The Rise and Future of Medicaid ACOs

Executive Summary

Call it what you may—ACO, ACE, CCO, CCE, or RCCO— Medicaid accountable care initiatives are on the rise. Although the accountable care concept was largely launched first within Medicare and the commercial sector, state-designed and Medicaid related care coordination, value based payment, and quality improvement efforts have increased steadily over the past several years. Oregon, Colorado, and Utah have the longest operational Medicaid accountable care programs, and several other states have recently either secured legislative support or operationalized efforts to incentivize quality care, reward positive patient outcomes, and lower costs. Local policy, demographic, and operational dynamics are shaping each state’s approach and contributing to a variety of models.

For simplicity’s sake, we will refer to the various state Medicaid accountable care models as ACOs. In this white paper, we will first provide background behind the movement and define some of the commonalities of state-sponsored Medicaid ACOs. We will also distinguish them from traditional managed Medicaid models. We will then discuss the emerging trends and pressures that are incentivizing states to move beyond traditional Medicaid managed care. We will next highlight different Medicaid accountable care initiatives occurring around the country and characterize areas where states likely have the most needs moving forward. Lastly, we will discuss the dynamics that will most likely influence the pace and prevalence of Medicaid ACO formation in upcoming years.