Alabama is moving from the traditional fee-for-service delivery model to a managed-care model under a new regional care organization waiver.
The CMS approved the 1115 waiver last week (PDF) and will provide up to $748 million in the next five years to implement Alabama's regional care organizations.
In May 2013, Alabama passed legislation to implement regional care organizations, its version of accountable care organizations. The RCOs will be managed by local providers, and upon approval by the state will deliver healthcare services to Medicaid beneficiaries at a fixed cost.
Under state law, the RCOs are divided into five regions of Alabama. Eleven local providers have been approved by the state so far to participate, with at least two providers per region. The participants include community hospitals and clinics that will provide primary and specialty care, as well as behavioral health services. They include Centene, Triton, St. Vincent's Health System, and Jackson Hospital.
Danne Howard, Alabama Hospital Association executive vice president, applauded the CMS' approval, and added that through RCOs, “Medicaid recipients will receive better coordinated care in a more efficient way, and the state budget will benefit from ongoing efforts to bend the future cost curve.”
In December 2015, the Alabama Hospital Association defended participating RCO hospitals after the state received reports that some hospitals did not follow up with beneficiaries after inpatient stays, a violation of an aspect of the program.
Sara Rosenbaum, professor of health policy at George Washington University, said RCO hospitals should be able to implement the program efficiently because they will have insurance risk management in place. She added the RCO model is a “step forward” for Alabama and will provide a healthy framework for the state if it were to expand Medicaid under the Affordable Care Act in the future.
More than 650,000 (PDF) of Alabama's one million Medicaid recipients will receive their care through an RCO. The elderly, persons with disabilities, pregnant women, children under 19 and caretakers will receive benefits.
The agreement with the CMS begins April 1. Medicaid recipients will choose an RCO by August.
