Federal law requires states to provide Medicaid health plans with prepaid payments that are actuarially sound, yet states use a variety of rate-setting methods that are often influenced by state budgetary factors. While the Secretary of HHS, through CMS, is required to certify that state rates are actuarially sound, enforcement of this requirement through the CMS regional offices has been inconsistent. Congress can ensure the federal-state partnership remains strong through enforcement of actuarially sound payment rates.
MHPA Fact Sheet on Actuarial Soundess and the Health Insurer Fee
The Affordable Care Act levies an annual fee on health insurers of $8 billion starting in 2014, which increases over time. The fee applies to all health insurance risk revenue, including Medicaid and CHIP business. The cost of the annual insurer fee will be passed along to states and the federal government, raising costs in the program.
Download MHPA's Fact Sheet on Actuarial Soundess and the Health Insurer Fee.
GAO Report on Actuarial Soundness Released
August 4, 2010: The Government Accountability Office released a report on CMS's oversight of states' compliance with actuarial soundness requirements in Medicaid managed care rate-setting. Click hereto read the report on GAO's website. Click here to read MHPA's Press Statement.
Rate Setting and Actuarial Soundness in Medicaid Managed Care
January 2006: This study surveyed state Medicaid program to determine how states are implementing actuarial soundness requirements, in order to identify both best practices and continuing areas of concern. Click here to read the study.