Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Issue Briefs


Realizing the Potential of Accountable Care in Medicaid

Two women in masks look at computer in front of "Mass General Brigham" sign

Mass General Brigham staff members Segovia Lucas and Karla Chamorro Garcia work from a table outside the Community Care Van logging in patients. Medicaid accountable care organizations (ACOs) have achieved improvements in health care quality, costs, and, to a lesser degree, equity. Photo: David L. Ryan/Boston Globe via Getty Images

Mass General Brigham staff members Segovia Lucas and Karla Chamorro Garcia work from a table outside the Community Care Van logging in patients. Medicaid accountable care organizations (ACOs) have achieved improvements in health care quality, costs, and, to a lesser degree, equity. Photo: David L. Ryan/Boston Globe via Getty Images

  • While research on Medicaid accountable care organizations is limited, studies suggest they have achieved notable improvements in health care quality, costs, and, to a lesser degree, equity

  • State and federal policymakers have an important role to play in supporting the broader adoption of Medicaid ACOs, which are often impeded by complex regulations and stakeholder resistance

  • While research on Medicaid accountable care organizations is limited, studies suggest they have achieved notable improvements in health care quality, costs, and, to a lesser degree, equity

  • State and federal policymakers have an important role to play in supporting the broader adoption of Medicaid ACOs, which are often impeded by complex regulations and stakeholder resistance



  • Issue: Accountable care organizations (ACOs), designed to hold health care providers responsible for the quality and overall cost of patient care, have played a leading role in U.S. efforts to improve health system performance. While much of the experimentation with ACOs has focused on the Medicare program, Medicaid ACOs have been established in more than a dozen states. Much less is known, however, about the design of Medicaid ACOs and their impact on patients and costs.
  • Goals: Evaluate the impact of Medicaid ACOs on health care costs, quality, and access, and analyze the building blocks and barriers to their success.
  • Methods: Synthesis of findings from 30 empirical studies and 16 interviews with Medicaid agency leaders and safety-net providers in eight states — four with and four without Medicaid ACOs.
  • Key Findings and Conclusions: Medicaid ACOs have achieved improvements in health care quality, costs, and, to a lesser degree, equity. Barriers to their adoption include competing policy priorities and local stakeholder resistance. CMS could encourage broader adoption of ACOs in Medicaid by offering greater flexibility to meet local needs and provider capabilities while streamlining the process through which states can introduce new payment models.


Over the past decade, accountable care organizations (ACOs) have been a centerpiece of value-based purchasing initiatives designed to improve health care quality and slow spending growth for patients and the government. ACOs are groups of health care providers that agree to take responsibility for the quality and cost of care they deliver to a defined patient population. They are also seen as a tool for promoting access to primary, behavioral, and dental health care; systematically investing in population health; and addressing social drivers of health like housing and food security that influence health equity alongside clinical risk factors.

Medicaid ACOs have now been established in 14 states, signaling an upward trend over the past five years. Still, their adoption remains slow, and several states have even reported their discontinuation. Medicaid ACO initiatives vary widely across states, reflecting different priorities as well as underlying differences in Medicaid program structures and health care markets.1 States have pursued ACO policies through direct contracting with providers, allowing or mandating their managed care organizations (MCOs) to develop ACO contracts, or a hybrid approach.2

Payment models also vary both between and within states, and they tend to evolve as payers and providers learn and develop greater capacity for managing risk arrangements. For example, in the Massachusetts Medicaid (MassHealth) ACO program launched in 2017, ACOs that included MCOs in a partnership arrangement were paid by capitation, while primary care–based ACOs were paid on a fee-for-service basis with shared savings and losses.3

In this brief, we consolidate lessons from Medicaid ACOs established since 2010. Synthesizing findings from 30 empirical studies, we summarize what is known about the impact of Medicaid ACOs on total cost of care, utilization, quality, and equity. Using this literature and interviews with Medicaid and health system leaders in eight states — four with and four without Medicaid ACOs — we identify the facilitators and barriers to adoption, and ingredients for success. We conclude by reflecting on federal opportunities to support state ACO programs. (See “How We Conducted This Study” for further details on methods.)

What Are ACOs and How Do They Operate?

Accountable care organizations (ACOs) are groups of health care providers that coordinate treatment for a defined population of patients and voluntarily accept financial accountability for the cost and quality of their care. For example, a health system made up of a hospital and a multispecialty physician group could serve as an ACO for all the Medicaid patients that get their primary care from a clinician in the physician group. The health system would earn a bonus if those patients’ total health care costs fall below a benchmark, and they might pay a penalty if they exceed it.

