DEPARTMENT OF HEALTH & HUMAN SERVICES 
Centers for Medicare & Medicaid Services 
7500 Security Boulevard, Mail Stop S2-26-12 
Baltimore, Maryland   21244-1850 
 
Center for Medicaid and CHIP Services               
                         
                  SMDL# 12-002 
                  ICM# 2 
 
       
RE: Policy Considerations 
for Integrated Care Models  
 
July 10, 2012 
 
Dear State Medicaid Director:  
 
This letter is the second in a series that provides states with guidance on designing and 
implementing care delivery and payment reforms that improve health, improve care, and reduce 
costs within Medicaid programs.  The first letter is SMD # 12-001.  Catalyzed by new 
opportunities in the Affordable Care Act, payers and providers are embarking on ambitious 
delivery system reforms that move from volume-based, fee-for-service (FFS) reimbursement to 
integrated care models with financial incentives to improve beneficiary health outcomes.  We 
believe that the information provided in this letter on the flexibility of federal authorities can 
help facilitate state innovation goals through Medicaid care models that place beneficiary health 
at the center of delivery systems.  By placing the beneficiarys needs and outcomes first, we can 
work together to ensure that our systems of care are better designed to meet the needs of the 
millions of beneficiaries that we currently serve. 
 
For purposes of this letter and future communications on payment and service delivery reform, 
we are using the term Integrated Care Models (ICMs) to describe these initiatives, which may 
include (but are not limited to) medical/health homes1, Accountable Care Organizations (ACOs), 
ACO-like models, and other health care delivery and financing models.  Such care models 
emphasize person-centered, continuous, coordinated, and comprehensive care (see Attachment 3 
for further description).  The primary purpose of this guidance is to describe policy 
considerations and relevant statutory authorities for implementing ICMs.  We are also 
introducing a state plan option to facilitate the efforts of states that wish to pay for quality 
improvement in FFS programs without a waiver.  Many of the concepts describing this state plan 
option, however, could also apply to capitated programs.  We plan to issue future guidance 
specifically addressing ICM implementation within risk-bearing managed care contracts. 
 
We encourage states to refer to our guidance when exploring avenues to implement ICMs within, 
and outside of, the bounds of policies discussed in this letter.  The discussion in this letter and 
associated attachments is not intended to be all-encompassing or limiting; rather, this is an  
                                                 
1 We are using the terms health home and medical home to generally refer to coordinated care models in a 
primary care setting.     
Page 2  State Medicaid Director 
 
effort to share the results of our initial interactions with states that have engaged us on authorities 
for new care models.  As we approve ICMs in State Medicaid programs, we will develop 
resource materials and summary documents of state-based efforts that will be available on our 
website at: http://www.medicaid.gov. 
 
I.  PATHWAYS TO ICMs 
 
To implement ICMs within Medicaid programs, states may seek to explore new initiatives or 
enhance existing efforts under a Medicaid state plan, or use demonstration or waiver authority.  
Existing Medicaid authorities allow states the opportunity to implement ICMs on a statewide 
basis or through a more limited approach based on geographic area, individual needs, or through 
selective provider contracts.   
 
The information below is an overview that describes potential ICM pathways, but as a quick 
reference, we include an Examples of ICM Arrangements and Authorities as Attachment 1 to 
this letter.  The design and scope of a states ICM will inform the appropriate pathway.   
 
Implementing ICMs as a State Plan Option 
 
Historically, in an effort to formally coordinate a Medicaid beneficiarys care while still paying 
providers fee-for-service, states have implemented primary care case management (PCCM) 
programs that limit a beneficiarys free choice of providers.  Because free choice of providers 
is limited, states generally must operate these programs under one of the Medicaid managed care 
authorities2 (which means a PCCM program is considered a managed care program even 
though service payments are not capitated), or a waiver/demonstration authority under section 
1115 of the Social Security Act (the Act).  Under these PCCM programs, states offer additional 
reimbursement through contracts with primary care managers who agree to coordinate, locate, 
and monitor health care services above and beyond what is expected from FFS primary care 
providers.   
 
