FFS, Risk-Based Medicaid ACO Programs Similarly Reduce Costs

February 15, 2017 - In a comparison of two state Medicaid Accountable Care Organization (ACO) programs, researchers in a JAMA Internal Medicine study found that Oregon’s global capitation ACO model produced similar healthcare savings and care quality improvements to Colorado’s fee-for-service-based model.

“Two years into implementation, Oregon’s Medicaid Accountable Care Organization, characterized by a large federal investment and movement to global budgets, exhibited improvements in some measures of care but no apparent differences in savings compared with the Colorado Medicaid Accountable Care Organization model, which was more limited in scope and implemented without substantial federal investments,” wrote study authors.

With only nine states electing to establish Medicaid ACO programs, Oregon and Colorado were two of the first to launch their programs. Colorado established its Medicaid Accountable Care Collaborative (ACC) in 2011 by developing seven regional Care Collaborative Organizations (RCCOs).

Medicaid reimburses RCCOs a per member per month payment to help pay for administrative support for boosting collaboration between Medicaid beneficiaries, providers, and community services. The Medicaid ACOs are then paid via a fee-for-service model.

As of 2014, the Colorado Medicaid ACC covered about 70 percent of the state’s Medicaid beneficiaries.

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A year after Colorado’s Medicaid ACO program launch, Oregon initiated its Medicaid transformation by developing 16 Coordinated Care Organizations (CCOs). The CCOs build on the traditional ACO model, but impose full financial risk on providers. Providers are reimbursed through global capitated payments and the program requires them to be accountable for mental health, addiction treatment, and dental services on top of traditional healthcare.

Unlike the Colorado Medicaid ACO program, Oregon received $1.9 billion from the federal government to establish the CCOs.

Using Medicaid claims data, researchers set out to explore how enhanced payments for care coordination and management as in Colorado’s Medicaid ACO program affected care quality and cost performance compared to a more comprehensive model as in Oregon.

The data revealed that Oregon’s more comprehensive Medicaid ACO program in terms of benefits covered and downside financial risk claims reimbursements did not significantly reduce healthcare spending compared to Colorado’s initiative.

Oregon’s Medicaid ACO program decreased total standardized per member per month spending by $6 from 2013 to 2014, but the changes in Oregon compared to Colorado revealed only a $2 difference in cost reductions over the same period.

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Generally, standardized healthcare spending on most cost measures was also similar in the first and second years of the Medicaid ACO programs.

While healthcare spending was not significantly different across the two initiatives, Oregon’s more comprehensive Medicaid ACO program did improve care quality slightly better than Colorado’s program. Oregon Medicaid ACOs improved or maintained care quality for the following access measures:

• Well-child care visits for patients aged 3 to 6 years old performance improved about 2.7 percent more compared to Colorado’s Medicaid ACO performance

• Adolescent well-care visit performance improved by 6.77 percent compared to Colorado Medicaid ACO performance

• Adult preventative ambulatory access performance improved about 1.36 percent versus Colorado’s Medicaid ACO performance

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Oregon’s Medicaid ACO program also decreased preventable healthcare utilization compared to Colorado’s initiative. Avoidable emergency department visits decreased by 1.8 visits per 1,000 member-months more than Colorado’s program and acute prevention quality indicator preventable hospitalizations dropped by 1.01 hospitalizations per 1,000 member-months more.

Low-value care performance, however, did not improve more under Oregon’s Medicaid ACO structure versus Colorado’s. Oregon Medicaid ACO performance was not significantly different for three out of four low-value care measures.

Although, Oregon Medicaid ACOs did improve imaging avoidance for uncomplicated headache by 2.36 percent more than Colorado Medicaid ACOs.

Additionally, researchers noticed that primary care utilization performance significantly decreased in both Medicaid ACO programs despite both states putting primary care at the center of their programs. Primary care visits dropped by 36.4 visits per 1,000 member-months in Oregon’s program and by 12.6 visits per 1,000 member-months in Colorado’s program.

“These observed decreases may reflect a lack of primary care capacity attributable to the 2014 Affordable Care Act Medicaid expansion, wherein both states increased their Medicaid enrollment substantially: Colorado increased its Medicaid enrollment by 41% by July 2014, whereas Oregon increased its enrollment by 59%, which was the second largest increase in the country,” study authors wrote.

Researchers advised the states to track primary care utilization to ensure Medicaid beneficiaries are not facing restricted care access.

Although, they also noted that primary care utilization declines may also reflect more case management substitutions.

Oregon’s Medicaid ACO program may have modestly improved care quality more than Colorado’s initiative, but researchers concluded that there is no clear winner. However, Colorado’s Medicaid ACO program structure may be “more feasible for other states to adopt, in comparison with the larger scope of the model pursued by Oregon.”

Despite modest improvements, Oregon’s Medicaid ACO program did not produce enough healthcare savings in two years to cover the $1.9 billion federal investment.

The study stated that the Medicaid ACO program may not have realized greater savings because the ACOs need more time to implement care delivery and practice changes. Researchers added that there “may be limits to the extent to which relative savings can be achieved in a period of shrinking (as opposed to growing) healthcare spending.”

Without federal investment for implementation, the Colorado Medicaid ACO program’s “focus on manageable, incremental steps has been followed by growth in enrollment, reductions in utilization, and improvement in some key performance indicators.”

Therefore, the Colorado Medicaid ACO structure may be better suited for other states looking to implement a Medicaid ACO program.