Public Comment: MHPA

May 26, 2021
Chiquita Brooks-LaSure, Administrator
Centers for Medicare and Medicaid Services
Office of Strategic Operations and Regulatory Affairs
Division of Regulations Development
Attention: CMS-10398 (#37)/OMB control number: 0938-1148
7500 Security Boulevard
Baltimore, Maryland 21244-1850
Re: Medicaid and Children’s Health Insurance Program (CHIP) Generic
Information Collection Activities: Proposed Collection; Comment Request
(CMS-10398 #37)
Dear Administrator Brooks-LaSure:
The Medicaid Health Plans of America (MHPA) is writing in response to your request for
comment on the Notice published in the Federal Register on May 12th, 2021, related to the
revision of the currently approved collection of information for the Medicaid Managed Care Rate
Development Guide (the Guide). We believe the Guide is an important resource for states,
Medicaid health plans, and stakeholders, and appreciate the opportunity to provide comments on
“ways to enhance the quality, utility and clarity of the information to be collected.”
MHPA represents the interests of the Medicaid managed care industry through advocacy and
research to support innovative policy solutions that enhance the delivery of comprehensive, costeffective, and quality health care for Medicaid enrollees. MHPA works on behalf of its 130+
member health plans, known as managed care organizations (MCOs), which serve more than 40
million Medicaid enrollees in 40 states, Washington, DC, and Puerto Rico. MHPA’s members
include both for-profit and non-profit, national and regional, as well as single-state health plans
that compete in the Medicaid market.
The Guide is a valuable means for communicating essential information for states and their
MCO partners that assist and support the Medicaid managed care rate-setting process in a
transparent manner. We appreciate that the Guide provides detail around CMS' expectations of
information to be included in actuarial rate certifications, acts as a basis for CMS’ review, and
builds upon the experience of states and CMS in completing rate certifications and review. We
also recognize the explicit references to the statutory requirement for capitation rates to be
actuarially sound (Section 1903(m) of the Social Security Act) and the implementing regulatory
requirements at 42 CFR 438.4(b). However, we also believe that increased opportunities for
engagement with Medicaid MCOs related to the development of the Guide prior to its official
release on an annual basis, at a minimum, would help bolster efforts to incorporate and
implement processes and actions that help ensure actuarial soundness and support transparency,
clarity, and innovation in the Medicaid managed care rate development process. For example,
we would be interested in working with CMS to develop requirements for including expenditures

for “social determinants of health” as quality improvement activities in Medical Loss Ratio
calculations.
As we have shared previously with the agency (https://medicaidplans.org/wpcontent/uploads/2020/07/MHPA-Letter-to-CMCS_9.20.pdf), MHPA believes that state
adherence to two essential programmatic principles and safeguards, actuarial soundness and
transparency protections, will support the continued financial viability of state partner Medicaid
MCOs and help ensure the sustainability of the Medicaid program.
We have attached a table in the Appendix of this letter to address specific sections in the Guide
and include recommendations for revisions in furtherance of actuarial soundness and
transparency. The table includes a column for each recommended change that details the
rationale for our suggested revisions. Please note that given the short timeframe to review the
Guide and its accompanying materials with only a 14-day comment period, we have focused our
comments on several key areas, but hope to continue an ongoing dialogue with CMS should
other areas raise issues or questions to be addressed.
Thank you for the opportunity to provide feedback on the Guide. We believe the comment
opportunity demonstrates your commitment to the principle of transparency and provides a
pathway for stakeholder engagement that will ultimately benefit the Medicaid program and the
beneficiaries we serve.
Please feel free to reach out to me directly at [email protected] with any questions or should
you need any additional information.
Sincerely,

Shannon Attanasio
Vice President, Government Relations and Advocacy

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Appendix
Recommendations for revisions that apply across multiple sections and to specific sections are as
follows (note: suggested changes made to Section I. should also be made to Section III. New Adult
Group Capitation Rates of the Guide):
General Comments Applicable Cross-Sub-Sections
Section I. Medicaid
Managed Care Rates;
Section B -Appropriate
Documentation/Appendix

Guide Section

I.1.A.ii.
General
InformationRate
Development
Standards

I.1.A.iii.(a)
General
Information –
Rate
Development
Standards

In Section B of Subsections 2 and 6 and as referenced in the Appendix, the Guide
provides for the notation of actuary concerns with the risk adjustment process. We
encourage CMS to consider adding an attestation and documentation provision for
health plans who have participated in the rate setting conversation regarding areas of
potential concern. We believe this would provide a formal path for Medicaid MCOs
to highlight assumptions or reasonableness concerns that may result in program
instability. We have included recommendations for potential processes for attestation
and documentation in sections below.