More recently, we have discussed with states their option to implement ICMs that align financial 
incentives such as care coordination payments and/or shared savings under the Medicaid state 
plan without restricting beneficiary free choice of providers.  After reviewing the statutory 
options for an appropriate pathway for ICMs, CMS is providing states the opportunity to 
implement ICMs furnishing services authorized under sections 1905(a)(25) and, by reference, 
1905(t)(1) of the Act.  These models are consistent with the statutory description of optional 
Medicaid state plan PCCM services.  States may use the authority under section 1905(t)(1) of the 
Act to offer coordinating, locating and monitoring activities  broadly and create incentive 
payments for providers who demonstrate improved performance on quality and cost measures.  
Under this authority, states may opt to reimburse providers through a per member per month 
(PMPM) arrangement and/or create quality incentive payments that could be calculated as a  
                                                 
2 Section 1905(a)(25) of the Act authorizes federal financial participation (FFP) for PCCM services.   Specific 
requirements for implementing PCCM contracts are described in section 1932 of the Act and implementing 
regulations at 42 CFR 438, the rules governing managed care.     Page 3  State Medicaid Director 
 
percentage of demonstrable program savings and shared with participating providers either 
directly or through umbrella provider network arrangements, also known as shared savings 
(i.e., ACO or ACO-like programs).   
 
Implementing ICMs through Medicaid Demonstrations and Waivers 
 
Depending on features of the model, some proposals for ICMs will require a combination of state 
plan and waiver authority.  The Social Security Act requires a Medicaid state plan to include 
important safeguards for beneficiaries which, among other things, ensure services are 
comparable for all individuals eligible under the plan and that care be received by any qualified 
and participating provider.3   States that seek to test models in specific geographical areas, limit 
freedom of choice, and/or vary the amount, duration, and scope of services amongst different 
populations may need to seek authority for a demonstration under section 1115(a) of the Act or a 
waiver program under section 1915(b) of the Act.  A state that selectively contracts with a 
defined set of providers, among a broader pool of qualified providers, may do so under waiver 
authority of section 1915(b)(4) of the Act.  State plan authority for Targeted Case Management 
under sections 1902(a)(19) and 1915(g) of the Act, or the state plan option for Health Homes 
under section 1945 of the Act (as enacted by section 2703 of the Affordable Care Act) are also 
potential pathways for ICMs.  These options are open to states that may not be ready to adopt 
models on a statewide basis, but are interested in evaluating approaches on a smaller scale to 
integrating care before fully investing across the state to all eligible individuals. States that are 
interested in implementing ICMs under the state plan must take the necessary steps to issue 
public notice, conduct tribal consultation, and follow all other Medicaid requirements described 
in federal statute and regulations. 
 
II.  POLICY CONSIDERATIONS UNIQUE TO ICMs AS A STATE PLAN OPTION 
UNDER SECTION 1905(t)(1) OF THE ACT 
 
The following sections are considerations unique to implementing ICMs as an optional state plan 
service using the authority at 1905(t)(1).   
 
Provider Qualifications and Service Definitions:  ICMs may be implemented as a state plan 
option under authority at section 1905(t)(1) of the Act.  Under this option, the state may identify 
reasonable qualifications for the case managers and related providers.  Provider options for an 
ICM consistent with this section of the Act include: 
  
  An individual practitioner, physicians, nurse practitioners, certified nurse-midwives, or 
physician assistants;  
  Physician group practices, or entities employing or having arrangements with physicians 
to provide such services.  
                                                 
3 Federal regulations at 42 CFR 440.240 require that the Medicaid state plan provide that the services available to 
any categorically needy recipient under the plan are not less in amount, duration, and scope than those services 
available to a medically needy recipient.  Under 42 CFR 431.51, Medicaid state plans must provide that a 
beneficiary may obtain services from any willing and qualified service provider.   Page 4  State Medicaid Director  
 
ICMs using section 1905(t)(1) of the Act must comply with statutory requirements that care 
managers are responsible for locating, coordinating, and monitoring primary care services.  But, 
the statute does not limit care managers to coordination of primary care.  To fully achieve ICM 
objectives, care managers could coordinate a full range of services beyond primary care to  
include integration of primary, acute, and behavioral health care, as well as long-term services 
and supports (see Attachment 3).   
 
