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Table of Contents

1. Today, Capitated Managed Care is the Dominant Way in Which States Deliver Services to Medicaid Enrollees.
2. In FY 2023, Payments to Comprehensive Risk-Based MCOs Accounted for Over Half of Medicaid Spending.
3. Three-Quarters (75%) of All Medicaid Beneficiaries Received Their Care Through Comprehensive Risk-Based MCOs.
4. Children and Adults Are Groups Most Likely to Be Enrolled in MCOs; However, States Are Increasingly Including Enrollees with Complex Needs in MCOs.
5. Five Publicly Traded Firms Account for Half of MCO Enrollment.
6. States Make Decisions About Which Services to Carve In and Out of MCO Contracts.
7. Each Year, States Develop MCO Capitation Rates That Must Be Actuarially Sound and May Include Risk Mitigation Strategies.
8. In 2024, CMS Finalized Rules to Strengthen Access Standards, But The Future of The Rules is Uncertain.
9. States Link Financial Incentives to Quality Measures and Use Contract Requirements to Advance Priorities, Including Addressing Social Determinants of Health.
10. CMS Has Taken Steps to Improve Managed Care Program Monitoring and Transparency.
11. FAQ

1. Today, Capitated Managed Care is the Dominant Way in Which States Deliver Services to Medicaid Enrollees.

Yes, capitated managed care is currently the primary method states use to provide services to Medicaid enrollees. States have the authority to design and manage their own Medicaid programs within federal guidelines, which includes determining how they deliver and pay for care. According to KFF, as of July 2024, 42 states, including the District of Columbia, contract with comprehensive, risk-based managed care plans to serve at least some of their Medicaid beneficiaries. Oklahoma recently joined this group on April 1, 2024, implementing capitated, comprehensive Medicaid managed care for most children and adults. States have been increasing their reliance on managed care delivery systems for more than three decades, hoping to improve access to specific services, enhance care coordination and management, and make future costs more predictable. While this shift has increased budget predictability for states, the impact of managed care on access to care and costs has had mixed results.

Alternative text: Medicaid managed care penetration across the United States, highlighting enrollment percentages by state as of July 2022.

What Are the Key Components of Capitated Managed Care in Medicaid?

Capitated managed care in Medicaid involves several key components:

• Risk-Based Managed Care Plans: These plans provide comprehensive acute care (such as physician and hospital services) and, in some cases, long-term care to Medicaid beneficiaries.
• Per Member Per Month Payment: Managed care organizations (MCOs) receive a set payment for each enrolled member per month, regardless of the services used.
• State Oversight: States design and administer their Medicaid programs, determining how care is delivered and paid for, while adhering to federal rules.
• Comprehensive Services: MCOs offer a wide range of services, aiming to improve care coordination and access.

Why Do States Increasingly Rely on Managed Care Delivery Systems?

States have been increasing their reliance on managed care delivery systems for several reasons:

• Improved Access: Managed care aims to enhance access to specific services for Medicaid beneficiaries.
• Enhanced Care Coordination: MCOs are intended to improve the coordination and management of care, ensuring beneficiaries receive appropriate and timely services.
• Predictable Costs: By paying a set amount per member per month, states can better predict and manage their Medicaid costs.
• Budget Predictability: The shift to MCOs has helped states stabilize their budgets by providing a fixed cost structure.

What are the Challenges and Criticisms of Managed Care in Medicaid?

Despite the benefits, managed care in Medicaid faces several challenges and criticisms:

• Mixed Impact on Access and Costs: Evidence on the impact of managed care on access to care and costs is limited and mixed. Some studies suggest improvements in certain areas, while others show little or no effect.
• Quality Concerns: Ensuring the quality of care provided by MCOs is an ongoing challenge, with variations in performance across different plans and states.
• Complexity: The structure of managed care can be complex, making it difficult for beneficiaries to navigate the system and understand their rights and options.
• Limited Evidence: There is limited evidence supporting the overall effectiveness of managed care in improving health outcomes for Medicaid beneficiaries.

