The Center for Medicare and Medicaid Services (CMS) released a proposed set of regulatory changes for Medicaid earlier this week. There are a couple of significant changes proposed for the program that covers 15% to 20% of the US population.
The proposed rule from CMS would set the medical loss ratio at 85 percent, which it described as the “industry standard” for large employers in the private health insurance market.
The rule quickly drew ire from Medicaid health plans.
“It’s a lot like a Swiss watch. There are a lot of moving parts, but you know deep down, its going to be very expensive,” Jeff Myers, the president and CEO of Medicaid Health Plans, said Tuesday.
85% is the medical loss ratio for large group commercial plans, while 80% is the MLR for small group and individual market plans. 85% is readily attainable for Medicaid manged care organizations. Modern Healthcare notes that most Medicaid Managed Care Organizations (MCOs) already meet that standard:
In a CMS review of 167 managed care plans in 35 states, one in 10 plans had an MLR below 79% and one in four had one below 83%.
I have to call bullshit on Mr. Myer’s statement that an MLR requirement will ruin MCOs as I know there are MCOs with MLRs in the low 90s and they are profitable, I know of MCOs with MLRs at 89% and they are profitable. It is quite possible to deliver high quality care to the Medicaid population, make a reasonable profit and not gouge the state on rates.
The 85% MLR rule will force the fat, bloated MCOS either become more efficient or hire fewer hookers and buy lower quality blow, but the CMS rule is basically taking average performance and mandating it as the floor, much like PPACA took average private commercial MLR performance and made it the floor. Big, bloated bureaucracies that can’t deliver good value won’t survive, but plenty of MCOs will do just fine.