Accountable Care Organizations were designed around a core assumption that Medicaid work requirements will systematically violate: population stability. ACOs invest in care coordination, prevention programs, and longitudinal patient relationships that generate savings over multi-year periods. When 18.5 million expansion adults face work requirements beginning December 2026, ACOs confront a structural dilemma in which the administrative eligibility system creates exactly the enrollment volatility that undermines their value proposition.
The distinction between ACOs and MCOs matters for implementation. MCOs are insurance entities with eligibility systems, member services infrastructure, and institutional experience managing enrollment volatility. ACOs are provider-led collaborations managing actual care delivery while sharing financial risk. They have clinical care coordination capabilities and deep provider relationships but limited experience with administrative eligibility management. Asking ACO care coordinators to manage work requirement verification is comparable to asking MCO eligibility workers to manage diabetes care plans. The competencies do not match organizational capabilities.
State variation in Medicaid ACO models compounds the challenge. Massachusetts operates seventeen ACOs serving approximately 800,000 MassHealth members under two-sided risk. Oregon’s Coordinated Care Organizations receive global budgets and accept full risk, meaning work requirement administrative costs compete directly with clinical care spending. Colorado’s Regional Accountable Entities focus on behavioral health populations where exemption documentation becomes a central function. New Jersey layers ACOs within managed care, creating three-party coordination complexity. States like Arkansas, Ohio, and Georgia implementing work requirements lack established Medicaid ACO programs entirely, leaving MCOs as the primary infrastructure.
The dual-eligible population creates particularly acute problems. Approximately 13.7 million Americans hold both Medicare and Medicaid coverage, and 35 percent of dual-eligible beneficiaries in traditional Medicare were attributed to ACO-participating providers in 2024. When a dual-eligible person loses Medicaid coverage for work requirement non-compliance, they retain Medicare and remain attributed to their Medicare ACO. The ACO continues bearing financial accountability for Medicare spending while losing the Medicaid-funded support services, including personal care, non-emergency transportation, and prescription assistance, that were preventing costly Medicare utilization. The ACO absorbs increased Medicare costs without payment adjustment and without the Medicaid tools that previously controlled those costs.
Attribution disruption cascades through quality measurement. Diabetes control measured through quarterly HbA1c tests, medication adherence tracked monthly, and cancer screening within annual windows all require continuous measurement periods that coverage churning breaks. ACOs cannot demonstrate quality improvement for populations not stably enrolled long enough for interventions to produce measurable outcomes. An ACO with 5,500 attributed members that loses 15 percent to work requirement non-compliance drops below Medicare’s 5,000-member minimum threshold, raising viability questions.
Population health management, the ACO model’s fundamental value proposition, depends on knowing who is in the population and maintaining engagement over time. Work requirements push ACOs away from proactive population health toward episodic interventions that can be completed in single encounters, because longitudinal programs lose participants to coverage gaps. The organizational model designed to transform healthcare delivery gets forced back into traditional reactive patterns by administrative eligibility rules.
Safety-net ACOs face intensified exposure. Community health centers and FQHCs forming many Medicaid ACOs serve populations with the highest rates of unemployment, unstable housing, chronic conditions, and limited digital literacy. These populations are simultaneously the most valuable for intensive care coordination and the most likely to lose coverage under work requirements. Safety-net ACOs operate on thin margins with no spare capacity for sophisticated work requirement support infrastructure.
The strategic implications extend beyond individual ACOs. Payment model design determines financial exposure to enrollment volatility. ACOs in shared savings models with upside-only risk face weaker incentives to invest in work requirement support than those in two-sided risk or global budget arrangements. Attribution methodologies, whether prospective or retrospective, affect timing of ACO awareness and ability to intervene before coverage loss. These technical design choices will shape whether ACOs engage proactively with work requirements or accept attribution volatility as a manageable cost.
The core tension is irreconcilable without deliberate policy accommodation. Value-based care requires population stability. Work requirements create population instability. ACOs cannot simultaneously fulfill their accountability obligations and absorb the enrollment disruptions that work requirements produce. States designing implementation must decide whether ACO performance expectations will adjust for coverage-driven attribution loss, or whether ACOs serving expansion populations will face performance penalties for system failures beyond their control.
References: CMS Medicare-Medicaid ACO Model Fact Sheet, 2016; AHA ACO Resource Center, 2024-2025; CHCS Medicaid ACO State Update, 2024; CMS MSSP PY2024 Results (476 ACOs, $4.1B shared savings); Roberts et al., Health Affairs Forefront, 2025; MedPAC/MACPAC Duals Data Book, 2024; KFF Dual-Eligible Coverage Landscape, 2024.