Payment describes the targeted delivery system (e.g. fee-for-service or managed care) of the initiative and the design of the accountable care payment model.


As described in the 1115 Waiver Concept Paper, this initiative would utilize a payment model that includes capitation with care management payments (the transition period could include fee-for-service).
The state will reform its payment methodologies to implement value-based purchasing strategies (the state offers the example of transitioning hospitals from per diem payments to All Patient Refined Diagnosis Related Groups). RCOs would be expected to use this methodology in establishing contracts with providers.
The state also proposes to enhance coverage or modify reimbursement for a number of services to encourage capacity development, potentially including care coordination fees to providers to cover necessary care coordination services that are not directly reimbursable under the current benefit structure. 
As stated in the initiative’s Planning Principles, Medicaid will establish a floor for applicable provider payments for all regions, including out-of-region contracts.
Alaska No known activity at this time.
Arizona No known activity at this time.

Under the Arkansas Health Care Payment Improvement Initiative, providers will submit claims for all care they deliver and continue to be reimbursed based on existing fee schedules.


Providers are eligible for risk- and gain-sharing based on average cost of care per-episode, assessed yearly based on claims data. Payers are using claims data to assess historical average per-episode costs for each episode type, and identifying thresholds that they believe will maximize provider incentives to provide high quality, cost effective care. For each episode, payers will identify three ranges (see slide 18) against which to assess principal accountable providers’ (PAPs’) average per-episode costs and determine provider eligibility for risk- and gain-sharing:

  • Unacceptable: Average per-episode costs above the “Acceptable” threshold indicate inefficient care or overtreatment. PAPs will pay 50% of average per-episode costs above the “Acceptable” threshold back to payers (“negative supplemental payment”).

  • Acceptable: There will be no change in payment to providers whose average per-episode costs fall within this range.

  • Commendable: PAPs will receive incentive payments equal to 50% of average per-episode savings below this threshold if they achieve quality standards.

Gain-sharing is dependent on achievement of “must pass” quality indicators which differ for each episode type; providers who achieve commendable average per-episode costs but fail to achieve these standards will not receive shared savings payments. However, providers who fail to fully report or who do not achieve these standards remain eligible for risk-sharing. A lower gain-sharing limit for each episode and minimum quality requirements disincent under-treatment; stop-loss provisions provide some financial protection to PAPs whose costs are above the “unacceptable” threshold. Risk- and gain-sharing percentages are defined in provider policy manual updates proposed by Medicaid for upper respiratory infections, ADHD, and perinatal care episodes (proposed in June 2012) and for congestive heart failure and total joint replacement episodes (in September 2012).

Payers will make patient- and provider-level adjustments (see slide 20) to ensure fairness to providers.

  • Patient-level adjustments include adjustments for patient risk and severity, and outlier exclusions for high-cost episodes.

  • Provider-level adjustments include “adjustments for providers in areas with poor physician access, adjustments for cost-based facilities (e.g., critical access hospitals), adjustments for differences in regional pricing, [and] adjustments or exclusions for providers with low case-volume.

Regulatory language proposed by Arkansas Medicaid in June 2012 provides more detail on each episode type, including exclusions and proposed payment thresholds, as well as Medicaid’s methodologies for calculating risk- and gain-sharing payments.

The California Public Employees’ Retirement System (CalPERS) accountable care organization (ACO) pilot relies on a hybrid of shared savings and global payment approaches: the pilot has a global spending target and offers shared risk and savings among Blue Shield and the participating providers, the hospital chain Dignity Health and Hill Physicians Medical Group. Blue Shield and the two provider organizations operate under a three-way per member per month budget; each shares the savings achieved under the target, and each bears financial risk for spending in excess of the target.
Risk was not even distributed among Blue Shield, Dignity Health, and Hill Physicians Medical Group for all services. Services were broken into broad "cost categories": facility costs (partner hospital, out-of-area non-partner hospital, and other non-partner hospital), professional costs, mental health costs, pharmacy costs, and ancillary costs. Each partner assumed greater risk for cost categories over which it had the most influence on per member per month costs.
However, the underlying reimbursement mechanisms for participating providers did not change during the pilot. The hospitals were still paid for services on a fee-for-service basis and the participating physician group was still paid on a capitated basis.

