Financial Alignment Initiative

Dually Eligible Beneficiaries

The Financial Alignment Initiative (FAI) was authorized under Section 3021 of the Patient Protection and Affordable Care Act (P.L. 111-148, as amended) to test ways to improve care for dually eligible beneficiaries and reduce program costs by aligning financing and coordinating care across Medicare and Medicaid. As of January 2018, approximately 440,000 beneficiaries were enrolled in the demonstration in 11 states: California, Illinois, Massachusetts, Michigan, Minnesota, New York, Ohio, Rhode Island, South Carolina, Texas, and Washington. The demonstrations, the earliest of which began enrolling beneficiaries in 2013, were originally scheduled to last for three years but many were subsequently extended. Demonstrations in two states, Colorado and Virginia, ended in 2017 and those still in operation are scheduled to end by 2020 unless CMS grants further extensions.

Key Features of Financial Alignment Initiative Demonstrations


Type of model

Beneficiaries enrolled1

Scheduled end date

California Capitated 115,480 2019
Illinois Capitated   55,740 2019
Massachusetts Capitated   20,778 2019
Michigan Capitated   39,836 2020
Minnesota2 Alternative   38,959 2018
New York 
    FIDA Capitated     3,879 2019
    FIDA-IDD Capitated     1,022 2020
Ohio Capitated   75,959 2019
Rhode Island Capitated   13,315 2020
South Carolina Capitated   11,132 2020
Texas Capitated   42,361 2020
Washington Managed FFS   20,310 2020
Notes: FIDA is fully integrated duals advantage. FIDA-IDD is fully integrated duals advantage for individuals with intellectual and developmental disabilities. FFS is fee for service. Enrollment figures for Minnesota and Washington are from state websites.
¹ Number of beneficiaries enrolled in Washington’s managed FFS model is as of July 2018; all others are as of August 2018.
² Enrollment in Minnesota Senior Health Option.
Sources: MACPAC analysis of CMS monthly enrollment reports and state memoranda of understanding; Minnesota health care programs managed care enrollment totals August 2018, Minnesota Department of Human Services 2018; and Washington State’s fee-for-service dual eligible demonstration monthly report, Washington State Health Care Authority 2018.
FAI models

Most states choosing to participate in the FAI established either a capitated model or a managed fee-for-service model. Minnesota established an alternative model focused on administrative alignment.

Capitated model. The capitated model involves a three-way contract between the Centers for Medicare & Medicaid Services (CMS), the state, and participating health plans, referred to as Medicare-Medicaid Plans (MMPs), to enable states to test models to integrate primary, acute, behavioral health, and long-term services and supports for their dually eligible beneficiaries. This model is being tested by 9 of the 11 participating states, and includes most of the FAI’s 440,000 enrollees. One state, New York, is operating two demonstrations under this model: the Fully Integrated Duals Advantage (FIDA) and the Fully Integrated Duals Advantage for Individuals with Intellectual and Developmental Disabilities (FIDA-IDD).

Managed fee-for-service model. This model involves an agreement between CMS and the state in which the state is eligible to benefit from a portion of any savings resulting from initiatives to improve quality and reduce costs for both Medicaid and Medicare. Originally two states were testing this model, Colorado and Washington, but Colorado’s demonstration ended in December 2017.

Alternative model. Minnesota obtained permission from CMS to test an alternative model that focuses on aligning administrative aspects of the two programs to improve beneficiary experience. Minnesota’s demonstration began in 2013 as part of the state’s longstanding Minnesota Senior Health Options (MSHO) program and was not designed to result in any new enrollment.

For more information on the FAI, see the issue brief and accompanying state fact sheets on the Financial Alignment Initiative for Beneficiaries Dually Eligible for Medicare and Medicaid.

For more information on beneficiary experiences with the FAI, see the contractor report on Experiences with the Financial Alignment Initiative in Massachusetts, Ohio, and California.

For more information on enrollment in the FAI, read the contractor report The Complex Art of Making It Simple: Factors Affecting Enrollment in Integrated Care Demonstrations for Dually Eligible Beneficiaries