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Informing Policy. Advancing Health.

Medicaid’s Road to Change

Colorado’s Medicaid program — called Health First Colorado — provides health coverage for upwards of one fourth of Colorado’s population. And it’s about to undergo some major changes.

The evolution of the ACC. Since 2011, Colorado has been grappling with a seemingly paradoxical question: How do you improve the health of Medicaid members while reducing costs? Colorado’s response is called the Accountable Care Collaborative (ACC).

The ACC’s big idea is that costs can be reduced in the short run by ensuring that care is coordinated across providers. The ACC invests in primary care with the aim that prevention will curb more costly care in the long run.

So how has it done? In fiscal year 2015-16, the latest year of data available, use of preventive services increased while costly services like MRIs decreased. The ACC saved taxpayers a net of $62 million, a relatively small amount compared with Medicaid’s overall budget, but a step in the right direction.

The ACC is about to undergo substantive changes in 2018, which the state anticipates will result in even greater savings and improvements in health. In CHI’s new brief, we discuss the implications of these changes in the ACC’s second phase.

Among the takeaways:

  • The state is betting that greater savings will be achieved if providers have additional incentives to provide higher-quality care.
  • The new ACC promotes integration by combining the administration of primary and behavioral health care.
  • And it invests in improving data systems, access to care and population health, aiming to improve health while ensuring long-term sustainability.

New entrants and exits to Colorado’s Medicaid market. Integrating the administrative functions of primary and behavioral health care means that the Behavioral Health Organizations (BHOs) and Regional Care Collaborative Organizations (RCCOs) will no longer exist in their current form. They will be replaced by new Regional Accountable Entities (RAEs).

To bid on a RAE contract, many new partnerships are being forged between the existing RCCOs and BHOs, or the stakeholders that created them in the first place. And the state is likely to see national companies — which often hold Medicaid managed care contracts in other states — bid to gain a foothold in Colorado’s market.

On the one hand, competition and market realignment may lead to innovations that improve efficiency and quality of care. On the other hand, change can mean disruptions in care for Medicaid members, which is in everybody’s interest to keep to a minimum.

A push to reduce spending. Finally, the change that has the biggest ramifications — but is also the least certain — stems from Congress’s proposal to modify how Medicaid is funded. The latest proposal from the Senate — called the Better Care Reconciliation Act — would limit federal spending by locking in a per capita payment to the states. It would also phase out the Obamacare Medicaid expansion, which added approximately 450,000 adults to Colorado’s Medicaid rolls.

These moves are anticipated to save American taxpayers $772 billion by 2026. Yet for Medicaid expansion states like Colorado, they would create some tough choices. The state would need to figure out if it can fund a greater portion of the expansion cost and how it will manage its entire Medicaid population with fewer resources. A recent CHI analysis showed that Colorado would need $15 billion by 2030 to make up for federal cuts if the state kept everybody enrolled.

Health First Colorado continues to grow. Regardless of what happens in Congress, it can only benefit from greater efficiencies as long as the quality of patient care is preserved. All eyes will be on the second phase of the ACC — slated to commence next spring — to see whether Colorado’s unique approach results in better care and decreased costs.

Or whether further changes are needed.