U.S. insurers facing tighter oversight of Medicaid plans

There’s no requirement that plans pay back premiums in excess of the ratio, as PPACA now requires private health insurance plans to do.

Industry criticism

Jeff Myers, the chief executive officer of Medicaid Health Plans of America, an industry group, said having one medical-loss ratio for plans in every state doesn’t make sense, and that states already have medical spending levels built into contracts with plans. He said his group is still reviewing the proposed rule.

America’s Health Insurance Plans (AHIP) called the medical-spending rule “arbitrary” and said it could undermine critical services that aren’t health care, such as transporting patients to appointments.

Medicaid and CHIP now cover more than 70 million people in the United States. PPACA expanded eligibility and the Medicaid program has added 12.6 million enrollees since the start of last year, according to the research group RAND Corp. Medicaid is state-run, but funded and overseen in part by the federal government.

Private Medicaid plans operate in 39 states and cover more than half of all Medicaid beneficiaries, according to the Henry J. Kaiser Family Foundation. In return for a promise of lower costs and better-managed care, states typically pay private insurers a fixed sum for each Medicaid member.

CMS also included rules for private plans that pay for long-term care for the elderly and disabled. That population is growing as the U.S. ages.

California has the largest number of people enrolled in managed-Medicaid plans, followed by New York and then Florida, according to Avalere Health.

States were allowed to opt out of expanding their Medicaid programs in a 2012 Supreme Court decision on PPACA, and 21 have since decided not to increase eligibility. Under PPACA, the federal government is supposed to pay the full cost of expansion through 2016 and 90 percent of the cost thereafter.