Health Reform Managed Care Medicaid

A Medicaid ACO?

Medicare’s Shared Savings Program (MSSP) contracts with accountable care organizations (ACOs) to provide care for Medicare beneficiaries.  Reimbursement levels for these ACOs depends on quality and their ability to generate cost savings relative to the non-ACO national trend.  The goal is to align provider and payer incentives in improving quality and reducing cost.

Would such a model work for Medicaid?  That is what the state of Illinois is attempting with their Accountable Care Entity (ACE) program.  

ACEs are an integrated delivery system that includes primary care physicians, specialists, behavioral health, and hospitals. Like ACOs, ACEs reimbursement depends on reducing cost and improving quality.

ModernHealthcare adds more detail:

The ACE initiative started because of a 2011 Illinois law. It mandated that by Jan. 1, 2015, at least half of the state’s 3 million Medicaid beneficiaries had to be enrolled in some type of a managed-care plan. The state has created a variety of ways to accomplish this, such as traditional managed-care organizations led by private health insurers. But Illinois wanted to include hospitals and doctors as part of the solution, Hamos said.

Under the ACE model, the participating provider groups agreed to contract with Illinois for three years to care for defined Medicaid populations in a specific geography.

During the first 18 months of operation, hospitals and physicians will receive two types of payment from the state. Illinois Medicaid will still reimburse all medical claims on the usual fee-for-service basis, but the state will also give ACEs a care-coordination fee of $9 per member, per month.

In the second half of the contract and after it ends, providers will bear full financial risk under an undetermined capitated payment.

Many fear that these ACO-like organizations are just managed care by another name. The key is whether these new organizations can control costs like managed care organizations but are also able to simultaneously improve quality and patient satisfaction as well.


  1. Here in Oregon, the 16 geographically-designated Coordinated Care Organizations (CCOs) seem to provide a good model for that sort of Medicaid-specific managed care organization. They seem to have been pretty successful in the first few years of their development as part of the state’s Transformation Center’s initiatives. The CCOs are each measured according to a fairly extensive set of metrics that cover the various aspects associated with the Triple Aim of improving healthcare, health, and lowering costs. There is good information available about that on the State of Oregon’s website, under the Oregon Health Authority and its Transformation Center.

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