For the first time since 2002, Medicaid Managed Care is primed to get a new set of rules with proposed regulations released on Tuesday. The 653-page document (not that anyone’s counting) includes new network adequacy standards, marketing rules aimed at helping to reduce churn between Medicaid and exchange plans, and the application of our least favorite formula, the medical loss ratio (MLR) to private Medicaid plans, in addition to new rules covering CHIP and Medicare. Medicaid managed care plans are contracted by the state and paid a fixed monthly premium instead of traditional fee-for-service and providers are incented to reduce costs. Medicaid managed care plans operate in 39 states and cover more than 46 million of the nation’s 70 million Medicaid enrollees.
Under the proposed rule, Medicaid managed care plans would be subjected to an 85% MLR level, putting it on par with the amount that is required of large groups under the PPACA. In addition to private fully insured group and individual plans, federal MLR requirements are currently applied to Medicare Advantage (MA) and Part D plans. This rule would extend similar requirements to Medicaid insurers. Nonetheless, unlike the existing private MLR rules that requires plans to pay back an overage to consumers, states will not be required to rebate amounts that exceeded the threshold. Many managed care administrators oppose the rule, arguing for state flexibility in implementing their own MLRs and that determining administrative verses quality costs may be more difficult in the managed care market where alternate care delivery is designed to reduce costs through unconventional measures. The MLR for Medicaid managed care would take effect in 2017.
The rule also proposes network adequacy requirements to address long-standing Medicaid issues like beneficiaries with long provider wait times and provider directories that have been habitually out of date. The proposed network adequacy standards would align Medicaid rules with network adequacy requirements in other markets. States would continue to have the greatest authority in setting standards, without any overarching national requirement, with the rule giving discretion to states to establish requirements on adequacy and quality metrics. In its press release, CMS stressed that the rule will increase transparency within plans for consumers and establish a quality rating system.
The rule also seeks to improve consumer engagement with the plans by improving marketing rules and finding ways that will help families that may have coverage across several programs. It seeks to reduce churn in the marketplace for individuals who may be at the higher end of Medicaid eligibility and fluctuate with eligibility for qualified health plans in the marketplace to be able to maintain coverage by allowing plans to market these options to consumers. Plans and their representatives would not be able to engage in unsolicited marketing activities such as cold-calling or door-to-door sales.
The rule will be published in the Federal Register on June 1 and comments are due by July 27.