Amid the bumpiness of Obamacare’s widely publicized technical launch, some in the media started taking the opportunity to laud the Affordable Care Act’s (ACA) largely untold story in reforming our “overpriced, underperforming health care system.”  The New York Times’ Bill Keller and Harvard health economist David Cutler, writing in the Washington Post, reported that progress was being made on multiple fronts in re-orienting the system to pay “for the value, not the volume, of medical care.” They pointed to penalties for hospital readmissions; the use of bundled payments; the development of Medicare and commercial accountable care organizations (ACOs); and a slowdown in health care cost growth at least partially attributable to these changes.

Within state-run Medicaid programs, a parallel phenomenon has been taking shape—the creation of ACOs tailored to the care needs of Medicaid’s beneficiaries, many of whom have multiple chronic health and social challenges. While ACOs for the broad range of Medicaid beneficiaries will be similar to the ACOs that already exist in the Medicare and commercial insurance sector, a new breed of Totally Accountable Care OrganizationsTACOs – offer the potential to push accountability for Medicaid populations, including those with complex needs, to a new level. “Totally” refers to the expectation that these organizations will be responsible for services beyond just medical care (for example, mental health, substance abuse treatment and other social supports), as well as the aspiration that these organizations will assume accountability for all associated costs of care, ultimately, through global payment mechanisms.

Medicaid’s Unique Opportunities For Total Accountability

Medicaid already provides publicly financed health care to more than 60 million low-income Americans and will grow rapidly in the next few years as most states pursue the ACA’s expansion of coverage for up to 16 million childless adults. With its growth in purchasing power and sophistication, Medicaid is increasingly well positioned to drive improvements in the delivery system. It will be particularly motivated to do so for its high-need beneficiaries — those who are both “clinically at risk and socially disadvantaged.”  For this highly vulnerable population, who may be part of the five percent of Medicaid beneficiaries accounting for 55 percent of its overall costs, the traditional fee-for-service (FFS) system typically produces lots of expensive volume, often for little value. Medicaid stakeholders are very interested in pursuing TACOs that offer the prospect of reducing avoidable emergency room visits, hospital stays, and institutionalizations for people with multiple physical and behavioral health conditions and social problems like homelessness.

In return for a global payment per patient, these totally accountable entities will assume responsibility for organizing, delivering, and paying for the whole range of physical and behavioral health care services. As TACOs evolve even further, these entities may eventually absorb responsibility for long-term supports and services for patients and—depending on partnership with other public sector agencies—the organization and delivery of housing, transportation, and other social services critical to patient health and well-being. It is widely accepted, after all, that these social needs are far greater drivers of health status (and costs) than medical care itself.

Emerging TACO Pioneers

Valerie Lewis, PhD, who, with her colleagues at Dartmouth, has been chronicling key elements in the Medicaid/safety net array of ACOs, has reported on the widely variable capacity among both urban and rural versions in this emerging field. Among the most sophisticated entrants in the Medicaid ACO arena, in terms of both the scope of services for which it is responsible and the depth of its financial accountability, is Hennepin Health in Minneapolis.

Hennepin is the inspiration for the label “totally” in going far beyond the traditional ACO model for the highest-need subset of the Medicaid population in Minneapolis. Hennepin Health’s patient population of low-income adults, ages 21-64, includes up to 60 percent with substance abuse and/or mental health needs, nearly a third with unstable housing, and 30 percent with more than one chronic disease.  To serve the “total” needs of these patients, Hennepin works with homeless shelters, the county jail, supportive housing providers, the public health department, and the whole array of physical and behavioral health services. Since Hennepin receives a global payment, it has the flexibility to create and pay for its own sobering center, because having individuals detox there is a lot less disruptive and expensive than having them do so in hospital beds or in the county jail.

Across the country, Medicaid TACOs are being built—like other more exclusively medically focused ACOs—on the strongest elements of the current local delivery system. Some are truly growing from the bottom up, like Dr. Jeffrey Brenner’s Camden Coalition of Health Care Providers and its primary care teams, which identify and work with concentrations of high utilizers or “super utilizers” for whom the current system is failing. A number of states, including Colorado, Maine, Massachusetts, and Vermont, are building their versions of TACOs on top of advanced primary care medical homes (PCMH). New York is aggressively using its health homes program for high-need beneficiaries to provide a holistic approach that fully addresses medical, behavioral health, and social needs. Other states with sophisticated integrated delivery systems like Minnesota or strong community-oriented Medicaid health plans like Oregon are pursuing their own routes to building TACOs.

Looking Forward: Implications For Supporting TACOs

To fulfill their promise, ACOs serving Medicaid populations will need to advance toward a more robust version of TACOs to fully address the needs of the program’s beneficiaries, particularly the most vulnerable subsets, while also addressing cost drivers. However, few are close to achieving the scope of services combined with the depth of financial responsibility needed. Hennepin Health is uniquely positioned to build a true TACO because it not only includes a partnership with a Medicaid health plan with the capacity to assume insurance risk, but it is also part of an integrated system of county-based acute and ambulatory service providers, which gives it special access to those responsible for organizing, delivering, and paying for many of the social services critical to its membership. As the payer most likely to reap the ultimate financial benefits, state governments are best positioned to drive this type of innovation.

As David Cutler noted, “The accountable-care movement — which aims to make providers more accountable for the cost and quality of care — has blossomed far beyond expectations.” Now is the opportune time to ride that wave and make sure that Medicaid’s ACOs are driving toward total accountability, particularly as the Medicaid-covered population is expanding. Innovation funding from the ACA, as well as leading-edge philanthropies like The Commonwealth Fund and Kaiser Permanente Community Benefit, are enabling states to build upon the strongest pillars of their community-based delivery systems to create ACO models that focus more keenly on the wide-ranging medical, behavioral, and social needs of their highest-cost patient subsets. Because the social conditions surrounding poverty are such potent determinants of health, lessons from these emerging TACOs in Medicaid will have important implications for serving all populations with similar challenges. The emergence of TACOs provides further evidence of the transformative energy generated by the ACA.