CMS showing confidence in managed care plans' fraud-prevention efforts

Providers are scrutinizing managed care regulations.
Providers are scrutinizing managed care regulations.

Medicaid managed care plans would be limited to fraud prevention expenditures of 0.5% of premium revenue when calculating medical loss ratios, signaling high confidence from federal regulators that such plans are already performing well with fraud prevention efforts. At least that's the view of  a Medicaid Health Plans of America spokesman who revealed the fraud-fighting budget on Thursday.

Under the proposed rule CMS released Tuesday, the agency recommends an 85% threshold in rates for Medicaid managed-care plans to devote to medical services, with the remainder to be used toward administrative costs and fraud prevention. The medical loss ratio is the minimum portion of the rates plans receive toward medical services.

The proposed loss ratio is the same as the government demands of large group plans in the private market, according to Modern Healthcare, which noted that it “generated frustration among health insurers in the hours after the draft was posted.”

MHPA President and CEO Jeff M. Myers told Bloomberg News Services the 0.5% threshold allowing plans to switch fraud expenses from their administrative loss ratio to the MLR is a signal the CMS understands plans are spending a “considerable” amount on fraud prevention.

Over the next few weeks, the Centers for Medicare & Medicaid Services is expected to unveil an ambitious and comprehensive policy-making effort that promises to completely transform and radically overhaul the Medicaid managed care marketplace. Observers say it could align Medicaid managed care regulations “with existing commercial, marketplace, and Medicare Advantage regulations,” as well as provide guidance to states on rate setting.

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