $46 million that hospitals received for the care of these patients would be sufficient to fund approximately 100 primary care nurse practitioners (NPs), with each NP caring for just 10 patients. A family physician, nurse practitioner, community health worker, and social worker staff an outreach project that provides transitional primary care to high users of the local emergency rooms. These patients have significant barriers to care, including homelessness, substance abuse, severe chronic illnesses, physical disability, and mental health problems. The chief advantage of a citywide coalition is its ability to encourage collaboration and data sharing among hospitals, to identify common challenges, and to address the challenges with coordinated solutions. For much of Camden s population, reducing emergency room and hospital utilization will require transforming local primary care offices into high-performing, modern, patientcentered medical homes, with features like multidisciplinary care teams, electronic health records ( EHR s), open-access scheduling, and patient registries. The Coalition has begun laying the groundwork for transitioning local practices into NCQA-certified medical homes through monthly office manager meetings, provider education programs, individual practice assessments, and technical assistance. The Coalition is also building a health information exchange that will share lab, radiology, and discharge summary data between local hospitals and healthcare providers. 10 Focus

6 The Coalition s efforts to reduce cost are succeeding, but the organization has no way of capturing savings to ensure long-term sustainable funding for the projects it s operating. Summary Proposal: Legislation for a Demonstration Project of Urban ACOs in New Jersey New state legislation creating a demonstration project of voluntary ACOs in urban, underserved communities in New Jersey should be enacted. These voluntary, urban ACOs would use gainsharing as their primary method of payment. The gainsharing payments for urban ACOs might include the following categories of patients: The ACOs would be non-profit organizations formed through the voluntary participation of local hospitals, clinics, federally qualified health centers (FQHCs), private practitioners, and public health agencies in a geographically defined area. Their purpose would be to improve the quality, capacity, and accessibility of the local health care system. They would receive funding based on the savings they generate from the projects they operate. This proposal would not cost the State of New Jersey or the Medicaid HMO anything. It would be funded solely through savings from gainsharing payments. Becoming an Approved and Recognized ACO In order to become an approved and recognized ACO, an organization should be required to apply to the Department of Health and Senior Services ( DHSS ), and meet the following criteria: 1) Be a municipality with a high number of Medicaid patients a municipality would need at least 10,000 Medicaid patients to qualify for this demonstration program. 2) Demonstrate broad-based stakeholder participation 100% of the hospitals and 75% of the primary care providers would need to agree to participate in joint care management projects and data sharing by signing a collaborative agreement. They would need to have meaningful representation on a non-profit board allowing shared decision-making. Decisions should require a supermajority on the board, thus allowing minority interests to force consensus building. 3) Demonstrate organizational funding and capacity the ACO should be incorporated as a non-profit and have the ability to accept funds, enter contracts, and hire staff. The organization should have adequate staff and funds to operate. The ACO can be housed within an existing organization and use borrowed staff, but must have an independent incorporation. 4) Demonstrate having access to and the ability to manage data the ACO should have the ability to obtain and manage claims data and clinical data to target and track care management services. 5) Document its plans to coordinate and manage care of high cost patients the ACO should outline its plans to build collaborative, municipal-level programs to jointly manage high cost, high needs patients. These programs should involve local homeless shelters, mental health agencies, and social services, as well as healthcare organizations. 6) Demonstrate strong relationships with primary care providers the ACO should demonstrate meaningful relationships with primary care providers to enable the coordination of services and the ability to help primary care providers, where necessary, increase their quality of care. This could include initiatives targeted at adoption of EHR systems, becoming certified patient centered medical homes, and use of the chronic care model. The Commissioner of DHSS could authorize continuation of the program beyond the initial demonstration project period, and allow expansion to additional sites if the project is shown to improve quality, expand access to healthcare services, and reduce cost after three years. Calculating and Distributing the Gainsharing Payment Calculating gainsharing payments is complex and requires significant research and data handling capacity. It also requires access to claims data from local hospitals, health plans, or the State of New Jersey. It makes sense to centralize and build this capacity within a recognized, independent health policy research entity such as the Rutgers Center for State Health Policy. The State of New Jersey and the voluntarily-participating Medicaid HMOs could each keep 5% of the gainsharing payment to cover administrative costs. ACOs could be required to submit annual plans to DHSS demonstrating how they would utilize their gainsharing payments. Consideration for plan approval could be based upon answers to the following questions: 1. Does the spending plan expand access to services? 2. Does the plan improve quality of care? 3. Does the plan result in eventual cost savings? 4. Is the plan the most efficient and effective way to achieve these goals? continued on page 12 Focus 11

7 continued from page 11 Start-up Funds and Outside Funding for the ACOs The ACOs would be responsible for finding their own start-up funds from foundations and local stakeholders. ACOs could seek private support through arrangements with corporations that provide funding, staff, or technical expertise in return for a share of the potential gains, as long as such arrangements placed no downside financial risk on the ACO. Risk Ad_2 7/18/07 4:23 PM Page 1 We know the risks Stark and Anti-Kickback Regulatory Protections Use of hospital funding to improve health, expand access, and decrease emergency room and hospital use in underserved communities can potentially trigger Stark and anti-kickback concerns for hospitals and other providers. This is especially true if payments are made from hospitals to the ACOs and then to primary care providers as incentive payments for expanding services. Language in the final statute could make it clear that, from the point of view of the State of New Jersey, ACOs operating in underserved communities will make use of hospital funding to expand access to health care services, and will have appropriate policies in place to prevent overutilization and inappropriate referrals. Opportunities for Participation in Federal ACO Demonstration Projects The Patient Protection and Affordable Care Act calls for pediatric and Medicare ACO demonstration projects. If New Jersey can pass and implement this urban ACO demonstration project in a timely manner, it will put New Jersey in a good position to participate in the federal ACO demonstration projects and to serve as model for communities across the country seeking improvements in access to care and alignment of financial interests among local health care stakeholders. We have the solutions New Jersey s Leading Hospital/Healthcare Insurance Broker We provide our clients with the best combination of coverage, pricing and risk management. About the Author: Jeffrey C Brenner, MD is Executive Director/ Medical Director of the Camden Coalition of Healthcare Providers in Camden, New Jersey. Dr Brenner is a family physician and has worked in Camden for the last eleven years. The Camden Coalition is committed to improving the quality, capacity, and accessibility of the local delivery system. 56 Park Street / Montclair, NJ / Focus