Financial Alignment Initiative (FAI)

SPOTLIGHT & RELEASES

Overview

A longstanding barrier to coordinating care for Medicare-Medicaid enrollees has been the financial misalignment between Medicare and Medicaid. To begin to address this issue, the Centers for Medicare & Medicaid Services (CMS) will test models with States to better align the financing of these two programs and integrate primary, acute, behavioral health and long-term services and supports for their Medicare-Medicaid enrollees.

• Capitated Model: A State, CMS, and a health plan enter into a three-way contract, and the plan receives a prospective blended payment to provide comprehensive, coordinated care.
  • Learn more about the capitated model.
• Managed Fee-for-Service Model: A State and CMS enter into an agreement by which the state would be eligible to benefit from a portion of savings from initiatives designed to improve quality and reduce costs for both Medicare and Medicaid.
  • Learn more about the managed fee-for-service model.

Qualifying states have an option to pursue one or both of the capitated or the managed fee-for-service models. In states with approved demonstrations, CMS will test these models over the next several years.

• State Medicaid Director's Letter Describing the Models (July 2011) (PDF) 

CMS is also working with some states to pursue demonstrations outside the capitated and managed fee-for-service financial alignment models.

• Learn more about the Minnesota Demonstration 

Demonstrations

CMS is providing an opportunity for three demonstration states with current end dates of December 31, 2018 -- Massachusetts, Minnesota, and Washington -- to extend the scheduled end dates for the demonstrations until December 31, 2020.

• Financial Alignment Extension Opportunity Memorandum (01/19/17) (PDF)

CMS is providing an opportunity for all states that are currently participating in the Financial Alignment Initiative to extend the scheduled end dates for the demonstrations.

• Financial Alignment Extension Opportunity Memorandum (07/16/15) (PDF)

Final Memoranda of Understanding (MOU) establishing the parameters of each demonstration may be found at:

• Approved Demonstrations and MOUs

Original state proposals and public comments may be found at:

• State Proposals and Public Comments

Resources for Implementation

Implementation of each demonstration will be a collaborative effort between CMS and the state. CMS has made several resources available to assist states with implementation activities:

• Beneficiary Counseling & Ombudsman Programs
• Integrated Care Resource Center

Additional Resources 

The Financial Alignment Initiative has two models, the capitated model and managed fee-for-service model. To learn more about enrollee experiences with the capitated and managed fee-for-service model demonstrations to date visit the resource below:

• FAI Consumer Assessment of Healthcare Providers and Systems (CAHPS) Survey Results (10/2020) (PDF)

To view performance data on care coordination activities and experiences in the capitated model, visit the resource below:

• Care Coordination Data Snapshot for the Capitated Model (05/26/2022) (PDF)

Please visit Information and Guidance for Plans to learn more about information and guidance for Medicare-Medicaid Plans (MMPs) participating in the capitated model demonstrations and the Minnesota Demonstration to Integrate Care for Dual Eligibles in the areas of:

• Application & Annual Requirements
• Reporting Requirements
• Audit Programs
• Enrollment
• Encounter Data Reporting
• Marketing Information & Resources
• Quality Withhold Methodology & Technical Notes
• Chronic Care Improvement Programs & Quality Improvement Projects

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