ACOs Branch Out to Medicaid with New Dual-Eligible Model

A new type of accountable care organization (ACO) is in the works for beneficiaries who account for a disproportionate share of home health spending, the Centers for Medicare & Medicaid Services (CMS) announced. The model may help pay for some of the sickest—and most costly—patients in coordinated care models.

Dual-eligible beneficiaries qualify for both Medicare and Medicaid. In home health, they cost nearly twice as much as non-dual-eligible beneficiaries in 2012, according to the Medicare Payment Advisory Commission (MedPAC), a commission that advises Congress on payments to health plans and providers in Medicare.

Aiming to improve the quality of care and reduce costs for this group of enrollees, the new Medicare-Medicaid ACO builds on the current Medicare Shared Savings Program.


The ACO concept is a group of various health care providers that work together to coordinate care to improve quality of care and lower costs. One goal is incentivizing hospitals, physicians, and post-acute providers—including home health—to work together more closely.

Photo source: MedPAC
Photo source: MedPAC

Health care providers that meet cost thresholds can share in savings, while those that don’t meet thresholds face financial penalties. But up until now those rewards and penalties only have involved Medicare payments, meaning ACOs do not have financial accountability for Medicaid expenditures for dual eligible patients, according to CMS.

Under the new ACO model, Medicaid payments also now will be included.


“On the surface, a Medicare-Medicaid ACO could prove to be beneficial for home- and community-based care because it would allow for consideration of combining Medicare and Medicaid home care benefits to comprehensively manage a patient in his/her own home, rather than working only within a more limited Medicare home health benefit,” William Dombi, vice president for law at the National Association for Home Care & Hospice (NAHC), told HHCN on the organization’s preliminary assessment.

The new model comes as care coordination has become a top priority across the health care system, and specifically home health care providers.

“This model aims to provide improved care coordination for those enrolled in both Medicare and Medicaid, allowing providers to focus more on providing care for their patients rather than administrative work,” Dr. Patrick Conway, CMS acting principal deputy administrator, said in a statement. “CMS continues to partner with and leverage the best ideas from states to transform our health care system to improve quality and care coordination. In the long run, this partnership will result in healthier people and smarter spending.”

The new model further pushes CMS’ efforts to move away from fee-for-service and toward value-based care. Furthermore, there has been a recent push to align Medicare and Medicaid programs for dual-eligible beneficiaries by the Bipartisan Policy Center (BPC), a nonprofit think tank based in Washington D.C.

Home health care providers have increasingly become partners in care coordination programs, including ACOs.

As payments continue to shift toward value instead of volume, home health care providers can position themselves to be care coordination partners, where they may also be able to share in any savings.

CMS is accepting letters of intent from states to work with CMS on the model for certain state-specific elements. The agency will enter into participation agreements with up to six states. Once a state is approved, a request for application will be released to ACOs and health care providers in that state.

Written by Amy Baxter

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