Managed Care Organizations (MCOs) are health plans that attempt to control the cost and quality of care by coordinating medical and other health-related services. State Medicaid plans began to contract with independent MCOs in the 1980s as a strategy to control and predict their Medicaid expenditures. The number of Medicaid beneficiaries that receive their health care services through MCOs has vastly increased in the past three decades. In 2002, the last time the federal government issued rules for Medicaid MCOs, about half of all Medicaid beneficiaries were enrolled in an MCO. Now, under Florida’s Statewide Medicaid Managed Care legislation passed in 2011, virtually all Medicaid enrollees participate in an MCO plan.
For the first time since 2002, the federal government is updating the rules for managed care plans that deliver Medicaid services. The proposed rule will align the regulations that govern Medicaid MCOs with managed care plans on the Health Insurance Marketplaces and with Medicare Advantage plans. Among the additional consumer protections in the proposed rule are increased transparency through standardized language, more robust provider networks, mandatory quality review, initial enrollment choice, and provisions to switch plans. Additionally, MCOs in Medicaid will have the same medical loss ratio requirement that other group plans must follow. That means the insurance companies must spend at least 85 cents of every tax dollar the state pays them on providing direct care to enrollees. Only 15 percent of their state-paid capitation rates may be spent for administrative overhead and profits.
The Florida CHAIN reviewed the proposed rule and we are encouraged by the increased focus on quality and consumer protections. We believe there is room for stronger protections in both areas. Our partners, The Children’s Trust, Florida Center for Fiscal and Economic Policy, and Children’s Movement of Florida, joined us in offering comments to the Center for Medicare & Medicaid Services. We urge them to expand the provider network requirements by ensuring enrollees have timely access to all needed services and encouraging them to require all Medicaid MCOs to be accredited by independent national quality reviewers.