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Transformation of Medicaid managed care

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Sara Rosenbaum writes in the blog of the Commonwealth Fund:

“The updated proposed Medicaid managed care federal regulation published by the Centers for Medicare and Medicaid Services on June 1 is a formal recognition of managed care’s central role in national Medicaid policy and in the lives of beneficiaries, including families with children, people with disabilities or serious health conditions, and Medicare beneficiaries who also receive Medicaid (known as dual enrollees). Indeed, the proposal represents a regulatory milestone in the life of Medicaid, an acknowledgement of the program’s evolution over the past 25 years, and an exemplar of the reforms and tradeoffs that will determine Medicaid’s transformation from a welfare program into a pillar of national health reform and a major player in the health plan market.”

The new proposed rule, she says,  “aims to foster the growth of companies that offer health plans in both Medicaid and the Affordable Care Act’s health insurance marketplaces to allow consumers to remain with an insurer even when their source of subsidy changes. Second, it aims to promote health plan innovation and improve accountability and beneficiary protections, especially as higher-need populations are moved into managed care. Finally, the rule will help ensure more rigorous federal and state oversight of a burgeoning industry.”

The proposed rule would, Ms Rosenbaum reports:

  • “Extend most of the tougher standards that apply now only to comprehensive managed care organizations to limited-service plans that previously have been subject to less rigorous requirements in areas such as network, access, and quality performance standards.
  • “Tighten current actuarial soundness requirements for states to ensure  payments to their health plans accurately reflect both what is covered under their contracts and the cost of furnishing those covered benefits to specific Medicaid beneficiary groups.
  • “Use an 85 percent medical loss ratio, which would require that insurers doing business with Medicaid programs spend 85 percent of premium revenue on medical care and quality improvement, as a means of measuring whether states and consumers are receiving good value for premiums paid.
  • “Require states to set time and travel standards  to measure the adequacy of provider networks, with a focus on primary healthcare, obstetrical care, pharmacy services, and children’s oral healthcare.
  • “Strengthen beneficiary grievance and appeals protections while simultaneously requiring plan members to exhaust their health plan appeals procedures prior to external review, as people enrolled in qualified health plans sold in the marketplace must do.
  • “Permit states to cover short-term inpatient treatment for mental illness and addiction disorders, thereby setting aside Medicaid’s traditional exclusion of federal funding for such treatments in the case of adults ages 21 to 64.
  • “Actively encourage insurance companies selling both Medicaid and marketplace health plans to advertise this fact, thereby exempting this activity from a longstanding ban on tie-in practices.
  • “Permit plans to offer additional benefits that are permissible under federal Medicaid law but not otherwise included in a state’s Medicaid plan.”


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