Alabama’s Regional Care Organization 1115 waiver approval

In May 2013, Act-2013-261, Ala. Code §§ 22-6-150 was passed, advancing the move from a fee-for-service (FFS) system to a managed care program. According to the Alabama Medicaid Advisory Board report issued in January 2013, based on 2011 data, 22 percent of Alabama’s population was Medicaid eligible for a portion of the year.  Additionally, Alabama’s Medicaid program covered 53 percent of births, 47 percent of children, and two-thirds of nursing home residents.  In 2009, Medicaid accounted for 16.3 percent of all health care expenditures in Alabama.  In order to contain costs associated with the substantial Medicaid population, managed care in the form of regional care organizations (“RCOs”) were established with little guidance other than the Act 2013-261 itself.

On February 9, 2016, the Center for Medicaid Services (CMS) approved Alabama’s Section 1115 waiver request, implementing the tenants of Act 2013-261. The waiver enables the transition from FFS to RCOs, established as provider led organizations in five regions of the State. The approval, however, provides for time limited financial assistance to the State, meaning that the State must transition to a waiver under subsection (a)(2) of Section 1115 of the Social Security Act, which allows CMS to fund costs that would not otherwise be matchable.

The major provisions of this waiver approval include:

  • An “Integrated Provider System” program, similar to a Delivery System Reform Incentive Payment (DSRIP) program, that will fund improvement programs for providers participating in the RCOs;
  • The RCO entities are non-profit organizations, incorporated in Alabama governed by a board that must include risk bearing and non-risk bearing members (including at least three primary care physicians—one from a federally qualified community health center). State law requires that each RCO establish a diverse citizen advisory board focused on efficient, quality care delivery;
  • RCOs will provide most physical and behavioral health services to enrollees including hospital inpatient and outpatient care, primary and specialty care, emergency services, lab and radiology, maternity, transportation and care provided at federally qualified health centers and rural health centers;
  • Available funding up to $50 Million to assist providers with startup costs.

To date, Alabama has granted probationary status to 11 RCOs, with the program launch scheduled for October 1, 2016. Medicaid recipients will be choosing their RCOs by August 1, 2016. It is estimated that the RCOs will provide care to 650,000 enrollees who receive full Medicaid benefits across the State.

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