Medicare-Medicaid ACO Model launched to improve ‘dual eligible’ care

The Medicare-Medicaid Accountable Care Organization (ACO) Model, an effort to improve the quality of care and lower costs for beneficiaries who are enrolled in both Medicare and Medicaid, has been announced by CMS. Current Medicare ACOs often do not have financial accountability for the expenditures of Medicaid beneficiaries attributed to their organization. The new Medicare-Medicaid ACO Model is designed to build on current Medicare Shared Savings Program (MSSP) ACOs by allowing MSSP ACOs to take on accountability for the quality of care and both Medicare and Medicaid costs for Medicare-Medicaid enrollees (also known as “dual eligible beneficiaries”).


Medicare ACOs are made up of groups of doctors, hospitals, and other health care providers and suppliers who come together voluntarily to provide coordinated, high-quality care to the original Medicare fee-for-service beneficiaries. Section 3021 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) created the Center for Medicare and Medicaid Innovation, which provides for the testing of innovative payment and service delivery models. The MSSP (established by ACA section 3022) and other ACO initiatives were created to change the incentives for how medical care is delivered and paid for, moving away from a system that rewards the quantity of services to one that rewards the quality of health outcomes.

The new model

According to a CMS fact sheet, The Medicare-Medicaid ACO Model will allow new and existing MSSP ACOs to take on accountability for the full spectrum of Medicare Part A, Part B, and Medicaid costs for their patients. If Medicare-Medicaid ACOs in a state generate Medicare savings for their Medicare-Medicaid enrollees, states (as well as the Medicare-Medicaid ACO) may be eligible to share in those savings with CMS. States may choose from three options for when to begin the first 12-month performance period for the Model ACOs in their state: January 1, 2018; January 1, 2019; or January 1, 2020.

Through the Medicare-Medicaid ACO Model, CMS also seeks to encourage participation from safety-net providers in alternative payment models. Medicare-Medicaid ACOs that qualify as “Safety-Net ACOs” will be eligible to receive pre-payment of Medicare shared savings to support the ACO’s investment in care coordination infrastructure.

Eligibility and application process

CMS is accepting letters of intent from states that wish to work with CMS to design certain state-specific elements of the model, such as the details of the Medicaid financial methodology and shared savings/shared losses arrangements, selection of additional quality measures, and additional ACO eligibility requirements. States will also have the option to include additional Medicare-Medicaid enrollees not assigned under the MSSP and Medicaid-only beneficiaries in the target population for the Model.

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 sent to ACOs and health care providers in that state.

In addition to applying to participate in the Medicare-Medicaid ACO Model, ACOs will be required to apply to participate in the MSSP and ultimately sign a participation agreement to participate in the MSSP in order to participate in the Medicare-Medicaid ACO Model.

Kusserow on Compliance: OIG advisory opinion relating to hospice

The HHS Office of Inspector General (OIG) released Advisory Opinion No. 16-08, which involves an arrangement “in which a hospice would make a supplemental payment to the nursing facilities in which the hospice’s dually eligible patients reside when the nursing facilities–instead of the hospice–receive payment for their patients’ room and board expenses.”  The OIG concluded that while this arrangement could potentially generate prohibited remuneration under the Anti-Kickback Statute (AKS), it would not impose administrative sanctions under that statute.

The facts presented to the OIG related to a “Proposed Arrangement” in which a hospice would make a supplemental payment to the nursing facilities in which the hospice’s dually eligible patients reside when the nursing facilities—instead of the hospice—receive payment for their patients’ room and board expenses.  The “Requestor” was a non-profit corporation licensed by the state to provide hospice care and the state has developed a “Demonstration Program” to test a fully integrated care system that manages the continuum of benefits for dually eligible beneficiaries. The state selected several “Participating MCOs” to provide services to dually eligible beneficiaries in the Demonstration Program. Under the Proposed Arrangement, Requestor would require a nursing facility to provide evidence of the amounts the Participating MCO pays the nursing facility for patients who have, and patients who have not, elected hospice. For a Dually Eligible Hospice Patient, Requestor would pay the nursing facility a standalone amount that, when combined with the payment the nursing facility would receive from the Participating MCO for the Dually Eligible Hospice Patient, would result in the nursing facility receiving the same amount as it would have received if the patient had not elected hospice.   Requestor certified that these steps would prevent the nursing facility from being reimbursed more than the Participating MCO pays for a patient who has not elected hospice.

The OIG found the Proposed Arrangement would involve the transfer of remuneration by Requestor to potential referral sources, the nursing facilities, in the form of the supplemental payment.  It cited its 1998 Special Fraud Alert that covered a situation in which a hospice remits payment to nursing facilities for Dually Eligible Hospice Patients’ room and board expenses only after first receiving payment for such expenses from a state’s Medicaid program and found the Requestor’s prior arrangement to that situation. The Proposed Arrangement was found to be consistent with that Special Fraud and it would help to ensure that the nursing facility has no incentive to provide a lower level of room and board services to Requestor’s Dually Eligible Hospice Patients or to discourage patients from electing hospice.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2016 Strategic Management Services, LLC. Published with permission.

