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Learn about policy issues important to medical schools and teaching hospitals, with Executive Vice President Atul Grover, M.D., Ph.D.

Washington Highlights

CMS Issues Medicaid and CHIP Managed Care Proposed Rule

May 29, 2015—The Centers for Medicare and Medicaid Services (CMS) May 26 released its proposed rule “Medicaid and Children’s Health Insurance Program (CHIP) Programs; Medicaid Managed Care, CHIP Delivered in Managed Care, Medicaid and CHIP Comprehensive Quality Strategies, and Revisions Related to Third Party Liability.”  The proposed rule will be published in the Federal Register on June 1, and comments are due to CMS by July 27.

The proposed rule updates Medicaid and CHIP managed care regulations to improve alignment between Medicaid and CHIP managed care rules and practices with those of other providers of health insurance coverage.

CMS data suggests that a little over one-half of Medicaid beneficiaries access part or all of their benefits through capitated health plans. Additionally, managed care is becoming more pervasive through Medicare Advantage (MA) plans and Qualified Health Plans offered by health insurance Marketplaces.  Recognizing this, CMS released the proposed rule to update Medicaid managed care regulations for the first time in over a decade. The rule proposes:

  • Medicaid managed care alignment with other health coverage programs such as MA and private coverage through revised marketing standards, modifications to regulations governing its grievance and appeals system, and standardizing and updating enrollment and disenrollment processes;
  • Revisions to CHIP managed care regulations to better align with updated Medicaid managed care rules;

  • Medical Loss Ratio (MLR) calculation, reporting, and utilization to develop actuarially sound capitation rates for Medicaid and CHIP managed care plans. CMS proposes MLR reporting and calculation standards and suggests using 85 percent as the minimum MLR threshold for rate setting. CMS does not propose to require enforcing the MLR with rebates for plans that exceed the threshold;

  • Revisions to the rate-setting framework and rate certification standards including documentation requirements, actuarial soundness standards, and adoption definitions that would ensure that Medicaid rates are developed in a transparent and consistent manner across Medicaid managed care programs;

  • Updated standards for contract terms including standards for: CMS review and approval of contracts, payment, prohibition of enrollment discrimination, services covered under the contract, compliance with applicable laws and conflict of interest safeguards, provider-preventable conditions, inspection, and audit of financial records;

  • Special contract provisions related to payment, specifically, risk-sharing mechanisms, incentive arrangements, and withhold arrangements;

  • Payment and accountability provisions including clarifying the intent of the prohibition of additional payments to contracted network providers, clearer standards for subcontractual relationships and delegation, and additional program integrity standards;

  • Improvements to care coordination and health information technology, access, and continued services to enhance the overall beneficiary experience;

  • Codifying May 2013 CMS guidance for managed long-term services and supports (LTSS) and other regulatory updates necessary to take into account the more frequent utilization of the managed care delivery system for LTSS;

  • Updated network adequacy standards including requirements for: state network adequacy standards that address medical services, behavioral health services, and LTSS; state standards to review provider networks used in Medicaid managed care; and the publication of state network adequacy standards on the Medicaid managed care website to promote transparency and public input; and

  • A new quality framework focused on increased transparency, alignment with other systems of care, and increased consumer and stakeholder engagement. Would require a quality strategy for each state's Medicaid program that would apply to both managed care and fee-for-service (FFS); establish a Medicaid managed care quality rating system aligned with the MA and Marketplace rating systems; require that all plans would be subject to review by an external organization; and modernize state monitoring standards.

Contact:

Ivy Baer, J.D., M.P.H.
Senior Director and Regulatory Counsel
Telephone: 202-828-0499
Email: ibaer@aamc.org

Allison M. Cohen, J.D., LL.M.
Senior Policy and Regulatory Specialist
Telephone: 202-862-6085
Email: acohen@aamc.org

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For More Information

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org