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1 (June 3, 2015)

handle is hein.crs/crsuntaaing0001 and id is 1 raw text is: Congressional Research Sevice m inforing the Iegislathve debate since 1914 S June 3, 2015 CMS Proposed Rule on Medicaid Managed Care What Is the Proposed Rule? On May 26, 2015, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule laying out the agency's plan to update the federal regulations pertaining to Medicaid managed care, under which states contract with private health insurers to provide health care to enrollees. In general, federal agencies develop regulations to implement the laws passed by the Congress. CMS has that responsibility for Medicaid and the State Children's Health Insurance Program (CHIP). This includes how states deliver services to Medicaid enrollees through risk-based managed care, the primary focus of the proposed rule. The proposed rule also addresses managed care in CHIP and third party liability (TPL) in Medicaid, but those topics are not the focus of this brief report. What Is the Current Status of the Proposed Rule? CMS is taking public comments on the proposed rule through July 27, 2015. Once the comment period closes, CMS will review the comments and make any changes before preparing a final rule for review by the Office of Management and Budget (OMB). OMB review, which typically lasts up to 90 days, is the last step before an agency releases a final rule. Background on Medicaid Managed Care Medicaid is a joint federal-state program that finances the delivery of primary and acute medical services, as well as long-term services and supports (LTSS), for a diverse low- income population, including children, pregnant women, adults, individuals with disabilities, and people age 65 and older. (See CRS Report R43357, Medicaid: An Overview.) Risk-based managed care is a system for delivering care to Medicaid enrollees. It differs from the traditional fee-for- service (FFS) arrangement in how states pay providers for their services. Under FFS, states pay providers directly for the services they deliver to Medicaid enrollees. The state assumes the financial risk for health care spending under a FFS arrangement. Under comprehensive risk-based managed care, states contract with managed care organizations (MCOs), which are private health insurers. The MCOs in turn contract with networks of providers to deliver a comprehensive set of services. The state pays the MCO a fixed amount for each enrollee, called a capitation payment, and the MCO pays the providers. The MCO assumes the financial risk for spending. Federal regulations provide guidance to states on delivering care through MCOs, including requirements and standards for contracts and for setting capitation rates. Risk- based managed care also includes state contracts with Prepaid Inpatient Health Plans (PIHPs) and Prepaid Ambulatory Health Plans (PAHPs) to deliver a limited benefit, such as dental coverage, for a capitated payment. Basic Medicaid Facts: Total enrollment: 59 million in FY2012, as measured on an average monthly basis. Total spending: $494 billion in FY2014 ($299 billion in federal spending). Comprehensive risk-based managed care accounts for about 50% of total enrollment (as of FY201 I) and about 37% of total spending in FY2014. Background on the Proposed Rule The proposed rule is the first major federal regulation impacting Medicaid managed care since 2002. Because roughly half of all Medicaid enrollees are enrolled in comprehensive risk-based managed care, the proposed rule is likely to impact millions of Medicaid enrollees. As of September 2014, 39 states had contracted with MCOs to deliver care to their Medicaid enrollees. Some states require enrollment in managed care. Enrollment has increased over time as states have sought out managed care because it can make costs more predictable through capitation and may improve care for beneficiaries-through better care coordination, for example. The proposed rule is also important for the Medicaid expansions under the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended). Many states are relying on MCOs to deliver services to individuals newly eligible under the ACA. The proposed rule will influence how states structure their managed care programs going forward. With so many people getting Medicaid services through managed care and with recent changes to Medicare Advantage and the private health insurance market (including the introduction of health insurance exchanges) as a result of the ACA, CMS is updating the regulations to make sure they are aligned with today's health care landscape. What Is Included in the Proposed Rule? The proposed rule has generated substantial interest among stakeholders, including state Medicaid programs and insurers, because it makes significant changes to the existing managed care regulations. Below is a summary of the major changes to the regulations grouped by Medicaid managed care and CHIP requirements. www.crs.gov 1 7-5700

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