Major New Rule Seeks to Modernize & Improve Quality of Medicaid Managed Care

By Kelly Whitener, Georgetown University Center for Children and Families (CCF)

Earlier this week, CMS released the much-anticipated final rule on Medicaid and CHIP managed care. The rule marks the first update to Medicaid managed care rules in over a decade, and it comes at a time when more and more Medicaid beneficiaries are covered under managed care arrangements. Three-quarters of children, and virtually all adults covered under the Medicaid expansion, are enrolled in Medicaid or CHIP managed care plans or primary care case management programs, so the rules governing managed care are critical to children and families.

Like the proposed rule released last summer, the final rule is centered around five principles: alignment with other coverage options; delivery system reform; payment and accountability improvements; beneficiary protections; and modernizing regulatory requirements and improving the quality of care. The provisions of the final rule are pretty similar to the proposed rule, though some of CCF’s comments to improve the rule were adopted, particularly strengthening the pediatric standards in the network adequacy rules and requiring posting of managed care contract information rather than simply making it available upon request.

As we continue to work our way through the details of the final rule, we thought we’d pause to share some key takeaways:

  • Consumer Information: Like the proposed rule, the final rule requires states to post or link to vital consumer information, including enrollee handbooks, provider directories and drug formulary lists.
  • Enrollment and Disenrollment: The final rule requires states to develop and implement a beneficiary support system that includes choice counseling for all beneficiaries. Choice counseling means providing information and services to assist beneficiaries in making enrollment decisions whether at the plan or provider level. Unfortunately, the final rule dropped the initial 14-day enrollment period in fee-for-service Medicaid while beneficiaries reviewed the information to make an informed choice. This means that states may continue to automatically assign beneficiaries to a plan without giving them sufficient time to choose.
  • Quality: The final rule contains many of the same provisions related to quality measurement and improvement as the proposed rule. We were pleased to see that CMS acted on our recommendation to require plans to address health disparities in their quality strategy. However, unlike the proposed rule, the quality strategy requirement in the final rule is limited to most types of managed care. This is disappointing as the comprehensive statewide quality strategy in the proposed rule would have advanced state efforts to measure and improve the quality of care provided to children and adults regardless of the delivery system.
  • Network Adequacy: The final rule provisions for network adequacy are largely unchanged from the proposed rule. The rule requires states to develop and enforce network adequacy standards that meet the high-level requirements laid out in 42 CFR §438.68. While we would have preferred to see the rule set specific, quantitative federal standards for states to meet, we are pleased to see that the final rule better incorporates pediatric providers. For example, the final rule requires states to develop pediatric network adequacy standards for the following classes of providers: primary care, behavioral health (including mental health and substance use disorder), specialists, and dental.
  • Accountability and Transparency: The final rule maintains the minimum medical loss ratio of 85% requirement, bringing Medicaid and CHIP into alignment will all other publicly-funded health coverage programs. The MLR must be calculated and reported annually. The final rule goes one step further than the proposed rule by requiring posting of important contract information rather than allowing states the option to make such information available upon request. However, the final rule does not include related requirements regarding the posting of financial data and solvency reviews. This additional information would have been useful for advocates and researchers evaluating managed care costs and compliance with federal rules.

The timeline for implementation varies by provision and by the contract cycles in each state, but it will be critical to work closely with states and managed care plans as implementation gets underway in order to ensure the best possible outcome for children and families. This work now moves to the states where there will be many opportunities for consumer advocates to ensure that the rules are implemented to serve the best interests of children and families. Keep in mind that the rules represent minimum standards and states can take additional steps to benefit and protect consumers such as providing adequate time for consumers to take action to enroll the plan of their choice before auto-assigning enrollees.

In the coming weeks and months, CCF will provide additional information and analysis about the final rule, so stay tuned!

Editor’s Note: This post was originally published on the Center for Children and Families Say Ahhh! Blog.


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The opinions expressed here are solely those of the individual blog post authors and do not represent the views of Georgetown University, the Center on Health Insurance Reforms, any organization that the author is affiliated with, or the opinions of any other author who publishes on this blog.