Tag Archives: capitation rates

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.

Changes to actuarial soundness requirements may or may not accompany changes to Medicaid funding

Proposals to change federal funding for state Medicaid programs using block grants or per capita caps could affect federal actuarial soundness requirements for Medicaid managed care capitation rates. In this article, Milliman’s Michael Cook discusses the following three scenarios that could play out if changes to Medicaid funding happen.

• The continuation of federal actuarial soundness requirements under revised federal funding is a plausible scenario.
• The establishing of individual state requirements if federal requirements are eliminated.
• The continued development of actuarially sound capitation rates by individual states even in the absence of any soundness requirements.