CMS Proposes Changes to Medicaid Managed Care

CMSOn Tuesday, May 26, 2015,  CMS unveiled a new proposal, which aims to create more standardized practices across states and align managed care standards with those of the private market. The proposed rule would be the first update to Medicaid managed care rules in more than a decade.

The proposed rule calls for managed care plans to adhere to a medical-loss ratio of 85%, which would take effect in 2017. However, unlike the MLR for insurance plans established under the Affordable Care Act, insurers would not be required to repay states if they do not meet the threshold. Instead, states would use the information to set future payment rates so that plans are able to meet the MLR standard.

It also aims to create standards to ensure beneficiaries can access adequate provider networks. Specifically, CMS has proposed states adopt distance and time standards for patients seeking behavioral health, ob-gyn and dental services. Further, CMS noted the number of children enrolled in Medicaid managed care plans and called for state rules for networks to reflect pediatric primary, specialty and dental providers.

The proposed rule seeks greater transparency in how states determine plan payment rates. States would be required to give CMS enough information for the agency to understand the data and the reasoning for the rate.

It also requires each state to establish a quality rating system to generate plan ratings. The ratings will be based on three components: clinical quality management, Member experience and plan efficiency. The ratings would be transparent and published on a state web site.

In addition, the proposed rule includes guidance on long-term care. In the past, many state Medicaid programs had used fee-for-service payments for long-term care, though 26 states were using managed long-term care in 2014, according to CMS.  The proposed rule would let beneficiaries who are enrolled in long-term care change plans or disenroll and move to standard Medicaid coverage if their providers are out of managed care networks

“A lot has changed in terms of best practices and the delivery of important health services in the managed care field over the last decade. This proposal will better align regulations and best practices to other health insurance programs, including the private market and Medicare Advantage plans, to strengthen federal and state efforts at providing quality, coordinated care to millions of Americans with Medicaid or CHIP insurance coverage,” said Andy Slavitt, Acting Administrator of CMS.

The 653-page proposed rule is available at and can be viewed at starting June 1. The proposal is open for public comments through July 27, 2015.

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