2021-2022 DRAFT Guide
2021-2022 Suggested
Rationale for Suggested Change
Language
Guide Language
Section I. Medicaid Managed Care Rates; General Information
Rate certifications must be
done on a 12-month rating
period.

a letter from the certifying
actuary, who meets the
requirements for an actuary in
42 CFR §438.2, who certifies
that the final capitation rates
meet the standards in 42 CFR
§438.3(c), 438.3(e), 438.4,
438.5, 438.6, and 438.7.

Rate certifications must be
done for a 12-month rating
period. CMS will consider a
time period other than 12
months to address unusual
circumstances. For example,
CMS would approve a time
period other than 12 months
when the state is trying to
align program rating
periods, which may require
a rating period longer than
one year (but less than two
years).
Add subsection (i) to the
list:
(i) include a statement that
the 1.5% range is centered
on the original capitation
rates approved by CMS for
that rating year.

Historically, CMS has allowed states
flexibility in the length of the rating
periods. These flexibilities have been
used effectively by states to align
contract years and RFP
implementations.
CMS should retain or clarify that
alternative time periods for rating
certification periods are available to
support program alignment and
implementation.
It is important to clarify the point at
which updated capitation rates require a
revised rate certification.
For example, if original capitation rates
for a given region/rate cell are $100
PMPM and are adjusted to $98.6
PMPM, that reduction is 1.4%, and
therefore would not require a revised
rate certification. If another subsequent

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adjustment is made and the resulting
capitation rate is $98 PMPM, relative to
the original rate, it is a 2% reduction;
relative to the first revised rate it is a
0.6% reduction. If a clarification is
made that the range is centered on the
original capitation rates, the second
revision in the example above would
require a revised rate certification.
However, if the center point is reset
each time the capitation rate changes,
rates can continuously be adjusted well
past 1.5% of the original rates and
never require a revised rate
certification.

I.1.A.iii.(a)
General
Information –
Rate
Development
Standards

I.1.A.iii.(c)(vi)
General
Information –
Rate
Development
Standards

a letter from the certifying
actuary, who meets the
requirements for an actuary in
42 CFR §438.2, who certifies
that the final capitation rates
meet the standards in 42 CFR
§438.3(c), 438.3(e), 438.4,
438.5, 438.6, and 438.7.

Add subsection (ii) to the
list:

If the actuary is certifying
rates (not rate ranges) and the
state and its actuary determine
that a retroactive adjustment
to the capitation rates is
necessary, these retroactive
adjustments must be certified
by an actuary in a revised rate
certification and submitted as
a contract amendment in
accordance with 42 CFR
§438.7(c)(2). The revised rate
certification must: … (A) (B)

Add (E) to the list:

…

(ii) include a statement that
the actuary certifies the
original rates plus any
changes within 1.5% as
actuarially sound.

(E) demonstrate how the
retroactive adjustment still
maintains the projected
(prospective) nature of
capitation rate setting and
allows MCOs to maintain
efficiencies already
achieved (e.g., updating the
rates in alignment with
ASOP 49 section 3.2.18,
such as retroactively
adjusting rates to correct
specific assumption(s)).

This scenario is extremely concerning
and can put a state Medicaid program’s
health and stability at risk.
This will support that any changes to
the original capitation rates within 1.5%
still result in an actuarial sound
capitation rates.
This is important since changes to
capitation rates within 1.5% do not
require a revised rate certification, so
assurances on the front end that
changes up to 1.5% will still result in
actuarially sound rates is vital.
It is important to maintain flexibility
that allows retroactive rate adjustments
when a specific assumption (or a few
specific assumptions) are materially
incorrect.
However, making a retroactive rate
adjustment should not remove the
prospective nature of capitation rate
setting. Removing the prospective
nature of capitation rate setting is
effectively a program wide risk-sharing
mechanism, which 42 CFR 438.6(b)(1)
states cannot be changed retroactively.
Doing so can harm the health and
stability of the program and ultimately
the beneficiaries.

