Accountable care organizations (ACOs) are making headlines these days for moving the needle on more efficient health care delivery. Reports of ACO successes have surged — from the promising results of the Pioneer ACO and Medicare Shared Savings Programs and the announcement of the Next Generation ACO model in Medicare to health plans and health systems touting ACO achievements in the commercial market. What is less often reported is that state-led Medicaid ACO programs are forming and beginning to make similar strides in providing a viable model for improving quality and mitigating costs. 
Latest Medicaid ACO Developments
Early evidence from pioneering efforts in Colorado, Minnesota, and Oregon (all of which have participated in CHCS’ Commonwealth Fund-supported Medicaid ACO Learning Collaborative) has shown the value of Medicaid ACOs for improving quality and reducing cost for safety net populations. More recently, additional advances have further accelerated the ACO momentum.
Last month, Minnesota reported $61.5 million in savings during the second year of its Integrated Health Partnerships (IHP) demonstration, bringing the total amount saved over two years to $76.3 million. According to the Minnesota Department of Human Services, all nine IHPs achieved shared savings in the program’s second year, continue to exceed their quality targets, and collectively reduced inpatient and emergency department (ED) utilization among those they served. These dramatic results were achieved in part by the program’s commitment to integrating behavioral health care, connecting health care providers with community organizations, and aligning with Minnesota’s State Innovation Model (SIM) grant. The state has recognized the effectiveness of the demonstration, which currently has 16 IHPs serving 200,000 Minnesotans, and plans to expand to serve over 500,000 Medicaid and Medical Assistance enrollees by 2018.
New Jersey launched its Medicaid ACO Demonstration Project on July 1st, authorizing three ACOs in the communities of Camden, Newark, and Trenton to improve care coordination and patient engagement for high-need, high-cost Medicaid beneficiaries and the communities as a whole. The New Jersey ACO program is unique due to its community-based approach. Each ACO serves a defined geographic area and includes all hospitals, 75 percent of primary care providers, and at least four behavioral health providers in its community.
Medicaid ACOs Moving Forward
Although many Medicaid ACO programs are proving their worth, there are still many ways for them to become even more effective. A number of states are exploring how to address the social determinants of health through their ACO programs, such as incorporating social services agencies and public health initiatives. In addition, states are looking to align their programs with existing Medicare and commercial ACO efforts, improve state and ACO analytic capacity, and gradually increase the amount of financial risk borne by ACOs.
Despite the challenges that remain, Medicaid ACOs seem to be here to stay. In health policy circles, many speak of a “tipping point” when value-based purchasing efforts such as ACOs become woven into the fabric of our health care system – and Medicaid ACOs appear to be reaching that point. Nine states now have active Medicaid ACO programs in place, with at least eight more actively pursuing their own models – which means over one-third of states have launched or are developing Medicaid ACO programs. Even more states are considering implementing Medicaid ACO programs as part of their SIM grants. States are clearly seeing the potential that a Medicaid ACO program can offer, and if this momentum continues, we can expect to see further positive outcomes and additional program launches in the near future.
