The Centers for Medicare & Medicaid Services (CMS) has announced a proposed rule that would update Medicaid and Children’s Health Insurance Program (CHIP) managed-care regulations for the first time in over a decade.

The rule would help modernize managed-care regulations. As Andy Slavitt, CMS acting administrator, said, the world is very different than it was the last time CMS made updates to these regulations.

“A lot has changed in terms of best practices and the delivery of important health services in the managed care field over the last decade,” Slavitt said in a statement. “This proposal will better align regulations and best practices to other health insurance programs, including the private market and Medicare Advantage plans, to strengthen federal and state efforts at providing quality, coordinated care to millions of Americans with Medicaid or CHIP insurance coverage.”

The proposed rule would bring big changes to Medicaid, touching on a variety of areas:

• Improving the beneficiary experience: The rule would establish adequacy standards on the network and state levels, improve communication between health plans and beneficiaries, and establish a 14-day plan selection period for enrollment
• Quality improvement: The rule would align Medicaid and CHIP managed-care plans with other existing systems of care, implement a state review process for health plans, and establish a managed-care quality rating system in each state.
• Program and fiscal integrity improvement and alignment: The rule would require plans to provide more documentation about how they set their rates, standardize a medical loss ratio (MLR) for all states, and implement plans for fighting fraud.
• Strengthening the delivery of managed long term services and supports (MLTSS): The rule would focus on improving MLTSS programs based on practices identified in 2013 guidance. This would include, among other things, setting standards to evaluate the adequacy of MLTSS plans and requiring “person-centered processes” that ensure beneficiaries have their desired quality of life and level of independence.
• CHIP Provisions: The rule would align CHIP managed-care standards with Medicaid, when applicable, to provide consistency across the two programs. This includes standardizing a MLR.
• Alignment with Medicare Advantage and private coverage plans: The rule would align these Medicaid managed-care regulations with Medicare Advantage and private coverage plans, when applicable, to provide consistency for both consumers and regulators.
• Strengthening states’ delivery system reform efforts: The rule would support “innovation and flexibility” related to delivery system reform and use incentive programs to plans that meet specific quality and performance goals.

Jeff M. Myers, the president and CEO of Medicaid Health Plans of America, released a statement thanking CMS for its efforts and said these regulations, “ultimately will serve to guide Medicaid through its next 50 years.” However, he did call out one part of the proposed rule that many healthcare providers are not in favor of: the standardized MLR.

“We urge CMS to rethink standards for a federal minimum medical loss ratio given that MLR is already built into health plans’ contracts with the states,” Myers said.

The 653-page proposed rule can be read here in its entirety. The deadline to submit comments to CMS is July 27.