Funder: West Health Policy Center
August 2016 | Technical Assistance Brief
States with Medicaid managed long-term services and supports (MLTSS) programs must set actuarially sound capitation rates that do not over- or under-pay health plans for the costs of the services they provide. This brief, supported through the West Health Policy Center, explores challenges in rate setting for MLTSS programs, including: predicting the portion of community-dwelling enrollees versus enrollees residing in institutional settings, developing accurate managed care savings assumptions, and anticipating enrollees’ unmet needs for long-term services and supports (LTSS). The brief also examines state approaches to mitigate risk, including risk adjustment, risk sharing, risk pools and reinsurance, to more equitably re-distribute or adjust for risk that is not otherwise accounted for in the base MLTSS rate-setting methodology. These approaches can help to better protect states and managed care plans from adverse risk and uncertainty and support managed care plans’ ability to provide high-quality LTSS in the most cost-effective care setting.