Alabama Medicaid to pursue RCO alternatives

health care

Alabama is walking back its decision to shift its Medicaid program to managed care after nearly four years of development and millions in cost. The state will now begin to pursue an alternative to the Regional Care Organization (RCO) initiative.

The Alabama Medicaid Agency announced its decision to abort the project Thursday due to the anticipated changes the Trump administration and Congress intend to make to Medicaid, along with the program’s high start-up costs.

“It is highly likely that federal health care changes are on the horizon,” said Alabama Medicaid Commissioner Stephanie Azar in a statement. “While the financial implications could be challenging for our state, the new flexibilities and waiver options that the Trump administration is willing to consider gives our state Medicaid program new options to accomplish similar goals without incurring the same level of increased up-front costs associated with the RCO program.”

RCO plan was created by the state Legislature in 2013 and 2014 following the passage of Obamacare. It would have moved the state’s current fee-for-service model to a regionally focused managed care system. According to the Medicaid website RCOs, “calls for the state to be divided into regions and for community and provider-led, regional organizations to coordinate the health care of Medicaid patients in each region, with networks ultimately bearing the risks of contracting with the state of Alabama to provide that care.”

“When RCO’s were first proposed after the Affordable Care Act under the Obama Administration, the plan was appropriate; However, in today’s climate it is no longer the best use of taxpayer resources,” Azar added.

Governor Kay Ivey supports Medicaid’s decision to move away from RCOs.

“I support Medicaid’s shift in reform strategy, which has been fully shared with legislative leadership and other key stakeholders,” said Ivey. “I spoke with Health and Human Services Secretary Tom Price, and he has assured me of the Trump administration’s desire to work with the states to allow more flexibility in Medicaid services moving forward.”

Ivey says  the state was at a crossroads and decided to pursue less risky options.

Ivey continued, “This flexibility brought us to a crossroads where we reconsidered the risks and rewards of RCOs, and decided instead to pursue new reform options which bring less risks and similar outcomes. The RCO model didn’t fail; instead the alternative is a recognition that the circumstances surrounding Medicaid have changed, thus our approach must change. Our end goal is clear – to increase the quality of services provided and protect the investment of Alabama taxpayers.”


  1. Recent HHS data shows that Alabama’s prisoners are not receiving better health care than its citizens. Especially in mental health. Perhaps the state should consider adopting the DOC health care system for all its citizens.

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