2. In FY 2023, Payments to Comprehensive Risk-Based MCOs Accounted for Over Half of Medicaid Spending.

Yes, in Fiscal Year 2023, payments to comprehensive risk-based Managed Care Organizations (MCOs) accounted for approximately 52% of the total Medicaid spending. According to KFF, state and federal spending on Medicaid services totaled over $880 billion in FY 2023. This substantial portion of Medicaid funding directed towards MCOs highlights their critical role in the financial structure of the program. The share of Medicaid spending on MCOs varies by state, with many directing at least 40% of their Medicaid dollars to these organizations. This variance reflects differences in state policies, the health profiles of Medicaid populations, and the inclusion or exclusion of high-need beneficiaries in MCO enrollment.

Alternative text: Distribution of total Medicaid spending allocated to managed care organizations across different states in the United States.

What Factors Contribute to the Variation in MCO Spending Across States?

Several factors contribute to the variation in MCO spending across different states:

• MCO Enrollment: The proportion of the state’s Medicaid population enrolled in MCOs significantly impacts spending. States with higher MCO enrollment typically allocate a larger share of their Medicaid budget to MCO payments.
• Health Profile: The health profile of the Medicaid population influences MCO spending. States with a higher proportion of beneficiaries with complex health needs may see increased costs.
• Inclusion of High-Risk Beneficiaries: Whether high-risk/high-cost beneficiaries, such as individuals with disabilities or dual-eligible beneficiaries, are included in MCO enrollment affects spending. Including these populations can raise the overall cost of care.
• Long-Term Care Services: The inclusion of long-term care services in MCO contracts is another key factor. States that include these services in their MCO contracts tend to have higher MCO spending.

How Might the Share of Medicaid Dollars Going to MCOs Change in the Future?

The share of Medicaid dollars directed to MCOs is likely to increase as states expand managed care to include higher-need, higher-cost beneficiaries. The potential drivers of this change include:

• Expansion to High-Need Groups: As states increasingly include adults ages 65+, individuals eligible through disability, and those with complex care needs in MCOs, the proportion of Medicaid dollars going to MCOs will likely rise.
• Inclusion of Long-Term Care: The ongoing shift to include long-term care services in MCO contracts will further increase the financial share allocated to these organizations.
• ACA Expansion: As more states adopt the Affordable Care Act (ACA) Medicaid expansion, the inclusion of newly eligible adults in MCOs will contribute to higher spending.

What are the Implications of Increased MCO Spending for Medicaid Programs?

The increase in MCO spending has several implications for Medicaid programs:

• Budget Allocation: States must allocate a significant portion of their Medicaid budgets to MCOs, potentially impacting the funding available for other aspects of the program.
• Cost Management: States need to implement effective cost management strategies to ensure that MCO spending is efficient and sustainable. This includes negotiating favorable rates and implementing risk mitigation strategies.
• Quality of Care: With a larger share of Medicaid dollars flowing to MCOs, it is essential to monitor and ensure the quality of care provided by these organizations. States must implement robust oversight mechanisms to assess MCO performance.
• Policy Adjustments: Policymakers need to consider the implications of increased MCO spending when making decisions about Medicaid expansion, benefit design, and eligibility criteria.

3. Three-Quarters (75%) of All Medicaid Beneficiaries Received Their Care Through Comprehensive Risk-Based MCOs.

Yes, approximately 75% of all Medicaid beneficiaries receive their healthcare through comprehensive risk-based Managed Care Organizations (MCOs). As of July 2022, nearly 72 million Medicaid enrollees were receiving care through these MCOs, according to KFF. This significant proportion highlights the dominant role of MCOs in delivering healthcare services to Medicaid recipients across the United States. Thirty states cover at least 75% of their Medicaid beneficiaries through MCOs, underscoring the widespread adoption of this model.

Alternative text: Graphical representation showing the percentage of Medicaid beneficiaries enrolled in managed care across different states as of July 2022.

How Did the COVID-19 Public Health Emergency Affect Medicaid Enrollment and MCOs?

