April 11, 2017
How ACOs Could Become the Norm for Medicaid

Value over volume is the thing of the future. Individual fee-for-service methods are gradually giving way to more integrated, coordinated patient-centered care. Over the years, this shift to value-based care has prompted hospitals, healthcare providers, and the Center for Medicare and Medicaid Services (CMS) to come up with alternative ways to organize healthcare delivery that would improve health outcomes in the most cost-effective way. One example of this is the Accountable Care Organization (ACO) which coordinates activities between various members within a physician group or hospital, holding them responsible for patient outcomes with the potential for shared savings rewards.

Expansion to Medicaid

ACOs were originally developed as an alternative care delivery model for Medicare, however, the concept soon spread to commercial organizations and, recently, to Medicaid as well. In 2012, ACO incorporation into Medicaid began in five different states across the country. This number has since increased to up to ten states, with eleven more that are considering the ACO route.

What does all of this mean for Medicaid? More value-based payments with shared savings and/or shared risk, quality metrics, and careful collection and data analysis, would be carried out. Additionally, examples like the transformation of the Massachusetts Medicaid Program into a Medicaid ACO, will bring integrated care to the Medicaid population and give ACO healthcare providers the chance to deliver care to Medicaid patients within their corresponding states. Furthermore, each state may incorporate ACOs to their Medicaid program in a slightly different way that depends upon the previous managed care experience of the state. And even within each state, there are still many options available on how payments would be allocated.

Documented success

Among the states that have already integrated ACOs into Medicaid, several have shown preliminary success. Colorado’s Regional Care Collaborative Organizations saved $77 million in 2015 with reduced ER visits and hospital readmissions for adult patients in the program. Minnesota’s Integrated Health Partnerships also reduced ER visits and inpatient care while exceeding their quality targets and saving $76.3 million within 2 years. Vermont’s Medicaid Shared Saving Program also experienced a $14.6 million saving within the first year of implementation and reaped the benefits of shared savings as a result of surpassing quality benchmarks. Oregon’s Coordinated Care Organizations also saw a 23% decrease in ER visits, a 32% decrease in hospital admission for diabetes-related complications, and a 68% decrease in hospital admissions due to asthma and chronic obstructive pulmonary disease-related complications.

If this trend in successful ACO-structured Medicaid continues and expands to prospective states, this could become another viable solution for optimizing care while reducing costs.