Colorado’s Medicaid Delivery Transformation Saves Millions by Addressing Social Determinants of Health

| Brittany McCullough
stethoscope on US currency of various amounts

With Medicaid spending projected to reach $1 trillion by 2026, states are experimenting with a number of innovative policies to curb spending without sacrificing quality. Colorado’s Medicaid ACO model is at the forefront of incorporating social determinants of health into patient care plans to improve care coordination efforts.

This article is the second in a series about pioneering approaches to value-based care in state Medicaid contracts.

Colorado implemented their Accountable Care Collaborative (ACC) in 2011 across seven Regional Care Collaborative Organizations (RCCOs) in the state. The RCCOs receive a per member per month (PMPM) capitated payment in addition to fee-for-service (FFS) payments and do not assume any downside risk.

However, providers are given incentive payments that are tied to performance. More than 75 percent of the state’s Medicaid beneficiaries are enrolled in the ACC program. The ACC program covers health care provider visits, dental care, emergency services and transportation, maternity and newborn care, behavioral health, pharmacy and durable medical equipment, physical, occupational and speech therapy, laboratory services, preventive and wellness care and family planning.

These services are standard under most Medicaid contracts, although behavioral health services remain “carved out” in a number of managed care arrangements.

The element of Colorado’s ACC that makes it innovative is the focus on addressing the social determinants of health, which can impact health more than a patient’s actual medical issues.

One costly area of our health system is unnecessary utilization derived from unaccounted for social determinants of health. The CDC describes social determinants of health as the “conditions in the places where people live, learn, work, and play.” According to a Kaiser Family Foundation issue brief, 19 states required Medicaid managed care plans in 2017 to screen members for social needs and refer them to appropriate resources. Given that socioeconomic status accounts for roughly 40 percent of health outcomes, addressing social determinants is vital.

When comparing socioeconomic status to health outcomes, individuals of lower socioeconomic status are more likely to suffer from health-related problems. Medicaid beneficiaries in particular are more likely to be subject to poor housing, education, food insecurity, and economic instability. Assessing their need for and referring them to social services and support systems in their community can help reduce utilization.

In Colorado, RCCO’s must “establish communication channels with community organizations that provide resources such as food, housing and job training.” The implementation of a nutrition program, one of the more common initiatives to address social determinants, resulted in $4.8 million in aggregate savings, or $3800 per patient for one ACO in Chicago with a similar patient population. Hospital readmission rates also declined among patients at increased risk for malnutrition.

According to the Colorado Department of Health Care Policy and Financing, the ACC program saved more than $205M from avoidable medical costs between July 1, 2015 – June 30, 2016.  Since being implemented in 2011, the ACC has produced $490M in gross savings. It has also led to a 15-20 percent reduction in hospital readmissions.

In addition to establishing communication channels with community organizations to provide needed support systems, RCCO contractors must also “promote promising initiatives that address the social determinants of health within the region.” Finally, they must “engage with hospitals and local public health agencies regarding community health needs assessment to develop and implement collaborative strategies to reduce health inequities and disparities in the community” according to their contract.  

This population health approach will not only advance the health of the Medicaid population but the entire surrounding Colorado community.

Brittany McCullough

Brittany McCullough, Health Policy Associate.

Brittany McCullough, URAC's health policy associate, focuses on tracking and analyzing legislation and regulations of importance to URAC stakeholders. Brittany considers herself an early careerist but most of her policy and research work has been centered on the ACA, Medicaid, CHIP, and mental health. She holds a B.S. in Neuroscience and a Master of Health Administration.

Views, thoughts and opinions expressed in my articles belong solely to me, and not necessarily to my employer.

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