Here are six things to know.
1. A medical loss ratio is the percentage of premium revenue a payer spends on medical care for its members as opposed to overhead costs and other expenses.
2. CMS’ Medicaid and CHIP managed care final rule adopted in 2016 included MLR calculation and reporting standards for Medicaid and CHIP managed care contracts.
3. The 2016 rule mandated states to include requirements for managed care plan MLR calculations and reporting for Medicaid managed care contracts beginning on or after July 1, 2017. Requirements affecting CHIP managed care contracts take effect the state fiscal year beginning on or after July 1, 2018.
4. Under the 2016 rule, CMS is required to annually publish credibility adjustments, which are used to account for random statistical variation concerning how many enrollees are in a managed care plan.
5. According to CMS, the majority of plans — including managed care organizations covering long-term services in addition to other services — will recognize “standard plans” credibility factors based on the plans’ member months. Plans covering only long-term services will use the “LTSS only plans” credibility adjustment factors, which also considers number of member months.
6. CMS provides the example of a managed care plan solely providing long-term services with an MLR of 81.1 percent prior to a credibility adjustment. The credibility adjustment would be calculated using “LTSS only plans” factors and would use the plans’ 1,475 member months to calculate an adjustment. The final MLR including the credibility adjustment would be 86.9 percent.
For the full CMS bulletin, click here.
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