Challenges in Medicaid Managed Care Rate Setting and Possible Plan Withdrawals Following the 2025 Reconciliation Law Implementation

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More than three-quarters of Medicaid beneficiaries are enrolled in managed care organizations, which represent half of total Medicaid spending in FY 2024.
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The implementation of the 2025 reconciliation law is expected to introduce challenges in Medicaid managed care rate setting due to changes in financing and eligibility.
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Elevance Health announced its exit from DC's Medicaid market and anticipated withdrawing from additional markets, impacting a significant portion of national MCO enrollment.
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The average medical loss ratio for Medicaid managed care rose from 88% in 2023 to 91% in 2024, indicating potentially lower profitability for MCOs.
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Elevance Health operates MCOs across 21 states, with Medicaid beneficiaries making up approximately 20% of the company's total medical membership.

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