A prominent group of health centers in the North Bay has applied to form what is known under the new federal health law as an "accountable care organization" serving thousands of Medicare patients that, if approved, would be one of the first of its kind in the nation.

Santa Rosa Community Health Centers, Petaluma Health Center, West County Health Centers, Alliance Medical Center in Healdsburg, Clinic Ole in Napa County and Coastal Health Alliance in Marin County are all combining efforts to form the Redwood Community Care Organization.

"In terms of an (accountable care organization) that's based on (federally qualified health centers), I've been unable to find any," said Mark Knight, a health care consultant in Santa Rosa who is advising the new organization on expanding its provider network. "This may be one of the first in the country. If it's not the first, it's one of a very small number."

[caption id="attachment_71370" align="alignright" width="200"] Naomi Fuchs[/caption]

The health centers hope to receive approval for the accountable care organization, an initiative overseen by the Centers for Medicare and Medicaid that was established under ObamaCare, by January, according to Naomi Fuchs, chief executive officer of Santa Rosa Community Health Centers. She will also serve as CEO of the newly formed organization, also known as an ACO.

Under the ACO program by Medicare, health care providers and payers are encouraged to better coordinate care, hoping to achieve the so-called "triple aim" of improving quality of care, improving patient experience and reducing costs, officials said.

"All of our initiatives are about the triple aim," Ms. Fuchs said. "Better care, better health and lower costs. Our emphasis is on achieving that goal through improved coordinated care. We think a lot of the excess cost is because there isn't enough coordination between hospitals, the medical homes and health centers."

The group of health centers hopes to take advantage Medicare's "shared-savings" program, which financially rewards heath care providers who meet certain criteria. It's one of three types of ACOs that "facilitate coordination and cooperation among providers to improve the quality of care for Medicare Fee-For-Service beneficiaries and reduce unnecessary costs," according to a description by CMS.

It differs from other ACOs that often take on more risk, such as the Pioneer ACO Model, according to Mr. Knight. In addition, he said, it's being carried out by mostly primary care providers, instead of multi-specialty groups and hospitals that have made up much of newly formed ACOs.

"This only has upside potential," Mr. Knight said, noting that after the three-year initial period, the ACO might have to assume more risk.

The Redwood Community Care Organization is also different from most ACOs in that it's one of only a few driven by federally qualified centers. Typically, ACOs throughout the state have involved either physician groups or independent physician associations partnering with hospitals and an insurance product, such as the Meritage Medical Network, which was approved as the North Bay's first ACO earlier this year.  

The new organization will serve approximately 6,000 Medicare patients across the three counties, according to Kathie Powell, CEO of the Petaluma Health Center, who will serve as the ACO's compliance officer.

Ms. Powell said the group of centers, each already a part of the Redwood Community Health Coalition, viewed the formation of an ACO as an opportunity to both save money and, eventually, increase services with any savings.

"We think we will be very successful with this," she said. "If we can save money -- and if Medicare will share with us the savings -- that will give us extra revenue to improve services. It will generate the revenue to pay for our expenses that we incur in changing our systems. There's a lot of data management and data analysis that will need to be done."

Initially, health centers in Santa Rosa, Petaluma, West County and Alliance in Healdsburg applied for the ACO status but were denied because there weren't enough Medicare patients. All ACOs must serve a minimum of 5,000 Medicare beneficiaries. In response, health centers in Napa and Marin were asked to join, said Tanir Ami, CEO of Clinic Ole in Napa.

"What happened is in the first round, they wanted to focus on Sonoma County, and I think they rethought that and approached us and invited us to come in," Ms. Ami said, adding that Clinic Ole currently serves about 1,000 Medicare beneficiaries.

"I think it will be really interesting," she said. "Each of us will really have to partner with our local hospitals. The regionalization of it is also a good approach.  I think it will be really interesting to see how it works with primary care as the focus."

Ms. Powell said talks are under way with just about every hospital in the North Bay about coordinating care for health center patients who either end up in emergency rooms or need more complex care.

"We are going to work with all the hospitals," Ms. Powell said. "We don't direct patients to one particular hospital, unless it's for convenience."

Ms. Fuchs said hospitals themselves stand to benefit by potentially reducing readmission rates, for which they could now be penalized with Medicare beneficiaries under another health reform program.

"We've had a lot of support from all of the hospitals, because our incentives are aligned," Ms. Fuchs said. "They want to prevent re-admissions. We're doing a much better job of communicating with each other."

The ACO will eventually have a nonprofit board structure, with members from each participating health center. Tim Moran, CFO of the Petaluma Health Center, will double as CFO for the new organization. Mary Szecsey, CEO of West County Health Centers in Guernville, will serve as its treasurer. And Dr. Francisco Trilla, chief medical officer of Santa Rosa Community Health Centers, will double as chief medical officer.

Each health center contributed $5,000 to form the ACO, and two Catalyst Grants totaling $60,000 helped cover legal costs, Ms. Fuchs said.