In May of last year, the Alabama legislature passed new reforms that overhauled the delivery of Medicaid in the state in favor of a capitated managed care system that will purportedly control the state’s burdensome Medicaid costs. The reforms are based largely on the recommendations of the Alabama Medicaid Advisory Commission which was appointed by Governor Robert Bentley to improve Medicaid’s financial stability. The commission recommended that a community-led network coordinate the health care of Medicaid patients on a regional basis, with networks ultimately bearing the risks of contracting with Alabama to provide that care.
Since the adoption of the reforms, the Alabama Medicaid Agency (the “Agency”) has taken several steps towards implementing the new model, which now awaits additional funding from the federal government.
At its core, the new legislation transforms Alabama Medicaid from a fee-for-service model to a managed care model, by which Medicaid beneficiaries will receive care through “regional care organizations” or “RCOs.” RCOs are corporations that contract with the Agency to provide a comprehensive package of Medicaid benefits (dental and long-term care not included) to beneficiaries in defined regions of the state. The RCOs will have large governing boards made up of a variety of stakeholders, including primary care physicians and risk-bearing participants in the RCO. The governing boards are required to obtain Agency approval, and such approval must be obtained by October 1, 2014.
The Agency is making steady progress towards implementing the new Medicaid RCO model. Last year, the Agency established the five (5) RCO regions: Region A covering the northern portion of the state; Region B covering the north and middle-eastern portion of the state; Region C covering the mid-western portion of the state; Region D covering southeast Alabama; and Region E covering southwest Alabama. A map of the regions is available at http://medicaid.alabama.gov/documents/2.0_Newsroom/2.7_Topics_Issues/2.7.3_RCOs/2.7.3_RCO_Districts_10-1-13.pdf. RCOs are not restricted to contracting with providers in their region; instead, RCOs are required to contract with any willing provider who is willing to accept the reimbursement and comply with the requirements of the RCO.
The Agency has also finalized and proposed a number of administrative rules, including the approval process for RCO governing board approval; the makeup of Citizens Advisory Committees; collaborator certification rules; and rules related to “probationary RCOs” which are organizations that are seeking to become RCOs. The Agency, per a presentation by Dr. Don Williamson, the State Health Officer for the Alabama Department of Health, seeks to begin accepting probationary RCO applications this summer, with the final date for certification set as September 30, 2014.
Ultimately, the funding for the transformation of Alabama Medicaid depends on the injection of federal funds. The Agency seeks to obtain those funds through an application for designation as a 1115 demonstration project. The 1115 demonstration is a federal program used to test new ways to deliver and pay for Medicaid health care services that improve care, increase efficiency and reduce cost. An applicant must show that the project will be budget neutral, meaning that means that during the course of the project Federal Medicaid expenditures will not be more than Federal spending without the waiver. The Agency utilized Navigant Consulting, a national consulting firm who will be assisting the Agency with implementation of the Medicaid reform, for assistance drafting the 1115 application. In its draft application, the Agency proposes to test the effectiveness of its Medicaid reforms while transitioning its program to one that focuses on “value over volume.”
The Agency is now reviewing public comments it received on its 1115 demonstration request, and intends to submit the finalized waiver to the Centers for Medicare and Medicaid Services (“CMS”) in May. Once submitted, CMS will consider the application and public comments received, and issue a decision not less than forty-five (45) days from the date the application was deemed complete.
Finally, the Agency has approved the One Health Record pilot project, which will test the benefits of Electronic Health Records (“EHR”) and Health Information Exchange (“HIE”) data for patients and providers, to be utilized along with the RCOs.
Looking ahead, the Agency has a long way to go before implementation of the reform is complete. Not only must CMS approve the demonstration project, but by 2016, RCOs must be both operational and able to accept risk/capitation. Notwithstanding, the RCO delivery model represents a sea change in the delivery of health care to Medicaid beneficiaries which all providers and health care executives should plan to address.
Jennifer E. Tyler is an associate in Balch & Bingham’s Atlanta office and a member of the Healthcare Practice Group.