Medicaid Managed Care: A New Group Arrives on the CMCS Block

There’s a new box on the Center for Medicaid & CHIP Services (CMCS) organization chart!  It’s the Managed Care Group, one of (now) eight Groups within CMCS that manage the Medicaid program for the federal government.  You’re probably thinking, “So what? A federal bureaucracy gets a new Group. What difference will that make for children and families?”  Fair enough.  Here’s why it could matter.

Managed care organizations (MCOs) are the dominant form of health care delivery in Medicaid, and children are the largest group of enrollees.  If MCOs don’t perform, enrolled children won’t have access to needed services to which they are entitled.  The job of state and federal Medicaid agencies is to make sure MCOs perform for their enrollees.  The creation of a Managed Care Group has the potential to increase the ability of CMCS to effectively monitor MCO (and state Medicaid agency) performance for children and families.  The existence of a Managed Care Group also makes it easier, at least potentially, for advocates and other stakeholders to hold CMCS accountable for its oversight of Medicaid managed care.

Let’s start at the beginning.  Medicaid is the largest federal health insurance program by lives covered (86.2 million low-income Americans), the second largest by spending (estimated at $594 billion this fiscal year), and far and away the most complicated, because of the enormous  variation inherent in its federal-state financing and administrative flexibility.  Eligibility, benefits, provider payment rates, financing arrangements, and more vary widely from state to state.   Managed care adds an additional level of complexity (not that one is needed); this fiscal year, 41 states are contracting with about 280 MCOs to furnish services to some 60 million children and adults who receive their health coverage through Medicaid at an estimated federal cost of $281 billion.

Managing a single state Medicaid program, and doing it well, is a high-degree-of-difficulty exercise.  Overseeing the Medicaid programs in all 50 states, the District of Columbia, and Puerto Rico and the territories is another level altogether.  That responsibility rests with CMCS within the Centers for Medicare & Medicaid Services (CMS), which also operates Medicare and the federal Marketplaces. In 2022, CMCS met this responsibility with only 526 employees.   The stakes are high not just because of the vulnerable populations Medicaid covers but also because the federal government, on average, finances about two thirds of the cost of the program and federal policymakers understandably expect performance.

Effective oversight of a health insurance program as large and complex as Medicaid requires many types of expertise. The varying and often extensive health needs of the populations covered (children, pregnant women, individuals with disabilities, frail elderly, etc.).  The complicated eligibility rules. The interactions of Medicaid, Marketplace, and Medicare coverage. Prescription drug rebates. State financing arrangements. Risk-based managed care. And on and on. The challenge for management is not just to develop and retain this expertise but to organize it effectively.

Like most large organizations, CMS and CMCS are hierarchical. Division Directors report to Group Directors, and Group Directors report to the Center Director, who in turn reports to the CMS Administrator. The 72-page CMS organizational chart reflects this hierarchy in all six Centers.  The organizational chart below, simplified to remove the Divisions within each Group, reflects the new hierarchy at CMCS.  The Managed Care Group, which had been a Division within the Medicaid Benefits & Health Programs Group, is now at the same level, reporting directly to the Center Director.

Elevating the leadership of managed care policy and operations to Group status explicitly puts managed care on a par with other major CMCS activities, such as reviewing state expenditures and administering section 1115 demonstrations.  It is an acknowledgment, perhaps overdue, of the dominance of MCOs as delivery systems and stewards of federal funds.

The tasks of the new Managed Care Group are set out in an opaquely-titled Statement of Organization Functions and Delegation of Authority. They include providing “Medicaid managed care policy and operational guidance to States;” leading “reviews of state contracts and amendments with managed care organizations;” and conducting “ongoing monitoring and oversight of Medicaid managed care programs.”  The reference to “monitoring and oversight” echoes language in a July 6, 2022 Informational Bulletin and in the May 3, 2023 Managed Care Access, Finance, and Quality proposed rule, where the phrase appears ten times in the preamble.

Perhaps the creation of the new Managed Care Group on the heels of these regulatory initiatives is purely coincidental.  But it is possible to connect these dots to see an agency taking a more assertive role in ensuring that Medicaid managed care actually works for children and other beneficiaries.  Of course, much depends on the staffing of the new Group, its capacity to carry out its functions, and the priority that CMCS leadership continues to place on monitoring and oversight.  Time will tell.

One friendly amendment.  Even though increasing transparency is not listed as one of the Managed Care Group’s functions, it is a tool the Group can use to support its monitoring and oversight responsibilities. CMS recognizes the importance of transparency in its May 3 proposed rules on access to care and managed care, but the focus is on transparency at the state level.  There’s a role for transparency at the federal level as well.  As an opener, the Group could post on what the states are already reporting to it about the performance of their MCOs.  At minimal cost and administrative burden, this would send an important message to MCOs and state Medicaid agencies: there’s a new Group in town, and we’re here to promote accountability through transparency.


Andy Schneider is a Research Professor at the Georgetown University McCourt School of Public Policy.