Implementing the Medicaid Managed Care Rule: A View from One State

Cheryl RobertstwitterBy: Guest Blogger, Cheryl Roberts, Deputy Director of the Virginia Department of Medical Assistance Services and NASHP Academy Member

During the 2016 NASHP Annual State Health Policy Conference, I gave my thoughts on 15 things that made me say, “Hmm” about the CMS Managed Care Regulations, aka The Mega Regs. I could note 40 but will stick to 15.

First, let me share that we all agree with the Centers for Medicare and Medicaid Services’ (CMS) desire to provide a blueprint that allows for innovation through value-based purchasing, pilots, and new initiatives. But the regulations also solidify their oversight role in this area.

The question on many states’ minds remains “Is there a comprehensive guide to the regulations?” And the answer is, there are numerous guides, resources, and interpretations. To narrow it down to some of my favorites, I would go with: CMS’s website for the Medicaid and CHIP Managed Care Final Rule and an excellent overview presentation featured at NASHP’s 2016 Annual Conference by Bailit Health Purchasing.

The 15 things that make me go “Hmm”:

  1. Need for compliance and reporting staff: States need to invest quickly in compliance and reporting staff! Not only will the regulations need to be incorporated in the contracts, waivers and state regulations, states will need staff to ensure that the terms are met by the managed care organizations (MCOs) through contractual terms and monitored reporting to compile for CMS.
  2. Three big contracts for states to solidify are the enrollment broker, the External Quality Review Organization (EQRO) and the actuary. Contracts with your enrollment broker (consumer protections), EQRO (quality reviews) and actuarial firms medical loss ratio (MLR) become even more critical post-regulation implementation.
  3. Geo-Mapping tool, access and adequacy: This type of expertise is rarely housed within the state; possibly in larger states but in smaller states it’s unlikely. This is where consulting firms and/or working with other states will help. The National Association of Medicaid Directors (NAMD) has formed a workgroup with CMS to develop a tool kit that will assist.
  4. The Mega Annual Report: This annual report, with multiple sections, is a good tool for CMS oversight, but it needs to be vetted with your advisory committee and placed on your website to provide transparency on health plans and show state compliance. FYI, the actual compilation of the material needed for the report is daunting so see #1.
  5. Medical Loss Ratio (MLR): Not only will this generate contract discussion, but it may or may not line up with other discussions on capping profits and gain sharing. Expect an interesting financial conversation!
  6. Encounter Data: “Go big or go bust”! CMS, along with all other entities, want good data. Meaning that it’s been edited and meets validation testing. This requires data quality governance and IT support.
  7. Provider enrollment: This forces the agency to have a discussion on screenings and alignment with your MCO and non-MCO system policies and rules. Again, will make for an interesting internal conversation as you discuss what happens when a provider is terminated from one entity and not another.
  8. Medicaid Enterprise System (MES) and Transformed Medicaid Statistical Information System (T-MSIS): As most of you know, we are involved in system transformation to modulate COTS systems versus one big singular system. At the same time, the IT department is beginning to provide data to MSIS (a regular requirement). Again, increased resources to not only conduct the competitive procurement process, but also to assist in the development of business transition rules, testing, etc. – yes, more resources!
  9. Increased consumer protections: In the midst of contracting and reporting, CMS did want us to remember the member – important to person-centered processes.
  10. Quality grows: Hello Mega Quality! A strategy and alignment with the Medicare stars. Like your exercise routine, we need to strengthen our core –– as in core measures! More studies, more measures. And in this case the dread is that there are more to come, as not all provisions were finalized.
  11. Managed Long-Term Support Services (MLTSS): As more states, including Virginia, enter or expand to the MLTSS arena, the regulations have expanded too. There were numerous provisions specifically targeted towards this population in increased consumer and disenrollment protections, specific choice counseling, care coordination, and oversight.
  12. Subcontractor work: Let’s meet the subcontractors. For many states that are happy when things are in sync with the plans, handling subcontractors, exchanging data, ownership, etc. will be new. Bring on a new level of scrutiny!
  13. Program Integrity (PI): Again, another interesting conversation as we move away from straight claim audits to a more collaborative approach with plans. There needs to be discussions on whose recovery is it? What happens when there is a review? It may mean a change of philosophy with the PI Division, some coordination efforts, as well as a change in contracts, thus the work with Medicaid Fraud Control Units (MFCU).
  14. Institution for Mental Disease (IMD): For most states, at first glance, 15 days was a godsend and now many are not sure. Partial capitations and provisions mean that it’s a work in progress. CMS guidance is forthcoming.
  15. Grievances and appeals: For most states the one appeal level is a change and will mean not just contract and compliance changes but, changes in coordination with the state appeal processes.


NASHP will continue to monitor implementation of the Medicaid managed care regulations at the federal and state level. Due to the upcoming change in presidential administration, full implementation of the managed care rule could be impacted by action at the federal level. The Congressional Research Service estimates that final regulations submitted to Congress after May 30, 2016 are subject to additional review by the new President and Congress under the Congressional Review Act. While the Medicaid managed care rules were finalized before this cut-off date, they may still be subject to augmentation by a new administration. NASHP will keep a close eye on federal action on the managed care rule and report out any findings.

For those who are interested in previous blog posts that NASHP has published on this topic, please click here for an overview and here for the impact of the rule on children with special health care needs.