Simply stated, the rule would better align Medicaid and Children's Health Insurance Program regulations to make them more consistent with the federal rule governing commercial, marketplace, and Medicare Advantage plans.
For the first time in more than a decade the federal government is proposing sweeping changes to the rule governing managed care programs under Medicaid and the Children's Health Insurance Program known as CHIP.
Late Tuesday afternoon the Centers for Medicare & Medicaid Services rolled out the 700-page tome for public view.
Simply stated, the rule would better align Medicaid and CHIP regulations to make them more consistent with the rule governing commercial, marketplace, and Medicare Advantage plans.
"A lot has changed in terms of best practices and the delivery of important health services in the managed care field over the last decade," Andy Slavitt, Acting Administrator of CMS, said in remarks accompanying the report.
"This proposal will better align regulations and best practices to other health insurance programs, including the private market and Medicare Advantage plans, to strengthen federal and state efforts at providing quality, coordinated care to millions of Americans with Medicaid or CHIP insurance coverage."
Medicaid managed care rules were last updated in 2002 and 2003, even as growth in Medicaid managed plans has flourished in the last two decades. In 1992 only 8% of Medicaid beneficiaries were in capitated health plans. Most recent data from 2011 show that 58% of all Medicaid beneficiaries in 39 states and the District of Columbia access some of their care in capitated plans.
A Regulatory Minefield
The regulatory boundaries between the federal government and the states' various Medicaid programs and waivers is a minefield, and the National Association of Medicaid Directors is urging the federal government to tread lightly.
"It will be important for the rules to balance the needs for stewardship of the taxpayer dollar with state flexibility to design programs that can reflect local health care conditions," NAMD said in prepared remarks.
Medicaid is one of the largest items in state budgets, and any overly burdensome rule change could be viewed as a hated "unfunded federal mandate" in state Capitols. NAMD warned that a new rule must not become "overly prescriptive" in areas such as administration, rate setting, network adequacy, and program integrity.
"The rules must help, not hinder, the outpouring of innovation that states are driving in how to improve the health and well-being of traditionally hard-to-serve populations, such as those needing long-term services and supports, those dually eligible for both Medicare and Medicaid, and individuals with multiple chronic conditions," NAMD said.
The health insurance industry cast a wary eye on a provision in the rule that attaches medical loss ratios to Medicaid managed care plans.
"An arbitrary cap on health plans' administrative costs could undermine many of the critical services—beyond medical care—that make a difference in improving health outcomes for beneficiaries, such as transportation to and from appointments, social services, and more," Dan Durham, interim CEO for America's Health Insurance Plans said in prepared remarks.
That concern was echoed in remarks from Jeff M. Myers, president and CEO of the Medicaid Health Plans of America, the advocacy arm for 124 plans in 33 states.
"We urge CMS to rethink standards for a federal minimum medical loss ratio given that MLR is already built into health plans' contracts with the states," Myers said.
On the other hand, Myers said he was "encouraged to see CHIP included in the proposed rule given the fact that half of US births are covered by Medicaid. We're also glad that the rule seems to cover long-term care, actuarial soundness and rate-setting, and quality ratings of health."
Comments to Come
Other key lobbies that undoubtedly will have something to day over the 60-day comment period are holding back on any detailed critiques until they can pore through the fine print.
Jeff Goldman, vice president of coverage policy at the American Hospital Association, offered guarded support: "We believe the proposals strengthen Medicaid and Children's Health Insurance Program managed care regulations by aligning them with Qualified Health Plans and Medicare Advantage plans.
We look forward to providing feedback to CMS after consultation with our members."
The American Medical Association says it's reviewing the rule and isn't ready to talk, yet.
The comment period ends on July 27. We'll be hearing more detailed comments from these lobbies in the coming weeks.
John Commins is the news editor for HealthLeaders.