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New Medicaid Managed Care Rules

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April 29, 2016


For the first time in more than a decade, the Centers for Medicare & Medicaid Services (CMS) has issued regulations that update how Medicaid works for the nearly two-thirds of beneficiaries who get coverage through private managed care plans. The final regulations modernize the way managed care plans operate and address issues ranging from electronic communications and delivery reforms to the adequacy of provider networks and medical loss ratios:



  • CMS establishes the medical loss ratio (MLR) at 85% for managed care plans operating in Medicaid, thus aligning with the requirements of the Affordable Care. The medical loss ratio refers to the percentage of premium revenues that insurance plans must spend on medical care, versus administrative or marketing activities.
  • CMS directs states to set the adequacy standards for networks of hospitals and physicians serving Medicaid patients. This focuses largely on the maximum time and distance patients must travel to reach the nearest provider.
  • CMS encourages states to take steps to foster delivery system reforms—such as medical homes, value-based purchasing, improved coordination among providers, and quality and performance targets for providers and health plans.


When the regulations were first proposed, Philips urged CMS to ensure that Medicaid managed care plans meet the needs of patients with multiple chronic conditions. View summary of Philips comments

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