Medicaid and Permanent Supportive Housing for Chronically Homeless Individuals: Emerging Practices From the Field. 7.2. Accountable Care Models in Medicaid


Accountable Care Organizations and similar integrated care models emphasize person-centered, continuous and comprehensive care. The CMS Center for Medicaid and CHIP Services released two letters to state Medicaid directors in 2012, providing guidance regarding Medicaid Integrated Care Models (ICMs), including ACOs and ACO-like models for payment and service delivery reform.87

As described by the Kaiser Commission on Medicaid and the Uninsured, ACO models vary, but they typically include three key elements: a provider organization at the base, accountability for shared outcomes, and the potential for shared savings. ACOs all focus on patient-centered care and involve the increased use of data and quality metrics, increased coordination of care, and incentives designed to reward improved outcomes. ACOs are intended to achieve savings in comparison with costs of health care services delivered and financed through fee-for-service arrangements. While ACOs are intended to improve health care quality while also controlling costs for all patient populations, they are particularly focused on providing benefits for patients with complex medical problems or social needs, who have the most to gain from improvements in care delivery, care coordination, and closer collaboration among providers of health care and social services.

ACOs: Key Activities and Functions

As ACOs and ACO-like models for people enrolled in Medicaid emerge in several states across the country, the Center for Health Care Strategies has observed some key activities and crucial functions:

  • Patient-centered care management and coordination, directed by providers (e.g., primary care team) as opposed to the managed care organization.

  • Targeted and intensive complex care management, tailored to the needs of a smaller subset of high-need, high-cost patients, with cross-functional care teams that span physical health, behavioral health, and social services, including long-term supports and services.

  • Data infrastructure and analytics, including claims-based data, electronic health records, and a health information exchange.

  • Motivated and mission-driven leadership and providers:

    • Empower providers to transform care delivery, including building high-performing, cross-functional teams that include primary care providers who are engaged in on-the-ground collaboration with mental health, substance abuse, long-term supports and services, social service providers, patients, and their families.
    • Structure ACO for meaningful patient and community partnerships, including the capacity to address social needs such as unstable housing and homelessness that directly lead to health challenges.*

* Center for Health Care Strategies, Accountable Care Organizations in Medicaid: Emerging Practices to Guide Program Design, Policy Brief, February 2012.

While emerging ACO models hold much promise for improving outcomes while controlling health care costs for patients with complex health and social needs, these models require substantial initial investments in capacity-building and infrastructure development. To be feasible, these ACO models also require that states or other purchasers and providers negotiate payment models that align financial incentives to serve patients with the greatest needs and highest risks. Well-designed systems for setting rates, sharing savings, and rewarding performance, including appropriate risk-adjustments, are important components of ACO financing strategies. They are often, however, very challenging to create, in part because existing risk-adjustment methodologies do not capture factors associated with social determinants of health or other complexities related to co-occurring health and behavioral health conditions (Lewis et al. 2012).

The next three sections of this chapter describe the new models we have been following through case studies. As we describe each of these major efforts, we describe how care coordination and housing stabilization services are organized and delivered; how the finances work, including the role of Medicaid and other funding sources; challenges to financial viability; and issues related to information technology and data sharing.

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