Obama administration issues sweeping new Medicaid regulation

The Obama administration on Monday unveiled a long-awaited and sweeping regulation governing the Medicaid program that imposes new limits on insurers. 


The regulation updates rules concerning what is known as Medicaid managed care, where states contract with private health insurers to provide benefits to low-income people through Medicaid, a system that has grown in recent years to 39 states and two thirds of enrollees. 

The final rule, issued Monday, imposes requirements on how much of insurers revenue must go towards paying medical costs, as opposed to administrative costs or profits. This 85 percent  “medical loss ratio,” which was previously imposed on insurers offering plans through ObamaCare’s marketplaces, has drawn resistance from insurers. 

Jeff Myers, CEO of Medicaid Health Plans of America, an industry trade group for insurers in managed care, said Monday that the new MLR regulation is a “one size fits all strategy” that would hinder states’ decision-making.  

Andy Slavitt and Vikki Wachino, two top officials at the Centers for Medicare and Medicaid Services (CMS), wrote in a blog post that the rule is intended to make insurers “focus on delivering care, not profits.”

The rule also requires states to put in place standards to ensure that patients do not have to travel too far in order to reach a doctor that is within their plan’s network, but leaves the details of implementing these requirements up to the states. 

“Medicaid delivers cost-effective, affordable health insurance coverage to millions of Americans,” said HHS Secretary Sylvia M. Burwell. “Today’s significant changes strengthen the program by improving the consumer’s care experience and supporting state efforts to deliver more coordinated, higher-quality care.”