CMS Streamlines Medicaid Managed Care Process Via Rate Guide

Managed care delivery systems are an integral part of the Medicaid and Children’s Health Insurance Plan (CHIP) programs, with nearly 80 percent of Medicaid and CHIP enrollees served via managed care. The high number of individuals served through managed care is perhaps a testament to the importance of sound financial planning for the programs.

In an effort to facilitate sound financial planning for managed care, the Centers for Medicare & Medicaid Services (CMS) has released the 2016 Medicaid Managed Care Rate Development Guide to help states develop sound actuarial rates for the upcoming year, and to streamline CMS’ review of those rates. Regulations from the guide will go into effect starting in 2016. The 2016 version of the guide builds upon practices from previous years’ consultation guides.

According to CMS, the guide explains what the agency expects from state actuaries in developing rates for 2016 Medicaid managed care programs. CMS intends this year’s guide to contain more detail and provide for more specific guidance for actuaries in comparison with previous years. CMS also expects that the guide’s increased detail will make for more accurate and specific documentation in rate reporting, allowing for the agency to determine whether capitation rates are appropriate for a specific state’s population needs.

According to CMS, the final guide is generally the same as the proposed guide released earlier this year. The central differences are with regard to administrative load development, clarification of the kinds of managed care programs, when legally mandated changes need to be incorporated into rates, and details regarding required supporting documents.

In addition, CMS explains three general principles in guiding regulation standards:

• The capitation rates are reasonable and comply with all applicable laws (statutes and regulations) for Medicaid managed care;

• the rate development process complies with all applicable laws (statutes and regulations) for the Medicaid program, including but not limited to eligibility, benefits, financing, any applicable waiver or demonstration requirements, and program integrity; and

• the documentation is sufficient to demonstrate that the rate development process meets generally accepted actuarial practices and principles.

As reported by RevCycleIntelligence.com, past managed care guides have included two sections that describe both general issues regarding Medicaid managed care programs, and managed care rates for new adult groups. The 2016 guide also includes a third additional section that describes specific issues state actuaries must make note of when developing rates for long-term services and supports.

CMS states in the 2016 guide that actuarial development of managed care capitation should be a part of an ongoing process, and that the guide was written as a way to maintain consistency amongst states submitting their rates to the agency.

“CMS anticipates that most of the information discussed in this guide is already part of ongoing actuarial work and program management in states. We provide the specific elements to be included in the rate certification to ensure consistency in the material that is submitted and transparency for what is included in federal review,” the CMS says.

The release of the 2016 guide comes after not only a draft guide, but a thorough revision period during which industry professionals were invited to submit comments and suggestions to CMS. As reported by RevCycleIntelligence.com, the National Association of Medicaid Directors (NAMD) submitted comments stating that the proposed guide was “overly federalized” and did not allow enough room for states to make innovations specific to their population needs.

CMS acknowledges in its final guide that minor revisions were made from the original draft based on the comments submitted, hopefully making for a guide that is potentially more functional for states and their actuaries.