Medicaid and Credentialing – Let’s Discuss

In 2014, a doctor published an essay, “The Toxicity of Medicaid” on KevinMD. In his essay, which was shared 2,000 times, the emergency-medicine physician posits that, while many low-income adults and children need Medicaid-covered health services, the federal-state insurance program is “hurting medicine—both primary care and emergency care.”

In other reports, providers lament Medicaid’s notoriously low reimbursement rates, which are substantially lower than commercial insurance rates, and 69% of Medicare’s rates. Medicaid’s payment cycles are also longer than those of other payers. 

Since the original 1965 Medicaid law, Medicaid and the Children’s Health Insurance Program (CHIP) have been burdened by bureaucracy, high costs, and sub-par health access and patient quality outcomes.    

To address these issues, as early as the 1980s, the Center for Medicare and Medicaid Services (CMS) began to transition away from a fee-for-service model to a value-based, managed care delivery system.

Today, the Kaiser Family Foundation reports that approximately 75 million Americans receive their care via Medicaid managed care plans. Nationwide, across 39 states, over two-thirds of Medicaid beneficiaries receive their care via comprehensive, risk-based managed care organizations (MCOs). 

Medicaid Managed Care: Who Are the Main Players? 

While individual states design, oversee and administer their own Medicaid programs, they do so within established federal requirements. State Medicaid agencies contract with managed care organizations (MCOs) for a set fee for each Medicaid beneficiary’s health services delivered via the MCO’s contracted provider network. On the MCO-provider end, capitated payments are fixed, pre-arranged monthly payments received by a physician, clinic or hospital per patient enrolled in a health plan, or per capita. The Medicaid-MCO risk-based contracts are based on local costs and usage rates, and the state-MCO contracts are reviewed and set annually.

Here’s an approximate analogy: Imagine that, instead of paying your daily or as-needed commuter costs, based on your predicted annual work travel, you pre-contracted with a local gas station or public-transportation provider for a set, per-year amount. There are, of course, some risk-based variables baked into that contracted amount.  

Medicaid Managed Care Plan Patients

Medicaid beneficiaries belong to three primary sub-groups:

  1. Low-income individuals and families;
  2. Individuals with disabilities;
  3. Elderly individuals, for whom Medicaid pays for non-Medicare-covered services.

Many Medicaid-covered adults are employed, but lack access to employer-sponsored health plans. Before the Affordable Care Act (ACA), many of these individuals and families went uninsured – with related and abysmal health outcomes and related Medicaid costs.    

Contracted Managed Care Organizations (MCOs)   

Medicaid’s 290 MCOs (in 39 managed care states) are a blend of private non-profit, private for-profit and government insurance plans. There are some publicly traded, for-profit “giants” who have MCOs in 10 or more states, including UnitedHealth Group, Centene, Anthem, Molina, Aetna and Wellcare.  

Check your state’s Medicaid agency for the list of MCOs in the state in which you practice.     

To safeguard patients’ access to care, (MCOs) are governed by the state’s network adequacy standards, based on enrollee travel time and distance. Recent (2020) updates to Medicaid regulations have given the states more latitude in determining these standards (see below).

Some MCOs automatically assign their members to primary care practices (PCPs) within the network, while other MCOs states mandate minimum reimbursement rates or offer financial incentives and more prompt provider payment cycles—all to recruit for–and retain–their providers.   

6 Medicaid Managed Care Updates that May Impact Providers

In November 2020, the Center for Medicare and Medicaid Services (CMS) updated or amended some of its 2016 policies (the Final Rule).  

Read all the 2020 CMS updates here.

1. Network Adequacy:

2016: A provider network was contracted as “adequate” based on patient or enrollee travel time and distance to the MCO network’s providers.

2020/2021: States can qualify networks as “adequate” via any quantitative standard.

2. Quality Oversight and Reporting:

2016: The states’ managed care quality rating system (QRS) had to yield information that was comparable to the CMS-developed QRS.

2020/2021: The State’s managed care QRS has to yield CMS-comparable data only to the extent feasible.

3. Capitation Rates:

2016:  States had to set a single rate per cell.

2020/2021: States can set capitation rate cell ranges (effective for contracts on or before July 1, 2021).  

4. Payments:

2016: States were allowed to adopt minimum or maximum fee schedules for plan payments to providers.  

2020/2021: CMS recognizes two minimum fee schedules for states directed payment arrangements from health plans to providers.

Also, effective July 1, 2021: Supplemental pass-through payments (“add-ons” to contracted rates) are permitted for up to three years for states that are transitioning populations or services from fee-for-service to managed care.  

5. Encounter data:

2016: Federal-to-state matching funds were based on states reporting patient-encounter data.

2020/2021: When plans submit encounter data, they must include allowed and paid amounts.

6. Provider Directories and Cultural Competency Reports:

2020/2021: In their network directories, health plans no longer have to identify those providers who have completed cultural competency training.  Also, the monthly-updated directories will now be updated (where possible) via electronic platforms, while print directories will be updated quarterly.


Among the reported 71% of providers who accept Medicaid, it’s too early to predict how exactly the 2020/2021 amendments will impact or improve how providers get recruited into, or retained by, their states’ Medicaid CMO networks. Ultimately, all changes to Medicaid will impact how providers can afford to care for or accept incoming low-income patients.

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