Financial Alignment Initiative for Medicare-Medicaid Enrollees

The Financial Alignment Initiative is designed to provide Medicare-Medicaid enrollees with a better care experience and to better align the financial incentives of the Medicare and Medicaid programs. Through the Initiative, CMS partners with states to test two new models for their effectiveness in accomplishing these goals. This initiative is possible through the collaboration of the CMS Innovation Center and the CMS Medicare-Medicaid Coordination Office. 


Today there are over 10.7 million Americans enrolled in both the Medicare and Medicaid programs, Medicare-Medicaid enrollees. The Financial Alignment Initiative seeks to increase access to high quality, seamless systems of care that better coordinate benefits and services for the Medicare-Medicaid enrollee population. 

Initiative Details

In 2011 CMS announced two new models to support care coordination for the Medicare-Medicaid enrollee population through the Financial Alignment Initiative. Through this initiative, CMS is working with States to test two models to integrate primary, acute, behavioral health and long-term services and supports for Medicare-Medicaid enrollees and better align the financing of the Medicare and Medicaid programs.

The two models are:

  • 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.
  • Managed Fee-for-Service Model: A State and CMS enter into an agreement by which the State would be eligible to benefit from savings resulting from initiatives designed to improve quality and reduce costs for both Medicare and Medicaid.

Participating States

When a state proposal meets the standards and conditions for the Financial Alignment Demonstration, CMS and a State develop a Memorandum of Understanding (MOU) to establish the parameters of the initiative prior to implementation. States with a MOU are listed below:

Additional Information

Evaluation Reports

Savings Reports

Additional details of this initiative are found on the Financial Alignment Initiative home page run by the Medicare-Medicaid Coordination Office (MMCO)