The Importance of Maintaining Actuarial Soundness During COVID-19

With mass layoffs brought about by the pandemic, millions of Americans will transition from private insurance coverage to chronically underfunded Medicaid programs. Accordingly, maintaining an actuarially sound rate-setting process is essential to maintaining stable Medicaid managed care programs. The requirement that Medicaid managed care plans receive actuarially-sound capitation rates is intended to ensure that plans can viably cover the needs of Medicaid enrollees and appropriately reimburse providers for their services. Without such assurances, providers’ willingness and ability to participate in Medicaid may be seriously jeopardized, and therefore, so may be access to care. Ensuring that Medicaid managed care plan rates are actuarially sound is, therefore, an essential component of a strong, efficient, and effective Medicaid program.

Waiving actuarially sound rates will only place an onerous burden on our nation’s safety net at a time where states should engage in fairly compensating their Medicaid health plans. During this epochal pandemic, it is more important than ever to protect health plans and providers’ financial livelihoods through actuarially sound capitation rates.

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