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What We Know About The New Medicaid Managed Care Regulations

What We Know About The New Medicaid Managed Care Regulations

The Centers for Medicare & Medicaid Services (CMS) released a long-awaited final ruling on Medicaid Managed Care regulations last week. As Medicaid has expanded over the past few years (and only continues to expand as more low-income beneficiaries are added to the program), its demographic makeup has altered greatly. This has prompted the federal government to get involved with improving the quality of care and the efficiency of Medicaid. The new ruling imposes a heavier regulatory structure to managed care plans overall.

The finalized regulations were released in a 1,000+ page document last week, which can make it difficult to understand how these new regulations will affect your organization and your patients. As it stands, States and private insurers will be the entities directly affected by these new regulations—for now. Here’s what we know so far about the finalized Medicaid Managed Care regulations.

Increased Medical Loss Ratio Requirements

The new ruling sets a medical loss ratio (MLR) of 85% for Medicaid managed care organizations (MCOs), which means that plans are required to spend 85% of their revenue on healthcare services, benefits, and improving the quality of care. This MLR regulation is an attempt to curb administrative spending and limit insurer profits. In some states, plans that fail to meet this requirement will have to pay remittance to the state.

This ratio may prove complicated for insurers in the future—if plans don’t meet the requirement, they won’t be spending enough on healthcare. If they overspend, however, they might be shortchanging enrollees. This leaves the state to determine whether an MLR is too high or too low.

Heightened Network Adequacy Standards

The ruling is the government’s attempt to strengthen the integrity of Medicaid managed health care plans by providing transparency for consumers and to make transitions between Medicaid and exchanges based on fluctuation of income more fluid. States must now make consumers aware of time and distance network standards, especially in regards to adult and pediatric primary care, hospitals, pharmacies, women’s health specialists, and more. Most notably, female enrollees can now get second opinions on women’s healthcare services from out-of-network providers without having to pay more for out-of-network services.

First-Ever Quality Rating System

In what is yet another signal of the industry moving toward quality-based care, CMS has implemented the first-ever quality rating system (QRS) for Medicaid and CHIP. With a goal of giving consumers more robust information about plans, the rule establishes a “star” rating system that allows consumers to see ratings on physicians, the quality of care, the types of plans and more. The overall intention is to help consumers find the best plan that suits their needs. Such a system will no doubt place more accountability on insurers, doctors, hospitals and other health organizations to improve the quality of care and coverage for enrollees.

 As the number of those who depend on Medicaid increases, hopefully these new regulations will allow low-income enrollees to find the coverage they need. While the responsibility of implementing these rulings will immediately fall to states and insurers, patients and medical groups alike can expect to see changes soon as well.


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