The COVID-19 public health emergency had a significant impact on Medicaid enrollment and MCOs:

• Enrollment Growth: During the public health emergency, states paused disenrollments, leading to substantial growth in Medicaid enrollment.
• MCO Enrollment Growth: As Medicaid enrollment increased, so did enrollment in MCOs.
• Peak Enrollment: Medicaid enrollment peaked at 94.5 million in April 2023, an increase of 23 million (32%) from pre-pandemic levels.
• Unwinding Period: Despite millions of disenrollments during the unwinding period that began in April 2023, Medicaid/CHIP enrollment in October 2024 was still nearly 8 million higher than in February 2020.

What Factors Influence the Decision to Enroll Medicaid Beneficiaries in MCOs?

Several factors influence the decision to enroll Medicaid beneficiaries in MCOs:

• State Policies: States have the flexibility to determine which populations and services are included in managed care arrangements, leading to considerable variation across states.
• Cost Management: MCOs provide states with a predictable cost structure through capitated payments, helping them manage their Medicaid budgets more effectively.
• Care Coordination: MCOs aim to improve care coordination for Medicaid beneficiaries, ensuring they receive appropriate and timely services.
• Access to Care: States hope that MCOs will improve access to care for Medicaid beneficiaries, although evidence on this is mixed.

What Are the Potential Benefits and Drawbacks of Receiving Care Through MCOs?

Receiving care through MCOs has several potential benefits and drawbacks:

• Benefits:
  • Comprehensive Care: MCOs provide a wide range of services, including acute and long-term care.
  • Care Coordination: MCOs aim to coordinate care for beneficiaries, ensuring they receive the right services at the right time.
  • Predictable Costs: Capitated payments provide a predictable cost structure for states.
• Drawbacks:
  • Access Issues: Some beneficiaries may face challenges accessing needed services due to network limitations or prior authorization requirements.
  • Quality Concerns: The quality of care provided by MCOs can vary, and some plans may not provide adequate services.
  • Administrative Burden: Navigating the MCO system can be complex and burdensome for beneficiaries.

4. Children and Adults Are Groups Most Likely to Be Enrolled in MCOs; However, States Are Increasingly Including Enrollees with Complex Needs in MCOs.

Yes, children and adults are generally the most likely groups to be enrolled in Medicaid Managed Care Organizations (MCOs). According to KFF data from July 2022, 36 MCO states reported covering 75% or more of all children through MCOs. Additionally, among the 39 states that had implemented the ACA Medicaid expansion as of July 2022, 32 states were using MCOs to cover newly eligible adults, with most covering over 75% of beneficiaries in this group through MCOs. While children and adults are the primary groups enrolled, states are increasingly including enrollees with complex needs in MCOs, such as those ages 65+ and people eligible through disability.

Alternative text: Bar graph illustrating Medicaid managed care enrollment rates across different eligibility groups, including children, adults, and disabled individuals, as reported by various states as of July 2022.

Why Are Children and Adults More Likely to Be Enrolled in MCOs?

Several factors contribute to the higher enrollment rates of children and adults in MCOs:

• Comprehensive Coverage: MCOs offer comprehensive acute care services, making them a suitable option for covering the healthcare needs of children and adults.
• Preventive Care Focus: MCOs often emphasize preventive care services, which are particularly important for children and adults.
• State Priorities: States prioritize the enrollment of children and adults in MCOs to improve access to care, enhance care coordination, and manage costs more effectively.
• Administrative Efficiency: Enrolling these groups in MCOs can streamline administrative processes and improve the efficiency of Medicaid programs.

What Challenges Do States Face When Including Enrollees with Complex Needs in MCOs?

Including enrollees with complex needs in MCOs presents several challenges for states:

• Higher Costs: Enrollees with complex needs often require more specialized and costly healthcare services, which can strain MCO budgets.
• Care Coordination: Coordinating care for individuals with complex needs requires extensive resources and expertise, which may not be readily available in all MCOs.
• Provider Capacity: Ensuring an adequate supply of providers with the necessary skills and experience to serve enrollees with complex needs can be challenging.
• Quality Monitoring: Monitoring the quality of care provided to enrollees with complex needs requires robust data collection and analysis systems.

