Modric is facing four months out due to injury.
Ancelotti said: "The idea is pretty straight forward; we have an array of players to cover these type of situations.
"Last year we faced a similar problem with Khedira's injury. We'll resolve the problem using another midfielder. Khedira, Illarramendi and of course we can play Isco in that position although he's not used to that role, but it's an alternative we can look at for certain games."
For the big stories and the banter follow us on Twitter: @tribalfootball