Providers agree to be paid partially based on their performance on a set of quality measures, such as the percentage of their diabetic patients whose blood sugar is under control. Before becoming an ACO, the health system would not have been rewarded financially for patient outcomes or reducing unnecessary services.

ACOs are fundamentally provider payment arrangements, meaning they are a mechanism for aligning provider incentives with payer goals of controlling cost and improving outcomes. There are different ways to arrange the financial relationship between providers in an ACO, including:

  • full risk capitation, a fixed per capita payment
  • two-sided risk sharing, fee-for-service payment with the possibility of bonuses or losses if actual costs fall below or above a benchmark
  • upside-only shared savings, a fee-for-service arrangement with the potential for bonuses if the provider keeps spending below a benchmark.

ACO payments also incorporate quality measures through bonuses and/or as factors that affect the provider’s share of savings or losses.

Providers form ACOs based on rules established by payers. In ACO arrangements, populations may be assigned by the payer either prospectively — so all patients in a particular county may be assigned to an ACO that serves that geographic region — or retrospectively based on where patients get the plurality of their primary care.

Key Findings

Potential Benefits and Adverse Effects of ACOs

As of September 2022, we identified 30 empirical studies on Medicaid ACOs, many of which are focused on just four states: Oregon (the sole or partial focus of 16 studies), Minnesota (nine studies), Colorado (five studies), and Ohio (four studies) (Exhibit 1). Approximately two-thirds of studies used quantitative methods, with about half employing a control group to identify impact (see the appendix, “Annotated List of Medicaid Accountable Care Organization (ACO) Evaluations”).


Exhibit 1 shows the frequency of positive and negative impacts quantified in Medicaid ACO evaluations. Positive findings include impacts that are consistent with the goals of ACOs, such as cost savings and quality improvement; negative findings indicate the potential downsides of adopting ACOs, including reduced access to primary care. Of the 30 studies analyzed:

  • The most common positive impacts were an improvement in one or more process measures of quality and a reduction in preventable utilization, such as ambulatory care–sensitive emergency department visits.
  • Six studies demonstrated cost savings.
  • Of the four studies that included equity analyses, three studies found reductions in racial or ethnic disparities in health care following ACO implementation.
  • Only two studies found adverse effects on any measure — a decrease in primary care utilization and an increase in emergency department visits.

ACOs and Health Equity

Medicaid serves populations disproportionately facing health-related social risks such as food and housing insecurity and a lack of access to high-quality health care.4 Medicaid also plays a prominent role in providing health insurance to minoritized racial and ethnic groups, covering approximately 40 percent of Black, Latino, and American Indian/Alaska Native people.5 ACOs have the potential to improve health equity both by targeting the most at-risk groups with population health tools —within-Medicaid equity improvements — and by deploying resources that improve the health and well-being of Medicaid enrollees overall. For example, the Oregon ACO program includes language access to culturally responsive health services as one of its performance measures.

It’s not hard to surmise that the populations that will have the most housing and nutritional instability will be disproportionately folks of color and other underserved communities, so that feels like a really important piece. A lot of folks in our community were excited about wrapping our arms around that in Medicaid.

— Health system leader participating in ACO

In our interviews, respondents from health systems serving Medicaid enrollees through ACOs frequently looked at these reforms through a health equity lens, which motivated their participation and guided their approach to transforming care. Interviewees particularly highlighted the availability of flexible funding within ACO programs for addressing health-related social risk factors.

ACO Adoption Enablers, Barriers, and Amplifiers


  • Regulatory flexibility at the federal and state level
  • Leadership and vision
  • Data and analytic capabilities
  • Advanced primary care and value-based payment experience
  • Urgent circumstance (“burning platform”)
  • History of collaboration and trust


  • Competing priorities
  • Regulatory complexity
  • Resistance from managed care organizations or local Medicaid authorities


  • More prevalent use of ACOs or other value-based payment by non-Medicaid payers
  • Community engagement
  • Alignment of ACO arrangements within Medicaid

Enabling Conditions for ACOs in Medicaid

Based on our interviews, we identified several factors that enabled states to introduce ACOs in their Medicaid programs. First, Medicaid and health system leaders alike underscored the need for flexibility, both from the Centers for Medicare and Medicaid Services (CMS), which establishes conditions under which ACOs are permitted in Medicaid, and from Medicaid agencies, which can allow multiple pathways for providers to participate. For example, states could allow providers with less capacity to bear risk to begin with “upside only” contracts rather than require all ACOs to share in losses from the start (this approach was used in Maine and Vermont, for example).

