Administration Says New Rules For Medicaid Plans Will Improve Service For Enrollees

By Jay Hancock California Healthline


The Obama administration tightened rules Monday for private insurance plans that administer most Medicaid benefits for the poor, limiting profits, easing enrollment and requiring minimum levels of participating doctors.

For consumers the most visible change may eventually be quality ratings intended to reflect Medicaid plans’ health results and customer experiences. The administration agreed to move slowly on such a sensitive industry issue, saying it would develop the scores over several years.

But the sweeping regulation, the biggest for Medicaid managed care in a decade, changes many aspects of how UnitedHealthcare, Aetna and other large contractors who administer care for some of the most vulnerable patients do business. It will:

  • Require states to set rules ensuring Medicaid plans have enough physicians in the right places. The standards will include “time and distance” maximums to ensure doctors aren’t too far away from members.
  • Limit insurer profits by requiring rate setting that assumes 85 percent of revenue will be spent on medical care. Unlike a similar rule for other plans, such as insurance sold through Obamacare marketplaces, the requirement would not compel Medicaid insurers to rebate the difference if they don’t hit 85 percent. Future rates would be adjusted instead.
  • Make plans regularly update directories of doctors and hospitals. A 2014 investigation by the Department of Health and Human Services’ inspector general found that half the doctors listed in official insurer directories weren’t taking new Medicaid patients.
  • Push plans to better detect and prevent fraud by providers, including mandatory reporting of suspected abuse to the states.
  • Tighten rules for Medicaid plans and states to collect patient data and submit it to HHS.
  • Make it easier for states to offer managed-care plans incentives to improve clinical outcomes, reduce costs and share patient information among hospitals and doctors.

“We’re taking a major step forward in our efforts to strengthen Medicaid and the Children’s Health Insurance Program,” said Vikki Wachino, deputy administrator for the Centers for Medicare & Medicaid Services. CMS is a division of HHS. CHIP offers low-cost coverage to children in some families that don’t qualify for Medicaid.

For years consumer advocates have pushed HHS to set stricter rules for managed-care plans, which they said too often favored profits over patients. The industry and some state Medicaid directors resisted, saying plans needed flexibility to serve different members in different states.

States operate Medicaid with big financial assistance from Washington. The 2010 Affordable Care Act substantially expanded Medicaid to include most low-income adults, but some states haven’t opted in.

Thirty-nine states and the District of Columbia outsource their Medicaid administration to managed care companies, which gives a degree of fiscal certainty and administrative relief. Of Medicaid’s 72 million members, nearly two-thirds are enrolled in managed-care plans, according to HHS.

The rules will be implemented in phases over the next three years, starting July 1, 2017.

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