CMS unveils overhaul to Medicaid managed care: 10 key points

CMS has unveiled a regulatory package containing the first major update to Medicaid managed care regulations in more than 10 years.

Medicaid managed care, which is aimed at controlling healthcare cost, utilization and quality, has evolved into the dominant delivery system in Medicaid, with more than 42 million Americans enrolled in some form of Medicaid managed care, according to a Kaiser Family Foundation report.

The regulations governing Medicaid managed care were last updated in 2002 and 2003, and the proposed rule CMS released Wednesday seeks to "modernize" the system. The proposed rule updates regulations "to reflect the changes in delivery systems, strengthen the system's ability to serve diverse populations, and promote greater alignment of Medicaid managed care policies with those of other payers," according to CMS.

Here are 10 key points from the proposed rule.

1. The nearly 700-page proposed rule aims to improve the beneficiary experience by improving the enrollment process, the communication they receive from the state and managed care plans and care coordination once enrolled.

2. The proposed rule would improve care coordination by making a number of changes, including strengthening the role of assigned care coordinators and requiring transition of care standards for all Medicaid beneficiaries transitioning from one delivery system to another within Medicaid.

3. The proposed rule also includes provisions for continuity of care between Medicaid and Medicare. "By aligning standards, where appropriate, the proposed rule would improve operational efficiencies for states and health plans, which in turn will improve the experience of care for individuals who transition between healthcare coverage options," according to CMS.

4. John Gorman, founder and executive chairman of the Gorman Health Group consulting firm told Bloomberg the proposed rule is really an "omnibus rule" since it touches both Medicaid and Medicare.

5. The proposed rule incorporates the medical loss ratio — a financial measurement that sets the minimum amount of premium dollars health plans must spend on actual healthcare costs. The goal of the measurement is to cut overhead spending by insurers. The Patient Protection and Affordable Care Act includes standards for a minimum MLR in the private health insurance and Medicare Advantage markets.

6. The proposed rule would set the MLR at 85 percent, meaning 85 cents out of every premium dollar would be used to on actual healthcare costs.

7. Regarding the ratio, Jeff Meyers, president and CEO of Medicaid Health Plans, told The Hill he "strongly encouraged CMS not to go down this route" because every state already uses some form of the MLR, and the proposed rule could "destabilize the programs that are developed on a state level."

8. The rule aims to improve the availability and accessibility of covered services, including minimum time and distance standards to behavioral health providers, dentists and OB-GYNs.

9. The proposed rule calls for establishing a Medicaid managed care quality rating system that would include performance information on all health plans and align with the existing rating systems used in Medicare Advantage and the PPACA marketplace.

10. The proposed rule will be published in the Federal Register June 1, and CMS is accepting comments on the proposed rule until July 27.

More articles on healthcare finance:

New York City hospitals say additional $1B needed for Medicaid reform initiative
Ascension, Banner, Kaiser, Mayo and UPMC's latest financial results
Hospitals challenge 'arbitrary and capricious' Medicare cut

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