Medicaid Managed Care Rules Will Improve Transparency, Accountability

Thanks to a grant from the Robert Wood Johnson Foundation, CCF has teamed up with NHeLP to launch a series of explainer briefs that unpack the Medicaid/Children’s Health Insurance Program (CHIP) managed care regulations. The importance of these rules cannot be understated. Nearly nine out of ten children in Medicaid and CHIP receive care through some kind of managed care arrangement. Five briefs in the series have been released already:

Looking at the New Medicaid/CHIP Managed Care Regulations Through a Children’s Lens, Improving Consumer Information, Enhancing the Beneficiary Experience, Network Adequacy and Access to Services, and Assuring Quality. Today we are releasing the final brief in the series on Ensuring Accountability and Transparency.

Under the new rules, child health and legal advocates will have new information at their disposal to ensure that states and managed care plans are complying with federal rules. States will be required to post managed care contracts on the state website, bringing much needed transparency about the division of responsibilities between states and plans. The plan contracts will also be required to comply with a long list of provisions outlining the types of entities eligible for comprehensive risk contracts, payments made for services under the contract, and certain performance standards.

The regulation also provides much needed transparency about how much states pay plans to provide Medicaid services. States have long been required to develop managed care rates in accordance with “actuarially sound principles” – that is, to make sure that the rates are projected to meet all reasonable and appropriate costs – but the final rule imposes additional requirements. Over the next few years, states will be required to comply with certain rate setting processes to enable CMS to more effectively review and approve rates. For example, rates must be developed so that the managed care plan would achieve a medical loss ratio (MLR) of at least 85 percent. States are not required to set a minimum MLR, nor are they required to collect a refund from plans that fail to meet a minimum MLR, but plans are required to report an MLR calculated according to the rules in the regulation. This will enable states, CMS, and advocates to have a better understanding of whether managed care rates are being set appropriately.

The regulation also requires states to operate a website and post certain information that is specified in various parts of the rule. This brief summarizes the website posting requirements for Medicaid and CHIP, including the effective date.

To learn more, register here for the webinar on Thursday, September 29 at 1:30pm ET.

Kelly Whitener is an Associate Professor of the Practice at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.