CMS Finalizes Long-Awaited Medicaid Managed Care Rule

The rule creates the first public reporting system of quality for Medicaid managed care plans.

After months of comments and behind-the-scenes negotiating, CMS on Monday finalized its mammoth, 1425-page rule for Medicaid managed care and the Children’s Health Insurance Program (CHIP), which will take more than 3 years to implement.

State Medicaid officers got some of what they asked for—according to a statement from Matt Salo, executive director of the National Association of Medicaid Directors (NAMD), the group convinced CMS to drop plans for some enrollees to briefly use a fee-for-service plan before moving into managed care.

But the much-loathed 85% medical loss ratio (MLR)—which strictly regulates how much money private plans can make on Medicaid—remains intact, despite more than 900 comments on this element alone. From the start, critics have said this requirement could stifle some state-level innovation, since 1 in 4 plans currently have an MLR below 83%.

CMS Acting Administrator Andy Slavitt and Deputy Administrator Vikki Wachino discussed the new rule in a blog post, noting a few key points:

· The rule creates the first-ever quality rating system, allowing states to publicly report how well plans are delivering care and giving consumers information to use when selecting them.

· The rule calls for increased use of technology, including things like electronic notices and online directories that are updated frequently.

· The changes seek greater fluidity and between the online experiences of Medicaid managed care and Medicare Advantage, so that as consumers move from one type of coverage to another, transitions are seamless.

· The new rule takes a step toward mental health parity with the requirement that beneficiaries receive coverage for in-patient stays in mental health facilities for up to 15 days. While this is considered an improvement, it’s far less than what advocates see as necessary.

· Slavitt and Wachino say the rule promotes the continued march away from fee-for-service toward value-based payment models, which is an ongoing goal of CMS.

Rules governing Medicaid managed care and CHIP had not been updated in more than a decade, and since then both personal technology and Medicaid itself have exploded—72 million Americans are part of Medicaid, including 14 million who have been added as a result of the Affordable Care Act. Two-third are enrolled in some form of managed care.

Use of personal technology is no longer limited to the very wealthy; studies show most people have a cell phone and, in fact, many have a cell phone in lieu of a land line. Thus, use of these methods to reach consumers and enable them to access healthcare should be reflected in healthcare regulations, advocates say.

Changes, however, are so immense that they will be implemented slowly over a number of years, starting July 1, 2017. This was a request of the NAMD, which remains concerned about the reporting duties and staff time that the new rules will require.