State Medicaid agencies are increasingly looking to accountable care organizations (ACOs) as a way to improve health care quality and reduce costs. As additional states pursue Medicaid ACOs, both existing and newly designed models are becoming more sophisticated by expanding their scope of services, focusing on specific patient populations with complex needs, and weaving ACOs more fully into state health care environments.

Six states – Colorado, Iowa, Massachusetts, North Carolina, Rhode Island, and Washington – are furthering their Medicaid ACO programs with the assistance of the Center for Health Care Strategies’ (CHCS) Medicaid ACO Learning Collaborative, which is supported by The Commonwealth Fund. In working with CHCS, these states and others identified five critical issues to focus on to ensure long-term ACO success:

  1. Caring for Complex Populations. Early ACO financial success hinges on successful care management for patients with complex social and medical needs. New Jersey’s Medicaid ACO program recommends a payment model that focuses on this high-need population. States have also designed their ACO programs to integrate with Medicaid health home programs that provide care coordination payments for beneficiaries with multiple chronic conditions.
  1. Leveraging Existing Medicaid Initiatives. In addition to health homes, states are looking both to support Medicaid ACOs with existing programs and to support existing efforts with ACOs. Some states are using federal State Innovation Model (SIM) resources to help their Medicaid agencies advance ACO efforts by investing in health information technology or developing partnerships with organizations in communities served by ACOs. A number of states also participate in the Delivery System Reform Incentive Payment program and can integrate those innovations to drive ACO development, as New York is planning to do.
  1. Integrating Behavioral Health Services. Integrating behavioral health and physical health care services is a challenging undertaking, but is also widely recognized as one of the most effective approaches to care for patients with complex social and medical needs. Accordingly, states with existing Medicaid ACO programs are using a variety of approaches to integrate behavioral health services into Medicaid ACOs, with four including behavioral health in their total cost of care calculations, and six requiring reporting of behavioral health quality metrics.
  1. Supporting Care Coordination. ACOs are designed to provide better care to their patients through care coordination, and some states provide ACOs with resources designed to support care coordination. Minnesota offers data analytics support to its Integrated Health Partnerships (IHPs), providing them with information needed to better coordinate patient care. Vermont drafted care management standards for all of its ACOs, and Washington State’s Bree Collaborative is supporting consistent standards for care coordination across the state.
  1. Addressing the Social Determinants of Health. The impact of social determinants of health on health status is a priority topic in health care today. By focusing on patients’ total cost of care, ACOs have an incentive to address patients’ non-medical needs. Oregon’s ACO program allows its Coordinated Care Organizations to use portions of their global budgets on “flexible services” – such as cooking classes or athletic shoes – that patient care teams have identified as priority needs. As states move forward with future iterations of Medicaid ACO programs, they are incorporating more intense social service delivery. For example, Minnesota’s Accountable Communities for Health program is designed to address issues beyond the clinical needs of beneficiaries through the work of community care teams and partnerships with the state’s IHPs.

As states design new Medicaid ACO programs and reform existing ones, the experiences of more “veteran” ACO states and the priorities they have identified can inform policymakers around the country. By addressing these ACO priority areas, states can potentially achieve major gains in advancing the accountability of care for a critical group of Medicaid beneficiaries, particularly those with complex needs.


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