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Statement of Need: The BBA significantly modifies Medicaid managed care programs by providing a new state plan amendment vehicle for States to furnish managed health care to beneficiaries, enhanced enrollee protections; and an emphasis on the quality of health care delivered to Medicaid enrollees.

Summary of the Legal Basis: Section 1903(m) of the Social Security Act and implementing regulations at 42 CFR part 434 contain a number of requirements related to Medicaid managed care contracts. Among other things, the requirements relate to contract provisions involving enrollment and disenrollment in a Medicaid managed care organization (MCO), marketing, choice of health professionals within an MCO, quality assurance systems, grievance procedures, and plan solvency. Statutory amendments made by sections 4701 through 4710 of the BBA modify those requirements. ^PTo control cost while enhancing quality of care, States are increasingly delivering services to their Medicaid populations through Medicaid managed care organizations (MCOs) and other managed care arrangements. These arrangements vary according to the comprehensiveness of the services they provide and the degree to which they accept risk. Fully capitated plans contract on a risk basis to provide beneficiaries with a comprehensive set of covered services in return for a monthly capitation payment. In general, partially capitated plans provide a less than comprehensive set of services on a risk basis; services not included in the contract are reimbursed on a fee-for-service basis. In addition, some States implement a primary care case management (PCCM) system in which a Medicaid beneficiary selects or is assigned to a single primary care provider that provides or arranges for all covered services and is reimbursed on a fee-for-service basis. Under each of these managed care arrangements, beneficiaries have a regular source of coordinated care and States have predictable, controlled spending per beneficiary. ^PThe BBA creates a new section of the Social Security Act relating to managed care arrangements. The new section 1932 establishes increased enrollee protections, quality assessment and performance improvement strategies for States, and enrollee rights and responsibilities.

Alternatives: If this rule is not published, we would not implement many of the provisions in the Balanced Budget Act of 1997 related to Medicaid managed care.

Anticipated Costs and Benefits: Estimates of the economic impact (if any) that will stem from these rules have not yet been completed.

Risks: This rule will potentially improve the quality of health care provided to Medicaid managed care enrollees and provide States with new tools to become more effective purchasers of health care services. Failure to publish this rule would jeopardize broad-based improvement in the quality of care our beneficiaries receive and would deprive States of many tools that would improve their managed care programs.