New Jersey’s Approach To Medicaid ACOs Is An Experiment Worth Watching

As the July issue of Health Affairs recognized, Medicaid has become a hotbed for health care transformation, with states increasingly turning to Accountable Care Organizations (ACOs) and medical homes to reduce costs and improve care delivery in their Medicaid programs. New Jersey joined the ranks in July by certifying three of six applicants for the New Jersey Medicaid Accountable Care Organization Demonstration Project — the Camden Coalition of Healthcare Providers, the Healthy Greater Newark ACO, and the Trenton Health Team.

Although the New Jersey ACOs were authorized by a 2011 law signed by Governor Chris Christie, this approach to care for Medicaid patients did not originate within state government, and the state did not invest in their formation. Rather, this approach grew out of work by Dr. Jeffrey Brenner and the Camden Coalition of Healthcare Providers, famously chronicled in Atul Gawande’s 2011 The New Yorker article, “The Hot Spotters.” Brenner and his colleagues analyzed local hospital claims data and discovered that a small percentage of patients were responsible for a substantial proportion of hospital costs. These findings were a wake-up call for the need to implement a new model of health care delivery for the state’s Medicaid enrollees. Subsequent advocacy by Brenner and other stakeholders led to the 2011 legislation.

The legislation requires each Medicaid ACO to be a nonprofit corporation. Their governing boards must include “general hospitals, clinics, private practice offices, physicians, behavioral health care providers, and dentists; patients; and other social service agencies or organizations.” The board must include voting representatives from at least two consumer organizations that advocate for patients.