ICMs using this authority must also satisfy statutory requirements that services must include 
twenty-four hour availability of information, referral and treatment in emergencies and the 
capability to arrange for, or refer to, a sufficient number of providers for the population served.   
 
Comparability and Freedom of Choice:  As with any state plan benefit under this authority, 
ICMs must include comparable services for all Medicaid populations and allow for any provider 
that meets defined qualifications to participate.  States can, however, set forth standards that 
address populations or circumstances for which primary care case management is appropriate, 
based on medical necessity, and set payment levels stratified to distinguish patients with high 
case management needs from those with low case management needs.  As noted above, a state 
seeking to target services in other ways incompatible with state plan authority may need to 
pursue a demonstration or waiver. 
 
Beneficiary Protections Under the Statute:  When a state implements ICMs under section 
1905(t)(1) of the Act, the regulations at 42 CFR 438 will not apply, although some of the 
provisions of those regulations merely reflect applicable statutory beneficiary protections at 
section 1905(t)(3) of the Act.  These statutory provisions contain important beneficiary 
protections concerning quality and access to care.  States should take care to ensure ICMs align 
with these access to care provisions, as well as the access requirements at section 1902(a)(30)(A) 
of the Act.    
 
Specifically, depending on the complexity of the integrated care model, states will need to 
consider the following as part of an ICM proposal: 
1)  Any marketing and/or other activities must not result in selective recruitment and 
enrollment of individuals with more favorable health status.  Section 1905(t)(3)(D) of the 
Act prohibits discrimination based on health status, marketing activities included.  
2)  When there is assignment or attribution for purposes of payment calculation (see 
below), the state will be required to notify beneficiaries of the program, describe how 
personal information will be used, and disclose any correlative payment arrangements 
(e.g., incentives).  Sections 1905(t)(3)(E) and 1905(t)(3)(F) of the Act refer to section 
1932 of the Act, which allows the Centers for Medicare & Medicaid Services (CMS) to 
enforce this provision without applying the general 42 CFR Part 438 regulations.  
3)  States should examine the role of ICMs in ensuring beneficiary access to Medicaid 
services under the State plan.  Specifically, section 1902(a)(30)(A) of the Act requires 
that services under the plan are available to beneficiaries at least to the extent they are 
available to the general population.  The ICM model must be designed to be consistent 
with this basic statutory requirement.   
  Page 5  State Medicaid Director 
 
We specified these provisions because they will require consideration by the state Medicaid 
Agency in program design.  The goal of any successful and approvable ICM, regardless of 
authority, is not to lower costs through the reduction of services or access to care, but through 
improvement in the quality of the beneficiary experience. 
 
Reimbursing ICMs Under a State Plan Option:  States should decide whether reimbursement 
will be for a particular set of activities (what a provider does) or particular practice 
characteristics and incremental improvements in practice behavior (what a provider is or how 
the provider performs).  (See Attachment 3 for examples.)  For state plan amendments that 
reimburse for a particular set of activities, a state should clearly define a minimum expectation of 
activities that a provider would perform for each enrolled beneficiary within a defined period 
(e.g., a quarter).  States may vary payments to providers based on the level of activity/service 
that will occur within a quarter and/or variations in the costs of delivering the care coordination 
activities.     
 
