Clinical Scorecard: Challenges in Medicaid Managed Care Rate Setting and Possible Plan Withdrawals Following the 2025 Reconciliation Law Implementation
At a Glance
Category
Detail
Condition
Medicaid Managed Care Rate Setting
Key Mechanisms
Capitation payments, risk sharing arrangements, medical loss ratios (MLR), and incentive arrangements.
Target Population
Medicaid beneficiaries enrolled in comprehensive managed care organizations (MCOs).
Care Setting
Medicaid managed care delivery system.
Key Highlights
Over three-quarters of Medicaid beneficiaries are enrolled in MCOs, representing half of total Medicaid spending in FY 2024.
Anticipated challenges in rate setting due to changes from the 2025 federal budget reconciliation law.
Elevance Health announced exits from the DC Medicaid market and anticipated further withdrawals.
Average medical loss ratio for Medicaid managed care rose from 88% in 2023 to 91% in 2024.
Five publicly traded companies control nearly half of the Medicaid MCO market.
Guideline-Based Recommendations
Diagnosis
Management
States can employ risk mitigation mechanisms such as risk sharing arrangements and medical loss ratios.
Monitoring & Follow-up
States are expected to monitor member enrollment and acuity changes due to federal policy adjustments.
Risks
Potential exits of MCOs could impact enrollment and provider participation.
Patient & Prescribing Data
Medicaid beneficiaries across multiple states.
Elevance Health's Medicaid portfolio is under review, with potential exits from markets not supporting sustainable performance.
Clinical Best Practices
Regularly assess the impact of federal policy changes on managed care rate setting.
Utilize actuarially sound capitation payments to ensure financial stability.
