Medicare-Medicaid ACO Model joins growing number of state-based efforts to improve quality of care, lower costs

Today, the Centers for Medicare & Medicaid Services (CMS) announced the Medicare-Medicaid Accountable Care Organization (ACO) Model, a new initiative designed to improve the quality of care and lower costs for beneficiaries who are enrolled in both Medicare and Medicaid.

The Medicare-Medicaid ACO Model builds on the current Medicare Shared Savings Program and advances efforts to partner with states in transforming the health care delivery system.

“This model aims to provide improved care coordination for those enrolled in both Medicare and Medicaid, allowing providers to focus more on providing care for their patients rather than administrative work,” said Dr. Patrick Conway, CMS acting principal deputy administrator. “CMS continues to partner with and leverage the best ideas from states to transform our health care system to improve quality and care coordination. In the long run, this partnership will result in healthier people and smarter spending.”
In current Medicare ACO initiatives, beneficiaries who are Medicare-Medicaid enrollees may be attributed to ACOs. However, Medicare ACOs often do not have financial accountability for the Medicaid expenditures for those beneficiaries. The Medicare-Medicaid ACO Model will allow Medicare Shared Savings Program ACOs to take on accountability for the quality of care and both Medicare and Medicaid costs for Medicare-Medicaid enrollees.

CMS is accepting letters of intent from states that wish to work with CMS to design certain state-specific elements of the model. The Medicare-Medicaid ACO Model is open to all states and the District of Columbia that have a sufficient number of Medicare-Medicaid enrollees in fee-for-service Medicare and Medicaid. CMS will enter into participation agreements with up to six states with preference given to states with low Medicare ACO saturation. Once a state is approved to participate in the model, a request for application will be released to ACOs and health care providers in that state.

The Medicare Shared Savings Program and other ACO initiatives were created to change the incentives for how medical care is delivered and paid for in the United States, moving away from a system that rewards the quantity of services to one that rewards the quality of health outcomes. ACOs are groups of doctors, hospitals, and other health care providers who voluntarily come together to develop and execute a plan for a patient’s care and share information, putting the patient at the center of the health care delivery system.

The Affordable Care Act, through the creation of the Center for Medicare and Medicaid Innovation, allows for the testing of innovative payment and service delivery models, such as the Medicare-Medicaid ACO Model. Today’s announcement is part of the Administration’s broader strategy to improve the health care system by paying providers for what works, unlocking health care data, and finding new ways to coordinate and integrate care to improve quality.

In March 2016, the Administration announced that it met the ambitious goal – eleven months ahead of schedule – of tying an estimated 30 percent of Medicare payments to quality and value through alternative payment models by 2016. The Administration’s next goal is tying 50 percent of Medicare payments to alternative payment models by 2018. The Health Care Payment Learning and Action Network established in 2015 continues to align efforts between government, private sector payers, employers, providers, and consumers to broadly scale these efforts to achieve better care, smarter spending, and healthier people.