State plan amendments that reimburse based on the characteristics of a provider will require a 
detailed description of the characteristics that trigger payments and any variations in payment 
levels associated with provider care coordination capabilities.  For instance, since the objectives 
of ICMs are largely measured in quality and health outcomes, a state could implement a tiered 
rate methodology that pays one rate for providers who maintain a staff of care coordinators, 
report process-based outcome measures, and routinely use electronic health records systems, and 
a higher rate to providers who meet all of the first tier criteria and additionally report outcome 
based quality measures, offer 24 hour care, provide a free nurse hotline, etc. Payments may also 
be based on performance on quality metrics, achievement of savings targets (shared savings), 
and other indicators of high quality care.   
 
Per member per month (PMPM) Care Coordination Payment:  While states have the option to 
define ICM services as a package of discrete care coordination activities to manage beneficiaries 
and reimburse through traditional fee-for-service payment methods, states may find that PMPM 
payment structures are conducive to the types of activities provided through ICMs.  PMPM rates 
need not require an administrative action by the provider for every coordinating event or a direct 
contact with a beneficiary, but may reimburse providers for direct and indirect actions (e.g. 
monitoring patient treatment gaps or offering extended hours of operation) that aim to improve 
health and outcomes for all beneficiaries.  
 
To take this option, states must submit a comprehensive state plan reimbursement methodology 
that explains how the state constructs payment rates.  The construction of PMPM rates for state 
plan ICM services will largely depend on: 
  State service definitions and associated service activities;  
  The qualified providers eligible to receive ICM payments;  
  The extent to which providers require support in coordinating care for Medicaid 
beneficiaries; and  
  The specific needs of the individuals who will benefit from the coordination 
activities.  
    Page 6  State Medicaid Director  
 
Rates must be economical and efficient in accordance with section 1902(a)(30)(A) of the Act, 
which means the costs used to calculate rates are appropriately tied to the provider activities and 
allocated to the Medicaid program (if the costs are not exclusive to the Medicaid program).  
States must consider costs associated with providing ICM services (i.e., salaries, fringe benefits, 
supplies, equipment, and overhead) which may vary based on the qualifications of providers and 
the needs of beneficiaries.   
 
CMS may consider the rates economical and efficient if the included costs are:     
     
  In line with the nature of the care coordination activities;  
  Generally reasonable;  
  Appropriately allocated across beneficiaries who gain from the care coordination 
activities (regardless of payer); and  
  Not prohibited under the Medicaid program. 
   
We note that PMPMs in the context of this state plan option are restricted to care coordination 
services and may not include cost considerations for other Medicaid services categories.  As part 
of ongoing oversight, the state plan methodology should explain the states process for reviewing 
the rates for economy and efficiency based on cost and other applicable information and rebasing 
the rates as necessary.   
 
Payment for Quality Improvement and Shared Program Savings:  An additional approach to 
reimbursing ICMs under this state plan option is through payments to the ICM provider for 
improvements in health care quality.  States may offer these payments as the base reimbursement 
methodology for the ICM provider, or as deferred compensation to a care coordination base rate.  
There are numerous quality measures available for states to adopt as part of payment models for 
quality improvement and CMS is interested in partnering with states to reward providers for 
quality improvement and achievement (e.g., improving patient care, focusing on person centered 
care, and using electronic health records).  As discussed above, States could offer payments that 
are tiered based on a providers improvement in process-based or outcome based measure, or 
both.  In addition, states may calculate a payment based on shared savings and reward providers 
for the quality improvements or outcomes.  Regardless of the outcomes or quality objectives a 
state promotes through the payment, the basic State Plan Amendment requirements are the same.   
 
The State plan must comprehensively describe:  
  Any eligibility restrictions for ICM providers to receive the payment; 
  How incentives do not discourage the provision of medically necessary care; 
  The specific method used to calculate the payment (including the quality 
measures that the State will use as the payment basis); and  
  The timeframe and method to distribute the payments. 
  
