Rob Houston, MBA, MPP and Deborah Kozick, MPH, Center for Health Care Strategies

January 22, 2015

Safety net providers — including safety net hospitals, community health centers, federally qualified health centers, and rural health centers — play a critical role in caring for low-income populations. While Medicaid accountable care organizations (ACOs) could surely benefit from the participation of safety net providers, these providers have been relatively slow to engage in Medicaid ACO arrangements.

State participants in CHCS’ Medicaid ACO Learning Collaborative, made possible by The Commonwealth Fund, have found that some safety net providers hesitate to participate in Medicaid ACOs due to:

  • Financial concerns, including infrastructure/start-up costs, modifying their business model, and bearing risk;
  • Tenuous relationships with larger health systems/hospitals, MCOs, and other safety net providers; and
  • Change fatigue from implementing a variety of payment and quality-related health reform initiatives.

With these factors in mind, several state Medicaid ACO initiatives have taken steps to encourage safety net provider participation. States may wish to consider the following strategies to support the integration of safety net providers in Medicaid ACO programs.

1.  Allow a Flexible Governance Structure

While a one-size-fits-all Medicaid ACO model may be appealing to states from an administrative standpoint, safety net providers may be more amenable to a governance structure that allows these providers the flexibility to participate as part of a hospital-based ACO, community-based ACO, or by forming their own safety net-led coalitions. Flexible Medicaid ACO approaches in Maine, Minnesota, and Vermont have led to the formation of safety net-led coalitions like the FQHC Urban Health Network (FUHN) in Minnesota, Community Health Accountable Care (CHAC) in Vermont, and the Community Care Partnership of Maine.

2.  Set Flexible Population Size Parameters

States can consider flexible population size requirements to encourage small provider organizations and rural providers to form ACOs. Both Minnesota and Maine have made the option of smaller attributable population size available to participating ACOs. To account for the additional variability of a smaller population, these states have raised the minimum savings rate for smaller ACOs. While this does set the bar higher for participating ACOs to achieve savings, it also mitigates the risk that smaller ACOs are taking on and, above all, allows their participation in the program.

3.  Phase in Financial Risk

States often consider phasing in financial risk over a period of time to support the transition of safety net providers from volume- to value-based payment. While large hospital systems may be able to accept risk immediately, safety net providers will generally need time to: develop adequate reporting and staffing infrastructure; build relationships across historically siloed organizations; and recoup any costs related to forming or joining an ACO. To encourage participation from a broad spectrum of providers, Maine, Minnesota, and Vermont have provided two tracks that ACOs can select — one with “upside only” risk, where an ACO can share in savings, but is not penalized if costs rise; and one with “symmetrical risk,” where an ACO can share in savings, but also must pay the state a percentage of any losses. For the symmetrical model, all three states have chosen to phase in financial risk for ACO participants over three years.

4.  Support Infrastructure Development and Facilitate Data Exchange

Timely and accurate data exchange is a cornerstone of ACO success, and states can help safety net providers achieve this functionality. While 93 percent of FQHCs had an electronic health record (EHR) system in place in 2013, less than half were able to share these data outside their organizations. States can facilitate information sharing among ACO providers by enabling them to access established, statewide health information exchanges (HIEs) and by recommending or subsidizing “approved” EHR software that is compatible with the HIE. Maine, Minnesota, and Vermont have made funding available to help ACO providers build the needed infrastructure improvements under their State Innovation Models (SIM) projects.

5.  Establish Provider Supports

State-sponsored provider supports, such as learning collaboratives and staff trainings can help providers understand ACO requirements, identify and implement needed changes in care delivery, and support information sharing across ACO providers. Currently, all states with active Medicaid ACO programs have established learning collaboratives for participating providers. Oregon runs peer-to-peer exchanges (conferences, workshops, and webinars) across its Coordinated Care Organizations via the Oregon Health Authority Transformation Center. Colorado requires each of its Regional Care Collaborative Organizations (RCCOs) to set up a learning collaborative to train its RCCO providers on data analysis and care coordination techniques. States have also used direct technical assistance, onsite guidance around clinical standards, and other community-based engagement to help foster collaboration.

Safety net providers are essential to help manage low income patients with complex needs, but they face challenges that may inhibit their participation in ACO activities. By making Medicaid ACO programs flexible enough to accommodate safety net providers and facilitate their participation by providing infrastructure and provider supports, states can enhance the effectiveness of these programs in providing care for high need Medicaid populations.

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