Leadership was also viewed as an essential ingredient in bringing forth an ACO program. Two respondents noted that visible support for ACOs in the governor’s office was critical for their adoption. One respondent highlighted the importance of leaders being able to articulate a vision for ACOs that could be embraced by a wide range of stakeholders, including providers, patients, and taxpayers.

ACOs are predicated on the idea that providers can effectively manage population health when incentivized to control costs and improve the quality of care. But beyond these incentives, data and analytic capabilities are a prerequisite for effectively administering ACOs and identifying opportunities for improving patient care and reducing waste.6 Medicaid leaders in states that have not yet adopted ACOs pointed to the challenge of making sense of fragmented data as a rate-limiting factor, while nearly all respondents in states with ACOs cited success in aggregating data for clinical use, such as a list of patients who are due for cancer screening, as an important first step in transforming care delivery.

We always say we’re drowning in data and starving for information, so we have now hired a team of data analysts who are making sense of it all. . . . [We hope] our health centers can then use [these data] to drive performance at the local level.

— Health system leader in state with Medicaid ACOs

Respondents also highlighted that ACOs are natural extensions of “advanced” primary care programs like patient-centered medical home (PCMH) recognition and reward programs. PCMH programs seek to foster “safe, high-quality, affordable, and accessible patient-centered care by promoting stronger relationships with patients, addressing care needs more comprehensively, and providing time to coordinate care across all sectors of the healthcare system.”7 Federal, state, and multipayer initiatives over the past decade have promoted the adoption of PCMH models of care through up-front payments, technical assistance, and collaborative learning networks. Primary care providers that have benefitted from these programs — especially federally qualified health centers (FQHCs) — are better equipped to participate in ACOs, particularly in terms of workforce readiness and information technology capacity. Similarly, state Medicaid agencies that have experience with PCMH programs or any kind of value-based payment report they are better prepared to design and negotiate ACO arrangements, identify and address challenges, and manage costs and quality.

Pay-for-performance and other commercial value-based purchasing is also sort of in the DNA, in that it’s been around for a while. So people are kind of used to the idea of standardized quality measures and performance incentives.

— State Medicaid leader where ACOs have been implemented

It came as no surprise that early Medicaid ACO adopters identified some kind of “burning platform” as a key catalyst. While we heard about longstanding dissatisfaction with fee-for-service payment among all interviewees, a more immediate crisis or opportunity prompted some states to adopt ACOs while others remained on the sidelines. Some states were mobilized by the prospect of unsustainable costs because of Medicaid expansion, and others by the possibility of receiving time-limited federal funding, such as Delivery System Reform Incentive Payments or State Innovation Models Initiative payments.8

The ACO model is a substantial departure from the fee-for-service status quo. It involves uncertainty and risk of financial loss, so a history of productive collaboration — between Medicaid agencies, providers, and any MCOs that are involved — increases the willingness of providers to participate in voluntary ACO initiatives. Contracting details such as risk adjustment, specification of performance measures, and the division of losses and savings can have dramatic consequences and it may not be easy for providers to forecast what combination of parameters will provide the best balance of opportunities and risks. In light of these uncertainties, health system leaders highlighted both trust and transparency as critical to effective collaboration with their Medicaid counterparts.

Barriers to ACO Adoption

In states that have not adopted policies to institute ACOs, Medicaid leaders cite competing priorities as a key reason. Medicaid leaders in two states indicated they had been taking steps to implement an ACO program prior to the COVID-19 public health emergency and the introduction of major policies that changed how Medicaid is administered through the introduction of MCOs. Both states expect to launch their ACO programs in the near future.

Respondents in both ACO and non-ACO states identified complex, prescriptive federal regulations as a barrier to ACO adoption and optimal design. This includes the CMS section 1115 demonstration process, which is one regulatory pathway through which state Medicaid agencies can test new payment models. For example, CMS has recently articulated a framework for approving 1115 demonstrations that loosens budget neutrality requirements but limits the total dollar amount that can be spent on these services and requires states to meet provider payment rate standards.9 Some respondents suggested that meeting the new requirements could be challenging despite the relaxation of budget neutrality.

Not all states use 1115 demonstrations to introduce ACOs; some states have opted instead to use State Plan Amendments, which are agreements between a state and the federal government that govern how a state administers its Medicaid program. However, reforms put forward through this pathway must be statewide, offer comparable services, and free choice of provider, which may preclude more limited pilots or efforts to test competing models.

