What Does the Medicaid Final Rule Mean for Pharmacy?

Jul 14, 2016
At Express Scripts, we are committed to keeping our clients compliant and helping to shape how we can continue to refine and reform the Medicaid program to help gain efficiencies and save taxpayer dollars.
  • Medicaid

Kyle Shayna Article

In May 2016, the Centers for Medicare & Medicaid Services (CMS) finalized changes to its Medicaid and Children’s Health Insurance Program (CHIP) Managed Care Rule – delivering the first comprehensive piece of legislation to address changes in the Medicaid Managed Care market place in more than 12 years. While changes from the Rule do not take effect until July 1, 2017, Medicaid plans begin focusing on changes they need to implement as their contracts are amended to remain compliant with federal regulations.

At 1,425 pages, the final Rule was comprehensive and sought to accomplish a number of goals including:

  • Align, where feasible, regulations governing Medicaid managed care with those of other types of federally regulated coverage, including Qualified Health Plans (QHPs) and Medicare Advantage plans (MA)
  • Implement statutory provisions, including provisions of the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA)
  • Strengthen actuarial soundness payment provisions to promote the accountability of Medicaid managed care program rates
  • Promote quality of care and strengthening efforts to reform delivery systems that serve Medicaid and CHIP beneficiaries
  • Ensure appropriate beneficiary protections
  • Enhance policies related to program integrity


Some of the changes with the most impact for the administration of Medicaid pharmacy benefits via managed care include:

  • Modification of member notices regarding Notices of Action
  • Enrollment of all Managed Care Organization (MCO) providers with the State Medicaid program (State)
  • Supervision and monitoring of the adequacy of Medicaid health plan provider networks
  • Establishment of a quality rating system for MCOs
  • Enforcement of a 24-hour turnaround times for decisions on Prior Authorization (PA) requests

What the changes mean for health plans

Generally, the changes made as a result of the Rule will align different government-funded programs and hopefully help ease transitions between coverage for members that may move between QHPs, Medicaid, and Medicare Advantage Plans. Other changes, such as the language modification from Notice of Action to Notice of Adverse Benefit Determinations and the requirement to enroll all MCO network providers in the State Fee-For-Service (FFS) program will present additional operational cost to Medicaid health plans and State Medicaid programs.

Additionally, some previous requirements clarified as part of the Rule, such as the expectations for Prior Authorization decisions, will add additional complexity to health plan operations and require health plans to look for ways to streamline the review process, or, simplify the administrative requirements for providers. Finally, CMS again reinforced the need for accurate and timely data, signaling a desire to provide additional guidance with regard to encounter file submissions.  This will hopefully include clarification and guidance on consistent file formats and data collection methodologies, which would save significant time and operational expense for Medicaid health plans.

How Express Scripts helps our Medicaid health plans

At Express Scripts, we are committed to keeping our clients compliant and helping to shape how we can continue to refine and reform the Medicaid program to help gain efficiencies and save taxpayer dollars.  We recognize that some of the requirements outlined in the final Rule, like the Medicaid Quality Rating System, still need additional guidance to clarify expectations and set forth guidelines for future improvements. We look forward to being an active stakeholder in those discussions and hope you will join us.

Author Bio

Lab Staff
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