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Additionally, efficiencies will
ultimately be captured in the capitation
rates as that data is used as base data in
subsequent rate development.
I.1.A.iv.
General
Information –
Rate
Development
Standards

I.1.A.vii.
General
Information –
Rate
Development
Standards

Any differences in the
assumptions, methodologies,
or factors used to develop
capitation rates for covered
populations must be based on
valid rate development
standards that represent actual
cost differences in providing
covered services to the
covered populations. Any
differences in the
assumptions, methodologies,
or factors used to develop
capitation rates must not vary
with the rate of Federal
financial participation (FFP)
associated with the covered
populations in a manner that
increases Federal costs. The
determination that differences
in the assumptions,
methodologies, or factors used
to develop capitation rates for
MCOs, PIHPs, and PAHPs
increase Federal costs and
vary with the rate of FFP
associated with the covered
populations must be evaluated
for the entire managed care
program and include all
managed care contracts for all
covered populations.
… Capitation rates must be
developed in such a way that
the MCO, PIHP, or PAHP
would reasonably achieve a
medical loss ratio, as
calculated under 42 C.F.R. §
438.8, of at least 85 percent
for the rate year. The
capitation rates may be
developed in such a way that

N/A

This section includes a requirement to
evaluate for differences for the entire
managed care program and include all
managed care contracts for all covered
populations to ensure cap rates must not
vary with the rate of FFP.
We would like to take this opportunity
to note that there are verifiably different
rating factors at play among
populations – particularly in the case of
expansion populations. State contract
requirements pertaining to the
population (e.g., jail transitions,
housing supports, employment support)
in addition to churn, relatively newness
to Medicaid, and managed care and
pent-up demand, all result in variables
that may factor into distinct rate cell
differences.

Add the following sentence
after this sentence:

The inclusion of an expected pre-tax net
income will allow CMS and the health
plans to review this assumption, in
The actuary should include a conjunction with other assumptions, to
determine if capitation rates are
projection of the estimated
adequate for reasonable, appropriate,
pre-tax net income for the
and attainable non-benefit costs.
capitation rate year to
support the capitation rates
are adequate for reasonable,

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I.1.A.xiii.
General
Information –
Rate
Development
Standards

the MCO, PIHP, or PAHP
would reasonably achieve a
medical loss ratio standard
greater than 85 percent, as
calculated under 42 C.F.R. §
438.8, as long as the
capitation rates are adequate
for reasonable, appropriate,
and attainable non-benefit
costs.
Procedures for rate
certifications for rate and
contract amendments, include:
… (a) – (f) …

appropriate, and attainable
non-benefit costs.

Add (g) to the list:
Any rate certification and
supporting documentation
provided to CMS on the
capitation rate development
must be provided by the
state to each MCO, PIHP or
PAHP within 5 federal
business days of submission
to CMS.

The level of detail for the information
shared from states and their actuaries to
MCOs can vary greatly from state to
state. MCOs receiving the same level of
information and detail that CMS
receives will support transparency in
the rate development process and
provide the opportunity for more
meaningful discussions around actuarial
soundness concerns.
Additionally, this level of information
provided is more robust than what
would be posted to the website if the
state and their actuaries chose to certify
a rate range.
Per ASOP 41, since the MCOs are
“intended users” of the rates, MCOs
should receive the same Actuarial
Report that CMS receives.

I.1.B.ii.
General
Information –
Appropriate
Documentation

States and their actuaries must
document all the elements
described within their rate
certification to provide
adequate detail such that CMS
is able to determine whether
or not the regulatory standards
are met. In evaluating the rate
certification, CMS will look to
the reasonableness of the
information contained in the
rate certification for the
purposes of rate development
and may require additional
information or documentation
as necessary to review and
approve the rates. States and
their actuaries must ensure

Add (d) to the list:
(d) A summary outlining
what information was
shared with MCOs,
indicating if it was the same
information shared with
CMS. If not, exhibits and
rate narratives provided to
the MCOs that were used to
communicate the
development and results of
the capitation rates, should
be provided to CMS.

