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Medicaid Announces Delay in RCO Implementation

By Chip Brownlee
Alabama Political Reporter

Even after a lengthy Special Session dedicated to finding funds for Gov. Robert Bentley’s experimental Medicaid Regional Care Organizations, Alabama’s Medicaid Agency announced last week it has requested a delay in the implementation of the RCO plan.

The Alabama Medicaid Agency officials, in a news release on their website, said they will ask the Federal Centers for Medicare and Medicaid Services to “postpone the start date for the proposed Regional Care Organizations until July 1, 2017.”

However, according to the Alabama Medicaid Agency’s communications director, Robin Rawls, the official request for delay is yet to be submitted for CMS approval.

The agency first announced in May that it would request the delay.

“There was legislation passed on the last day of the State Legislature, which gave the agency leeway on the timeline to start RCOs,” said Rawls. “We went ahead and announced on May 9, that we would delay implementation, but did not have a date at that time.”

This summer, Bentley called a Special Session of the Legislature devoted to finding a solution for an $85 million shortfall in the Medicaid Agency’s budget. A State-run lottery was Bentley’s main objective, but only a bill allocating money from a settlement with oil giant BP escaped the Statehouse.

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Rawls said the agency notified CMS of the July 1, 2017, start date earlier in the summer, before the Legislature went into the Special Session.

“CMS has closely followed our budget situation and advised us that we had to amend the waiver, because we would not be able to implement RCOs on Oct. 1, 2016,” said Alabama Medicaid Commissioner Stephanie Azar. “We now look forward to moving ahead with our plans to implement a new healthcare delivery system for Medicaid.” The delay must be approved by CMS.

Bentley has promised his experimental RCOs will provide more and better coverage than is currently provided by the State’s struggling Medicaid Agency, while the Regional Organizations also serve as a cost-cutting measure.

The Governor’s RCO plan divides the State into five regions. In each region, a locally-led medical organization will provide healthcare services to about two-thirds of the State’s Medicaid population.

The State’s Medicaid agency will pay each RCO a fixed fee, which they will then use to provide the services to their region. Bentley and officials in the Medicaid Agency have said these RCOs will eventually save the State money.

But in the meantime, the transition will cost the State millions.

Danne Howard, the executive vice president of the Alabama Hospital Association, said the trade organization will stand behind the Medicaid Agency’s RCO plan, and agrees with the agency’s decision to delay implementation of the RCO plan.

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“The delay was obviously necessary … prior to the Special Session when the Medicaid Agency was underfunded by $85 million and cuts were being put into place,” Howard said. “Clearly RCOs were not going to be able to move forward.”

Earlier this month in the final days of the Special Session, the Legislature approved using funding from the settlement with BP to make up for the shortfall.

Along with funding to solve the shortfall for the 2017 fiscal year, the Legislature also approved $105 million from BP money for Medicaid, through fiscal year 2018. However, it is unclear whether the State will have money to pay for the transition to Regional Care Organizations, even with the influx of BP money.

Recent reports suggest the State’s agency will most likely have to refund more than $96 million to the federal government, after audits of two State-run Medicaid programs.

Chip Brownlee is a former political reporter, online content manager and webmaster at the Alabama Political Reporter. He is now a reporter at The Trace, a non-profit newsroom covering guns in America.

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