Alabama has received federal approval for delaying the start of its Medicaid privatization and restructuring demonstration, based on state budget issues that forced the delay.
Under the delayed schedule, the CMS demonstration formally began on April 1, 2017, and will end on March 31, 2022. The original timeline was April 1, 2016, through March 31, 2021. The state plans to convert its Medicaid program into a managed-care model using regional care organizations.
Alabama says it will begin enrolling beneficiaries into managed care by Oct. 1, 2017. First, the CMS will conduct an onsite review to validate the state's readiness to implement statewide managed care.
Enrollment into managed-care organizations will face delays if the state is found to not be ready, the CMS said in a March 30 letter.
The granting of the delay follows widespread problems in Iowa's Medicaid managed-care program since it was launched early last year. There, Republican Gov. Terry Branstad rushed through a broad transformation of the state's traditional Medicaid program to a private managed-care model, arguing it would save the state money.
But Iowa providers, patients and Democratic state legislators say there have been major problems with access, payment and administration, and the three participating insurers say they are losing lots of money on the program. Critics said the program was implemented too rapidly.
Last year, the CMS approved Alabama's Section 1115 waiver proposal that provided up to $748 million over five years to move the state away from traditional fee-for-service payment. But even with the federal dollars, state officials told the CMS it did not have money to help providers switch to regional care organizations.
Alabama's elected Republican leaders have refused to expand Medicaid under the Affordable Care Act, which would cover an estimated 300,000 additional residents and bring about $1 billion a year in federal funding into the state.
As part of the waiver extension, the CMS made clear that Alabama will not receive any federal dollars for any work the state has done to implement the regional care organizations prior to April 1, 2017.
Republican Gov. Robert Bentley said last year he was committed to moving forward with the switch to managed care. He acknowledged there were a few unknowns, including state funding and whether the Trump administration would give states block grants allowing more flexibility to write the rules for their Medicaid programs.
Alabama passed legislation in 2013 to implement regional care organizations, its version of accountable care organizations. The groups would be managed by local providers, which received fixed per-capital payments to deliver healthcare services to Medicaid beneficiaries.
More than 650,000 of Alabama's 1 million Medicaid recipients will receive their care through regional care organizations, operating in five areas of the state. Eleven local providers have been approved by the state so far to participate, with at least two providers per region.
Oregon previously implemented a similar system of regional coordinated-care organizations under a federal Medicaid waiver.
