"Clinical integration" and "organizing for value" are two key themes at the HFMA 2014 ANI conference. Both are crucial in preparation for the eventual transition from a fee-for-service reimbursement system. Here's an example of how one health system is preparing, by teaming with a health plan on a new Medicaid care management venture.
Huntsville Hospital Health System and the insurance subsidiary of Sentara Healthcare are creating a nonprofit “Regional Care Organization” to serve Medicaid beneficiaries in northern Alabama. The two organizations are forming the first of what will be five RCOs covering Medicaid beneficiaries throughout Alabama by 2016, when a capitated Medicaid reimbursement policy enacted by the legislature last year takes effect, assuming it does.
Though the policy has not been approved by the Centers for Medicare & Medicaid Services yet, Huntsville Hospital Health System and Sentara are confident in the prospects.
Huntsville Hospital Health System is a community-owned network with the flagship 941-bed Huntsville hospital that’s been dealing with the ebbs and flows of Medicaid since its inception, and selected Sentara as its partner.
A Norfolk, Virginia-based health system with an insurance subsidiary called Optima Health, Sentara entering Alabama precisely for the Medicaid business opportunity, hoping to use its 19 years of experience serving 165,000 Virginians enrolled in Medicaid managed care.
In Alabama, Medicaid has recently become a major cost concern for lawmakers, as enrollment has grown from 800,000 pre-recession to more than 1 million today — 20 percent of the state’s population — even without eligibility expansion under the Affordable Care Act.
After allocating $400 million from the state’s trust fund to fill a Medicaid shortfall in 2011, the legislature created the capitated managed care program in 2013 to phase out fee-for-service, envisioning a community-led network of providers and health organizations serving Medicaid beneficiaries and bearing risks in contracting with the state.
“Our goal is to preserve the fundamental principles of these existing programs through the development of RCOs in order to improve care coordination, clinical outcomes, patient engagement, and access while ensuring the long-term sustainability of Alabama’s Medicaid program,” said Donald Williamson, MD, state health officer and chair of the Medicaid transition task force that devised the policy.
Huntsville Hospital Health System and Sentara are aiming to be the first network for the new Medicaid coverage program once it gets approved and be ready a year ahead of schedule, estimating that they will cover about 120,000 Medicaid beneficiaries in the 10 counties of northern Alabama.
The two organizations say the details will be finalized in the coming months, pending approval from the state, which in turn still awaits a decision on a waiver application from CMS.
“The combined strengths of our two organizations will enable Medicaid beneficiaries to have access to quality, affordable healthcare,” said Michael Dudley, president of Sentara Health Plans, in a media release.