Health plans react to proposed managed Medicaid changes

Health insurers responded to a proposed rule that aims to overhaul CMS' 2016 managed care regulations for Medicaid and the Children's Health Insurance Program.

Proposed changes aim to create more flexibility and target provisions that states and stakeholders operating managed Medicaid plans said are costly and burdensome. Under managed care systems, states contract with private health insurers to administer Medicaid and CHIP plans. In 2016, more than two-thirds of Medicaid beneficiaries were in a managed care plan, and states are continuing to expand their use of managed care contracts.

Among the proposals, CMS said it will let states develop and certify a rate range, as long as it meets specific conditions. It will also provide states a three-year transitional period to comply with pass-through payment requirements. Pass-through payments are what the government pays Medicaid managed care plans in addition to their base capitation rate, and the plans must pass payments to contracted providers. The rule also proposes giving states more flexibility to set network adequacy standards that can include telehealth services.

Here are comments on the proposal from three health plan trade associations:

Margaret A. Murray, CEO of the Association for Community Affiliated Plans, which includes 60 nonprofit safety-net health plans: "One area in which CMS has shown tremendous leadership in recent years is in increasing transparency and oversight between the federal government and states. While we're glad for this development, ACAP strongly believes that this regulation could go much further in providing insight into interactions between states and plans, especially with regards to rate-setting."

Here is the link to ACAP's comments.

Matthew Eyles, president and CEO of America's Health Insurance Plans, which includes more than 70 health plans: "We appreciate the administration's efforts to increase flexibility, reduce administrative burden, and ensure the Medicaid program's ongoing ability to serve millions of Americans and support many provisions in the Proposed Rule that would advance these goals. At the same time, we have strong concerns with several proposals that would undermine the strength of Medicaid managed care plans. In our view, several proposals would result in health plans having inadequate resources, thereby hampering their ability to meet the needs of Medicaid enrollees through care coordination, disease management, and other vital services and supports."

Access AHIP's comments here.

Alexander Shekhdar, vice president of policy of Medicaid Health Plans of America, which represents 93 private-sector health plans that contract with state Medicaid agencies in 39 states and the District of Columbia: "The new proposed rule makes significant changes by reintroducing the certification of rate ranges. Rate ranges must conform to a number of parameters including an upper bound rate range that does not exceed the lower bound by 5 percent. MHPA suggests that this range should be narrower. A rate range width of 5 percent appears excessive given the range of risk margin of 0.5-2.5 percent [with an average of 1.5-1.8 percent across States in 2015] for MCOs. Rather than set a broad rate range, we suggest that the rate range should be narrow and recommend limiting the width to lesser of 2 percent or 2x underwriting gain. Any decision on rate range width should also consider any withhold provisions and the materiality of the withhold provision magnitude on the viability of the rates at the lower boundary."

MHPA's full comment can be found here.

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