ACAP Reaction to Updated Medicaid Managed Care Regulations

FOR MORE INFORMATION: Jeff Van Ness, (202) 204-7515


WASHINGTON—The Association for Community Affiliated Plans (ACAP) today issued the following statement about the updated Federal regulations surrounding Medicaid managed care. The statement is attributable to Margaret A. Murray, CEO, ACAP: 

The way that health care is delivered and paid for has evolved substantially since the last overhaul of the Medicaid managed care regulations in 2003. The Centers for Medicare & Medicaid Services (CMS) has made a number of thoughtful modernizations to these regulations.

These regulations have had few changes since the Notice of Proposed Rulemaking was issued last summer. While we are pleased with some of the changes brought about by this update, we believe significant room for improvement remains.

ACAP’s reaction to several provisions of the regulation follow.


On provider networks, network adequacy and provider directories:
CMS has brought forward the regulation to recognize rapidly changing technologies that hold promise to promote access to care. Many Safety Net Health Plans deploy telemedicine to address physician shortages – either in areas that are physically remote and sparsely populated, or in areas where there simply be a dearth of specialists, such as child psychologists or dermatologists. Some of our plans have seen some real success in improving access to care through telemedicine, whether it’s reducing wait times for patients to get in to see specialists, or in some cases where there are real shortages, to see specialists at all.

Health plans need to have flexibility with respect to provider networks to take local conditions into account, for obvious reasons. Lower Manhattan is fundamentally different from Manhattan, Kansas.  Leaving the time and distance standards to the states was the right approach, and accounting for new technologies that could improve access is exactly the kind of thing an update like this should accomplish.

We are also pleased that CMS brought the requirements around updates to electronic provider directories in alignment with rules governing Medicare and Marketplace coverage.


On quality measurement and reporting:
A proposed provision of the regulation had been that states develop a quality strategy plan which includes Medicaid fee-for-service arrangements. That language was not included in the final regulation, and it’s a missed opportunity. Comprehensive quality data shouldn’t be limited to people in managed care plans; patients and policymakers alike deserve to know what is and isn’t working across the entirety of the Medicaid program. The rescinded provision would have been a good first step in this direction. 

We also believe that CMS should have modified the proposed Quality Rating System so it applies to all delivery systems, including fee-for-service and emerging delivery systems, to assure a comprehensive approach to quality reporting. Unfortunately, the final rule did not take up this suggestion. Greater visibility into the quality of the entire Medicaid program and not just Medicaid managed care will help us get the most benefit out of the federalized nature of the Medicaid and CHIP programs – because Medicaid is different in all 50 states, a richer set of quality data will give us a better idea of what’s working well, and what needs improvement.

However, the regulation isn’t the last chance for such a proposal. Earlier this year, Senator Sherrod Brown introduced S. 2438, the Medicaid and CHIP Quality Improvement Act of 2016, which would create similar mechanisms to help policymakers and taxpayers better understand the yields of their substantial investments in Medicaid and CHIP.


On establishment of a Medical Loss Ratio (MLR):
We would have liked to have seen the MLR lowered to 80 percent for plans serving CHIP programs and an exemption for Medicare-Medicaid plans operating in Financial Alignment Demonstrations. Some baseline managed care activities such as case management, care coordination, and some accreditation functions are rightly included in the MLR numerator; however, we believe a broader scope of activities related to quality improvement and accreditation should be allowable in the numerator.


On the proposed 14-day period of fee-for-service (FFS) coverage for new enrollees:
Requiring new enrollees in voluntary managed-care programs to first spend 14 days in a fee-for-service environment would have added confusion, fragmentation of care, disrupted access, and complications around provider reimbursement into the mix by regulation. ACAP urged CMS to decline this proposal, and CMS ultimately concurred.


On services received at an institution for mental disease (IMD) as an “in-lieu-of” service:
CMS opted to allow states to provide capitations payments to plans for services received at an IMD for psychiatric or substance use disorder treatment. However, it’s bounded by a 15 day-per-month limit, which may be insufficient for certain courses of treatment. ACAP is also concerned with certain provisions related to rate-setting for these services.

About ACAP
ACAP represents 56 not-for-profit Safety Net Health Plans, which provide health coverage to more than fifteen million people in 26 states. Safety Net Health Plans serve their members through Medicaid, Medicare, the Children’s Health Insurance Program (CHIP), the Marketplace and other health programs. For more information, visit

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