Medicaid Managed Care Proposed Rule Would Give States More Flexibility

The Centers for Medicare & Medicaid Services (CMS) has proposed a new regulation that gives states more flexibility to design and implement Medicaid managed care programs for Medicaid and Children’s Health Insurance Program (CHIP) enrollees. The proposal aligns with the Trump administration’s goal to reduce regulatory requirements imposed on states.

The majority of the proposed changes are policy and technical corrections to the 2016 Medicaid and CHIP Managed Care Final Rule. (The National Academy for State Health Policy has analyzed, and highlighted aspects of the rule relevant to children with special health care needs.) CMS notes the proposed rule addresses state officials’ concerns that existing federal regulations are overly prescriptive and administratively burdensome.

NASHP has performed an initial review of the proposed rule and found the following provisions may require fewer state administrative resources if the rule is finalized:

  • Rate setting:
    • Rather than require states to develop and certify each individual rate paid per rate cell (or population group within certain regions, which can be numerous within Medicaid) to demonstrate actuarial soundness in managed care capitation rates as currently exists, states would have the option to develop and certify a rate range. Prior to the finalization of the 2016 regulation, most states used a rate range to justify managed care capitation rates.
  • Network adequacy:
    • Instead of requiring time and distance standards for provider types within a managed care network, states would be able to implement a combination of “quantitative minimum access standards,” such as:
      • Minimum provider-to-enrollee ratios;
      • Maximum travel time or distance to providers;
      • A minimum percentage of contracted providers who are accepting new patients;
      • Maximum wait times for an appointment; and
      • Hours of operation requirements (for example, extended evening or weekend hours).
    • The 2016 final rule required states to set time and distance standards for primary and specialist providers without providing a definition of specialist providers. The proposed rule clarifies that states may define “specialist” in whatever way they deem most appropriate for their programs.
  • Member information:
    • To allow for the printing of shorter member marketing materials, states would only be required to include taglines in prevalent non-English languages and in large print on materials for potential enrollees who “are critical to obtaining services,” instead of all written materials.
    • Managed care organizations (MCOs) would no longer have to provide monthly updates to paper provider network directories if they offer a mobile-enabled, electronic directory that is regularly updated.
    • Provider directories would no longer have to indicate if an individual provider has completed cultural competency training – only the provider’s cultural and linguistic capabilities would be required, including the languages spoken by the physician or provider.
  • Quality rating system:
    • The 2016 final rule required CMS, in consultation with states and other stakeholders, to develop a Quality Rating System (QRS) framework. States have the option to use the CMS-developed framework or establish their own QRS that contains “substantially comparable information about plan performance subject to CMS approval of the alternative system.” The proposed rule would:
      • Allow states to implement their own QRS as long as it was as “substantially comparable to the extent feasible to enable meaningful comparison across states,” and
      • Require CMS to identify a set of mandatory performance measures to be used in the QRS. A state alternative QRS would have to include the mandatory measures identified.

To submit a comment on the proposed rule, go to and follow the “Submit a comment” instructions. The public comment period is open through Jan. 14, 2019.