Under the Accountable Care Collaborative (ACC) program, Regional Care Collaborative Organizations (RCCOs), Primary Care Medical Providers and the Statewide Data and Analytics Contractor receive a total of $20 per-member/per-month (PMPM) for medical home services:



  • Regional Care Collaborative Organization: $13 PMPM
  • Primary Care Medical Provider: $4 PMPM
  • Statewide Data and Analytics Contractor: $3 PMPM


Primary Care Medical Providers will receive fee-for-service reimbursements for medical services rendered to enrolled Medicaid beneficiaries.


In the program’s expansion phase, RCCOs and Primary Care Medical Providers are eligible to receive incentive payments: initial incentive payments will be available for RCCOs and Primary Care Medical Providers that reduce emergency room visits, hospital re-admissions, and utilization of medical imaging. On July 1, 2013, a fourth indicator measuring well child visits was added to this list. PMPM payments to RCCOs and Primary Care Medical Providers will be reduced to $12 and $3 respectively, with $1 from each withheld to support incentive payments based on achievement of performance targets. The state hopes to incorporate a shared savings component at a later date as more beneficiaries enroll in the ACC program.


Legislation passed in June 2012, House Bill 12-1281, will also test innovative payment methodologies “that are designed to provide greater value while ensuring good health outcomes and client satisfaction.” In July 2012, RCCOs were invited to submit abstracts outlining proposed innovative payment methodologies to participate in the “Medicaid Payment Reform and Innovation Pilot Program.” Abstracts will be reviewed during the fall of 2012, and the Department plans to release formal proposal criteria by November 1, 2012. HB 12-1281 requires the state to select one or more proposals for piloting by July 1, 2013. See the state’s Payment Reform Initiative fact sheet for a complete timeline.

Connecticut No known activity at this time.
Delaware No known activity at this time.
District of Columbia No known activity at this time.
Florida No known activity at this time.
Georgia No known activity at this time.
The Accountable Healthcare Alliance of Rural Oahu (AHARO) seeks to utilize contracts with Medicaid managed care organizations based on aligned incentives and shared savings.

AHARO’s payment model uses a per member per month payment for medical home proficiency, as well as a $5 per member per month match from health plans for investment in health information technology and care coordination. Shared savings are built into the contracts with health plans, based on seven metrics. AHARO receives 50-75% of the savings, depending on the relative health center and health plan performance on financial metrics and accountability measures.

No known activity at this time.
Coordinated Care Entities (CCEs) may choose from three risk-based payment models (full payment is contingent upon adequate performance on specified quality measures):
  1. A care coordination fee, paid on a per member per month basis for each population in its care coordination model. A percentage of the fees will be withheld, contingent upon the CCE meeting quality measure targets.
  2. A shared savings model that makes the CCE eligible for up to 50 percent of annual savings below a projected cost of care baseline, provided quality targets are met.
  3. An “interagency payment flexibility proposal” option, by which CCEs are encouraged to develop innovative payment methodologies, which may include new reimbursement methods like bundled payments or payments for episodes of care.
CCEs may choose more than one of the reimbursement options. CCEs may also propose alternative reimbursement methodologies to fee-for-service for medical services.
Managed Care Community Networks (MCCNs) operate under a capitated payment structure. Portions of the capitation rate are withheld and paid based on the MCCN’s performance in meetings quality measure targets.
Accountable Care Entities will receive care coordination payments and receive shared savings for the first 18 months of their operation. For months 19 through 36, ACEs will transition to pre-paid capitation with pay-for-performance incentives. Beginning in the fourth year of operations, CCEs will receive full risk-based capitation payments.

Indiana No known activity at this time.
In the first year of the operation of an accountable care organization (ACO), primary care physicians in it will initially be paid on a fee-for-service basis, and they will receive a care coordination payment for managing referrals and coordinating care. The ACO will receive bonus payment according to the performance targets and methodology detailed in a Value Index Score Medical Home Bonus Document.
If the ACO qualifies, the Medicaid agency will pay the ACO three bonus payments:
  • A $10.00 per year per member that received aphysical exam Physical Exam Bonus. Providers qualify for the bonus if at least 85 percent of members who have been attributed for at least six months have received a physical exam during the Performance Year.
  • A Medical Home Bonus of up to $4.00 per member per month (PMPM) based on performance in meeting measures aligned with core attributes of good primary care: (1) person-focused care; (2) first contact with the health care system; (3) comprehensive, coordinated care and (4) transfer of information.
  • An ACO Incentive of an additional $4.00 PMPM for assisting in the transformation to a person centered delivery system. To receive this bonus, the ACO must provide: member education and outreach on the plan’s benefits, on adopting healthy behaviors, and on the premiums for which members might be responsible. ACOs must also provide resources to their patient managers that include collection and evaluation of health risk assessments, support in providing after-hours care, and establishing urgent care centers and supporting efforts in ongoing member outreach and education.
In subsequent years, ACOs will be subject to a risk-adjusted global budget with shared savings (and, within five years of the initial contract year, two-way risk sharing) based on quality performance.

