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State Medicaid ACO program sees double year-over-year savings

Colorado's experiment with accountable care in Medicaid has led to a second year of savings, and other states are taking note.

Colorado Medicaid achieved $44 million in gross savings or "cost avoidance" in its accountable care collaborative program during the 2012-2013 fiscal year, the Department of Health Care Policy and Financing announced.

Most of that $44 million is going back to providers and regional care organizations as performance incentive payments, but the state is taking a slice -- $6 million, double what the state government saved last year.

"In terms of savings, the program has exceeded our expectations," deputy Medicaid director Laurel Karabatsos said in a media release. "Next year at this time, we expect to be talking not only about savings, but also about all the ways the program provides value to our providers, clients and the community."

Colorado's Medicaid accountable care collaborative was created by the legislature and launched in 2010, with most beneficiaries covered through unmanaged fee-for-service after previous capitated managed care initiatives mostly failed.

The accountable care collaborative preserves fee-for-service but tries to incentivize valued-based, coordinated care in primary care settings through a number of policies.

Under the program, the state reimburses primary care providers with fee-for-service plus $4 per member per month for home-based care, while seven regional collaborative care organizations help primary care practices coordinate patient care and receive between $8 to $10 per member month, and a data and analytics contractor reports on performance to the state.

$1 from the monthly member payments to primary care practices and the coordination organizations are withheld and then later paid out as incentives, depending the quality of care provided by practices and care managers.

Starting initially as a pilot program, now nearly half of the state's Medicaid beneficiaries, some 352,000, are enrolled, about two-thirds of them children.

Early results showed promise -- at least $9 million in gross savings and $3 million going back to state coffers, with reduced ER rates, hospital readmissions and high-cost imaging services.

In the recently ended fiscal year, the Department said that hospital readmissions for program beneficiaries declined by about 15 percent and high-cost imaging declined by 25 percent. Emergency room utilization among beneficiaries increased slightly, by almost 2 percent, but less than the 2.8 percent increase for beneficiaries not enrolled in the Medicaid accountable care collaborative.

Colorado was the first state to experiment with accountable care in Medicaid, and now some other states are looking to similar policies.

After using partial- and no-risk Medicaid contracts in the 2000s, Utah just started a Medicaid ACO program in January and is incorporating some innovative patient-centered incentives.

Four ACOs, including Intermountain Healthcare's managed care subsidiary Select Health and the University of Utah Health Care, are covering about 70 percent of the state's 245,000 Medicaid beneficiaries, employing direct incentive payments to patients as a way to encourage cost-effective care -- going to a clinic for non-emergency care as opposed to the ER -- and improve self-management.