States warn Medicaid managed-care rule would shrink their authority over plans

As expected, the CMS' sweeping rule to modernize the regulation of Medicaid managed-care plans is drawing flak from state Medicaid directors and insurers who say it would impose heavy-handed federal control and could hurt patient care.

But some consumer advocacy groups responded favorably to the proposed rules, saying they offer guidance to states and Medicaid plans in developing provider networks that offer better access to beneficiaries.

The 653-page rule released in May would cap how much premium revenue private plans could allocate for administration and profits; require states to more rigorously supervise the adequacy of plans' provider networks; encourage states to establish quality rating systems for plans; allow more behavioral healthcare in institutional settings; and encourage the growth of managed long-term care. 

The proposed rule was considered long overdue because Medicaid managed-care enrollment has soared by 48% to 46 million beneficiaries, according to consulting group Avalere Health. By year-end the firm estimates that 73% of beneficiaries will receive services through managed-care plans. 

Currently, 37 states and the District of Columbia contract with Medicaid plans, according to Medicaid Health Plans of America.

States have turned to Medicaid managed-care plans hoping to reduce costs and get more budget predictability. Insurers, however, have faced criticism for offering inadequate provider networks and denying needed care to pad their bottom lines. Because of the wide variation in how states run their Medicaid managed-care programs, there have been “inconsistencies” and “less-than-optimal results,” the CMS said when it issued the proposed rule.