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CMS Releases Final Medicaid Managed Care Regulation

The Centers for Medicare & Medicaid Services (CMS) Nov. 9 released the Medicaid and Children’s Health Insurance Plan (CHIP) managed care final rule, almost two years after the proposed rule in 2018.

The final rule reflects the agency’s broader strategy to relieve regulatory burden, support state flexibility, and promote transparency and innovation in care delivery. Of particular interest to essential hospitals, the rule includes provisions to help reach Medicaid goals, increase network adequacy for managed care plans, and align quality rating approaches.

Additional Flexibility to Achieve Medicaid Policy Goals

To help achieve Medicaid policy goals, the fine rule:

  • codifies the option to request multiyear directed payment arrangements for value-based and delivery system reform models;
  • updates definitions to state plan approved rates and supplemental payments for purposed of the managed care rules;
  • eliminates the need for prior approval of directed payments based on Medicaid state plan approved rates to further reduce administrative burden on states and the agency; and
  • finalizes a proposal to allow new pass-through payments to providers during periods of state transition to managed care delivery systems.

The rule does not finalize proposals to expressly permit states to develop directed payments tied to a variety of bases (e.g., market-based rates). It also does not finalize a proposal to remove language allowing states to direct the amount and frequency of plan expenditures where needed to achieve the states’ goals in value-based and delivery system reform models.

Network Adequacy for Managed Care Plans

The final rule allows states to determine and develop quantitative network adequacy standards instead of requiring time and distance standards.

The rule does not provide specific guidance to states for developing quantitative network adequacy standards, and it does not require network adequacy standards that would preserve access to Medicaid providers and services.

Quality Rating System

In addition to finalizing a stakeholder engagement requirements, the final rule aligns MAC QRS with other CMS-developed quality rating approaches.

It does not finalize the change to the current requirement that states receive prior-approval from CMS of an alternative QRS prior to its implementation.

America’s Essential Hospitals is reviewing the final rule in depth and will follow up with a detailed Action Update in the coming weeks.

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


About the Author

Abigail Painchaud is a policy associate at America's Essential Hospitals.

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