An Accountable Care Organization (ACO) is a provider-run organization in which the participating providers are collectively responsible for the care of an enrolled population, and also may share in any savings associated with improvements in the quality and efficiency of the care they provide. Although the concept of ACOs originated in the Medicare and commercial sectors, several states are actively developing ACO initiatives in an effort to improve the care provided to people through the Medicaid program. Our review of a number of state initiatives indicates that most Medicaid ACOs are currently at an early stage of development, as states engage in relatively lengthy planning and implementation processes, both to accommodate diverse stakeholder concerns and to address state and federal legislative and regulatory requirements. The structure of Medicaid ACO initiatives is influenced by individual states' history and experience with managed care, other existing care delivery arrangements within Medicaid, and the challenges inherent in serving low-income and chronically ill populations. While Medicaid ACOs are a strategy to more directly engage providers and provider communities in improving care, cost-containment is also a significant motivating factor for many states. It remains to be seen how states will balance short-term cost-containment pressures against the investments in partnerships and delivery system redesign necessary for the success of Medicaid ACOs over the longer term.
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