There is growing interest in leveraging Medicare’s Pioneer accountable care organization (ACO) model to serve Medicaid beneficiaries, with the goal of creating efficiencies by standardizing approaches to accountable care across patient populations and payers. Created under the Affordable Care Act, Medicare ACOs are groups of providers that join together to share in Medicare savings generated through better coordinated care. The Pioneer ACO model was designed for health systems that already have experience coordinating patient care and managing financial risk across multiple settings; it requires the immediate assumption of financial risk. The program, which launched in 2012, currently includes 23 health systems.

To explore the possibility of extending the model to Medicaid, the Centers for Medicare and Medicaid Services (CMS) and the Center for Medicare and Medicaid Innovation (CMMI) began soliciting input last December on how the Pioneer ACO model might be adapted to serve Medicaid beneficiaries, including those enrolled in both Medicaid and Medicare.

The Center for Health Care Strategies elicited input from the eight states participating in the Medicaid ACO Learning Collaborative, an initiative supported by The Commonwealth Fund. From the states’ perspective, many elements of the Pioneer ACO model may need to be adjusted to serve Medicaid beneficiaries. The Medicare Shared Savings Program (MSSP) model of accountable care, which was developed for a broader range of provider organizations, may prove a more viable option than the Pioneer ACO model given that many states have already incorporated elements of it into their Medicaid ACO programs. CMS should consider granting states flexibility around key parameters of either Medicare ACO program to account for the particular needs of Medicaid beneficiaries.

To chart a path forward, federal policymakers should take note of four policy considerations identified by states.

1. The health needs of Medicaid beneficiaries are different than those of Medicare beneficiaries.

Medicaid programs expend substantially more on behavioral health services than does Medicare, suggesting that Medicaid beneficiaries have a greater need for mental health, substance abuse, and social services than Medicare beneficiaries do. These issues are significant drivers of health care costs and outcomes. As a result, ACOs may need to partner with behavioral health providers, long-term services and supports providers, and community and social service organizations to deliver cost-effective care to Medicaid beneficiaries. To ensure that potential ACO partnerships among Medicaid and Pioneer or MSSP programs address these needs, federal policymakers should consider allowing Medicaid ACOs to adjust: 1) services that are included in Medicare ACOs’ total cost of care measurement; 2) quality metrics to reflect conditions prevalent among Medicaid beneficiaries; and 3) ACO governance and provider participation requirements.

2. The Medicare models do not include managed care beneficiaries.

Three-quarters of Medicaid beneficiaries are enrolled in some form of managed care, yet Medicare ACO models are designed to serve fee-for-service beneficiaries. If one policy goal is to reach the majority of Medicaid beneficiaries under a unified ACO program, federal policymakers will need to consider whether—and if so, how—to include Medicaid managed care beneficiaries in these programs.

3. Many states have established Medicaid ACO programs.

A growing number of states are experimenting with Medicaid ACO programs: Colorado, Minnesota, Oregon, Utah, and Vermont have already launched them while Illinois, Maine, and New Jersey plan to establish programs this year. In the absence of federal regulations, states are developing ACO programs with unique structural and functional requirements, payment methodologies, and quality measurement mechanisms. States also are structuring ACOs to complement other existing state programs, including those related to patient-centered medical homes and health homes. Of these, the ACO programs in Minnesota, Maine, and Vermont align closely with the MSSP model. Federal policymakers should consider policies that enable states to align with certain parameters of the Medicare models, while giving them flexibility around parameters such as payment, quality measurement, and patient attribution methodology that align with existing state investments.

4. Medicaid ACOs may not be able to assume risk immediately.

Pioneer ACOs are required to take on financial risk immediately. However, newly formed Medicaid ACOs may not be able to do so because of their lack of experience in managing risk and significant start-up costs. To encourage broad participation, the Medicaid ACO programs in Minnesota, Maine, and Vermont phase in risk in a manner similar to the MSSP. If the Pioneer model is adapted to Medicaid, policymakers should consider using a phased risk approach for Medicaid ACOs.

Encouraging Alignment

While the expansion of the Pioneer ACO model to Medicaid has the potential to create operational efficiencies and further the spread of ACOs, the MSSP accountable care model may be more easily adapted to serve Medicaid beneficiaries. Both models would have to be modified to address the particular needs of Medicaid beneficiaries and the inclusion of managed care.

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