Accountability of PMPM activities:  Though monthly ICM payments need not be directly tied to 
a distinct activity to a beneficiary under this payment arrangement, there is an expectation that 
practice transformation will have a positive impact on the overall care provided to, and health of, 
Medicaid beneficiaries.  States must have a transparent process in place to review evidence of   Page 7  State Medicaid Director 
 
these activities and the resulting benefit, such as regular reviews of quality measure results, 
provider reporting systems, and other means that demonstrate tangible benefits to the Medicaid 
program and beneficiaries. While states transition to reliable outcomes measurement, an 
intermediary process may include evaluation of documentation, audits, or submission of related 
claims (with or without value) in order to establish accountability of provider activities. 
 
III.  POLICY CONSIDERATIONS IN DEVELOPING ICMs UNDER ALL 
AUTHORITIES 
 
In selecting the appropriate pathway for an ICM, a state should consider the goals of the model 
and its core features.  Based on our initial discussions with states, we have developed a list of 
considerations we believe could generally apply to all models.  The questions in Attachment 2 
are intended to generate ideas among states that are considering developing ICMs and help states 
anticipate some of the issues CMS may raise in reviewing ICM proposals.  The policy topics and 
discussion below provide context to the attached list of questions and outline some of the 
programmatic boundaries that exist within each pathway.   Policy continues to evolve as we 
move forward on these topics. 
   
Provider Designation:  Designation is a mechanism by which a beneficiary formally establishes 
a relationship with a provider or practice site that, in the case of an ICM, could serve as the 
beneficiarys primary care medical/health home.  Because the nature of ICM activities (locating, 
coordinating, and monitoring care) is considered long-range endeavors, States may be interested 
in formalizing the relationship between Medicaid beneficiaries and providers by ensuring that the 
beneficiary selects an ICM provider.  To be effective, ICMs generally rely upon such an 
established and continuous relationship between beneficiary and provider.  This relationship 
encourages providers to develop care plans that address person-centered short and long-term 
needs and goals, maintain continuous outcome and quality data, and allows for payment 
continuity to reward efforts.  It builds trust between a beneficiary and provider, which is key to 
coordinating effective care.   
 
When considering provider designation policies, states should be cognizant of the free choice of 
provider regulation at 42 CFR 431.51.  This requires that a Medicaid eligible individual may 
seek care from any willing and qualified service provider as defined under the state plan.  To 
ensure freedom of choice within an ICM as a state plan option, states must have an effective opt-
out process for beneficiaries who no longer wish to participate in the ICM program or who wish 
to switch ICM providers.  States also need to ensure that the designated relationship does not 
inhibit free choice within any Medicaid service.  For instance, a primary care physician who 
serves as a primary care medical or health home cannot restrict the beneficiarys ability to make 
an appointment with any other physician who is qualified and willing to provide care.       
Should a state seek to limit beneficiaries enrollment or care from a particular ICM provider or 
program, it would need to pair the ICM state plan benefit with an authority that limits the 
beneficiarys choice of providers through a waiver or demonstration authority, as discussed in 
Section I of this letter.   
 
  Page 8  State Medicaid Director 
 
Provider Attribution Methodology:  An attribution method is a calculation that appropriately 
rewards providers for care coordination efforts based upon an estimation of the patients for 
whom he or she is most directly responsible.  Attribution is particularly important in models that 
offer financial incentives to providers for quality achievements and methods that share program 
savings.   When designing an ICM, states should consider the method used to attribute provider 
activities to outcomes that result from measures used to evaluate the model.  In other words, the 
state should employ a method that gives reasonable assurance a providers intervention can be 
connected to improved health care outcomes.  Attribution methodologies must account for the  
possibility of beneficiaries changing care coordination providers using their free choice during 
designated periods in which quality achievements, and/or shared savings, are calculated.   
  