Documentation allows CMS to see
what information is provided to MCOs
(and to determine if any information
differs).

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I.1.B.xi –
NEW

that the following elements
are properly documented: …
(a) – (c) …
N/A

General
Information –
Appropriate
Documentation

xi. Within 14 federal
business days following a
state submission to MCOs,
PIHPs or PAHPs the rate
certification and
documentation of the
capitation rate development,
the MCOs, PIHPs, PAHPs
or the Health Plan
Association may submit
page limited feedback
regarding top actuarial
soundness concerns of the
capitation rates directly to
the state and that
information will forward to
CMS by the state via email
inbox. Feedback should
include contact information
for the MCO, PIHP, PAHP
or Health Plan Association
for follow-up questions as
needed.

This supports transparency in the rate
development process. Even if the
recommendation for adding in section
I.1.A.xiii. is taken, this provides the
MCOs/Association an opportunity to
share any concerns with actuarial
soundness to CMS and maintaining
state engagement in the process. This is
an important communication avenue
since certain actuarial soundness
concerns may come to light once final
capitation rates are received by the
MCOs. This can help CMS identify
areas of interest that may require
additional review prior to their final
approval of determining if rates are
actuarially sound and can be used to
cross check against the information sent
by the state.

Section I. Medicaid Managed Care Rates; Data
I.2.A.i.(b)
Data – Rate
Development
Standards

(b) states and their actuaries
must use the most appropriate
base data, from the three
most recent and complete
years prior to the rating
period, for developing
capitation rates.

Replace (b) with the
following:
(b) states and their actuaries
must use the most
appropriate base data, from
the three most recent and
complete years prior to the
rating period, for developing
rates. Due to the impacts of
the COVID-19 Public
Health Emergency (PHE)
on service patterns and
utilization, states and their
actuaries may continue to
use pre-PHE data as base
data, even if it is not in the
three most recent and
complete years prior to the
rating period. If states and

Given the disruption the COVID-19
PHE caused in the healthcare system, it
is important to provide flexibilities
when selecting appropriate base data.
To the extent the most appropriate base
data is from a pre-PHE time period and
it is more than three years from the
rating period, flexibilities should exist
to allow the selection that base data
given the unprecedented nature of the
COVID-19 PHE.
If base data that is impacted by the
COVID-19 PHE is selected, it is
important for the states and their
actuaries to provide rationale for why
the time period was selected and the
methodology/assumptions used to
adjust the data as COVID-19 PHE
impacts may not be fully known.

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I.2.B.ii.(a).(ii)
Data –
Appropriate
Documentation

ii. The rate certification, as
supported by the assurances
from the state, must
thoroughly describe the data
used to develop the capitation
rates, including:
(a) a description of the data,
including:…(i) – (iv)
(ii) the age or time periods of
all data used.

their actuaries use data
impacted by the COVID-19
PHE to develop base
experience, the rationale for
why this period was chosen
and the assumptions,
methodologies and impacts
of the adjustments made to
the base data must be
included in the rate
certification.
Replace (ii) with the
following:

Describing what the data was used for
and how it was used will increase
transparency in the rate development
process. For example, if the entirety of
actual program experience in a rating
year was used to retroactively overwrite
the previously prospectively developed
capitation rates, it is important for that
to be clearly communicated in the rate
certification documentation.

(ii) the age or time periods
of all the data used and a
description of what the data
was used for (e.g., create a
programmatic adjustment
factor) and how it was used
(e.g., applied to projected
benefit costs after
application of trend).
Section I. Medicaid Managed Care Rates; Special Contract Provisions Related to Payment

I.4.B.i.
Special
Contract
Provisions
Related to
Payment –
Withhold
Arrangements

Rate Development Standards
… (a) – (b) …

Add (c) to the list as
follows:
(c) if withhold measures
change materially after the
submission of the rate
certification or if the
measures remain undefined
at the time the rate
certification is submitted,
the state and their actuaries
must disclose this fact and
redetermine if the withhold
measures remain reasonably
achievable once defined and
finalized.

