Accountable Care Organizations (ACOs) for Duals

At the June 3 Alliance for Health Reform meeting on Dually Eligible Beneficiaries (i.e. beneficiaries who have Medicare and Medicaid benefits), the discussion focused on how to address the needs of the most complex, costly and frail  beneficiaries.  Currently only 100,000 of 9 million duals are in integrated systems.  The incentives in Medicare and Medicaid clearly reward shifting care and costs to the other program, e.g. if a beneficiary is shifted to a hospital from nursing home, Medicare will pick up the cost or if a beneficiary is shifted to a nursing home from a community setting, Medicaid will pick up the costs.

While the integrated Medicare and Medicaid funding and benefits in the PACE program is a gold standard for the dual population, this program remains small and is currently serving only 22,000 beneficiaries.  Multi-payer ACOs offer an alternative that could better serve a broader segment of the dual population.  ACOs are patient centered and offer a structure to coordinate Medicare and Medicaid benefits and funding streams.  By focusing on shared savings from better care and integrated care, dual ACOs could avoid the cost shifting incentives in the current programs. Partial or full capitation from Medicare and Medicaid would facilitate the ability of ACOs to make the best use of federal and state funds in the most appropriate setting.  Minnesota is embarking on an ACO model for its Medicaid program and a number of the Integrated Delivery Systems in Minnesota are pursuing a Medicare Pioneer ACO demonstration.  While the Minnesota ACOs will not be specialized dual ACOs, they will have duals assigned to their providers and there will be an opportunity to see how flexible the ACO model can be in serving this vulnerable population.  CMS has funded 15 states to develop fully integrated dual programs and states should consider the ACO model as part of their designs.