May 30, 2014

State of Alabama
Press Release: Medicaid

State seeks federal approval of a new capitated care system

Calling Regional Care Organizations the “cornerstone” of Alabama’s Medicaid transformation plan, state officials asked the federal government to approve a plan to move Medicaid away from a fee-for-service payment model to a capitated managed care system. The request, in the form of a Section 1115 Demonstration waiver application, was submitted to the Centers for Medicare and Medicaid Services on May 30.


If approved, it would allow the state to implement Regional Care Organizations by building on the successes of the Agency’s Patient 1st, maternity and health home programs while injecting additional funds needed to build necessary administrative infrastructure and support providers through the transition.


Prior to submission of the waiver application, the Agency held two public hearings and reviewed more than 400 questions, comments and suggestions from providers, recipients, advocates and the general public.


“Our goal is to preserve the fundamental principles of these existing programs through the development of RCOs in order to improve care coordination, clinical outcomes, patient engagement, and access while ensuring the long-term sustainability of Alabama’s Medicaid program,” said Dr. Donald Williamson, State Health Officer and Chair of the Medicaid Transition Task Force. 


The proposed project is based on the recommendations of a multi-stakeholder Medicaid Advisory Commission, convened by Governor Robert Bentley in October 2012. The Commission’s recommendations focused on the Agency transitioning from a volume-based, fee-for-service reimbursement system to a payment system that incentivizes the delivery of quality health outcomes and improved care coordination. The Commission’s recommendations informed the plan to create RCOs, which was incorporated into Senate Bill 340 and signed into law in May 2013.


A copy of the waiver application and related information is available at

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