How Can States Improve the Enrollment and Care of Enrollees with Complex Needs in MCOs?

States can take several steps to improve the enrollment and care of enrollees with complex needs in MCOs:

• Risk Adjustment: Implement risk adjustment mechanisms to ensure that MCOs receive adequate funding to cover the costs of serving enrollees with complex needs.
• Care Coordination Programs: Develop specialized care coordination programs tailored to the unique needs of enrollees with complex conditions.
• Provider Training: Provide training and support to providers to enhance their ability to care for enrollees with complex needs.
• Data Collection and Analysis: Strengthen data collection and analysis systems to monitor the quality of care and identify areas for improvement.

5. Five Publicly Traded Firms Account for Half of MCO Enrollment.

Yes, it is accurate that five publicly traded firms account for approximately half of all Medicaid Managed Care Organization (MCO) enrollment. According to KFF, as of July 2022, states contracted with a total of 282 Medicaid MCOs. Among these, 16 firms operated Medicaid MCOs in two or more states, accounting for over 63% of total enrollment. Of these 16 parent firms, six are publicly traded, for-profit entities. The five largest firms—Centene, UnitedHealth Group, Elevance (formerly Anthem), Molina, and Aetna/CVS—collectively account for 50% of all Medicaid MCO enrollment. All five are publicly traded companies ranked in the Fortune 500, with four of them in the top 100.

Alternative text: Chart showing market share of Medicaid managed care enrollment by parent company, highlighting major publicly traded firms and their enrollment percentages as of July 2022.

What Factors Contribute to the Dominance of These Five Firms in the Medicaid MCO Market?

Several factors contribute to the dominance of these five publicly traded firms in the Medicaid MCO market:

• Scale and Resources: These firms possess significant scale and resources, allowing them to efficiently manage large numbers of enrollees and negotiate favorable contracts with states.
• Geographic Reach: Operating in multiple states provides these firms with a broad geographic reach, enabling them to leverage economies of scale and share best practices across different markets.
• Expertise and Experience: These firms have extensive expertise and experience in managing Medicaid populations, allowing them to effectively coordinate care and manage costs.
• Market Consolidation: The Medicaid MCO market has experienced consolidation in recent years, with larger firms acquiring smaller ones, further increasing their market share.

What Are the Potential Implications of This Concentration of Enrollment?

The concentration of enrollment among a few large firms has several potential implications for Medicaid programs:

• Negotiating Power: These firms may have significant negotiating power when contracting with states, potentially impacting the rates and terms of their contracts.
• Innovation and Efficiency: Large firms may have the resources to invest in innovation and efficiency improvements, potentially leading to better care and lower costs.
• Reduced Competition: Concentration may reduce competition in the Medicaid MCO market, potentially limiting the choices available to states and beneficiaries.
• Oversight and Accountability: States need to carefully oversee these large firms to ensure they are providing high-quality care and meeting their contractual obligations.

How Do States Balance the Benefits of Contracting with Large Firms with the Need for Competition and Innovation?

States can take several steps to balance the benefits of contracting with large firms with the need for competition and innovation:

• Promote Competition: Encourage smaller and regional MCOs to participate in the Medicaid market by reducing barriers to entry and providing technical assistance.
• Incentivize Innovation: Offer financial incentives for MCOs to develop and implement innovative care models and technologies.
• Performance-Based Contracting: Use performance-based contracting to hold MCOs accountable for meeting specific quality and outcome targets.
• Transparent Procurement Processes: Conduct transparent procurement processes to ensure that all qualified MCOs have an equal opportunity to compete for contracts.

6. States Make Decisions About Which Services to Carve In and Out of MCO Contracts.

Yes, it’s true that states decide which services to include (carve in) or exclude (carve out) from their Managed Care Organization (MCO) contracts. While MCOs generally provide comprehensive services to beneficiaries, states have the flexibility to carve out specific services into fee-for-service systems or limited benefit plans. Common services that are often carved out include behavioral health, pharmacy, dental, and long-term care services. However, there has been a significant trend among states to carve these services back into MCO contracts to promote better coordination and integration of care.

