How new Medicaid managed care rules affect MCOs

Over 75% of Medicaid enrollees in the United States are enrolled in some form of managed care. The vast majority of managed care services are provided by risk-based managed care organizations (MCOs), contracting with state Medicaid agencies.

ReynoldsMedicaid populations are unique and challenging to manage for many reasons. Chronic conditions are prevalent among Medicaid members and they often face determinants of health issues that most non-Medicaid members do not.  These determinants can be related to economic stability, housing, transportation, other environmental factors, food, community support, education, culture, experience, and more.

This May, CMS published a final rule addressing Medicaid managed care, through which the regulatory requirements for both the Medicaid MCOs and for states managing the plans has become even more complex.  This article can only begin to touch on the issues raised within that regulation.  Each plan will have to perform its own impact assessment of the new regulation and the likely effects to their plan going forward, with differences in each state.

Some of the key goals stated by CMS are supporting state efforts to advance delivery system reform, strengthening the beneficiary experience, improving accountability and transparency, and alignment of Medicaid managed care requirements with other health coverage programs.

Some of the major provisions under which Medicaid MCOs must operate are the following:

• Cap on insurer profits and setting of Medical Loss Ratios (MLRs);

• Increased State specific scrutiny regarding provider network adequacy;

• State specific delivery system and provider payment reforms;

• Increased requirements to engage consumers and strengthening program integrity requirements; and

• Support for behavioral healthcare in institutional settings and promotion of the growth of managed long-term care.

Next: How MCOs can be successful under new rules

How MCOs can be successful under the new rules

Considering the complexities associated with caring for Medicaid members, there will be challenges associated with aligning Medicaid plans with other commercial or Medicare plans. 

Medicaid plans must ensure that they efficiently utilize administrative funds in order to meet the MLR targets while assessing how they can leverage administrative loss ratio services to positively impact MLR. 

Because of the potential complexity of members entering the plan, Medicaid plans must quickly assess the unique health and determinate attributes of members as they enroll.  In cases of transience or homelessness, this can include the added difficulty of locating the member. 

Once located and assessed, members must be quickly placed in the appropriate care delivery setting with the supports required to achieve optimal health status.  Supports can include care coordination, consumer engagement, transition management and at home care and monitoring, medication therapy management, behavioral health or substance abuse treatment integration, and others.

Members must be connected with ancillary services they may need to support housing, access to healthy food, transportation, utility assistance, and more.  At the same time, plans must engage community partners and work to address both community and population health issues with these partners.

Medicaid MCOs operate within the context of a quickly changing political environment compounded beyond normal four year political cycles as Medicaid directors nationally serve less than two years in their positions.  Who and how many members are eligible, what new programs and what services are covered can change. Under the final rule, plans must expect that states will pass-through provider payment reforms aimed at paying for value, and other service delivery reforms allowed under the rule. 

Given these rapid forces of change, and the risk absorbed by Medicaid plans, they must deploy infrastructure and services that are able to adapt to change rapidly and cost effectively. Plans must continually assess how their programs are performing and adjust (or replace) them based on rapid-cycle evaluations.  

As Medicaid MCOs prepare to conform to the new guidelines over the next few years, it’s important for Medicaid plans to take an active role in providing feedback and guidance to their states.

Medicaid MCOs are experts in delivering effective care while controlling costs and they can take advantage of their position to inform states and influence policy and program, which plans will ultimately operationalize.

Steve Reynolds is vice president of Market Management for Xerox Government Healthcare Solutions.