Kansas No known activity at this time.
Kentucky No known activity at this time.
Under a fee-for-service with coordinated care networks shared savings (CCN-S) model, the CCN-S receives monthly enhanced primary care case management fees, as well as lump sum savings payments if it is eligible. The CCN-S in turn reimburses primary care providers a monthly case management fee for each enrollee assigned to the primary care provider.
The state will establish a Per Capita Prepaid Benchmark (PCPB) based on the health risk for Medicaid enrollees in the CCN-S. Periodic reconciliations (for time periods covering at least 12 months of service) are performed by the Department of Health and Hospitals to determine total medical cost incurred by the CCN-S. If the CCN-S exceeds the PCPB, it will be required to refund to the state up to 50 percent of the total amount of enhanced primary care case management fees paid to the CCN-S during the performance period. The CCN-S is eligible to receive up to 60 percent of savings if the actual aggregate costs of authorized services, including enhanced primary care case management fees advanced, are less than the aggregate PCPB.
Due to federally mandated limitations under the Medicaid State Plan, shared savings will be limited to five percent of the actual aggregate costs including the enhanced primary care case management fees paid.

Under Maine’s proposal, two payment models would be utilized.


Accountable Communities that do not consist of integrated health systems will operate under a shared savings model. A target per member per month is identified for the Accountable Community based on risk-adjusted actuarial analysis of project costs. If the actual per member per month amounts is lower than the target amount, the savings are split between the state and the Accountable Community; the Accountable Community can share in a maximum of 50 percent of savings based on quality performance.


Accountable Communities that have capacity to assume risk will move toward a symmetric risk-sharing model over time: these Accountable Communities will be responsible for a portion of the loss associated with actual per member per month expenses that exceed the target PMPM. These Accountable Communities can share in up to 60 percent of savings (based on quality performance), but are held accountable for up to 5 percent of losses in year two and 10 percent of losses in year three.


The Department of Health and Human Services will cap the per member costs included in cost calculations for shared savings or penalties to protect Accountable Communities from being penalized for an abnormal distribution of catastrophic claims. Per enrollee costs are capped at:

  • $50,000 for small (1,000-2,000 attributed members) Accountable Communities
  • $200,000 for medium (2,000-5,000 attributed members) Accountable Communities
  • $500,000 for large (5,000 or more attributed members) Accountable Communities
Additional payment reform models will also be phased in under the Accountable Communities Program as part of a continuum of payment reform. This continuum begins with shared savings, moves to shared savings plus risk, then to partial capitation models, and finally to global capitation.
No known activity at this time.
Certified accountable care organizations (ACOs) will be required to receive reimbursements or compensation from alternative payment methodologies—defined as methods of payment not solely based on fee-for-service reimbursements—and they must be capable of coordinating financial payments among their providers. These alternative payment methodologies must be consistent with the adoption of payment incentives that improve quality and care coordination. The legislation specifies that these alternative payment methodologies may include, but are not limited to, shared savings arrangements, bundled payments, and global payments.
Standards for the alternative payment methodologies used to reimburse ACOs will be described in forthcoming regulations from the Health Policy Commission.

No known activity at this time.

The Health Care Delivery Systems (HCDS) demonstration will use two payment models. Both models will set a risk-adjusted total cost of care target for participating HCDSs that is calculated using risk-adjusted fee-for-service or encounter claims. Participating providers continue to receive fee-for-service or managed care contracted payments, but each HCDS’s performance for all Medicaid enrollees attributed to it for the performance period will be compared to the total cost of care target. Savings will be shared between the HCDS and the state via a reconciliation payment that is disbursed annually, contingent upon performance on quality and patient experience indicators.


One payment model, the Virtual HCDS, is aimed at provider organizations including primary care providers and/or multi-specialty providers groups that are not formally integrated with a hospital or integrated system. This approach uses a shared savings model in which the difference between annual expected and actual realized total cost of care is distributed if savings are achieved.