Connecting Incentives to Outcomes Improvement:  As states move forward with care 
coordination models, careful consideration should be given to appropriate financial incentives 
that drive change and promote quality and lower costs, regardless of whether authorized by a 
State plan amendment or waiver.  Depending upon the states ICM concept and the capability of 
providers to organize within the care coordination model, it may be in a states interest to 
consider a variety of payment arrangements to encourage improvement.  All methods that 
propose to share Medicaid savings under the ICMs (regardless of authority) will be reviewed in 
collaboration with our partners in the Office of the Actuary.  In Attachment 4, we provide a 
reference to several payment methods that could be applied to state ICMs.   
 
Patient Engagement: States should explain how ICMs will notify its patients of participation in 
an ICM and the impact of that participation on the patients care. Such notification should 
include a description of any incentive payments included in the states ICM model.  
 
IV.  COORDINATION WITH OTHER CMS INITIATIVES   
 
A states attribution method should be consistent with other state and CMS initiatives providing 
services to all eligible beneficiaries. Such methods must avoid duplication in payments and 
ensure Medicaid, and other CMS-funded initiatives, provides for seamless coordination while 
incentivizing providers to minimize or eliminate program overlap.   
 
To the extent states are operating other care coordination or quality incentive programs through 
federal initiatives (e.g., the Comprehensive Primary Care Initiative, Financial Alignment Models 
to Integrate Care for Medicare-Medicaid Enrollees, or Health Homes for Individuals with 
Chronic Conditions), states should ensure programs complement each other without duplication 
of payment and allow for the unique impact of each intervention to be evaluated independently 
of any other.  Additionally, federal funds may not be used to fund the state share for Medicaid 
payments made under ICMs or any other Medicaid service category.   
 
We are committed to working with states to ensure states coordinate with and supplement efforts 
funded through other federal initiatives that aim to improve care and quality for Medicaid 
beneficiaries.      
 
  Page 9  State Medicaid Director 
 
V. CONCLUSION 
 
We look forward to working with states, individually and collectively, to provide assistance and 
facilitate collaboration in developing and implementing ICMs within the Medicaid program.  As 
you continue to consider and implement transformational efforts, we are available to provide 
assistance in navigating the policy options and the tools available to you.  If you have any 
questions, please contact Ms. Dianne Heffron, Director of the Financial Management Group, at 
410-786-3247.     
 
 
 
 
Sincerely, 
 
/s/ 
 
            Cindy Mann 
            Director 
 
Enclosures 
  Page 10 - State Medicaid Director 
 
cc:   
 
CMS Regional Administrators 
 
CMS Associate Regional Administrators 
Division of Medicaid and Childrens Health 
 
Matt Salo 
Executive Director 
National Association of Medicaid Directors 
 
Alan R. Weil, J.D., M.P.P. 
Executive Director 
National Academy for State Health Policy 
 
Ron Smith 
Director of Legislative Affairs 
American Public Human Services Association 
 
Tracey Wareing            
Executive Director 
American Public Human Services Association 
 
Joy Wilson 
Director, Health Committee 
National Conference of State Legislatures 
 
Heather Hogsett 
Director of Health Legislation 
National Governors Association 
 
Debra Miller 
Director for Health Policy 
Council of State Governments 
 
Christopher Gould 
Director, Government Relations 
Association of State and Territorial Health Official 
 
    Attachment 1: Examples of ICM Arrangements and Authorities  
Tool  Statutory  Purpose  Policy Consideration 
Reference 
ICM State Plan  Section 1905(t)(1)  Option to provide    Statewide 
Amendment (SPA)  42 CFR 440.168  integrated care models    All Eligible Participants 
to all individuals    All Qualified Providers 
under the State plan.  
Ability to incentivize 
quality and share 
savings. 
Primary Care Case  Section  Utilize existing PCCM    Requirements at 42 CFR 
Management  1905(a)(25)  contracts to reward  438.6 
(PCCM) Contract  42 CFR 438.6  quality. Limits   
providers eligible to 
offer services through 
contract.  Ability to 
incentivize quality and 
share savings. 
Selective Contract  Section  Limit the number of    Test for cost effectiveness 
Waiver  1915(b)(4)  providers eligible to  and efficiency 
offer services within 
the model. 
1115 Demonstration  Section 1115  Target populations,    Budget neutrality 
limit geographic    Time limited 
scope, reach target 
populations. 
 
