The Medicaid Managed Care Rule

In April of 2016, the federal Centers for Medicare & Medicaid Services (CMS) published the Medicaid and CHIP Managed Care Final Rule.  The rule, many provisions of which went into effect July 1, 2017, is a sweeping update to the regulatory framework for Medicaid managed care for the first time in many years.

Significantly for California’s 21 public health care systems, the rule places new restrictions on how health care providers may receive supplemental payments in the Medicaid managed care context.

California’s public health care system have for years financed and received supplemental payments for services provided to patients enrolled in Medi-Cal managed care plans. These supplemental payments add up to more than $1 billion in federal funds each year and supplement the state’s low reimbursement rates at no additional cost to the state.  They are an absolutely critical source of funding for public health care systems that allows them to continue providing a disproportionate share of their overall care to low-income patients.

In order to come into compliance with the new regulation and maintain existing funding, public health care system supplemental payments must be restructured and be approved by CMS.

In 2017, CAPH worked to help pass AB 205 (Wood) and SB 171 (Hernandez), two state bills that would authorize the needed legislative changes to comply with the final Medicaid managed care regulation. The legislation would create a new structure for how public health care systems earn this funding, which would be based on meeting quality and clinical performance measures and providing services to Medi-Cal enrollees.  CAPH/SNI is working with the California Department of Health Care Services (DHCS) to refine and finalize a proposal and is working closely with all public health care systems to implement these new provisions.