Alternative text: Map showing which states carve pharmacy benefits out of their Medicaid managed care contracts as of July 2024.

What Factors Influence a State’s Decision to Carve Services In or Out of MCO Contracts?

Several factors influence a state’s decision to carve services in or out of MCO contracts:

• Care Coordination: States may carve in services to improve care coordination and integration, ensuring that beneficiaries receive comprehensive and seamless care.
• Cost Management: Carving out certain services can allow states to manage costs more effectively by contracting with specialized providers or using fee-for-service arrangements.
• Access to Care: States may carve out services to ensure that beneficiaries have access to specialized providers or services that may not be readily available through MCOs.
• Administrative Complexity: Carving out services can reduce the administrative complexity of MCO contracts, making them easier to manage and oversee.

What Are the Potential Benefits and Drawbacks of Carving In Services?

Carving in services to MCO contracts has several potential benefits and drawbacks:

• Benefits:
  • Improved Care Coordination: Carving in services can improve care coordination by integrating them into the MCO’s comprehensive care model.
  • Enhanced Quality: MCOs may be better positioned to monitor and improve the quality of care for carved-in services.
  • Simplified Administration: Consolidating services within MCO contracts can simplify administrative processes and reduce duplication of effort.
• Drawbacks:
  • Reduced Specialization: Carving in services may reduce access to specialized providers or services that are not readily available through MCOs.
  • Increased Costs: MCOs may charge higher rates for carved-in services, potentially increasing overall costs for the state.
  • Complexity: Integrating carved-in services into MCO contracts can be complex and require significant effort from both the state and the MCO.

What Are the Potential Benefits and Drawbacks of Carving Out Services?

Carving out services from MCO contracts also has potential benefits and drawbacks:

• Benefits:
  • Cost Savings: Carving out services can allow states to negotiate lower rates with specialized providers or use more cost-effective service delivery models.
  • Access to Specialists: Beneficiaries may have better access to specialized providers or services that are not readily available through MCOs.
  • Flexibility: Carving out services gives states more flexibility to design and implement innovative programs tailored to specific populations or needs.
• Drawbacks:
  • Fragmented Care: Carving out services can lead to fragmented care, as beneficiaries may receive services from multiple providers who do not coordinate effectively.
  • Administrative Complexity: Managing carved-out services can increase administrative complexity and require additional oversight from the state.
  • Quality Concerns: The quality of care for carved-out services may be more difficult to monitor and improve.

7. Each Year, States Develop MCO Capitation Rates That Must Be Actuarially Sound and May Include Risk Mitigation Strategies.

That’s correct. Each year, states develop capitation rates for Managed Care Organizations (MCOs), and these rates must be actuarially sound, potentially including risk mitigation strategies. States pay Medicaid managed care organizations a set per member per month payment for the services specified in their contracts. Unlike commercial and Medicare Advantage markets where plans set rates, Medicaid managed care rates are developed by states and their actuaries, then reviewed and approved by the Centers for Medicare & Medicaid Services (CMS). Payments to Medicaid MCOs must be actuarially sound, meaning the capitation rates are projected to cover all reasonable, appropriate, and attainable costs required under the contract terms for the covered population and time period.

Alternative text: Map of the United States showing which states consistently require managed care organizations to remit payments if they do not meet minimum medical loss ratio requirements.

What Does Actuarial Soundness Mean for Medicaid MCO Capitation Rates?

Actuarial soundness ensures that capitation rates are sufficient to cover the costs that MCOs will reasonably incur. This includes:

• Utilization of Services: The expected use of covered healthcare services by the enrolled population.
• Administrative Costs: The costs associated with running the managed care plan.
• Profit: A reasonable profit margin for the MCO.

Capitation provides upfront fixed payments to plans for expected service utilization, administrative costs, and profit, differing from the fee-for-service (FFS) model. Rates are typically set for a 12-month rating period.

What Risk Mitigation Strategies Do States Use in Setting MCO Capitation Rates?

