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State Directed Payments

The managed care regulation provides the ability for states to implement payment arrangements that direct expenditures under Medicaid managed care contracts.

COVID-19 Delivery System and Provider Payment Initiatives

The COVID-19 public health emergency is causing dramatic shifts in utilization across the healthcare industry, causing financial uncertainty for both healthcare providers and managed care plans. While some providers are experiencing surges in COVID-19 related utilization, other providers are experiencing dramatic declines in utilization and revenue. The Centers for Medicare & Medicaid Services (CMS) understands that many states are now seeking ways to temporarily modify provider payment methodologies and capitation rates under their Medicaid managed care contracts to address the impacts of the public health emergency while preserving systems of care and access to services for Medicaid beneficiaries. This guidance (PDF, 213.82 KB)  provides several options that states can consider under their Medicaid managed care contracts, including the following:

  1. Adjusting managed care capitation rates exclusively to reflect temporary increases in Medicaid fee-for-service (FFS) provider payment rates where an approved state directed payment requires plans to pay FFS rates;
  2. Requiring managed care plans to make certain retainer payments allowable under existing authorities to certain habilitation and personal care providers to maintain provider capacity and access to services; and
  3. Utilizing state directed payments to require managed care plans to temporarily enhance provider payment under the contract.

CMS is also publishing 2 examples of 438.6(c) preprints to facilitate review of state-directed payments discussed in this CIB:

Delivery System and Provider Payment Initiatives

Delivery System and Provider Payment Initiatives under Medicaid Managed Care Contracts: This Informational Bulletin (CIB) (PDF, 181.11 KB) 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.