More on CMS' Proposed Rule for Medicaid Managed Care

CMSAs discussed in a previous post, CMS released a Medicaid managed care proposed rule which aims to increase the uniformity of requirements applicable to Medicaid managed care plans and align managed care standards with those of the private market. CMS wrote in the proposed rule that the changes will help to ease the administrative burden on issuers and regulators while also providing an appropriate level of protection for enrollees. Today, approximately two-thirds of all Medicaid beneficiaries receive benefits through private health plans, compared to roughly 8% in 1992. Some of the key provisions from the proposed rule include:

  • MLR Provisions: Under the proposed rule, CMS calls for managed care plans to adhere to a medicalloss ratio of 85%. However, insurers would not be required to repay states if they do not meet the threshold. Additionally, the rule suggests but does not require that states establish a maximum MLR threshold in the rate-setting process. These MLR standards should be in place for contract years beginning after January 1, 2017.
  • Rate-Setting Provisions: CMS is proposing that states consider a plan’s past MLR when developing future rates. Additionally, the proposed rule requires that rates be “actuarially sound” and “provide for all reasonable, appropriate, and attainable costs” required under the terms of the managed care contract. In general, the proposed rule seeks to promote actuarial soundness and transparency in the rate-setting process.
  • Marketing Provisions: The proposed rule allows marketing communications from qualified health plans to Medicaid beneficiaries, even if the QHP is also a Medicaid managed care entity. This will allow parent companies to market their QHP products to their Medicaid plan enrollees upon loss of Medicaid eligibility.
  • Network Adequacy Provisions: The proposed rule requires states to develop network adequacy standards that are closely aligned with QHP and MA standards. The rule requires Medicaid managed care plans to satisfy time and distance standards for primary care, OB-GYN, behavioral health, specialty, hospitals, pharmacy, pediatric dental, and other provider categories.

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