On May 26, 2015, CMS released a proposed rule for Medicaid managed care plans with the objective of creating more standardized practices across states, and to align Medicaid managed care with other major sources of coverage, including those offered by the private market.  The proposed rule would be the first update to Medicaid managed care rules in more than a decade.

The proposed rule calls for managed care plans to adhere to a medical-loss ratio (MLR) of 85%, which would take effect in 2017.  Unlike the MLR for insurance plans established under the Affordable Care Act (ACA), here, Medicaid managed care plans would not be required to repay states if they do not meet the threshold.

The proposed rule also seeks to create standards that would ensure beneficiaries can access adequate provider networks.  For example, CMS proposed states adopt distance and time standards that plan applicants must meet.  This would largely parallel the Medicare Advantage program that requires MA plans to limit how far patients have to travel and how long they have to wait for a primary care visit.  Further, CMS noted the high number of pediatric Medicaid enrollees and called for states and plans to specifically include pediatric primary, specialty, and dental providers in their network – the intention is to prevent critical provider shortages and decrease the need for out-of-network authorizations and coordination.

The proposed rule provides for greater transparency in how states determine plan payment rates. States would be required to give CMS sufficient information for the agency to understand the data and the rationale for the rate.  In addition, the proposed rule includes new guidance on long-term care.

In sum, the proposed rule is broad in scope as it relates to networks, price transparency, and long-term care, among other concerns.  CMS is currently accepting comments on the proposed rule’s provisions.  Comments must be received by no later than 5 p.m. on July 27, 2015.