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Financial Alignment Initiative (FAI)

10/05/2018 - MOU Extension (Second; 09/29/2018)  (FAI MN page)
09/17/2018 - Public comments accepted through 5 p.m. Pacific Time on October 17, 2018 on the Massachusetts "Duals Demonstration 2.0" Proposal (FAI MA page)
07/19/2018 - Rhode Island Medicare-Medicaid Plan Quality Withhold Analysis Results for Calendar Year 2016  (FAI RI page)
07/17/2018 - South Carolina Contract Amendment (07/01/2018) & Summary of Contract Changes (07/01/2018)  (FAI SC page)


A longstanding barrier to coordinating care for Medicare-Medicaid enrollees has been the financial misalignment between Medicare and Medicaid. To begin to address this issue, the Centers for Medicare & Medicaid Services (CMS) will test models with States to better align the financing of these two programs and integrate primary, acute, behavioral health and long-term services and supports for their Medicare-Medicaid enrollees.
  • 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 (FFS) Model: A State and CMS enter into an agreement by which the state would be eligible to benefit from a portion of savings from initiatives designed to improve quality and reduce costs for both Medicare and Medicaid.
Qualifying states have an option to pursue one or both of the capitated or the FFS financial alignment models. In states with approved demonstrations, CMS will test these models over the next several years. CMS is also working with some states to pursue demonstrations outside the capitated and FFS financial alignment models.  


CMS is providing an opportunity for three demonstration states with current end dates of December 31, 2018 -- Massachusetts, Minnesota, and Washington -- to extend the scheduled end dates for the demonstrations until December 31, 2020. CMS has asked that each interested state submit a non-binding letter of intent by March 1, 2017. CMS is providing an opportunity for all states that are currently participating in the Financial Alignment Initiative to extend the scheduled end dates for the demonstrations. CMS has asked that each interested state submit a non-binding letter of intent by September 1, 2015. Final Memoranda of Understanding (MOU) establishing the parameters of each demonstration may be found at: Original state proposals and public comments may be found at:  

Resources for Implementation

Implementation of each demonstration will be a collaborative effort between CMS and the state. CMS has made several resources available to assist states with implementation activities:  

Additional Resources 

The Financial Alignment Initiative has two models, the capitated model and managed fee-for-service model. To learn more about enrollee experiences with the capitated and managed fee-for-service model demonstrations to date visit the resource below: To learn more about enrollment, age, and health risk assessment (HRA) experiences to date for the capitated model visit the resource below: 

To view performance data on care coordination activities and experiences in the capitated model, visit the resource below:

Please visit Information and Guidance for Plans to learn more about information and guidance for Medicare-Medicaid Plans (MMPs) participating in the capitated model demonstrations and the Minnesota Demonstration to Integrate Care for Dual Eligibles in the areas of:

  • Application & Annual Requirements
  • Reporting Requirements
  • Audit Programs
  • Enrollment
  • Encounter Data Reporting
  • Marketing Information & Resources
  • Quality Withhold Methodology & Technical Notes
  • Chronic Care Improvement Programs & Quality Improvement Projects