Medicaid managed care rule introduces new challenges to states

The recently unveiled Medicaid managed care rule puts states in the "driver's seat" in the effort to overhaul the delivery system for Medicaid beneficiaries, according to The Commonwealth Fund.

Enrollment in managed care plans has risen over the years, as 39 states and the District of Columbia currently contract with private insurers to manage their Medicaid populations. The new rule seeks to modernize managed care plan regulations by establishing network adequacy standards, settinga medical loss ratio of 85 percent for Medicaid managed care plans and creating Medicaid's first quality rating system, among other provisions. 

But all these new regulations will pose unique challenges for states, which are charged with overseeing Medicaid managed care, The Commonwealth Fund says in its blog post. These include:

  1. Reaching medically underserved communities. Medicaid beneficiaries are more likely to live in medically underserved communities that frequently lack the providers essential to building quality networks, the post says. Staff shortages plague almost any health system, and the new rule adds even more focus on the provider network adequacy standard.
  2. Handling unstable eligibility and enrollment. Even with the massive efforts now under way to streamline Medicaid enrollment and renewal, income fluctuations will continue to cause coverage shifts over time. But states have a key opportunity in the rule's provision that allows health plans to participate in both the Medicaid managed care market and the qualified health plan marketplace.
  3. Organizing coverage and care and developing effective payment incentives. Deciding what to include in a plan contract and what to carve out into separate specialized plans or leave in the fee-for-service system carries major downstream implications for plans' network needs, the post points out.
  4. Aligning managed care with health, education, nutrition and social services. The rule doesn't address developing partnerships between managed care plans and social programs, nor recognize population health invervention efforts by nonprofit hospitals that are part of managed care networks. But it does permit states to develop managed care systems that can bridge health and social services.
  5. Investing in information technology. The final rule's emphasis on IT underscores that successful managed care turns on the use and exchange of information, the post argues. Yet despite a $30 billion federal investment, health systems today remain woefully underfunded, particularly those needed to support long-term care plans.

To learn more:
- read the post