States use various mechanisms to adjust plan risk, incentivize performance, and ensure payments are neither too high nor too low. These strategies include:

• Risk Sharing Arrangements: Mechanisms where states and MCOs share the financial risk associated with unexpected costs or changes in utilization.
• Risk and Acuity Adjustments: Adjustments based on the health status and risk profile of the enrollees, ensuring MCOs are adequately compensated for managing higher-risk populations.
• Medical Loss Ratios (MLRs): Requirements that MCOs spend a certain proportion of their capitation payments on clinical services and quality improvement, typically a minimum of 85%.
• Incentive and Withhold Arrangements: Performance-based incentives or withholds that reward MCOs for meeting certain quality and outcome targets.

How Do Medical Loss Ratios (MLRs) Affect Medicaid MCOs?

States develop capitation rates to achieve a minimum MLR of 85%, meaning that MCOs must spend at least 85% of their capitation payments on clinical services and quality improvement. While there is no federal requirement for Medicaid plans to pay remittances to the state if they fail to meet the MLR standard, many states require MCOs to make remittance payments when they do not meet state minimum MLR requirements. As of July 2024, 34 MCO states reported always requiring these remittance payments, while two states indicated they sometimes require them.

8. In 2024, CMS Finalized Rules to Strengthen Access Standards, But The Future of The Rules is Uncertain.

Yes, that is accurate. In 2024, the Centers for Medicare & Medicaid Services (CMS) finalized significant regulations designed to enhance the quality of care and improve access to care for Medicaid enrollees. These rules are comprehensive, addressing various aspects of Medicaid managed care access, financing, and quality. However, their future is uncertain due to potential congressional actions or changes under a new presidential administration.

Alternative text: Comparison of prior authorization denial rates between Medicaid managed care organizations and Medicare Advantage plans, highlighting differences in approval processes.

What Are the Key Provisions of the 2024 Managed Care Rule?

The 2024 Managed Care rule includes several key provisions aimed at strengthening access standards:

• Timely Access to Care: Establishes national maximum wait time standards for certain routine appointments to ensure enrollees receive timely care.
• State Monitoring and Enforcement: Enhances state monitoring and enforcement efforts to ensure that managed care plans comply with access standards.
• Network Adequacy: Strengthens rules around network adequacy to ensure that managed care plans have a sufficient number of providers to meet the needs of their enrollees.
• Prior Authorization: Streamlines the prior authorization process to reduce approval wait times and improve transparency.

What Factors Could Affect the Future of These Rules?

Several factors could affect the future of these rules:

• Congressional Action: Congress may seek to overturn the rules through legislation, such as the Congressional Review Act.
• Presidential Administration Changes: A new presidential administration could delay implementation or issue new regulations that would undo the 2024 rules.
• Legal Challenges: The rules could face legal challenges from states or managed care organizations.

How Have State-Directed Payments (SDPs) Been Addressed in Recent Regulations?

Recent reports indicate that state-directed payments (SDPs) have been a major driver of Medicaid expenditure growth in recent years. CMS aimed to help states ensure access to adequate provider networks and increase the use of value-based payment arrangements by creating state-directed payments in 2016. The 2024 managed care rules permit states to pay hospitals and nursing facilities at the average commercial payment rate (ACR) when using directed payments. These rules also tightened SDP requirements to improve oversight, evaluation, and transparency, requiring states to report provider-level directed payment data and tie SDPs to actual utilization.

9. States Link Financial Incentives to Quality Measures and Use Contract Requirements to Advance Priorities, Including Addressing Social Determinants of Health.

Yes, it is true that states are increasingly linking financial incentives to quality measures and utilizing contract requirements to advance priorities, including addressing social determinants of health (SDOH). States incorporate quality metrics into the ongoing monitoring of their programs, including linking financial incentives like performance bonuses or penalties, capitation withholds, or value-based state-directed payments to quality measures. As of July 2021, over three-quarters of MCO states reported using at least one financial incentive to promote quality of care.

