"We're the main health care provider for the area — we're going to have to be involved in it," McCormack said. "We have the most at stake."
Alabama's Medicaid reform law will shift the state's Medicaid services from a payment-for-treatment system to a managed care model and allow the program to establish contracts with private regional care organizations to provide services at a fixed cost.
The goals of the reform are to provide improved care for Medicaid patients while lowering costs. Though Gov. Robert Bentley just signed the reform bill into law June 6 and full implementation of it is several years off, area health care providers are already making plans and discussing their level of involvement.
Looking for partners
McCormack said RMC administrators have been meeting with state representatives to learn more about the details of the law and how it will be implemented. He said RMC will possibly team with UAB Hospital to establish a regional care organization for the area. RMC has partnered with UAB in recent years, such as becoming one of the first affiliates in UAB's Cancer Care Network, to provide better health care to the region, officials say.
"UAB is in our region and we certainly want to work with them," McCormack said regarding being a regional care provider. "We are excited ... this is an opportunity to improve patient health in this state."
McCormack said 12 percent of RMC's patients receive Medicaid.
RMC has already made efforts to become a larger, regional provider. RMC bought Jacksonville's hospital in December, renamed it RMC Jacksonville and has been upgrading it with new technology to offer better services ever since.
Dr. Donald Williamson, state health officer, said he and other Alabama health officials have been meeting with health care providers to establish regions in the state in which regional care organizations will operate. The regions must be set by Oct. 1.
A regional care organization can be formed by a group of hospitals, by a large physicians’ group or a combination of hospitals and physicians and home-health agencies, Williamson said. The groups must put up the capital to establish their regional care organizations. State hospitals and physicians must be part of a regional care organization to serve Medicaid patients, Williamson said. The regional care organizations must be established by Oct. 1, 2014, and will then have two more years before they must be fully organized and implemented.
"Think of it as a holding company ... the RCOs will have contracts with hospitals, doctors and home health agencies to provide a range of services to Medicaid clients," Williamson said.
Medicaid provides health care services mainly for low-income children, nursing home residents and disabled patients.
McCormack said he was not concerned about the costs associated with setting up a regional care organization.
"There will be costs up front but we should make up for it later on through savings," McCormack said.
Also under the law, the regional care organizations will provide services under a managed care system and not a fee-for-service system the way Medicaid is traditionally operated, Williamson said.
"Now what Medicaid is going to do is pay for patients ... they'll give you an 'X' number of dollars to take care of patients," he said. "That will create incentives for RCOs to better manage care, so Medicaid spending will be less and you will get better outcomes."
Will Ferniany, CEO of UAB Health System, said RMC is one of UAB's significant associated health providers and expects to work with the Anniston-based hospital as the implementation of the Medicaid reform begins.
"We'll work with anyone who provides Medicaid in our region," Ferniany said.
A Western model
Ferniany said UAB is still in the very early stages of determining how it will operate under the new law.
"We've been talking with providers in the area about how to go about implementing this," Ferniany said.
Ferniany said he has also been talking with health officials in Oregon to learn about their experiences since their state began a program similar to Alabama's Medicaid reform law just last year.
Christine Stone, spokeswoman for the Oregon Health Authority, said that state’s Medicaid reform program began in August and was designed to provide better health care for patients while keeping costs low.
"One way is to do that is through coordinated care," Stone said.
Oregon has 15 coordinated care organizations made up of various hospitals, mental health agencies, physician groups and home health organizations, who work as a team to provide better preventative and managed care, Stone said.
"For example, for a person with diabetes, who might be coming into the hospital multiple times for treatment, which costs a lot, the hospital could have a home health person help them prepare proper meals ... so they'll be healthier and might require less treatment," Stone said. "Or it may be something as simple as having a group visit of several diabetics to the hospital at once for check ups and information ... to keep costs down."
The Oregon organizations also each have one budget, are accountable for health outcomes for the populations they serve and have health care improvement goals for various services. Data on health care service improvements and cost management were not yet available.
"The idea is to reduce spending or spending growth by slowing preventable hospitalization and offering better-managed care," said Julia Paradise, an analyst with the Kaiser Family Foundation, a nonprofit, nonpartisan group that focuses on health care issues facing the country. "Alabama has been looking closely at what Oregon is doing."
Williamson noted that Alabama's reform actually goes further than Oregon's by switching to a managed care system of Medicaid.
"We're trying to take it further and more quickly," Williamson said.
Paradise said Kaiser did not yet have any data to show whether models like Oregon's or Alabama's work as planned.
"But we're certainly interested — we're doing some work now to understand a little better about what it takes to operate these models," Paradise said.
Bryan McCauley, CEO of Stringfellow Memorial Hospital in Anniston, said his facility is in the very early stages of preparing for the law.
"I can't say we have a specific plan in mind, but we are certainly aware of the situation," McCauley said.
Still, McCauley conveyed some skepticism about how successful the reform will be once it is in full swing.
"Whether this is going to result in cost savings remains to be seen," McCauley said.
Staff writer Patrick McCreless: 256-235-3561. On Twitter @PMcCreless_Star.