Financial Alignment Initiative

Recent Updates:

08/23 - Announced: Memoranda of Understanding between CMS and Massachusetts.
07/05 - Beneficiary Alignment guidance document for Medicare Fee for Service Models updated.
06/07 - Beneficiary Alignment guidance document for Medicare Fee for Service Models posted under "Additional Information" below.


The Financial Alignment Initiative is designed to better align the financial incentives of Medicare and Medicaid to provide Medicare-Medicaid enrollees with a better care experience. Through the Initiative, CMS will partner with states to test two new models for their effectiveness in accomplishing these goals.

Participating States

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

  • Massachusetts


Today there are over 9 million Americans enrolled in both the Medicare and Medicaid programs, Medicare-Medicaid enrollees. The Financial Alignment Initiative seeks to increase access to quality, seamless programs to better coordinate benefits and services for the Medicare-Medicaid enrollee population. 

Initiative Details

Last July, CMS announced two new models to support care coordination for the Medicare-Medicaid enrollee population through the Financial Alignment Initiative. Through it, CMS is working with States to test two models that may better align the service delivery and finances 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.

Additional Information