2 ways states' Medicaid ACOs can overcome challenges

As Medicaid accountable care organizations (ACOs) continue to gain traction, their success largely will depend upon states' ability to generate savings and overcome challenges.

For the most part, states adopt ACOs for two reasons: To reign in cost-related concerns and to coordinate care across populations, according to a report from Leavitt Partners.

While states like Oregon, Colorado and Utah have the longest operational Medicaid ACOs, several other states have gotten into the game amid growing concern that the traditional managed-care model can no longer achieve actual savings or improve patient outcomes.

There are several key areas in which states need assistance when rolling out ACOs, the report notes. Here are two examples:

Focus on long-term services

Value-based payments typically focus on primary and acute care services. But for ACOs to become successful, states will need to experiment with and implement post-acute and long-term services.

Integrating long-term care services has been tricky due to incentive-based challenges. What's more, tight operating margins may hinder long-term care organizations unless they're able to implement ACOs. So, if states are able to more effectively incorporate long-term care into their ACOs, they may be able to enhance chronic disease management and reduce hospital readmissions.

Assume risk

States may experience some challenges as they balance provider and insurer roles while also learning how to generate shared savings. One hospital executive mentioned in the report, for example, raised concerns about providers' ability to manage risk for Medicaid patients due to their higher probability of having chronic conditions.

States concerned about assuming risk can look to Oregon as an example. The state unveiled its Coordinated Care Organization in 2012 and designed the program to assume full financial risk of its beneficiaries by managing their physical, behavioral and health needs. The program was able to drive down overall inpatient and outpatient costs, even though primary care costs increased.

For more:
- here's the report (.pdf)

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