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Medicaid and CHIP Managed Care Proposed Rule CMS-2390-P

Medicaid and CHIP Managed Care Proposed Rule CMS-2390-P

Medicaid and CHIP Managed Care Proposed Rule CMS-2390-P

Today, the Centers for Medicare & Medicaid Services (CMS) proposed to modernize Medicaid and Children’s Health Insurance Program (CHIP) managed care regulations to update the programs’ rules and strengthen the delivery of quality care for beneficiaries.  This proposed rule is the first major update to Medicaid and CHIP managed care regulations in more than a decade.  It would improve beneficiary communications and access, provide new program integrity tools, support state efforts to deliver higher quality care in a cost-effective way, and better align Medicaid and CHIP managed care rules and practices with other sources of health insurance coverage.  Overall, this proposed rule supports the agency’s mission of better care, smarter spending, and healthier people.


Managed care is a health care delivery system designed to manage cost, utilization, and quality. It provides for the delivery of Medicaid services through contractual arrangements between state Medicaid agencies and managed care plans that accept a set per member per month payment for these services. Enrollees receive part or all of their Medicaid services from health care providers who are in the managed care plan’s network.

Managed care has evolved into the dominant delivery system in Medicaid.  In 1992, eight percent of Medicaid beneficiaries accessed part or all of their Medicaid benefits through capitated health plans. The most recent data from 2011 shows 58 percent of all Medicaid beneficiaries in 39 states and the District of Columbia accessed part or all of their Medicaid benefits through such capitated health plans. Many states have expanded managed care to enroll new populations, including seniors and persons with disabilities who need long-term services and supports, as well as individuals newly eligible for Medicaid under the Affordable Care Act.  

Managed care is also an option in Medicare through Medicare Advantage plans and the Qualified Health Plans available through the Marketplace.  As managed care’s role has grown, states have partnered with managed care plans to align payment incentives with quality improvement goals consistent with larger, nationwide efforts at strengthening delivery systems and improving enrollee care.  

Medicaid managed care regulations were last updated in 2002 and 2003. The proposed rule updates CMS’s regulations to reflect the changes in delivery systems, strengthen the system’s ability to serve diverse populations, and promote greater alignment of Medicaid managed care policies with those of other payers.

Summary of Key Provisions 

Beneficiary experience

The proposed regulation includes provisions that would improve the beneficiary’s experience in enrollment, communications from the state and managed care plans, care coordination, and the availability and accessibility of covered services.

State delivery system reform

The proposed regulation supports states’ efforts to encourage delivery system reform initiatives within managed care programs that strive to improve health care outcomes and beneficiary experience while controlling costs.

Quality improvement

The proposed regulation sets forth a quality framework focused on transparency, alignment with other systems of care, and consumer and stakeholder engagement.  The proposed rule would require a quality strategy for a state’s entire Medicaid program and also establish a Medicaid managed care quality rating system that would include performance information on all health plans and align with the existing rating systems in Medicare Advantage and the Marketplace. 

Program and fiscal integrity

The proposed regulation includes provisions that would strengthen the fiscal and programmatic integrity of Medicaid managed care programs and rate setting by clarifying actuarial soundness requirements.

Managed long-term services and supports (MLTSS) programs

The proposed regulation would implement best practices identified in existing MLTSS programs.


The proposed rule would align the CHIP managed care regulations, where appropriate, with the proposed revisions to the Medicaid managed care rules in order to ensure CHIP beneficiaries the same quality and access in managed care programs.  

Alignment with Medicare Advantage and Private Coverage Plans

By aligning standards, where appropriate, the proposed rule would improve operational efficiencies for states and health plans, which in turn will improve the experience of care for individuals who transition between health care coverage options.

The proposed rule is available at and can be viewed at starting June 1. The deadline to submit comments is July 27, 2015.

For more information, visit  



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