Beyond Compliance: State Leadership Under the Medicaid Managed Care Final Rule

The Centers for Medicare & Medicaid Services’ (CMS) 2024 Managed Care Final Rule (MCFR) represents a consequential shift in Medicaid oversight. With three-quarters of Medicaid enrollees in comprehensive managed care, the MCFR strengthens expectations for what it means to deliver high-quality care through Medicaid managed care. To provide additional detail on the MCFR’s scope and operational impact, Aurrera Health developed a roadmap that outlines the MCFR’s key provisions and implications for states.

While the MCFR raises the bar, it also raises a fundamental challenge: translating policy intent into practice amid budget shortfalls and competing priorities. Major changes to the Medicaid program driven by H.R. 1 and short-term funding from the Rural Health Transformation Program are placing demands on Medicaid agencies that already have a lot on their plates. For states and their partners, including External Quality Review Organization (EQROs), Medicaid managed care plans, providers, community-based organizations, and consumers, success will depend on how effectively these reforms are implemented. 

Despite the short-term challenges that compliance poses, the MCFR presents an opportunity for states to go beyond compliance and modernize how they use Medicaid managed care to deliver high-quality care and move from regulatory compliance toward coordinated implementation and collective accountability.

MCFR as an Opportunity to Increase Accountability and Improve Outcomes

At its core, the MCFR seeks to align oversight and patient outcomes – connecting access, payment, and performance in more transparent and measurable ways. The rule introduces new and strengthened expectations across three domains:  

1. Access and Network Adequacy

   The MCFR establishes new standardized, data-driven approaches to measure and monitor access to care. These include appointment wait time standards, annual enrollee experience surveys, secret shopper validation of provider directories, and enhanced access and monitoring requirements.

2. Payment Standards

   The rule builds greater transparency and fiscal integrity into rate setting and payment processes. Key provisions include annual managed care plan payment analyses, updated expectations for State Directed Payments, safeguards to ensure certain payments do not exceed average commercial rates, and strengthening Medical Loss Ratio reporting. 

3. Oversight and Accountability

   The MCFR modernizes performance monitoring to promote continuous improvement and public transparency. Examples include enhanced External Quality Review reporting, formalized definitions and oversight for In Lieu of Services, Medicaid and CHIP Quality Rating Systems, and a defined measure set for Home- and Community-Based Services.

Taken together, these changes signal a shift in the way states are expected to demonstrate how Medicaid managed care programs improve access and quality for members.

The Challenge of Implementation

For most states, operationalizing new MCFR requirements will be a challenge. Effective implementation will require: 

• Alignment across policy, operations, data, and IT teams to ensure requirements are reflected throughout contracts, monitoring processes, and reporting systems.

• Infrastructure modernization to link contracting, monitoring, and quality measurement.

• Detailed coordination with EQROs, managed care plans, stakeholders, and external evaluators to ensure consistency and efficiency.

• Meaningful stakeholder engagement to ensure implementation approaches are responsive to community needs and operationally feasible. 

Three Steps States Can Take to Ease Compliance in the Long-Term

1. Conduct a readiness assessment

   Identify where policies, contracts, data systems, and oversight processes need to align with MCFR requirements, and assess staff capacity and governance structures.

2. Plan for coordination, not just compliance

   Establish cross-team structures, like MCFR workgroups, that include policy, quality, data, and IT leads. Incorporate stakeholder engagement to inform implementation decisions and refine workflows.

3. Design for sustainability

   Develop tools, trainings, and processes that are intentionally designed to exist beyond the initial compliance deadlines.

Beyond Compliance

The MCFR provides an opportunity to move from regulatory compliance toward coordinated implementation and collective accountability. Our team has supported states and the federal government through similarly complex initiatives – including early stages of MCFR implementation, quality measure reporting, and large-scale stakeholder engagement – and we’ve learned that successful implementation depends on three factors:

1. Clarity: Turning regulatory language into actionable project plans and realistic workflows. 

2. Coordination: Aligning internal teams and external stakeholders around an implementation plan and shared goals. 

3. Communication: Making policy and other information understandable across audiences, and conducting structured engagement with stakeholders. 

The MCFR provides an opportunity for collaboration and capacity building across states, EQROs, managed care plans, providers, advocacy groups, and consumers to align evaluation and outcome goals. If you are interested in discussing how your organization can implement the MCFR, please reach out to Megan Thomas.

---

Authors

Alisa Chester [Director]

Nicole Markmann [Director]

Megan Thomas [Managing Principal]