States’ Moves to Claw Back Funds Raise Medicaid MCOs’ Ire

As state budgets continue to be squeezed by the COVID-19 pandemic and related economic downturn — and as health insurers report large profits due to low utilization of routine health care services — state officials are perhaps understandably eyeing Medicaid managed care organizations as sources of extra funding. But at least one health insurer isn’t happy about a tactic states are using, with CMS’s blessing, to claw back money from MCOs.

The issue in question is the use of risk corridors in MCO contracts, according to Kamran Hashim, vice president of policy and planning at Molina Healthcare, Inc. In a Sept. 16 virtual session during the America’s Health Insurance Plans (AHIP) National Conference on Medicare, Medicaid & Dual Eligibles, Hashim explained that risk corridors typically are used when there isn’t enough data to make an accurate estimate of future medical utilization or costs. To solve that, risk corridors limit an MCO’s medical expenditures to a certain range — so if actual costs come in below that, they return the difference to the state, and if the MCO’s costs are above the cap, the state absorbs the excess.

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