On May 26, 2015, CMS issued a proposed rule that aims to update Medicaid and Children's Health Insurance Program (CHIP) managed care plans (Proposed Rule).  The Proposed Rule is the first major update to Medicaid and CHIP managed care regulations in more than a decade.  According to CMS, the Proposed Rule would improve beneficiary access, offer new program integrity tools, support state efforts to deliver higher quality and cost-effective care, and better align Medicaid and CHIP managed care rules and practices with other types of health insurance coverage.  Comments are due on July 27, 2015. The Proposed Rule seeks to improve the beneficiary experience through changes to beneficiary enrollment, communications from the state and managed care plans, care coordination, and the availability and accessibility of covered services through network adequacy requirements.

According to CMS, the Proposed Rule also addresses quality improvement.  It would require a quality strategy for a state's Medicaid program and also establish a Medicaid managed care quality rating system that would include performance information regarding all health plans and align with the existing rating systems in Medicare Advantage and the Affordable Care Act Marketplace.  In addition, CMS announced that the Proposed Rule includes provisions to strengthen the fiscal and programmatic integrity of Medicaid managed care programs and rate setting by clarifying actuarial soundness requirements. 

The Proposed Rule also seeks to align certain Medicaid managed care standards with Medicare Advantage and private coverage plans in an effort to improve care for beneficiaries who transition between health care coverage options.  With respect to CHIP, the Proposed Rule aims to align certain CHIP managed care regulations with the proposed revisions to the Medicaid managed care rules in order to ensure CHIP beneficiaries have the same quality and access as in managed care programs. 

Notably, the Proposed Rule would implement a medical loss ratio (MLR) of 85% for Medicaid managed care plans.  According to CMS, Medicaid and CHIP are the only health benefit coverage programs that do not currently utilize a minimum federal MLR for managed care plans, although some states already have implemented their own minimum MLR requirement for Medicaid managed care plans.

The Proposed Rule was published in today's Federal Register and is available here. The CMS fact sheet is available here.