Medicaid and CHIP Managed Care Final Rule

On April 25, 2016, the Centers for Medicare & Medicaid Services (CMS) put on display at the Federal Register the Medicaid and CHIP Managed Care Final Rule, which aligns key rules with those of other health insurance coverage programs, modernizes how states purchase managed care for beneficiaries, and strengthens the consumer experience and key consumer protections. This final rule is the first major update to Medicaid and the Children's Health Insurance Program (CHIP) managed care regulations in more than a decade. See the related blog co-authored by the CMS Administrator and the Centers for Medicaid and CHIP Services (CMCS) Director, Medicaid Moving Forward. For questions regarding Managed care, email

Summary of Key Provisions

Webinar Slide Presentations

Additional Resources and Guidance

  • Medical Loss Ratio (MLR) Requirements Related to Third-Party Vendors: This Informational Bulletin provides additional clarification and specific examples of the regulatory requirements for determining the amounts that can be included as incurred claims in a Medicaid or CHIP managed care plan’s MLR, particularly when a managed care plan uses a third-party vendor in a subcontracted arrangement. This guidance will assist states in ensuring that revenues, expenditures, and amounts are appropriately identified and classified for each Medicaid and CHIP managed care plan’s MLR.
  • Delivery System and Provider Payment Initiatives under Medicaid Managed Care Contracts: This Informational Bulletin (CIB) describes states’ ability to implement delivery system and provider payment initiatives under Medicaid managed care contracts. These types of payment arrangements permit states under 42 CFR 438.6(c) to direct specific payments made by managed care plans to healthcare providers and can assist states in furthering the goals and priorities of their Medicaid programs.
  • Institution for Mental Disease (IMD) Frequently Asked Questions (FAQs): This document is the second set of published FAQs and addresses common questions related to section 438.6(e) for payments to managed care organizations (MCOs) and prepaid inpatient health plans (PIHPs) for an enrollee that is a patient in an IMD in the Medicaid and CHIP Managed Care Final Rule.
  • This Informational Bulletin (CIB) describes CMS’ intent to use enforcement discretion related to the managed care final rule, particularly for new requirements that are applicable for rating periods for contracts beginning on or after July 1, 2017. States interested in utilizing this enforcement discretion should identify for CMS those regulations of the final rule that they are unable to implement by the required compliance date. This flexibility will not apply to the actuarial soundness, medical loss ratio (MLR), and pass-through payment provisions of the final rule due to the significant federal fiscal implications of these provisions.
  • Frequently Asked Questions (FAQs): Medicaid and CHIP Managed Care Final Rule (CMS-2390-F)
    This document is the first set of published FAQs and addresses common questions related to the Medicaid and CHIP Managed Care Final Rule. We encourage states, managed care plans, and other stakeholders to submit questions to to inform future guidance and FAQs.
  • The effective date of the Final Rule was July 5, 2016; however, the implementation date for many of the provisions is based on a future date or contract cycle.  Due to the phased implementation of many of the provisions, the requirements for managed care prior to the effective date of the Final Rule may remain applicable for some period of time.
  • Transparency Requirements: Information Required on a Public Website
    The Medicaid managed care final rule improves transparency by requiring states and managed care plans to provide and maintain specific content on a public website that is accessible to Medicaid managed care enrollees.  This fact sheet is a resource and provides the areas of information required on the state’s or managed care plan’s public website, the citation to the Medicaid managed care regulations, and the corresponding compliance date.
  • Technical corrections have been made to the final rule published in the May 6, 2016 Federal Register (81 FR 27498 through 27901) entitled, “Medicaid and Children's Health Insurance Program (CHIP) Programs; Medicaid Managed Care, CHIP Delivered in Managed Care, and Revisions Related to Third Party Liability.” The effective date for the rule was July 5, 2016.