UMass Memorial to lead MassHealth overhaul in Central Mass.

Photo | Courtesy of UMass Memorial Health Doug Brown, previous president of UMass Memorial Health’s Community Hospitals

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By Emily Micucci

A senior official at Umass Memorial Health Care said the region’s dominant healthcare system will lead participation in a MassHealth pilot program that will change how providers are paid for delivering care to Medicaid patients.

Under a $52.5-billion Medicaid waiver deal approved by the federal government earlier this week, the MassHealth program will provide $1.8 billion to Bay State hospitals to launch accountable care organizations (ACOs) that will incentivize health care providers to care for patients on a budget, rather than under a traditional fee-for-service model.

Doug Brown, chief administrative officer at UMass Memorial and president of the system’s community hospitals, said the organization will likely discuss partnering with all other players in the region, both within the system and outside of it, in the MassHealth ACO pilot.

“We think we will be able to form an organization that will create integrated care in our region for all Medicaid patients,” Brown said, adding that UMass Memorial officials will likely reach out to all providers in the region to gauge interest in pooling patient populations together to minimize risk to individual providers.

MassHealth overhaul a ‘tipping point’

The ACO model has been pushed by policy makers as a better alternative to fee-for-service, which has the potential to create waste because providers aren’t rewarded for managing the cost of delivering care.

Brown said the medicaid waiver deal, which was championed by the Baker Administration, is a significant tipping point for how Massachusetts providers are paid. While many commercial insurers incorporate value-based care into contracts that rewards providers to managing costs, MassHealth has not employed this model until now. At $15.5 billion this year, the program is the biggest driver of healthcare spending in Massachusetts and the largest component of the state budget.

Given its size and experience with ACO models – such as participation in a Medicare shared savings program – Brown said UMass Memorial is in a strong position to lead participation in the MassHealth pilot, slated to begin in 2017. He said UMass Memorial will likely discuss partnering with all smaller providers in the region to pool together the patient populations they serve in one large MassHealth ACO contract.

What is not known is how steady Medicaid funding will as Bay State hospitals launch MassHealth ACOs. Brown noted that recent Medicaid cuts have been painful to UMass Memorial and other providers, so the feasibility of a risk-based approach to managing MassHealth patients is unclear.

Edward Moore, president and CEO of Southbridge-based Harrington HealthCare, cited this as a significant challenge in the applying for the MassHealth ACO program. Moore said since applications are due in January, Harrington officials must quickly determine how to proceed without much information on the financial benefits.

With about 11,000 patients covered by its insurance contracts, Moore said it will need to ally with a larger player, like UMass Memorial, in order to proceed.

On the insurance side, Fallon Health is working aggressively with area providers to offer MassHealth ACO contracts, according to Michael Nickey, executive director of MassHealth Programs at Fallon Health. Nickey said MassHealth has been slow to adopt an ACO model while commercial insurers have offered similar programs for years because the Medicaid population is unstable and therefore hard to budget for. But he noted that the MassHealth ACO program will employ a tapered funding approach, building in some time for programs to fly on their own.

“There’s some promise to this. I think it won’t be easy and there may not be success year one or two,” Nickey said.