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CMS Releases Medicaid Managed Care Final Rule

November 13, 2020

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CONTACTS
Mary Mullaney, Director, Hospital Payment Policies

The Centers for Medicare & Medicaid Services (CMS) released the Medicaid and Children’s Health Insurance Program (CHIP) managed care final rule on Nov. 9. The AAMC submitted comments, on the proposed rule on Jan. 19, 2019, and the final rule will go into effect on Dec. 17 unless otherwise noted.

The final rule includes revisions to the following areas of the managed care regulatory framework.

Pass-through payments: This provision permits states transitioning Medicaid enrollees or services from a fee-for-service (FFS) delivery system to a managed care delivery system to require managed care plans to make pass-through payments for up to three years at an amount that is less than or equal to the amount of their current upper payment limit payments under the FFS system. This provision is effective with rate periods beginning on or after July 1, 2021. The final rule confirms that disproportionate share hospital and graduate medical education payments are not — and do not constitute — supplemental payments.

State-directed payments: This provision allows states to require managed care plans to adopt payment models that are based on a state plan approved FFS fee schedule without having to receive written approval from the CMS. It also allows states to provide for the approval of multiyear payment arrangements when specified criteria are met.

Network adequacy: This provision removes the requirement for states to set time and distance standards for network adequacy and allows states to set quantitative network adequacy standards. States will have the authority to define “specialists” in whatever way they deem most appropriate for their programs.

For more information, please refer to the CMS’ fact sheet.

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