Alabama Medicaid RCOs and APR-DRGs

on Tuesday, 20 June 2017. All News Items | Case Management | Quality | AL Medicaid

When everything seems so out of control, one thing you can count on in the south is the summer heat. A typical southern summer day is hot, muggy, prone to a daily heat activated thunderstorm, and driving down the interstate you can see wavy lines hovering over the road in front of you. For those not familiar with this phenomenon, on a hot surface (i.e. I-65 South headed to the beach) air stands in layers of differing densities. Warm air is less dense so once summer hits, heat from the road rises and mixes with layers of warm and cool air and voila you get the mirage of bright wavy lines.

Alabama Medicaid (the Agency) implementing Regional Care Organizations (RCOs) and APR-DRGs is one mirage that just might finally become a reality. Alabama Medicaid currently has the following notice posted to their website:

“On October 1, 2017 (projected date), Alabama Medicaid is converting hospital inpatient pricing for fee-for-service recipients from a per diem calculation to a per discharge calculation based on All Patient Refined Diagnosis Related Groups (APR-DRGs).”

You will note the Agency indicates October 1st is a “projected date.” This article takes a look back at the RCO and APR-DRGs implementation date mirage.

March 15, 2016: APR-DRG Implementation Date

An Alert was sent to all Alabama hospitals, prospective RCOs and other interested stakeholders indicating the Agency would be converting to APR-DRGs effective October 1, 2016 to coincide with the Regional Care Organizations (RCOs) go live date.

May 12, 2016: Budget Shortfall prompts Agency to Seek Delay for RCOs

RCOs were designed to provide medical care to 650,000 Alabamians who receive full Medicaid benefits. Being able to move forward with this program was dependent on the model being adequately funded by the Alabama Legislature in the 2016 Regular Session.

On May 12, 2016, the Agency announced they would be seeking to delay the October 1, 2016 start date for the RCOs. The delay “became necessary after the Alabama Legislature adjourned May 4 without appropriating additional funds needed by the Agency for existing operations and to move forward with its plans to implement RCOs. A federal waiver that would enable the state to implement the managed care program was approved in February. Commissioner Azar emphasized that the legislation passed on the last day of the regular session provides the Agency flexibility to work with the Centers for Medicare and Medicaid Services and the Probationary RCOs on an alternative implementation plan.”

July 8, 2016: APR-DRGs Implementation Delay

The Agency announced that due to the delay in RCOs and budget uncertainty, the October 1, 2016 implementation date for APR-DRG pricing for hospital inpatient stays would be delayed.

September 14, 2016: Medicaid to Request July 1, 2017 start for Regional Care Organizations

The Agency notified CMS that it will ask to postpone the RCO start date until July 1, 2017. This was necessary due to a General Fund shortfall delaying the planned October 1, 2016 start date. “The five-year waiver is an essential component of the Agency’s transformation efforts, providing funding and authority to create a managed care system for about two-thirds of its current recipients.”

December 1, 2016: RCO Implementation Changes and Service Delivery Network Timelines

The Agency announced that they are working with CMS to amend their approved 1115 waive to allow for an October 1, 2017 start date for the RCO program.

February 28, 2017: RCO Implementation on Schedule as New Regions Offered to Other Probationary RCOs

Even as Medicaid was notified a capital contributor was ending their agreement with organizations planning to operate as RCOs, the Agency announced that they are “still in position to implement Regional Care Organizations by October 1, 2017, under a 2013 state law that allows current probationary RCOs to provide services in additional regions.”

June 2, 2017: Public Comment Sought for Second RCO Amendment

The Agency announced they are seeking public comment on Proposed Amendments that would among other things “allow the Agency to phase-in the RCO program on a geographic basis; the phase-in is currently planned to begin on October 1, 2017 in Regions A and C is it is expected that RCOs will begin operations in Regions B, D, and E after October 1, 2017, but by October 1, 2018.”

The comment period is open until July 2, 2017. Written comments should be submitted to This email address is being protected from spambots. You need JavaScript enabled to view it. or James Hartin, Office of General Counsel, Alabama Medicaid Agency, 501 Dexter Avenue, P.O. Box 5624, Montgomery, Alabama 36103-5624.

As of today, Alabama Medicaid RCO’s and APR-DRGs implementation seem to be “a go” for October 1, 2017, and only time will tell if the “mirage” moves on down the road to a future date. For those interested in following Alabama Medicaid news you can access their Newsroom at

Article by Beth Cobb

Beth Cobb, RN, BSN, ACM, CCDS, is the Manager of Clinical Services at Medical Management Plus, Inc. Beth has over twenty-four years of experience in healthcare including eleven years in Case Management at a large multi-facility health system. In her current position, Beth monitors, interprets and communicates current and upcoming Case Management / Clinical Documentation issues as they relate to specific entities concerning Medicare. You may contact Beth at This email address is being protected from spambots. You need JavaScript enabled to view it..

This material was compiled to share information. MMP, Inc. is not offering legal advice. Every reasonable effort has been taken to ensure the information is accurate and useful

green-iconWe are an environmentally conscious company, dedicated to living “green” both at work and as individuals.


1900 Twentieth Avenue South
Suite 220
Birmingham, AL 35209


This email address is being protected from spambots. You need JavaScript enabled to view it.