For the past several years, a number of states interested in simultaneously improving health outcomes for Medicaid enrollees and reducing Medicaid program costs have turned to accountable care organizations (ACOs). As Medicaid ACOs rapidly evolve, our team at the Center for Health Care Strategies (CHCS) regularly updates a Medicaid ACO Fact Sheet to report on the latest state progress. There have been a number of notable developments recently, which are summarized below:

Rhode Island Launches Medicaid ACO Pilot

In January 2016, Rhode Island launched its Accountable Entities (AE) pilot, making it the ninth state with an active ACO or ACO-like program. The provider-led pilot effort, part of the state’s Reinventing Medicaid initiative, will run for three years. The program has two types of AEs, one broadly serves all Medicaid enrollees and one serves individuals with severe and persistent mental illness (SPMI) or serious mental illness (SMI). Five AEs serve the full population, while two serve enrollees with SPMI/SMI. Pilot AEs approved by the state can contract with Medicaid managed care organizations (MCOs) under a risk-adjusted total cost of care arrangement. The state plans to scale up the pilot program and release final certification standards for a longer timeline tied to other state payment and delivery system reforms.

Iowa Encourages Formation of Medicaid ACOs through Managed Care Contracts

Iowa is implementing value-based payment (VBP) through its Medicaid Modernization initiative, which will convert the state’s Medicaid program to risk-based managed care. Under the new managed care payment methodology, managed care organizations (MCOs) will be required to use the 3M value index score (VIS) to measure population health outcomes and total cost of care within VBP arrangements. The VIS quality score is already established in Medicaid, having been implemented in January 2014 under Iowa’s Medicaid expansion. Iowa’s MCOs are required to have at least 40 percent of members in value-based contracts by 2018. The program, slated to launch in March, will supersede the state’s existing ACOs for its Medicaid expansion population, though ACOs represent one way that MCOs could meet the 40 percent threshold.

Four States May Launch Medicaid ACO Programs in 2016

Of the eight states that are currently developing ACO programs, Alabama, Maryland, Massachusetts, and Michigan could launch their Medicaid ACO or ACO-like programs in 2016.

Alabama’s Regional Care Organizations (RCOs) were recently approved by the Centers for Medicare & Medicaid Services (CMS) as part of the state’s 1115 waiver. This clears the way for the geographically based, provider-led, full-risk nonprofit entities to begin providing care to an estimated two-thirds of the state’s Medicaid population later this year.

Maryland, Massachusetts, and Michigan are also developing ACO-like models through their State Innovation Model (SIM) grants. Massachusetts has held several stakeholder meetings and is well on its way to developing a Medicaid ACO model; Michigan is developing an Accountable Systems of Care initiative that emphasizes population health; and Maryland is developing an ACO-like model for Medicare-Medicaid enrollees.

Colorado and Minnesota Design “Version 2.0” of their ACO Programs

Following successful implementation of Colorado’s Accountable Care Collaborative (which has shown $77 million in net savings over four years) and Minnesota’s Integrated Health Partnerships (which has saved $76.3 million in two years), both states are considering how to enhance their programs in the future. Colorado intends to emphasize VBP and a whole-person definition of health during the reprocurement of its Regional Care Collaborative Organizations in 2017-2018. In its new model, Minnesota is looking to stabilize support for care coordination and date analytics and improve attribution methodologies for patients who are not accessing primary care. More information about these programs can be found via the recent CHCS webinar “Designing a Medicaid ACO Program: Insights from Trailblazing States” and brief “Program Design Considerations for Medicaid Accountable Care Organizations.”

Medicaid ACOs are likely to continue to spread, grow, and evolve at a rapid pace over the coming year. CHCS looks forward to helping five states — Maryland, Massachusetts, North Carolina, Rhode Island, and Washington — in their efforts to reduce costs and improve patient outcomes through the Medicaid ACO Learning Collaborative, supported by The Commonwealth Fund. Look to CHCS’ website for continued updates regarding Medicaid ACO progress.