The second payment model, the Integrated HCDS, applies to provider organizations that are integrated delivery systems providing a broad spectrum of outpatient and inpatient care as a common financial and organizational entity (serving 2,000 attributed Medicaid participants or more). This uses a shared risk model that builds toward two-way risk sharing over time.


In the Integrated HCDS model, gains above a minimum 2 percent performance threshold are shared equally between the state and the HCDS in Year 1. In Year 2 the HCDS assumes asymmetric downside risk (with a minimum 2:1 ratio of gain-sharing thresholds to loss-sharing thresholds) and in Year 3 the HCDS assumes symmetric risk-sharing thresholds.


As described in a DHS memorandum on catastrophic claim cap levels, the amount of a HCDS’ liability for catastrophic cases is limited by caps to the defined total cost of care that a provider organization can be accountable for. These caps are:



  • Small Population (1,000–2,000 attributed participants) – $50,000 maximum claims per participant (Virtual model only)
  • Medium Population (2,000-5,000 attributed participants) –$200,000 maximum claims per participant
  • Large Population (5,000+ attributed participants) – $500,000 maximum claims per participant
Mississippi No known activity at this time.
No known activity at this time.
Montana No known activity at this time.
No known activity at this time.
Nevada No known activity at this time.
New Hampshire No known activity at this time.

The New Jersey Department of Human Services will approve gainsharing plans submitted by applicant Accountable Care Organizations (ACOs) with input from the state’s Department of Health and Senior Services and assistance from Rutgers Center for State Health Policy. Gainsharing plans must promote “improvements in health outcomes and quality of care, as measured by objective benchmarks as well as patient experience of care; expanded access to primary and behavioral health care services; and the reduction of unnecessary and inefficient costs associated with care rendered to Medicaid recipients residing in the ACO’s designated area.”


Under the gainsharing plan, a percentage of the cost savings achieved by an ACO will be distributed to the ACO. P.L. 2011, Ch. 114 establishes that “Savings shall be calculated in accordance with a methodology that:



  1. Identifies expenditures per recipient by the Medicaid fee-for-service program during the benchmark period, adjusted for characteristics of recipients and local conditions that predict future Medicaid spending but are not amenable to the care coordination or management activities of an ACO which shall serve as the benchmark payment calculation;
  2. Compares the benchmark payment calculation to amounts paid by the Medicaid fee- for-service program for all such resident recipients during subsequent periods; and
  3. Provides that the benchmark payment calculation shall remain fixed for a period of three years following approval of the gainsharing plan.”


The state’s legislation indicates that data analysis will be performed by the Rutgers Center for State Health Policy. The Center’s proposed methodology for calculating savings was released in May 2012, with a final recommended methodology published in July 2012.


Managed care organizations in the state may also choose to contract and establish a plan for gainsharing with ACOs participating in the Medicaid ACO pilot. Regulations issued by the Department of Human Services in April 2013 anticipate that ACOs may negotiate different savings allocations with different managed care organizations.

The 2013 regulations clarified that ACOs may seek to pursue shared savings in phases. They may focus the shared savings on a specific spending area (e.g. diabetes treatment) in the first year of the project, but by the end of the demonstration period the ACO’s gainsharing plan must identify savings for all Medicaid costs within the designated geographical area.


No known activity at this time.
The Department of Health will discuss accountable care organization (ACO) payments in forthcoming regulations.
However, NYS Public Health Code Article 29-E provides that ACOs may enter into payment arrangements with one or more third-party payers to establish novel payment methodologies, including full or partial capitation. Payment arrangements must include provisions for the ACO to receive and distribute payments to participating providers, including incentive payments (which can include medical home payments). ACOs can have mechanisms in place to pool payments received by participating providers from third-party payers.
No known activity at this time.
North Dakota No known activity at this time.
Ohio No known activity at this time.
No known activity at this time.

As described in the state’s 1115 waiver request narrative, Coordinated Care Organizations receive a fixed global budget from the state. These global budgets include:



  1. A capitated per-member per-month portion for services formerly provided by physical health plans, mental health organizations and (in included) dental care organizations (alcohol/drug treatment services and dental coverage are optional for inclusion in CCOs until July 1, 2013 and July 1, 2014, respectively, at which point inclusion is required in the CCO benefit package);
  2. CCO transformation incentive payments held outside of the capitated portion to 1) infrastructure for metric reporting and delivery system transformation efforts in year 1 of the global budgets, and 2) incentive for continual transformation and improvement through meeting both cost and health outcomes metrics; and
  3. Medicare funding to blend with Medicaid funding to provide services to dual eligibles.


