Proposed updates to actuarial soundness present new considerations

The Centers for Medicare and Medicaid Services (CMS) released proposed updates to Medicaid managed care regulations with the goal of easing some of the regulatory burdens while increasing the requirement for transparency. These updates offer more flexibility in developing and placing more regulation on certifying actuarially sound capitation rates.

The most significant changes related to actuarial soundness under the proposed authority are the reintroduction of certifying rate ranges and the considerations that must be given to assumptions applicable to rates under different federal financial participation levels.

The reversal of the elimination of rate ranges from the 2016 final rule places more stringent requirements on documenting support for the developed rate ranges. CMS also commented that the reintroduction of rate ranges may be especially valuable to states that procure contracts through competitive bidding, which was a primary reason for installing them.

To read more about the proposed updates to actuarial soundness, read this article by Brad Armstrong, Marlene Howard, and Christopher Pettit.

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