Dual eligible demonstrations huge undertaking, but may show promise

Coordinating care for beneficiaries who are eligible for both Medicare and Medicaid (dual eligibles) can be challenging and demand a significant amount of state resources. Reports released by CMS that evaluated the implementation of its Financial Alignment Initiative demonstrations in various states and in Washington’s health home managed fee-for-service model revealed the unexpected challenges states faced in attempting to improve care coordination across the two complex and distinct health care programs. However, the reports also indicate that Washington’s demonstration shows initial promise in significantly reducing Medicare costs.

Multi-state Demonstrations

CMS contracted with RTI International to review the first six months of implementation of dual eligible demonstrations in California, Illinois, Massachusetts, Minnesota, Ohio, Virginia, and Washington. The demonstrations arose from CMS’ Financial Alignment Initiative, which was created to test integrated care and financing models for dual eligibles. The goals of the demonstrations were to develop person-centered care delivery models that would integrate medical, behavioral health, and long-term services and supports (LTSS) for dual eligibles and address the current challenges associated with care coordination between Medicare and Medicaid.

The review examined integrated delivery systems, enrollment, care coordination models, beneficiary safeguards, and stakeholder involvement in each of the demonstrations. Although the models and features of the demonstrations varied across the states, the review found notable similarities.

For states that adopted the capitated model, three-way contracts have been negotiated between CMS, states, and Medicare-Medicaid plans (MMPs) that create delivery models, provider networks, access and quality standards, beneficiary protections, requirements for data submissions, and payment arrangements. In order to implement the demonstrations, state officials had to entirely redesign eligibility, enrollment, and data systems so that they could effectively interface with Medicare.


The review found that fewer beneficiaries enrolled during the first six months than were previously anticipated, which may have been caused by the difficulties states experienced in locating beneficiaries and persuading them of the benefits of the service model.

Other findings

States also made significant investments in training care coordinators, providers, and MMPs about dual eligibles’ special needs. States used CMS funds to establish or enhance assistance and ombuds programs to support beneficiaries so as to facilitate informed and impartial decision making and to resolve problems. Stakeholders were found to be actively engaged in ensuring the transparency of the demonstration and to be responsive to beneficiary needs.

Resource commitments

States found that the upfront time and resource commitment that was needed to implement the demonstrations “far exceeded” their estimates, with officials reporting that they were unaware of many of the Medicare requirements. As a result, reconciling the differences between Medicare and Medicaid operations took up a significant amount of resources. At the time of publication, it is unclear whether the resource commitments will lessen as the demonstrations progress.

Washington Model

RTI also reviewed the first six quarters of Washington’s managed fee-for-service model, which uses Medicaid health homes, which were established under Section 2703 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) in an attempt to integrate care for high-cost, high-risk full-benefit Medicare-Medicaid beneficiaries. Medicaid health homes are the lead local entities in the demonstration that are responsible for care coordination and bridge care across the health care delivery systems.

Care coordinators

Beneficiaries are assigned a health home coordinator who will assist in coordinating their services. A coordinator works with beneficiaries to develop Health Action Plans (HAPs) and has access to information about the enrollee’s utilization of Medicare and Medicaid-financed services through the Predictive Risk Intelligence System (PRISM). The HAP will be used to prioritize health action goals and will set forth action needed to accomplish those goals and identify where intervention and supports are needed.


The state hired a sufficient number of health care coordinators so that it was able to offer the health home demonstration to beneficiaries in all of its 37 counties. Enrollment in the demonstration increased every quarter, with over 50 percent of eligible beneficiaries enrolled by the end of 2014.

Cost impact

Initial findings suggest that the demonstration has been successful in reducing costs. The review found substantial reductions in monthly, per-member Medicare costs that exceeded the largest monthly payments that were made for health home services. The report notes that further adjustments will be required to account for changes in Medicaid costs, but that the health home intervention has successfully lowered costs.

Quality of care

It is not yet known whether the quality of care was able to be maintained or improved while the cost savings were achieved by the Washington demonstration. However, none of the findings suggest that the demonstration is having a detrimental effect on beneficiaries or on costs. While further research will provide more information about the demonstration’s impact on utilization and quality of care, Medicare Utilization Data did show some decreases or leveling off of rates of inpatient hospitalization admissions in general and physician office visits. Other measures showed either no trend change during the demonstration period. The report notes, however, that the trends could be attributable to the fact that new demonstration entrants may have fewer health care and LTSS needs than earlier program entrants.

Continued Evaluation

RTI will continue to monitor and evaluate all of the demonstrations by collecting information on a quarterly basis and producing annual reports for each demonstration performance years, which will be posted on CMS’ website. RTI will also examine the experiences of beneficiaries, their families, and caregivers to determine whether the demonstrations meet their goals of developing person-centered delivery models. Additionally, a quantitative evaluation of quality of care, utilization, access to care, and cost will also be conducted as soon as the data is available.