Several respondents noted that federal rules related to FQHC payment caused confusion about how these entities — which are an important part of the Medicaid delivery system — could be included in ACO programs.

Both the literature and our interviews suggest that resistance from other entities involved in administering Medicaid benefits, including local governments and MCOs, can complicate ACO implementation. In particular, implementing ACOs in environments where decision-making is more decentralized or delegated can be difficult because of divergent interests. For example, in some county-administered programs — where the county is a provider through safety-net hospitals — the state and county government Medicaid authorities may have different views on ACOs. Likewise, MCOs that operate in multiple states might seek to standardize contracts across states rather than customize to each state.

It is worth noting that some states that do not currently have ACOs have adopted other population- or value-based payment models.10 One respondent made it clear that their state’s goals of improving quality and equity were tied to a different alternative value-based payment model and the state had no intention of pursuing ACOs because of a question of fit.

Factors That Amplify the Benefits of ACOs

In a health system with multiple payers, such as government and private insurers, the impact of a payment model like ACOs will depend in part on the share of providers’ revenues governed by that contract. For example, if 10 percent of a provider’s patients are covered by ACO contracts and 90 percent are reimbursed using traditional fee-for-service, there will be less incentive to invest in systems to control cost and improve quality. Thus, the presence of larger shares of Medicare and commercially insured patients cared for under ACO contracts should amplify the effects of Medicaid ACOs. The need for comprehensive community engagement in the design of ACO programs and their ongoing oversight was another theme. Addressing health-related social needs necessitates collaboration with community-based organizations, which requires Medicaid ACOs to build bridges beyond the health care sector.

Finally, Medicaid agency respondents noted that states implementing ACOs through MCOs need to ensure their providers are not faced with multiple ACO incentive structures because such fragmentation increases administrative costs and dilutes incentives. Health system interviewees likewise suggested that providers were wary of participating in Medicaid ACO programs where individual MCOs had broad discretion to design their own contracts. Some states mitigated fragmentation by requiring exclusive arrangements between MCOs and providers or creating a single ACO program that is administered identically by all MCOs in a region.


The literature and key informant interviews bring into relief several key insights about Medicaid ACOs. States with advanced primary care, a history of value-based purchasing, and a compelling mandate for change are fertile ground for ACOs. And upfront investments in data and delivery system transformation can help their ACOs succeed — whether this is from new federal funds, states, or MCOs. It is also clear that providers cannot effectively respond to multiple, diverging incentive models, so state policymakers need to either centralize or coordinate ACO contracts in multipayer and managed care environments. Finally, broader adoption of ACOs in Medicaid may require additional flexibility from CMS for states to build models that meet local needs and provider capabilities.

Relatively few Medicaid ACO programs have been the subject of controlled studies and this lack of a strong evidence base is a barrier to effective policymaking. The extant literature suggests that ACOs can improve health care access and quality overall, and, in some cases, simultaneously improve equity. But more research is needed, particularly on how specific aspects of ACOs lead to improvements in health and health care among marginalized groups. For example, how have Medicaid ACOs been able to increase primary care use among Black patients? These insights also may have salience for the recently launched ACO Realizing Equity, Access, and Community Health model for Medicare beneficiaries, which specifically targets equity both in the selection of participants and the model requirements.

Federal policymakers have a number of opportunities to support state innovation in the ACO space. First, CMS should consider whether the 1115 demonstration approval process and requirements for ACO initiatives can be streamlined to lower the barriers to entry and allow states to tailor ACOs to their contexts. A more expedited review process could also be beneficial. Demonstration approvals can take as long as a year, making it hard for states to maintain momentum and stakeholder engagement. Second, CMS should continue to offer information and shared learning opportunities for Medicaid decision-makers, including clear guidance on common stumbling blocks such as federal rules that limit downside risk sharing with FQHCs. Finally, in states where both Medicaid agencies and providers have comparatively limited resources, new federal funds could jumpstart ACO implementation and support rigorous evaluation.


We identified papers and reports through keyword searches in PubMed and Google Scholar using keywords including “ACO,” “Accountable Care Organization,” “coordinated care organization,” and “Medicaid” from 2010 to the present. A total of 667 papers were identified from the initial search. We screened the papers and identified 79 papers that met our criteria. We then categorized the papers as empirical papers, case studies/series, policy papers, or review articles. To synthesize findings on impact (as opposed to design or implementation alone), the 26 empirical papers and six case studies/series were used for further analysis.

