The Commonwealth Fund Blog

Advancing Accountable Care Organizations in Medicaid

August 15, 2012

Tags: accountable care organizations Medicaid safety net

Tricia McGinnisBy Tricia McGinnis

The health professionals who care for people with Medicaid coverage are struggling to deliver high-quality, efficient care to their most vulnerable patients. Low-income patients with complex conditions often cycle in and out of the hospital because they don't have good primary care, have unmet mental health needs, and lack critical social supports, such as stable housing, that are essential for good health. At the same time, many health care practices and clinics that care for low-income Medicaid patients often lack the infrastructure, resources, and staff to ensure that these patients receive targeted interventions from community-based care teams that are familiar with patients' needs. The result is often poor patient outcomes, poor coordination of care across different providers, and wasteful spending from avoidable hospital use.

To address these challenges, several leading states are developing accountable care organizations (ACOs) for their Medicaid populations. Under this model, financial incentives are changed to encourage better-coordinated care delivery across providers, and accountability for patients shifts from health plans down to the practice level, where providers are better positioned to assess and help address patient needs. With over 150 ACOs now serving Medicare patients and significant ACO activity among commercial insurers, it is encouraging to see this approach gaining momentum in the Medicaid arena as well.

The emergence of Medicaid ACOs is particularly timely given the Medicaid expansion that will occur in 2014, which may cover an additional 11 million to 16 million Americans. Many of these newly eligible individuals will have urgent and complex health care needs, and providing them with high-quality, cost-effective care will be imperative. By building on complementary state innovations, such as patient-centered medical homes—a primary care delivery model that offers easy access to coordinated care and puts patients' needs first—and collaborations among medical, behavioral health, and social service providers, the ACO approach presents an opportunity to better serve the most vulnerable low-income populations.

To accelerate states' efforts, the Center for Health Care Strategies (CHCS) is launching Advancing Medicaid ACOs: A Learning Collaborative, with support from The Commonwealth Fund and additional funding from the Massachusetts Medicaid Policy Institute. The initiative will help seven states develop and launch ACO models. CHCS will work with Medicaid agencies in Maine, Massachusetts, Minnesota, New Jersey, Oregon, Texas, and Vermont, focusing on four critical areas:

  1. designing the essential building blocks for an ACO program;
  2. building robust financing, data-sharing, and measurement approaches;
  3. obtaining federal approval; and
  4. implementing the ACO program.

These seven states are pursuing a wide range of ACO models, including communitywide ACOs, provider-led ACOs, and hybrids that hold both health plans and providers accountable. They are all applying core ACO concepts, such as value-based purchasing, wherein payment is directly tied to improved health outcomes and lower costs; care management targeted to high-risk patients that use health services at an avoidably high rate; and data-sharing. Yet, each state is tailoring these strategies to address the needs of their unique state and local markets.

Oregon, for example, has created Coordinated Care Organizations (CCOs), which are community-based organizations governed by a partnership of providers and community members that benefit from cost savings generated through improvements in care. The CCOs are held responsible for losses if the total cost of care exceeds a global budget, and ultimately will be responsible for the integration and coordination of physical, behavioral, and dental health care. Minnesota is working under a payment demonstration that enables Medicaid to contract directly with providers to implement risk-sharing payment models (in which Medicaid plans and providers share in savings or losses) based on improvements in quality, patient experience, and cost. New Jersey's model relies on community-based ACOs that are modeled after the Camden Coalition of Healthcare Providers' "super-utilizer" approach, in which community-based care teams work to stabilize patients who are high utilizers of inpatient services.

Designing and implementing ACO programs is challenging, requiring Medicaid agencies to develop new payment approaches, certification criteria, quality improvement strategies, data-sharing and analytic capabilities, and new roles and responsibilities for their health plans. Provider innovation and collaboration, stakeholder input and buy-in, and Centers for Medicare and Medicaid Services (CMS) approval are all linchpins to success. To support these efforts, the Medicaid ACO Learning Collaborative will provide a forum for the seven states to tap into each other's experiences, as well as the expertise of researchers, providers, and health plans, as they refine their strategies. This learning laboratory will produce a broad set of lessons to all states and stakeholders considering Medicaid ACO programs.

It also should prove valuable to broader efforts being considered by the federal government, particularly the Center for Medicare and Medicaid Innovation's recently announced State Innovation Models initiative, which offers states the opportunity to test multi-payer payment and delivery models to achieve high-quality health care. Multipayer approaches promise to be particularly effective in engaging providers, as care models and payment methods would be similar across most, if not all, of a practice's patient population.

As Medicaid ACO models advance alongside commercial and Medicare efforts, we anticipate that all payers will begin to leverage the strengths of each respective approach and that multipayer opportunities will rapidly follow. By incentivizing patient-centered coordination across a broad array of physical health, behavioral health, and social services providers, ACOs offer tremendous opportunity to dramatically improve the way care is delivered for low-income patients who have a complex array of health care needs. Supporting and accelerating the development of ACOs in Medicaid is an important step on the path to achieving high-performance health care for vulnerable populations.