Review of Wisconsin Medicaid Managed Care Program Potential Savings With Minimum Medical Loss Ratio

We determined that the Wisconsin Medicaid program could have saved $16.2 million (approximately $9.6 million Federal share) in 2014 if Wisconsin (1) required its Medicaid managed care plans to meet the minimum medical loss ratio (MLR) standard similar to the Federal standards for certain private insurers and Medicare Advantage plans and (2) required remittances when Medicaid managed care plans did not meet the MLR standard. Specifically, of the 11 managed care plans that we reviewed, we calculated MLRs for 4 plans that were less than 85 percent (the minimum MLR standard for large private insurers) during calendar year 2014.

After our review but before the issuance of our report, the Centers for Medicare & Medicaid Services (CMS) published a final rule requiring Medicaid managed care organizations (MCOs) to achieve a minimum MLR for rate-setting purposes.

We recommended that Wisconsin (1) incorporate into its contracts with Medicaid MCOs the MLR standards adopted in the CMS final rule and (2) consider implementing into its Medicaid MCO contracts a remittance requirement if appropriate. Wisconsin agreed with our recommendations and described actions that it has already taken and plans to take to address our recommendations.