Constraints for Medicaid managed care might ease

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Matt Salo, executive director of the National Association of Medicaid Directors
Matt Salo, executive director of the National Association of Medicaid Directors

State Medicaid directors are actively working to mitigate effects of the Centers for Medicare & Medicaid Services' 2016 managed care rule.

Given the president's interest in scaling back regulations, the directors and other stakeholders say they seek to soften the rule, which has sought to make Medicaid and the Children's Health Insurance Program more similar to Medicare Advantage and other insurance. Other parts of the final rule, which was released in January, encourage boosting quality and trimming waste, fraud and abuse. It also wanted to phase out “pass-through payments.”

The rule was one of several in 2015 and 2016 that “overburdened states in their operation of the program,” said Matt Salo, executive director at National Association of Medicaid Directors, in a Bloomberg BNA report. Among other goals, officials hope to eliminate the medical-loss-ratio requirement, which the rule says should be developed to “reasonably achieve” an 85% ratio.

Also in the rule, CMS tackled pass-through payments, which is money passed through plans to providers that is meant to offset high costs for low-income patients. The final rule, released in January, said existing arrangements around pass-throughs could finish, but that the payment system should be phased out. The change on pass-throughs was criticized by the American Health Care Association, American Hospital Association and others.

Part of the CMS criticism related to the lack of reimbursement tied to quality in the payments in pass-throughs.

“A distinguishing characteristic of a pass-through payment is that a managed care plan is contractually required by the state to pay providers an amount that is disconnected from the amount, quality or outcomes of services delivered to enrollees under the contract during the rating period of the contract,” the rule states.