Understanding the withhold measures
and their thresholds for payment on a
prospective basis is vital for MCOs. It
provides the opportunity for planning to
have success achieving the withhold
measures.
It is not uncommon for withhold
measures to be updated materially after
the start of the rating period or that they
remain undefined at the start of the
rating period. Without the opportunity
to plan for the withhold measures,
achievability must be redetermined to
ensure the capitation rates remain
actuarially sound.
We believe more stringent requirements
on the state Medicaid programs
regarding including quality withhold
arrangements that are built into rates
would address the lack of structure in
some states related to the quality
withhold portion of the rate

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development. The CMS 2020-2021
Medicaid Managed Care Rate
Development Guide, the 2021-2022
Medicaid Managed Care Rate
Development Guide, 42 CFR 438.6,
and ASOP 49 all address the
importance of the quality withhold
adjustment. . For example, in some
states, we are not aware of the
parameters until well into the year
creating challenges for being able to
earn back the withheld dollars.
Accordingly, in our review of withhold
applications in practice, we have
identified a number of areas where the
current regulatory text language allows
for improvement. Specifically, we have
the following suggested additions to the
current requirements:
1) The quality withhold can be a
material portion of the revenue at
risk for the plans, especially when
compared to the level of
underwriting gain included in the
capitation rates. The assumption on
achievability is a critical
component of rate setting.
Therefore, the criteria for earning
back the entire withhold should be
clearly defined in the rate
certification.
2) The health plans require time to
prepare and implement strategies to
meet the quality criteria and earn
the withheld amount. The criteria
for earning back the entire
withhold should be made known to
the health plans prior to the
evaluation period.
3) We have observed instances where
the quality withhold criteria is
adjusted throughout the rating
period. These adjustments impact
the achievability of earning the
withhold. The certifying actuary
should clearly indicate what
percent of the withhold is
considered reasonably achievable

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in the development of the rates,
and
4) The certifying actuary must
indicate what percent of
achievability would result in the
rates becoming unsound.
I.4.B.ii.(a)
Special
Contract
Provisions
Related to
Payment –
Withhold
Arrangements
I.4.C.ii.(a).(iv)
Special
Contract
Provisions
Related to
Payment –
Risk-Sharing
Mechanisms

I.4.C.ii.(a)
Special
Contract
Provisions
Related to
Payment –

the rate certification must
include a description of the
withhold arrangement. An
adequate description includes
at least the following: … (i) –
(vii) …

Add (viii) to the list as
follows:

(iv) documentation
demonstrating that the risksharing mechanism has been
developed in accordance with
generally accepted actuarial
principles and practices.

Replace (iv) with the
following:

the rate certification and
supporting documentation
must include a description of
any other risk-sharing
arrangements.,. An adequate
description of these includes

(viii) the rationale for why
the measures/metrics were
chosen and why/how the
thresholds for payment were
chosen.

(iv) documentation
demonstrating that the risksharing mechanism has been
developed in accordance
with generally accepted
actuarial principles and
practices, including but not
limited to, development of
the funding pool, rationale
for the center point of the
arrangement, the width of
risk-sharing bands, if they
are symmetric and the
percent of risk shared at
each band.

Add (v) to the list:
(v) the methodology used to
calculate the risk-sharing
arrangement result

The level of detail provided by states
and their actuaries on withhold
arrangements varies significantly.
Providing rationale for the
measures/metrics chosen and why/how
the thresholds for payment will assist
CMS in understanding the intent/goal
of the withhold arrangement and
increase transparency in the rate
development process.
It is not always clear that risk-sharing
mechanisms are developed in
accordance with generally accepted
actuarial principles and practices.
Providing examples of what should be
included in the documentation will set
more clear expectations of what should
be considered and described when
demonstrating that risk-sharing
mechanisms are developed in
accordance with generally accepted
actuarial principles and practices.
We also believe that there are
opportunities for the development of
parameters to better inform the use of
risk sharing mechanisms by state
Medicaid managed care programs and
to ensure that these tools are used
appropriately; we would invite future
discussions with the agency for this
purpose.
This will align the documentation
required to support the risk-sharing
arrangement with the documentation
required to support minimum MLR
arrangements with remittances.

