Medicaid Accountable Care Organizations in Four States: Implementation and Early Impacts

April 2019 | Regina I. Rutledge, Melissa A. Romaire, Catherine L. Hersey, William J. Parish, Stephanie M. Kissam, Jennifer T. Lloyd | State Innovation Models

Policy Points:

• Maine, Massachusetts, Minnesota, and Vermont leveraged State Innovation Model awards to implement Medicaid accountable care organizations (ACOs). Flexibility in model design, ability to build on existing reforms, provision of technical assistance to providers, and access to feedback data all facilitated ACO development. Challenges included sustainability of transformation efforts and the integration of health care and social service providers.
• Early estimates showed promising improvements in hospital-related utilization and Vermont was able to reduce or slow the growth of Medicaid costs.
• These states are sustaining Medicaid ACOs owing in part to provider support and early successes in generating shared savings. The states are modifying their ACOs to include greater accountability and financial risk.

Context: As state Medicaid programs consider alternative payment models (APMs), many are choosing accountable care organizations (ACOs) as a way to improve health outcomes, coordinate care, and reduce expenditures. Four states (Maine, Massachusetts, Minnesota, and Vermont) leveraged State Innovation Model awards to create or expand Medicaid ACOs.

Methods: We used a mixed-methods design to assess achievements and challenges with ACO implementation and the impact of Medicaid ACOs on health care utilization, quality, and expenditures in three states. We integrated findings from key informant interviews, focus groups, document review, and difference-in-difference analyses using data from Medicaid claims and an all-payer claims database.

Findings: States built their Medicaid ACOs on existing health care reforms and infrastructure. Facilitators of implementation included allowing flexibility in design and implementation, targeting technical assistance, and making clinical, cost, and use data readily available to providers. Barriers included provider concerns about their ability to influence patient behavior, sustainability of provider practice transformation efforts when shared savings are reinvested into the health system and not shared with participating clinicians, and limited integration between health care and social service providers.Medicaid ACOs were associated with some improvements in use, quality, and expenditures, including statistically significant reductions in emergency department visits. Only Vermont’s ACO demonstrated slower growth in total Medicaid expenditures.

Conclusions: Four states demonstrated that adoption of ACOs for Medicaid beneficiaries was both possible and, for three states, associated with some improvements in care. States revised these models over time to address stakeholder concerns, increase provider participation, and enable some providers to accept financial risk for Medicaid patients. Lessons learned from these early efforts can inform the design and implementation of APMs in other Medicaid programs.

Keywords: Medicaid, alternative payment models, state innovation models, accountable care organizations.

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DOI: 10.1111/1468.0009-12386
Published in 2019