On April 25, 2016, the Centers for Medicare & Medicaid Services (CMS) released its long-awaited Medicaid managed care Final Rule, the first update to Medicaid managed care regulations since 2002, and implements dozens of changes, revising existing standards and requirements for Medicaid managed care plans and aligning Medicaid and the Children’s Health Insurance Program (CHIP) with other sources of health care coverage, including qualified health plans (QHPs) under the Affordable Care Act's health insurance exchange marketplaces and the Medicare Advantage (MA) program. The Final Rule finalizes many of the proposals included in the Medicaid managed care proposed rule, which was published on June 1, 2015. Dentons produced a series of analyses of the proposed rule, available on our website.

The Final Rule will be published in the Federal Register on May 6, 2016. Until then, the 1,425-page pre-print version can be accessed at the Federal Register's website.

In coming alerts, Dentons will provide more detailed analyses of various aspects of the rule. However, it is worth noting the following highlights from our initial review (recognizing that this is just a sampling of the many issues the rule addresses):

  • Directed and pass-through payments. CMS reaffirmed its proposed rule direction regarding directed payments-- i.e., those that states direct a managed care organization to make. But it also added explicit recognition of and permission for pass-through payments, which will be phased out over a defined period.
  • Medical loss ratio. CMS included a medical loss ratio (MLR) requirement for Medicaid and CHIP plans that is similar to what is required for QHPs and MA plans. However, there is no enforcement mechanism for this provision.
  • Managed long term services and supports (MLTSS). CMS incorporated much of its prior guidance regarding MLTSS, including provisions that strengthen beneficiary protections and state flexibility in design and administration.
  • Access to services and provider networks. CMS will require that all providers participating in managed care networks are screened and enrolled by state Medicaid programs. CMS will also require that states develop and implement time and distance standards for primary and specialty care providers.
  • Program integrity. CMS included numerous new requirements regarding program integrity, including the treatment of overpayments.
  • Appeals and grievances. CMS sought to align Medicaid and CHIP appeals processes with MA appeals requirements and the private market.
  • Communications. CMS updated its regulations to account for new communication methods that have become more prevalent since 2002. It now allows use of a range of electronic communication methods, including email, text, and website posting.