On May 6, 2016, CMS will publish a final rule to update Medicaid and Children’s Health Insurance Program (CHIP) managed care regulations to more closely align with Medicare Advantage (MA) and private health plan standards, promote quality, and strengthen the actuarial soundness of payment provisions. The last major update to the Medicaid/CHIP managed care rules occurred in 2002; since that time, states have expanded the use of managed care, both geographically and in terms of the populations served, including seniors and persons with disabilities and those needing long-term services and supports (LTSS).

The sweeping new rule (the advance version is more than 1,400 pages) addresses numerous aspects of program requirements and responds to the nearly 900 comments received from the public in response to the June 1, 2015 proposed rule. Among other things, the final rule:

  • Requires that Medicaid and CHIP managed care plans calculate and report a medical loss ratio (MLR), with standards that are generally consistent with the standards applied by MA plans and the private market. The rule requires capitation rates to be developed in a manner so that managed care plans can be expected to reasonably achieve at least an 85% MLR, and MLR reports for prior years must be taken into account.
  • Aligns certain Medicaid and CHIP managed care appeals policies and procedures with MA and private market processes.
  • Strengthens Medicaid managed care network provider screening and enrollment requirements and plan program integrity responsibilities.
  • Establishes requirements for states when setting and monitoring Medicaid and CHIP managed care network adequacy standards (such as time and distance standards for primary and specialty care providers), but gives state flexibility to set the actual standards.
  • Strengthens beneficiary protections, including provisions related to beneficiary enrollment and disenrollment and coordination and continuity of care.
  • Promotes delivery reforms, such as clarifying that states can encourage managed care plans, through their contractual agreements, to develop and participate in delivery reform or performance improvement initiatives such as patient-centered medical homes and provider health information exchange initiatives.
  • Codifies CMS policies guiding delivery of LTSS through managed care plans.
  • Updates options available to states and Medicaid and CHIP managed care plans to communicate with beneficiaries.

The provisions of the rule have various implementation dates, which are spelled out in a CMS fact sheet.