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Risk-Sharing
Mechanisms

at least the following: … (i) –
(iv) …

I.4.C.ii.(a)

the rate certification and
supporting documentation
must include a description of
any other risk-sharing
arrangements. An adequate
description of these includes
at least the following: … (i) –
(iv) …

Add (vi) to the list:

the rate certification and
supporting documentation
must include a description of
any other risk-sharing
arrangements. An adequate
description of these includes
at least the following: … (i) –
(iv) …

Add (vii) to the list:

Special
Contract
Provisions
Related to
Payment –
Risk-Sharing
Mechanisms
I.4.C.ii.(a)
Special
Contract
Provisions
Related to
Payment –
Risk-Sharing
Mechanisms

(vi) the formula for
calculating a
remittance/payment for
having a risk-sharing result
below/above the
predetermined thresholds.

(vii) any other consequences
for a remittance/payment for
a risk-sharing result
below/above the
predetermined thresholds.

This will align the documentation
required to support the risk-sharing
arrangement with the documentation
required to support minimum MLR
arrangements with remittances.
It will also provide clarity to CMS how
the calculation of the risk-sharing
mechanism works.
This will align the documentation
required to support the risk-sharing
arrangement with the documentation
required to support minimum MLR
arrangements with remittances.

Section I. Medicaid Managed Care Rates; Projected Non-Benefit Costs
I.5.B.i
Projected NonBenefit Costs –
Appropriate
Documentation

The rate certification and
supporting documentation
must describe the
development of the projected
non-benefit costs included in
the capitation rates in enough
detail so CMS or an actuary
applying generally accepted
actuarial principles and
practices can identify each
type of non-benefit expense
that is included in the rate and
evaluate the reasonableness of
the cost assumptions
underlying each expense in
accordance with 42 CFR
§438.7(b)(3). To meet this
standard, the documentation
must include: … (a) – (c) …

Add (d) to the list:
(d) A description of the
statistically-based model
and assumptions used to
develop the Underwriting
Gain assumption; including
the two major components
of cost of capital and risk
margin.

Medicaid managed care is unique from
other health insurance in that the entity
setting the capitation rates is not usually
the entity bearing the risk of mispricing.
Since the rate-setting actuaries do not
bear the financial risk of mispricing,
they do not have the same economic
incentive to include margins for
deviation as does a pricing actuary
working in other lines of health
insurance. Since Medicaid MCOs rely
on the state’s actuary to develop
capitation rates at levels that adequately
fund the program, even in years of
adverse deviation, explicit inclusion of
an adequate risk margin in the
capitation rates is especially important.
Another unique aspect of Medicaid
capitation rate setting is that the state
actuary often develops rates for the
program overall, rather than for each
specific MCO, using the combined
experience of all MCOs in the program.

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This further increases the risk that the
rates for any one MCO within the
program may not be adequate. Not only
will actual results vary from expected
results for the entire Medicaid program,
but results will vary by each individual
MCO. Some of the variation is due to
factors that generally exist across all
types of health insurance and are
outside the MCOs’ control, such as
anti-selection or the inability of riskadjustment mechanisms to fully capture
membership risk, which further
supports the need to include risk
margin.
I.5.B.i
Projected NonBenefit Costs –
Appropriate
Documentation

I.5.B.ii
Projected NonBenefit Costs –
Appropriate
Documentation

The rate certification and
supporting documentation
must describe the
development of the projected
non-benefit costs included in
the capitation rates in enough
detail so CMS or an actuary
applying generally accepted
actuarial principles and
practices can identify each
type of non-benefit expense
that is included in the rate and
evaluate the reasonableness of
the cost assumptions
underlying each expense in
accordance with 42 CFR
§438.7(b)(3). To meet this
standard, the documentation
must include: … (a) – (c) …
States and actuaries should
estimate the non-benefit costs
for each of the following
categories of costs:
(a) Administrative
costs.
(b) Taxes, licensing
and regulatory fees,
and other assessments
and fees
(c) Contribution to
reserves, risk margin,
and cost of capital

Add (e) to the list:
(e) a disclosure of the
portion of the administrative
expenses related to activities
that improve healthcare
quality and the portion of
the administrative expenses
not related to activities that
improve healthcare quality.

