The law would divide the state’s Medicaid program into eight geographic regions with regional care organizations in each contracting with the state to deliver care and assume the financial risk of treatment, similar to the accountable care organization model. About 930,000 Alabama residents, or one in five, is on Medicaid.
That managed care model, once it is fully rolled out in 2016, is expected to save Alabama between $49 million and $71 million per year, or 2.6 percent to 3.7 percent of its $1.7 billion annual Medicaid budget, which accounts for one-third of the state’s budget. The program is expected to run at a deficit in fiscal year 2015, before the savings kick in.
The law is not an expansion of Medicaid under the optional provision of the Patient Protection and Affordable Care Act that grants states extra federal funding if they loosen income and family status restrictions to enroll more individuals on Medicaid.
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