Alternative text: Chart displaying states that mandate social determinants of health-related policies in Medicaid managed care contracts, showing efforts to address non-medical factors influencing health outcomes.

What Types of Financial Incentives Do States Use to Promote Quality of Care?

States employ various financial incentives to encourage MCOs to improve the quality of care they provide:

• Performance Bonuses: MCOs receive additional payments for meeting or exceeding specific quality targets.
• Penalties: MCOs face financial penalties for failing to meet minimum quality standards.
• Capitation Withholds: A portion of the MCO’s capitation payment is withheld and only paid if the MCO meets certain quality benchmarks.
• Value-Based State-Directed Payments: States direct payments to providers based on their performance on quality measures.

Financial incentive performance areas most frequently targeted by MCO states include behavioral health, chronic disease management, and perinatal/birth outcomes.

How Do States Use Medicaid MCO Contracts to Address Social Determinants of Health?

In Fiscal Year 2024, most MCO states reported leveraging Medicaid MCO contracts to promote at least one specified strategy to address social determinants of health. These strategies include:

• Screening for SDOH Needs: Requiring MCOs to screen enrollees for social needs, such as food insecurity, housing instability, and transportation barriers.
• Referral to Community Resources: Mandating MCOs to refer enrollees with identified social needs to community-based organizations that can provide support.
• Care Coordination: Requiring MCOs to coordinate medical and social services for enrollees with complex needs.
• Investment in SDOH Interventions: Encouraging or requiring MCOs to invest in interventions that address social determinants of health, such as housing assistance or food banks.

What Challenges Do States Face in Linking Financial Incentives to Quality Measures and Addressing SDOH?

Despite activity in this area, detailed performance information at the plan level frequently has not been made publicly available by state Medicaid agencies, limiting transparency. States face several challenges in linking financial incentives to quality measures and addressing social determinants of health:

• Data Availability: Obtaining reliable and comprehensive data on quality measures and social determinants of health can be difficult.
• Attribution: Determining the impact of MCO interventions on quality and SDOH outcomes can be challenging due to the complex interplay of factors affecting health.
• Sustainability: Ensuring the long-term sustainability of SDOH interventions requires ongoing funding and support.
• Stakeholder Engagement: Effectively addressing SDOH requires collaboration and coordination among various stakeholders, including MCOs, providers, community-based organizations, and government agencies.

10. CMS Has Taken Steps to Improve Managed Care Program Monitoring and Transparency.

Yes, CMS has indeed taken steps to improve the monitoring and transparency of managed care programs. The 2016 Medicaid managed care final rule established new reporting requirements for states. Under the Biden administration, CMS developed standard reporting templates and a variety of toolkits and released a series of informational bulletins to help states improve their monitoring and oversight of managed care programs. Transparency has the potential to promote accountability. To improve transparency, CMS began publicly posting the Managed Care Program Annual Report (MCPAR) and the MLR Summary Reports on Medicaid.gov in 2024.

What Specific Measures Has CMS Implemented to Improve Monitoring?

CMS has implemented several specific measures to enhance the monitoring of managed care programs:

• Standard Reporting Templates: Developed standardized templates for states to report data on various aspects of their managed care programs, including enrollment, utilization, and expenditures.
• Technical Assistance Toolkits: Released toolkits to provide states with guidance and best practices on monitoring and oversight of managed care programs.
• Informational Bulletins: Issued informational bulletins to provide states with updates on federal policies and guidance related to managed care.
• Data Collection and Analysis: Enhanced data collection and analysis efforts to better understand the performance of managed care programs.

How Does CMS Promote Transparency in Managed Care Programs?

CMS promotes transparency in managed care programs through several initiatives:

• Public Reporting of Data: CMS publicly posts data on managed care programs, including the Managed Care Program Annual Report (MCPAR) and the MLR Summary Reports, on Medicaid.gov.
• Stakeholder Engagement: CMS engages with stakeholders, including states, MCOs, providers, and beneficiaries, to gather input and feedback on managed care policies and programs.
• Transparency Requirements: CMS requires states to post the MCPAR and Network Adequ