Following the screening, we screened titles and abstracts of the 26 empirical papers and six case studies/series for relevant information (see the appendix). If the abstract was insufficient in providing adequate data, we reviewed the full text. Two members of the research team independently reviewed the characterizations of studies, which were then entered into a standardized form. Discrepancies were reviewed by additional members as needed and resolved through discussion. This information was entered into a computer database. Data elements included publication year, states included, study years, study design, outcomes, years post-ACO, and relevant paper findings. From the literature review, we extracted key themes relating to barriers and facilitators for state agencies and health systems to participate successfully in ACO programs.

Using the themes extracted from the systematic reviews as a starting point, we conducted semistructured qualitative interviews with key informants from eight state Medicaid agencies and health systems that serve Medicaid patients. The eight states selected included four that have adopted Medicaid ACO programs (Iowa, Massachusetts, Minnesota, and Oregon) and four that have not (California, Missouri, Pennsylvania, and North Carolina). States represented a mix of geographic locations, history with ACO programs, and adoption of innovative features such as incentives for health equity. We sought to explore perceptions of effective policy approaches, tools and resources provided, data requirements, and the organizational relationships and capabilities currently present (or lacking) to address population health within state agencies and participating provider organizations. We also explored respondents’ views on the barriers and facilitators to the expansion of ACOs in Medicaid, including federal policies and regulations. The target of our interviews were state Medicaid directors for state Medicaid agency interviews and chief medical officer or executive director for health system interviews.

Two members of the research team independently transcribed the interviews and coded them for recurring themes. Any discrepancies were resolved by discussion. The analysis was completed using NVivo 12 (QSR International). All portions of the study were approved by the Harvard University Institutional Review Board (IRB22-1280).


We are grateful for assistance with our literature search from Carol Mita of the Harvard Countway Library. We also thank our interviewees for their insights and candor, which were essential to the project.

  1. States That Reported Accountable Care Organizations in Place,” State Health Facts, Henry J. Kaiser Family Foundation (KFF), Jan. 2023. Based on our interviews with eight states and review of the literature, we recognize that there is some variability in the way that states characterize ACO activity in surveys. For example, in the KFF survey cited here, Oregon does not report ACO activity after fiscal year 2016, while we consider their CCOs to meet the definition of ACOs (notably, the published evaluations take that stance as well). In addition, based on our interviews we know that some states that report ACO activity in the KFF survey are identifying ACOs that are voluntarily sponsored by their Medicaid managed care organizations without state Medicaid agency involvement.
  2. For background on the role of MCOs in Medicaid, see Elizabeth Hinton and Jada Raphael, 10 Things to Know About Medicaid Managed Care (Henry J. Kaiser Family Foundation, Mar. 2023).
  3. Katharine Heflin and Jim Lloyd, Massachusetts’ Medicaid ACO Makes a Unique Commitment to Addressing Social Determinants of Health (Center for Health Care Strategies, Dec. 19, 2016).
  4. Katharine H. Schiavoni et al., “Prevalence of Social Risk Factors and Social Needs in a Medicaid Accountable Care Organization,” Health Services Research 56, no. S2 (Sept. 2021): 80–1.
  5. Jamila Michener, “Race, Politics, and the Affordable Care Act,” Journal of Health Politics, Policy and Law 45, no. 4 (Aug. 2020): 547–66.
  6. Frances M. Wu et al., “Using Health Information Technology to Manage a Patient Population in Accountable Care Organizations,” Journal of Health Organization and Management 30, no. 4 (June 2016): 581–96.
  7. Katharine J. Moran and Rosanne Burson, “Understanding the Patient-Centered Medical Home,” Home Healthcare Nurse 32, no. 8 (Sept. 2014): 476–81.
  8. Alexandra Gates, Robin Rudowitz, and Jocelyn Guyer, An Overview of Delivery System Reform Incentive Payment (DSRIP) Waivers (Henry J. Kaiser Family Foundation, Oct. 2014).
  9. Cindy Mann and Mindy Lipson, “CMS’s New Policy Framework for Section 1115 Medicaid Demonstrations,” To the Point (blog), Commonwealth Fund, Jan. 10, 2023.
  10. Rob Houston, Anne Smithey, and Kelsey Brykman, Medicaid Population-Based Payment: The Current Landscape, Early Insights, and Considerations for Policymakers (Center for Health Care Strategies, Nov. 2022).

Publication Details



Meredith B. Rosenthal, C. Boyden Gray Professor of Health Economics and Policy, Harvard T.H. Chan School of Public Health

[email protected]


Meredith B. Rosenthal et al., Realizing the Potential of Accountable Care in Medicaid (Commonwealth Fund, Apr. 2023).