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CMS Issues Final Rule for Medicaid Managed Care

On April 25, the Centers for Medicare & Medicaid Services (CMS) released a final rule to modernize Medicaid and Children’s Health Insurance Program (CHIP) managed care regulations — the first in more than a decade.

The final rule explicitly prohibits states from directing plan expenditures under contracts, except under specified circumstances. In a statement, America’s Essential Hospitals said it was disappointed CMS maintained this prohibition, but pleased the agency recognized the potential for the policy to adversely affect vulnerable patients and the essential hospitals on which they rely. To address that concern, CMS provided a 10-year transition period (ending July 1, 2027) for hospitals and a five-year period (ending July 1, 2022) for physicians and nursing facilities to phase down payments.

The final rule also maintains the prohibition against direct payments by states to providers for services delivered under managed care contracts, with exceptions for graduate medical education payments, disproportionate share hospital payments, and federally qualified health center payments.

America’s Essential Hospitals is reviewing the final rule and will publish an Action Update later this week summarizing all relevant provisions.

Contact Director of Policy Erin O’Malley at or 202.585.0127 with questions.

About the Author

Zina Gontscharow is a former senior policy analyst for America's Essential Hospitals.

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