The Local Approach To Medicaid ACOs

Executive Briefing | by | April 17, 2015


Athena Mandros
Athena Mandros

One of the effects of health care reform is that Medicaid is now the largest payer in the U.S. in terms of number of Americans enrolled (see Medicaid Is The Largest Payer – Now What?). And, the percentage of Medicaid beneficiaries enrolled in managed care plans has increased to 66% (see 66% Of All Medicaid Beneficiaries Enrolled In Managed Care Plans In 2014). In another parallel development, we reported last week that eight states have Medicaid ACOs up and running (see Eight States Sponsoring Medicaid ACOs; Nine States Pending), with more to come.

We’ve covered the Medicaid managed care issue – and its implications for providers frequently (see Planning For The New Managed Care and “Managed Behavioral Care” Evolves). But Medicaid’s move to embrace the ACO concept is a more recent development. Unlike the strict structure of Medicare ACOs, state models for ACOs vary widely and are more loosely defined. There are three general models that states use to implement and manage Medicaid ACOs:

  1. The state has a primary contract with health plans, which have the responsibility for the ACO operations (for example, Minnesota’s Integrated Health Partnerships).
  2. The state contracts with provider collaboratives to coordinate and manage care for enrollees (for example, Colorado’s Regional Care Collaborative Organizations).
  3. The state contracts with organizations that are partnerships with local provider organizations and private health plans.

Today, we’ll focus on the partnership model as it has interesting connotations for provider organizations. What do these partnerships look like? Mainly, risk-based contracting – each state pays the organization managing care a capitated rate to manage services for Medicaid enrollees and is at-risk for all services provided. We’ve found two examples of states that are utilizing this partnership model for managing care – Oregon and Alabama. Both models feature care that fits three criteria:

  1. Regionally based – Although managed care is available statewide, in both states, the managed care entities only provide health care to beneficiaries in specific regions in the state. If an individual moves to a new region, they must choose a new managed care entity.
  2. Focused on care coordination – Both states have emphasized care coordination to improve beneficiary experience and lower costs through medical home/health home models.
  3. Global budgets – Each state pays the organization a capitated rate to manage services for Medicaid enrollees and is at-risk for all services provided.

Oregon’s Move to Coordinated Care Organizations (CCOs) – In 2012, Oregon implemented CCOs, which are either local community-based organizations or a statewide organization that has community-based participation in governance. CCOs are at-risk for all services provided to Medicaid enrollees including physical, behavioral, and dental care. Currently, there are 16 CCOs that operate regionally and are “governed by a partnership among health care providers, community members, and stakeholders in the health systems that have financial responsibility and risk” (see Coordinated Care: The Oregon Difference). An example of this is Health Share of Oregon.

Health Share of Oregon is a non-profit collaborative organization that includes: Clackamas, Multnomah, and Washington counties; Kaiser Permanente and CareOregon health plans; and provider organizations Adventist Health, Central City Concern, Legacy Health, Oregon Health & Science University, Providence Health & Services, and Tuality Healthcare. The organization is governed by a board of directors comprised of representatives from each of the organizations. Health Share of Oregon is a good example of providers, government, and health plans coming together to coordinate and provide care for Medicaid enrollees. Kaiser Permanente brings expertise for managing a global budget, the counties bring their expertise in providing publicly funded behavioral health services, and Adventist Health and the other provider organizations bring expertise in service delivery and local management.

Alabama’s Move to Regional Care Organizations (RCOs) – In October 2016, Alabama intends to move from a primary care case management (PCCM) program to RCOs (see Alabama Medicaid Certifies 11 Probationary Regional Care Organizations In Shift To Risk-Based Care). RCOs are “provider-based, community-led organizations that will, through an at-risk capitated payment model, manage State Plan benefits” (see Alabama Medicaid Transformation). In late 2014, the state awarded “probationary” RCO contracts to 11 organizations that are beginning the RCO certification process. These organizations are partnerships formed by local provider organizations and national health plans. An example of these RCOs is Alabama Community Care in Region A.

Alabama Community Care-Region A is a non-profit organization jointly owned by Sentara Health Plans of Virginia and Huntsville Hospital System (see The State Of Medicaid In Alabama: Snapshot Of A Transition). The two organizations will partner to provide the full range of Medicaid services to enrollees in the northern part of the state. Non-profit Sentara Health Plans, a subsidiary of Sentara Healthcare of Virginia, serves a total of 454,000 members, including Medicaid beneficiaries in the state of Virginia and North Carolina. Huntsville Hospital System, a publicly owned, non-profit hospital system based in northern Alabama, has a total of 1,800 beds and twelve affiliate hospitals and provider organizations.

These are examples of “creative” partnership to fill the ACO role in Medicaid. Unfortunately, when it comes to Medicaid ACOs, there is enough variability that “when you’ve seen one, you’ve seen one.” But we know this is another step on the path toward the evolution of pay-for-value.  For more, join Suzanne Kieltyka, RD, CDE, Health Education Manager, Summit Strategic Solutions and OPEN MINDS Senior Associate Joseph P. Naughton-Travers, for their session, Where Do Behavioral Health Organizations Fit In The ACO Landscape? A Review Of Emerging Accountable Care Models, on June 17 at The OPEN MINDS Strategy & Innovation Institute.


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