CCOs are expected to move beyond fee-for-service payment mechanisms for compensating health care services providers. CCO applicants must be able to demonstrate experience and capacity for “Developing and implementing alternative payment methodologies that are based on health care quality and improved health outcomes.” Alternative payment methodologies include, but are not limited to: shared savings arrangements, bundled payments, payments based on episodes, and payments based on a global budgeting system.


A Transformation Center will be formed under Oregon’s State Innovation Model Grant to provide technical assistance to promote alternate payment methodologies. The Center will offer implementation tools for a “start set” of promising payment models, which will include:

  • Patient-Centered Primary Care Home payments;
  • Bundled payments, including case rates, fee-for-service with risk-sharing, and episode payments;
  • Risk and gain-sharing arrangements between health plans and their providers;
  • Service agreements aligning incentives for specialty and primary care physicians;
  • Quality bonuses or other performance incentives; and
  • Accountable Care Organization models.
No known activity at this time.
No known activity at this time.
South Carolina No known activity at this time.
South Dakota No known activity at this time.
Tennessee No known activity at this time.
Health care collaboratives (HCCs) in Texas may contract with governmental or private entities for all or part of the cost of services provided or arranged by the collaborative. They can then distribute payments to participating physicians and health care providers in a manner approved by the board of directors.
HCCs can contract for, accept, and distribute payments from public or private payers based on fee-for-service or alternate payment methodologies, including:
  • Episode-based or condition-based bundled payments
  • Capitation or global payments
  • Pay-for-performance or quality-based payments
Accountable Care Organizations (ACOs) would receive monthly, risk-adjusted capitated payments based on enrollment. The payments will consist of actuarially certified rates based on major categories of Medicaid eligibility and the severity of illness prevalent in the enrolled population. They would be responsible for delivering necessary and appropriate care, as well as demonstrating that quality of care and access to care are not suffering.
Organizations contracting as ACOs will be given flexibility to pursue innovative payment mechanisms among their networks of providers. According to the state’s proposal, “Rather than reimbursing providers based on the units of service delivered, the ACO would make payments for delivering the necessary care to a group of Medicaid enrollees for a specified period of time.”
The state distinguishes this arrangement from traditional managed care contracts by noting:
(1) that the ACO contract payments eliminate the incentives to provide excess care and
(2) the contracts will be maintained only if the ACO meets established quality and access criteria.
Under Vermont’s Medicaid Shared Savings Program, ACOs will have a choice between two payment tracks.
Under Track 1, ACOs will not agree to downside risk and their upside shared savings will be smaller than under Track 2. Under Track 2, ACOs will have a downside risk component in which they are required to repay Medicaid for shared losses. ACO will assume the following downside risk in each pilot program year :
  • Year 1: risk limited to 5.0% of total benchmark expenditures
  • Year 2: risk limited to 7.5% of total benchmark expenditures
  • Year 3: risk limited to 10.0% of total benchmark expenditures
For both tracks, the state will identify members who would have been attributed to the ACO in 2010, 2011, and 2012. Total expenditures for all services for each attributed member within a calendar year are trended and risk-adjusted to produce a blended per member per month expenditure value for each eligibility super category. The average per member per month spending across all super categories, weighted by member volume, is then calculated to produce a single historical benchmark.
Actual spending will be calculated to determine if the ACO has achieved savings or losses—beyond a minimum savings rate and minimum loss rate, respectively—relative to the historical benchmark.
For losses in excess of the minimum loss rate, an ACO participating in Track 2 is responsible for paying back a share of the losses. For savings in excess of the minimum savings rate, ACOs in both tracks are eligible for savings if they meet a minimum threshold for performance on a defined set of common measures to be used by all pilot-participating ACOs.
The ACO is assigned points based on its level of quality performance. Greater point scores result in the ACO receiving a larger percentage of the total shared savings payment for which it is eligible.
Virginia No known activity at this time.
No known activity at this time.
No known activity at this time.
Wisconsin No known activity at this time.
Wyoming No known activity at this time.

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