 
 
 
 
 
 
 
  Attachment 2: Questions to Consider in Developing ICMs 
General Program Description 
  Is the State building off of an existing PCCM or 1115(a) demonstration program or will 
the model be a new Medicaid initiative?  
  How will the model support better care for individuals, better health for populations and 
lower cost through improvement?  
  What are the provider qualifications for the model? 
  Will any provider that meets the established provider qualifications be able to be 
designated as a qualified provider? 
  How do incentives from other payers support the same objectives? 
Eligible Participants 
  Will the model be implemented on a statewide basis?  If no, what are the limiting 
criteria? 
  May all State plan eligible beneficiaries (including those dually eligible for Medicaid and 
Medicare) enroll within the model?   
  Are there other federally funded programs within the State serving clients with special 
needs who may be (or become) eligible for the expanded range of services under an 
Integrated Care Model? 
Model Services and Activities 
  Which delivery systems will the model impact (e.g. primary care, long-term care, 
behavioral health, etc.)? 
  What services/activities will the model providers conduct through the model?   
  What services will be considered for coordination in the model? 
  Do these services go above and beyond any current care coordination within the State 
plan or waiver programs? 
  What key characteristics must the providers possess or strive to achieve that are integral 
to implementing the model?  
Beneficiary Notification 
  How will beneficiaries be notified that they are enrolled within the model?   
  What is included in the notification  what will be communicated to beneficiaries?   
  How can beneficiaries get more information about the program?  Assignment and Attribution 
  How does the program assign and attribute beneficiaries to providers? 
  Are assigned beneficiaries able to opt-out of the program voluntarily? What waiver 
authority will form the basis for that request?  
Quality Metrics 
  What data measures will be used to ensure that providers are transforming their method 
of care delivery? 
 
  What quality measures are proposed?  Are these measures the most relevant to and 
measure most accurately the care coordination and quality improvements anticipated 
from the model? 
 
  How do the proposed quality measures relate to other care coordination initiatives in the 
State (e.g. Health Homes, Medicare-Medicaid Financial Alignment Demonstrations, 
etc.)? 
 
  What thresholds or improvements must be shown for a provider to meet the criteria for a 
quality based payment (if applicable)? 
Program Oversight and Accountability 
  What evaluative methods will the State use to assess whether the model is effective?  
 
  What oversight functions will the State Medicaid agency have in place to ensure that 
ongoing payments are effecting better care coordination, practice transformation and 
quality improvement? 
Payment Methodology 
  Will the State reimburse providers a regular payment for care coordination activities?   
 
  Is the payment level tiered based on provider activities, provider characteristics, or 
outcomes? 
 
  What factors did the State use to determine the appropriate payment amount to reimburse 
provider activities under the model? 
 
 
  Does the State propose to offer supplemental provider payments under the model?  
 
  What criteria will the State use to determine provider eligibility for a supplemental 
payment?  
    Does the State propose shared program savings as the methodology to determine 
supplemental provider payments?  
 
  Did the State conduct an actuarial analysis to assess the validity of the shared savings 
structure? 
    Attachment 3: Hypothetical Integrated Care Models 
 
Model  Primary Care Medical Home  Network Supported Primary  Accountable Care 
Care Medical Home (e.g.  Organization 
network of PCMHs working 
together) 
 
Providers  Physicians,     Physician Groups, Network,  ACOs (adopted Medicare 
   Physician Directed  Collaborative, and/or  definition or State defined and 
Team,   Partnership Organizations  authorized through risk-based 
Other Designated Primary Care  Composed of Individual  contract). 
Provider.  Practices.  
Potential  PMPM   PMPM   Shares Savings and Distributes 
Payment      Savings to Partnering Providers 
Models  Stage One: Process-Based  Tier One - Process-Based  Based on State plan 
Quality Incentive.  Quality Incentive.  Methodology. 
     
