Final managed Medicaid rule brings LTC updates, 85% medical-loss ratio

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The 1,425 page behemoth of a managed Medicaid overhaul released this week includes a controversial provision that would allow beneficiaries needing long-term care services to switch to a different plan if their provider is not in-network.

The final overhaul rule, released late Monday by the Centers for Medicare & Medicaid Services, marks the first time since 2002 that the agency has addressed Medicaid managed care policies. The overhaul was first proposed last May, in an effort to “modernize” the program.

Among the rule's provisions are several that aim to bolster the growth of managed long-term supports and services. The current managed Medicaid care regulations were developed when managed care was not typically used to cover long-term care, CMS officials said. They argue there is a better need for care coordination.

The final rule includes requiring states to permit managed Medicaid enrollees to drop coverage and switch to another managed care or fee-for-service plan if their long-term care provider is terminated from their network.

That provision drew the ire of insurers, who said it could discourage long-term care providers from negotiating contracts if they could still serve beneficiaries under another plan, according to Modern Healthcare. As of 2014, 26 states were using managed long-term care, a jump from eight states in 2004.

The final rule also includes an 85% medical-loss ratio, which requires all insurers to spend at least 85% of their Medicaid funds on medical care and other quality improvement efforts. Insurance plans that don't hit that threshold could see their state rates lowered.

The medical-loss provision may come as an inconvenience to plans, but won't damage provider reimbursements, experts shared in June. The final rule helps managed Medicaid catch up to other health benefit programs in terms of medical-loss ratios — the Affordable Care Act has an 80% ratio for individual policies, while Medicare Advantage has a similar 85% requirement.

The final rule includes caps on insurer profits, requirements for states to develop standards for overseeing provider networks and establishing a quality ratings systems for managed Medicaid plans. The majority of the original proposal's provisions remain unchanged in the final version.

The final rule is anticipated to be published on May 6, with the majority of the new requirements to be phased in beginning in July.