Replace (c) with the
following:
(c) Underwriting gain
assumptions, including cost
of capital, contributions to
reserves, and risk margin
including the impact of
contractual requirements
such as minimum MLRs,
performance withholds and
incentives that impact the
underwriting gain.

This will help illustrate how much of
each type of administrative expense is
loaded into the capitation rates, which
can be used to ensure a reasonable load
is added for each component.

Medicaid programs have changed such
that there are now common limitations
in Medicaid contracts (e.g., risk sharing
and withholds) which cause the amount
of underwriting gain in the rates to not
result in the MCO percentage of net
income. Therefore, a more precise
analysis is required to determine an
appropriate underwriting gain
assumption.

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(d) Other operational
costs associated with
the provision of
services identified in §
438.3(c)(1)(ii) to the
populations covered
under the contract.
Section II. Medicaid Managed Care Rates with Long-Term Services and Supports
II.1.C.i.(c)
Managed
Long-Term
Services and
Supports –
Appropriate
Documentation

(c) any other payment
structures, incentives, or
disincentives used to pay the
MCOs, PIHPs or PAHPs (for
example, states may provide
additional payments to
managed care plan(s) that
transition beneficiaries from
institutional long-term care
settings into other settings, or
may pay adjusted rates during
time periods of setting
transitions).

Replace (c) with the
following:
(c) any other payment
structures, incentives, or
disincentives used to pay the
MCOs, PIHPs or PAHPs
(for example, states may
provide additional payments
to plans that transition
beneficiaries from
institutional long-term care
settings into other settings,
or may pay adjusted rates
during time periods of
setting transitions). This
must include comments on
how these payment
structures were developed
and their achievability (e.g.,
if using a blended rate with
a HCBS transition
assumption, how was the
transition assumption
developed and how does it
align with historical
beneficiary placement
trends and account for
market specific conditions).

It is not always clear how certain
payment structures are developed and if
their achievability was considered.
This becomes even more important as
the temporary FMAP increase is in
place for HCBS services. It is vital that
the states and their actuaries develop
reasonable and achievable assumptions
around these payment structures.

Appendix A
Appendix A,
Introduction

Under the accelerated rate
review process, for
certifications that meet
qualifying criteria , states
must submit the following:

Replace (2) with the
following:
(2) the full rate certification
and related supporting
documents, including MCO

Including the actuarial soundness
concerns that MCOs or Health Plan
Associations have will increase
transparency and provide CMS another
perspective if an accelerated rate review
is appropriate.

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Appendix A,
Criteria for a
Rate
Certification to
Qualify for
Accelerated
Rate Review
#6

(1) the Rate Development
Summary,
(2) the full rate certification
and related supporting
documents, and
(3) the executed managed care
plan contracts for the certified
rates.
6. No material issues have
been identified (by any party)
in rate setting for the prior
rating period. Material issues
are generally identified
through extensive questioning
or conference calls.
CMS retains discretion to
determine whether or not
material issues were identified
in rate setting for the prior
rating period; therefore, states
should give CMS prior notice
if they intend to participate in
the accelerated rate review.

or Health Plan Association
actuarial soundness
concerns, and

Replace 6 with the
following:
6. No material issues have
been identified (by any
party, including MCOs or
Health Plan Associations) in
rate setting for the prior
rating period. CMS retains
discretion to determine
whether or not there were
material issues that were
identified in rate setting
during the prior rating
period, and therefore states
should give CMS and
MCOs or Health Plan
Associations prior notice if
their intention is to
participate in the accelerated
rate review. Material issues
are generally discussed
through extensive
questioning or conference
calls.

Ensuring that MCOs are included in the
definition of “any party” will clarify
which entities can identify material
issues and help CMS truly understand
what are the material issues.
This highlights the importance for an
avenue for MCOs or the Associations
to submit top actuarial soundness
concerns in writing to CMS shortly
after the rate certification
documentation is submitted for CMS
review.

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