Stage Two: Outcome-Based  Tier Two  Outcome-Based 
Quality Incentive.  Quality Incentive. 
Activities    Referral Management   All activities under first  All activities under first 
  Care Coordination   column, plus:  column, plus: 
  Care Management    Staff Training    Staff Training 
  Use of Care Plan    Health Promotion    Health Promotion 
  Beneficiary Outreach and    Quality Management    Quality Management 
Advocacy     Practice Support    Practice Support 
  Clinical Data    Promotion of Evidence-   Promotion of Evidence-
Management   Based Medicine  Based Medicine 
  Individual and Family    Promotion of Patient    Promotion of Patient 
Supports  Engagement  Engagement 
  Development and    Infrastructure for Quality    Infrastructure for Quality 
Maintenance of Care  and Cost Measure  and Cost Measure 
Plans  Reporting  Reporting 
  Quality Reporting    Promotion Coordination of    Promotion Coordination 
Care  of Care 
  Quality Reporting    Quality Reporting 
  Model  Primary Care Medical Home  Network Supported Primary  Accountable Care 
Care Medical Home (e.g.  Organization 
network of PCMHs working 
together) 
 
Characteristics    Offers Extended Care  All activities under first column,  All activities under first 
Hours  plus:  column, plus: 
  Designates Hours for    Offers 24 hour Nurse    Offers 24 hour Nurse 
Patient Telephone  Advice Lines  Advice Lines 
Consultation    Conducts Quarterly staff    Conducts Quarterly staff 
  Ability to Report Process  training on care  training on care 
Quality Measures  coordination practices  coordination practices 
  Ability to Report Outcome    Collects and Analyzes    Collects and Analyzes 
Quality Measures  Practice Quality Data  Practice Quality Data 
  Demonstrates Defined    Meets National or State    Meets National or State 
Improvement in Process  Defined Medical Home  Defined Medical Home 
Measures  Certification Standards  Certification Standards 
  Meets National or State    Partners with Network of    Partners with Network of 
Defined Medical Home 
Certified Medical and  Certified Medical and 
Certification Standards  Health Home Providers  Health Home Providers 
  Has a functional certified 
  Process for evaluating the    Process for evaluating the 
EHR 
health needs of the  health needs of the 
population served  population served 
  Partners with community    Partners with community 
stakeholders  stakeholders 
  Communicates clinical    Communicates clinical 
knowledge/evidence-based  knowledge/evidence-based 
medicine to beneficiaries in  medicine to beneficiaries in 
a way that is understandable  a way that is 
to them  understandable to them 
  Has written standards in    Has written standards in 
place for beneficiary access  place for beneficiary access 
and communication, and a  and communication, and a 
process in place for  process in place for 
beneficiaries to access their  beneficiaries to access their 
medical record  medical record 
  Engages and shares    Engages and shares 
decision-making that takes  decision-making that takes 
into account the  into account the 
beneficiaries' unique needs,  beneficiaries' unique needs, 
preferences, values, and  preferences, values, and 
priorities  priorities 
 
     
Attachment 4: Potential Payment Approaches for State Plan ICM 
Payment Approach  Basis for Payment  Methodology Expectations 
Base Rates  PMPMs  Comprehensive description of: general rate 
Fee for Service  construction, effective date language, location 
of rate schedule, tiered payment levels, acuity 
adjustments.   
Incentive Payment for  Annual performance  Definition of quality measures and scoring 
Quality Improvement  criteria.  Eligibility requirements for receiving 
payment.  Methodology for calculating and 
distributing payment.   
Medicaid Shared  Annual performance  Definition of quality measures and scoring 
Savings Payment  criteria.  Methodology for calculating and 
distributing payments.  Specific service costs 
included in the calculation.  Validation from 
CMS actuaries.