CMS Releases Final Rule Governing Medicaid and CHIP Programs Delivered in Managed Care

Rachel B. Morgan RN, BSN 7/28/2016

MedicaidThe Center for Medicare and Medicaid Services (CMS) released a final rule on April 25 that governs the operation of Medicaid and Children’s Health Insurance (CHIP) Programs offering benefits and services through a managed care delivery system. Over the years, states have increasingly utilized managed care arrangements to provide Medicaid coverage to beneficiaries.

In 1992, only 8 percent of all Medicaid beneficiaries accessed part or all of their Medicaid benefits through capitated health plans. By 2013, 45.9 million or 73.5 percent of all Medicaid and 81 percent of all separate CHIP beneficiaries accessed all or part of their benefits through a managed care organization (MCO). Currently, 39 states and the District of Columbia contract with private managed care plans to furnish services to Medicaid beneficiaries, and almost two thirds of the 72 million Medicaid beneficiaries are enrolled in managed care.

The final rule is designed to:

  • Support states’ efforts to advance delivery system reform and improvements in quality of care for Medicaid and CHIP beneficiaries.
  • Strengthen the consumer experience of care and key consumer projections.
  • Strengthen program integrity by improving accountability and transparency.
  • Align rules across health insurance coverage programs to improve efficiency and help consumers who are transitioning between sources of coverage.
  • Ensure appropriate beneficiary protections.
  • Enhance policies related to program integrity.

Key Features of the Final Rule

  • Establishes Medicaid’s first Quality Rating System and clarifies states’ authorities to enter into contracts that pay plans for quality or encourage participation in alternative payment models and other delivery system reform efforts.
  • Revises state and managed care plan standards in the areas of enrollment, communications, care coordination, and the availability and accessibility of covered services.
  • Establishes mechanisms for providing support, education, and a central contact for complaints or concerns, including assistance with enrollment, disenrollment, and the appeals process for consumers requiring long term services and supports.
  • Offers flexibility for plans to cover inpatient short-term mental health services, which are an important tool in addressing behavioral health issues.
  • Establishes network adequacy standards in Medicaid and CHIP managed care for key types of providers, while leaving states flexibility to set the actual standards.
  • Requires additional transparency on how Medicaid rates are set to ensure the fiscal integrity of Medicaid managed care programs, including with respect to data relating to utilization and quality of services.
  • Improves alignment of the reporting of medical loss ratios (MLR) with the Medicare Advantage program and the Marketplace, Medicaid plans’ appeals processes with those of other programs, and Medicaid’s requirements for disseminating consumer information with private market best practices to improve the consumer experience for those who transition between coverage programs and ease administrative burden on issuers participating in multiple programs.

The provisions of the rule will be implemented in phases over the next three years, starting on July 1, 2017. The final rule is scheduled to be published in the Federal Register May 6, 2016, but the 1,425 page PDF file may be viewed here.

CMCS Webinar Series

The Center for Medicaid and CHIP Services (CMCS) is conducting a series of webinars on the managed care rule. Specific topics/provisions of the final regulation will be presented on the following dates:

NCSL will email the links and conference call information to the NCSL Standing Committee on Health and Human Services (HHS) and those who are listed on the HHS interested list serves as the information may change weekly.

NCSL Fact Sheets & State CHECKLISTS

The following are summary documents prepared by NCSL on the CMCS Medicaid and CHIP Managed Care final rules. The fact sheets provide a more detailed summary by section and issue of the final rule, and the CHECKLISTS highlighted points that legislatures may want to review and consider as they comport state statutes to comply with the new requirements.

Fact Sheets


Additional Resources

CMS has prepared several documents summarizing key provisions of the final rule as follows:

NCSL staff is preparing a summary and materials on the final rule to assist states in determining their needs to comport their laws and programs to the new requirements.