CMS signs off on Medicaid managed-care changes

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Curator summary

4 years in the making, the Medicaid Managed Care Rule is now fully finalized, with most of the original components in tact.


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CMS on Monday wrapped up its long-awaited changes to how states can run their Medicaid and Children’s Health Insurance Program plans.

The final rule gives states more flexibility to set rates for their managed-care plans and ensure plans have adequate provider networks. The Trump administration hopes the changes will encourage private health plans within Medicaid and CHIP, slash regulations and cut federal exposure to healthcare costs.

“The era of prescriptive regulations has failed. The government should identify expected outcomes, results, and standards—not micromanage processes,” CMS Administrator Seema Verma said in a statement.

Most of the rule changes take effect next month.

Health plans sparred with provider and consumer groups over the rule’s relaxed network adequacy standards, which allow states to set their standards—like provider-to-enrollee ratios—instead of using minimum time-and-distance standards. Insurers claimed the change would help states and plans take up telehealth and other innovations. But critics argued the move could make it harder for beneficiaries to access care.

Providers and Medicaid managed-care plans also asked CMS to allow states switching to managed care to require plans to make pass-through payments to providers for up to five years instead of three years.

“We continue to view pass-through payments as problematic and not consistent with our regulatory standards for actuarially sound rates because they do not tie provider payments with the provision of services,” the final rule states. CMS claimed three years is “a reasonable amount of time to integrate pass-through payment arrangements into allowable payment structures.”

The rule doesn’t affect an Obama-era requiring insurers to spend at least 85% of their Medicaid revenue on medical care and other activities to improve quality, even though that requirement is the biggest concern for plans and states.

According to CMS, comprehensive managed-care plans covered more than 55 million people enrolled in Medicaid in 2018.