Proposed MCO rule would subject Medicaid managed care plans to quality ratings

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The Centers for Medicare & Medicaid Services wants to bring quality ratings to Medicaid managed care organizations (MCOs).

This week, CMS released a proposed rule that outlines the agency's first changes to MCO regulations since 2002. As FierceHealthPayer previously reported, the rule is already under fire for proposing an 85 percent medical loss ratio for managed care plans. However, the provision that would require states to establish quality rating systems could affect private insurers who offer managed care plans just as much, according to Forbes.

Aside from stating that it would base the ratings on "clinical quality management, member experience and plan efficiency" and posted on state websites, the proposed rule remains vague on what the ratings would entail, Forbes noted.

While CMS administrators told Forbes that the final quality-rating system will depend on what works best for Medicaid, the rating system may resemble the existing Medicare Advantage star-rating system. This matters to insurers for two reasons:

Consumers increasingly prefer Medicare Advantage plans with high ratings on the five-star CMS scale. It's likely that Medicaid beneficiaries will also gravitate toward plans with high marks for customer service, appointment availability and enhanced product offerings.

Under Medicare Advantage, the higher the quality rating, the larger the reimbursement. If states decide to structure their Medicaid star ratings in a similar manner, managed care plans with higher ratings would likewise receive larger payments.

Jeff Myers, CEO of the industry group Medicaid Health Plans of America, told Forbes that the MCO ratings systems will need to account for the fact that Medicaid beneficiaries tend to have "unique and extensive" healthcare needs as well as "diminished health literacy." Applying the Medicare Advantage star-rating system to Medicaid managed care plans with little modification, he said, "will cause a strain on health plans and providers."

The comment period for the proposed rule ends July 27.

For more:
- read the Forbes article
- here's the CMS proposed rule (.pdf)

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