Medicaid to Pursue Alternatives for Regional Care Organizations

Alabama Medicaid Commissioner Stephanie Azar announced Thursday that in light of known federal administration changes and potential congressional adjustments the Alabama Medicaid Agency will pursue an alternative to the Regional Care Organization (RCO) initiative to transform the Medicaid delivery system. Moving forward, the State will work with the Centers for Medicare and Medicaid Services (CMS) to create a flexible program which builds off the Agency’s current case management structure as a more cost-efficient mechanism to improve recipients’ healthcare outcomes.

Commissioner Azar cited major changes in federal regulations, funding considerations, and the potential for new opportunities for state flexibility regarding Medicaid spending and services under the Trump Administration as key factors in the decision to employ a new strategy for the state Medicaid program. Since the passage of the RCO statute, new managed care regulations have made the RCO program less viable for the state. Additionally, funding uncertainties at the state and federal levels led to the withdrawal of several probationary RCOs.

“It is highly likely that federal healthcare changes are on the horizon,” Commissioner Azar said. “While the financial implications could be challenging for our state, the new flexibilities and waiver options that the Trump Administration is willing to consider gives our state Medicaid program new options to accomplish similar goals without incurring the same level of increased upfront costs associated with the RCO program.”

“In the coming days, I will work with Governor Ivey, our stakeholders and CMS to develop an innovative model to accomplish our goal of retooling Medicaid to better serve the needs of Alabamians.”

RCOs were mandated by state law in 2013 to move the Medicaid agency away from its current payment system to one that would incentivize efficient delivery of high-quality healthcare services and improve health outcomes. When RCOs were first proposed after the Affordable Care Act under the Obama Administration, the plan was appropriate; however, in today’s climate, it is no longer the best use of taxpayer resources, she said.

The program was set to launch in 23 north and west Alabama counties on October 1,
2017.

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Governor Kay Ivey on Thursday released a statement regarding the decision to pursue alternatives to Regional Care Organizations for the Alabama Medicaid Agency.

“I support Medicaid’s shift in reform strategy, which has been fully shared with legislative leadership and other key stakeholders.

“I spoke with Health and Human Services Secretary Tom Price, and he has assured me of the Trump administration’s desire to work with the states to allow more flexibility in Medicaid services moving forward.

“This flexibility brought us to a crossroads where we reconsidered the risks and rewards of RCOs, and decided instead to pursue new reform options which bring less risks and similar outcomes.

“The RCO model didn’t fail; instead the alternative is a recognition that the circumstances surrounding Medicaid have changed, thus our approach must change.

“Our end goal is clear – to increase the quality of services provided and protect the investment of Alabama taxpayers.”

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State Senate Majority Leader Greg Reed (R-Jasper), the sponsor of the 2013 legislation establishing Regional Care Organizations (RCOs), voiced his support for the decision today by Medicaid Commissioner Stephanie Azar and Governor Kay Ivey to pursue alternatives to the RCOs:

“The Regional Care Organizations were a smart mechanism for the delivery of Medicaid care under the Affordable Care Act during the era of the Obama administration. The goal of the RCOs was to bend the cost curve down for Alabama taxpayers and improve healthcare outcomes for Medicaid recipients.

“The policy ground underneath our feet has shifted dramatically, however, with the new Trump administration. Governor Ivey, Commissioner Azar, and I have had multiple meetings and calls with Trump administration officials, and they are committed to giving states more flexibility with Medicaid.

“I believe with the new presidential administration we can accomplish the goals of the RCO initiative via a different path and without the upfront costs it would take to fund a transition to the RCOs. Pursuing new options with the Trump administration for Medicaid is the right call for Alabama.

“I look forward to continuing work on solutions to improve Medicaid patients’ healthcare outcomes, while also saving taxpayers’ dollars.” 

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Blue Cross Blue Shield releases statement on decision to pursue alternative RCOs:

Blue Cross and Blue Shield of Alabama (Blue Cross) and our affiliated non-profit, My Care Alabama, are disappointed that the Regional Care Organizations, created by the Legislature to bring innovation, cost containment and improved care to Medicaid recipients, will not be going forward. 

Blue Cross and My Care Alabama made a total commitment to the RCO initiative and partnership with the Medicaid Agency to achieve the goals and objectives of the project. My Care Alabama continued to be engaged and committed to the RCO initiative at the request of the State and the Medicaid Agency. 

We regret that there will not be an opportunity to move the state toward these goals.