As of February 2018, Maryland’s Medicaid managed care program, HealthChoice, provides coverage to approximately 1.2 million people. Accessing coverage for a wide range of Medicaid services through the managed care delivery system of the HealthChoice program is mandatory for approximately 85 percent of Medicaid beneficiaries in the state. Capitation payments, representing the projected cost of providing care for the covered beneficiaries, represent the vehicle through which the risk of the Medicaid program is transferred from the state to the managed care organizations.

For The Hilltop Institute at the University of Maryland, Baltimore County, Manatt Health in partnership with Milliman, Inc., conducted a managed care rate setting study pursuant to a requirement in the 2017 Joint Chairman’s Report. The focus of this study is to help the state of Maryland identify processes and methodologies that can help the state achieve its broader goals of ensuring access to high-quality, cost-effective healthcare for the state’s most vulnerable populations.

In the report, Manatt assesses Maryland’s approach to rate setting for its Medicaid managed care program, with a focus on identifying recommendations for further promoting efficiency, transparency, accountability and cost-effectiveness in Medicaid rate setting. The report includes a summary of federal and state regulations governing the Maryland rate setting process; an overview of Maryland’s current approach to rate setting; a discussion of promising and innovative strategies from other states for producing a rate setting methodology that more efficiently promotes access to high-quality, cost-effective care; and a specific set of recommendations for Maryland decision makers to consider.

While some recommendations are Maryland-specific, others, such as approaches to paying for high-cost drugs, sustaining and strengthening the quality incentive program, and leveraging encounter data, may be applicable to other state Medicaid programs.

Click here to read the report.