CMS Studying Medicaid Managed Care Plan Rates, Drafting New Rule

CMS has unveiled details on two initiatives -- an actuarial study and a new regulation -- that are likely to alter how Medicaid managed care providers and plans operate and how they are paid, Modern Healthcare reports.

The District of Columbia and 37 states currently contract with Medicaid plans, according to Medicaid Health Plans of America. In 2012, the contracts generated revenues totaling nearly $78 billion. Nearly all of the estimated five million U.S. residents who enrolled in Medicaid during the 2014 open enrollment period under the Affordable Care Act are in managed care plans.

The Government Accountability Office -- which has outlined its concerns about the adequacy of state payment rates for such plans -- previously recommended that CMS implement a mechanism to track state compliance, publish guidance for CMS officials on how to conduct rate-setting reviews and require states to submit to CMS descriptions of actions they take to ensure the quality of data used in rate-setting. Last year, CMS signaled that it was working to address the concerns and recommendations, Modern Healthcare reports.

Actuarial Study

At a Medicaid managed care symposium last week, Camille Dobson -- a senior policy adviser at CMS -- said the agency has launched a study into whether states have an adequate process for establishing payment rates in the program, which in turn affects whether providers' reimbursements are adequate.

According to Modern Healthcare, Medicaid policy staff will work with the CMS Office of the Actuary to gauge whether states' payments to providers are actuarially sound. Specifically, the study will examine whether the payments cover all anticipated medical costs, taxes and fees tied to the plans and administrative costs.

Dobson said that CMS could release the study's findings in the summer but indicated that preliminary results have been "concerning." She added that the problems spotted so far "are probably longstanding issues."

New Managed-Care Rule

Meanwhile, CMS is drafting a new rule to update Medicaid managed care regulations with a goal to publish the rule by the end of 2014.

According to Modern Healthcare, the agency believes that the update is necessary because the current rule was created in 1998 and millions of new people have enrolled in managed care plans under the ACA.

While Dobson could not offer extensive details about the update, she suggested that it would include stronger beneficiary language and would be modeled after relevant provisions in major laws, such as the Children's Health Insurance Program-reauthorization provisions in the ACA, Modern Healthcare reports. In addition, the rules likely also will incorporate 2013 guidance on using capitated reimbursement to pay for long-term care rather than fee-for-service payments (Dickson, Modern Healthcare, 5/27).