Summary of Alabama's Medicaid Care Management Programs

Richard J. Brockman and Angie Cameron

Alabama recently passed into law two separate bills to develop at-risk provider-driven Medicaid care management programs. The first bill, passed in 2013, created the Regional Care Organization (RCO) system. See Alabama Code § 22-6-150 et seq. This legislation was developed upon the recommendation of the Medicaid Study Commission, which was created by the Governor who appointed members representing a range of providers, insurers, consumer advocacy groups, and state government officials.

Under the RCO legislation, the state is to be divided into not less than five or more than eight regions. Each region is required to have a sufficient Medicaid population to support at least two RCOs, although there is no requirement that there be more than one RCO in a given region. By rule, the Alabama Medicaid Agency (Medicaid) established five regions. The legislation contemplates that providers in each region would convene to form and fund the RCOs. To the extent practical, the regions were designed to accommodate historical referral patterns, while having sufficient targeted Medicaid populations to support two RCOs. Currently there are 11 probationary RCOs. Three probationary RCOs are in the north region, and two probationary RCOs are in each of the other four regions. Although the legislation provides that all Medicaid beneficiaries would be assigned to a RCO, it also permits Medicaid to carve-out classes of beneficiaries. The RCO legislation further provides that long term care (LTC) services would be studied and continue to be administered under the current Medicaid system through October 1, 2016, the date the RCOs are to be operational. "Long term care services" is defined in the RCO statute as "…Medicaid funded nursing facility services, home and community based support services, and such other long-term care services as Medicaid may determine by rule…." The RCO legislation definition includes intermediate care facilities for the developmentally disabled (ICF-DDs).

The second bill, passed on May 28, 2015, created the Integrated Care Network (ICN) system. The ICN legislation authorizes a provider-driven program for the Medicaid LTC population that would function similar to the RCOs. This bill was written based on the recommendations made by the Medicaid LTC Study Task Force commissioned in the RCO legislation. Similar to the Medicaid Study Commission, the LTC Study Task Force consisted of representatives from an array of providers, consumer groups and government officials. The task force received reports from various of its members, as well as persons and groups outside its membership.

The ICN legislation contemplates that providers would convene to form and fund the ICNs and that Medicaid would assign LTC beneficiaries to the ICNs. In addition to care managing Medicaid beneficiaries and their benefits, the legislation permits ICNs to coordinate with other provider programs. The ICN program is to be operational no later than October 1, 2018. This bill further provides that until the ICN program is operational, LTC services would continue to be administered by Medicaid under its current program.

The RCO and ICN entities will each receive an actuarially determined monthly per member-per month (PMPM) payment from Medicaid and in return (i) case manage assigned Medicaid beneficiaries and (ii) process claims and pay providers for Medicaid covered goods and services provided to its assigned Medicaid beneficiaries. RCOs and ICNs are deemed to be "at-risk" entities because, in accepting the actuarially determined PMPM payment, each (a) assumes all responsibility for care managing, claims processing, and paying Medicaid covered claims for its assigned Medicaid beneficiaries, and (b) must make up any short-falls.

Medicaid has applied to the Centers for Medicare and Medicaid Services, Department of Health and Human Services (CMS) for a section 1115 waiver for the RCOs. (States may apply to CMS for waivers from certain federal Medicaid state plan requirements. These waiver applications refer to specific sections of the federal Medicaid statute.) It is contemplated that the ICN program will either be added to that section 1115 waiver application or there will be a separate section 1115 waiver filing, as well as a filing to apply for a section 1915 waiver for the home care portions of the ICN program.

Under the RCO and ICN programs, Alabama providers (with consumer input through non-at-risk board membership) are given the unique opportunity to develop and apply innovative and creative methods for case managing assigned Medicaid beneficiaries through collaborating provider networks. Establishing the RCOs and ICNs will require significant investment by the provider community. While these are difficult undertakings, Alabama's Governor and Legislature have deemed that this course has the potential to not only create tangible Medicaid program savings by requiring the RCOs and ICNs to promote care collaboration among providers, thereby bending the growth curve, but also, through this system of care collaboration, develop better access to needed medical treatment and better quality of care and life for its citizens who are Medicaid beneficiaries. It is anticipated that these provider collaborating networks will reach into other payor classes, such as Medicare, to innovate better care coordination throughout the care continuum and permitting these benefits to have wider application.

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Richard Brockman is Counsel with Burr & Forman LLP. He is also the current President of the Alabama Nursing Home Association. Richard served on the Governor's Medicaid Study Commission during the development of the RCO legislation and worked with the Medicaid LTC Task Force in the development of the ICN legislation.

Angie Cameron is a Partner with Burr & Forman LLP practicing in the firm's healthcare group.