Potential Medicaid Changes Could Imperil New ACO Pilot

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By Michael D. Williamson

Potential changes to federal Medicaid financing may complicate a new pilot aimed at reducing costs for providers treating patients eligible for both Medicare and Medicaid, a health-care attorney said Dec. 19.

The Centers for Medicare & Medicaid Services recently announced the Medicare-Medicaid accountable care organization model. Through the model, the CMS intends to partner with interested states to offer ACOs in those states the opportunity to take on accountability for both Medicare and Medicaid costs and quality for their beneficiaries.

The biggest risk states may face is if they start preparing for the pilot project and the entire form of Medicaid financing changes under the incoming administration of President-elect Donald Trump, attorney Mark Reagan told Bloomberg BNA. Reagan, who represents providers, is in Hooper, Lundy & Bookman PC’s San Francisco office.

There is a growing consensus that Trump’s administration and the next Congress intend to drastically alter the Medicaid program in 2017. Significant changes to the program may affect states’ ability to pay providers that join the Medicare-Medicaid ACO model, which was announced Dec. 15. In addition, the future of the ACO program is in doubt as Trump has promised to repeal the Affordable Care Act.

ACOs are groups of doctors, hospitals and other providers working together to provide better, more coordinated care with the aim of lowering Medicare’s costs. They were created as part of the ACA.


Applications from states seeking to join the program are due Jan. 20, an agency fact sheet said.

All 50 states and the District of Columbia may apply for the program. The CMS will choose up to six states to participate, according to the Dec. 15 fact sheet.

Other Risks

Another uncertainty facing the demonstration project is the possibility the Center for Medicare and Medicaid Innovation, the agency within the CMS administering the Medicare-Medicaid ACO model, won’t continue if there’s a complete repeal of the ACA, Reagan told Bloomberg BNA.

As for whom the CMS may pick for the program, the agency is likely to choose states where there’s not a large population of Medicaid enrollees in managed care plans, John Feore, director at Avalere’s Center for Payment and Delivery Innovation, told Bloomberg BNA Dec. 19. Avalere is a Washington-based health-care consulting firm.

States with high levels of Medicaid enrollees in managed care probably won’t find the demo as attractive because the ACO program is built off of a fee-for-service model, Feore said.

Medicaid Expansion

If states have already bought into Medicaid expansion under the ACA, they’re more likely to pursue this, attorney Susan Feigin Harris told Bloomberg BNA Dec. 19. Those states that haven’t probably won’t want to joint the demo, she added. Harris is Houston-based health-care attorney with Baker & Hostetler LLP.

Providers in the Medicare Shared Savings Program (MSSP) for ACOs, or those applying to join, may apply to join the Medicare-Medicaid model after the CMS announces which states are picked for the demo, Feore said.

ACOs with a high dual-eligible population will likely be particularly interested in the pilot project, Feore told Bloomberg BNA.

In current Medicare ACO initiatives, beneficiaries who are Medicare-Medicaid enrollees may be placed in ACOs, a Dec. 15 CMS press release said. However, Medicare ACOs often do not have financial accountability for the Medicaid expenditures for those beneficiaries, according to the press release.

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, it said.

Industry’s Take

The pilot program may make it easier for safety-net providers, who typically care for a greater share of dual eligibles, to start ACOs, Maryellen Guinan, policy analyst at America’s Essential Hospitals (AEH), told Bloomberg BNA Dec. 19. The AEH is an industry group for safety-net providers.

Under the Medicare-Medicaid ACO model, so-called safety-net ACOs will be eligible to receive pre-payment of Medicare shared savings to support the ACO’s investment in care coordination infrastructure.

The AEH thanks the CMS for recognizing the significant upfront costs required to form an ACO, Guinan said. These costs can be prohibitive for essential hospitals, which serve vulnerable and complex patients, including those with chronic conditions who can benefit from the care coordination ACOs offer, she added.

To contact the reporter on this story: Michael D. Williamson in Washington at mwilliamson@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

For More Information

The CMS fact sheet is at http://src.bna.com/kRo.

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

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