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Medicaid Managed Care Final Rule


On April 25, 2016, the Centers for Medicare & Medicaid Services (CMS) issued the Medicaid and CHIP Managed Care Final Rule (Final Rule), which aligns the Medicaid managed care program with other health insurance coverage programs in several key areas:
  • Modernizes how states purchase managed care for beneficiaries;
  • Adds key consumer protections to improve the quality of care and beneficiary experience; and
  • Improves state accountability and transparency.


The Final Rule was the first significant overhaul of the federal Medicaid managed care regulations since 2002, which was a response to the predominant shift to managed care delivery system occurring nationwide. The Final Rule is effective July 5, 2016 with a phased implementation over several years, starting with the July 1, 2017 health plan contract year.
The Final Rule regulations are applicable to the Medi-Cal Managed Care Plans, County Mental Health Plans, Drug Medi-Cal Organized Delivery System, and Dental Managed Care Plans.
This webpage contains posting requirements for the Network Adequacy and Mental Health Parity components of the Final Rule. For additional posting requirements specified in the Final Rule, please visit the Customer Service Portal.

Network Adequacy

In order to strengthen access to services in a managed care network, the Final Rule requires states to establish network adequacy standards in Medicaid managed care for key types of providers, while leaving states the flexibility to set the actual standards. The Final Rule requires that states:
  • Develop and implement time and distance standards for primary and specialty care (adult and pediatric), behavioral health (adult and pediatric), OB/GYN, pediatric dental, hospital, and pharmacy providers;
  • Develop and implement timely access standards for long-term services and supports (LTSS) providers who travel to the beneficiary to provide services; and
  • Assess and certify the adequacy of a managed care plan’s provider network at least annually.


The Final Rule network adequacy requirements are effective in the July 1, 2018 health plan contract year.

Network Adequacy Proposal

On February 2, 2017, DHCS sought public comment on the proposed network adequacy standards. The proposal outlines the approach that DHCS has undertaken to develop the standards and describes monitoring activities for ongoing compliance. On July 19, 2017, DHCS finalized the network adequacy standards in consideration of the stakeholder feedback received.

Mental Health Parity

On March 29, 2016, the Centers for Medicare & Medicaid Services (CMS) issued the Medicaid Mental Health Parity Final Rule (Parity Rule) to strengthen access to mental health and substance use disorder services for Medicaid beneficiaries. The Parity Rule was intended to create consistency between the commercial and Medicaid markets. Specifically, the Medicaid Parity Rule includes the following compliance requirements:
  • Aggregate lifetime and annual dollar limits
  • Financial requirements (FR) such as copayments, coinsurance, deductibles, and out-of-pocket maximums
  • Quantitative treatment limitations (QTLs), which are limits on the scope or duration of benefits that are represented numerically, such as day limits or visit limits
  • Non-quantitative treatment limitations (NQTLs), which are limits on the scope or duration of benefits in processes, strategies, and evidentiary standards, or other factors, such as medical management standards or provider network admission standards
  • Availability of information


A key objective of the Medicaid Parity Rule is to ensure that restrictions or limits are not more substantively applied on mental health and substance use disorder services as compared to medical surgical services. Parity compliance requires that the analysis of imposed restrictions and limitations is conducted in the four benefit categories: inpatient, outpatient, prescription drugs, and emergency services. Further, the Medicaid Parity Rule requires that parity is applied across delivery systems and includes long-term care services and supports.

Compliance Plan

DHCS submitted the State Compliance Plan to CMS to demonstrate compliance with the Parity Rule by the implementation deadline of October 2, 2017.

Resources & Information

Additional CMS Resources

Last modified on: 1/17/2018 8:26 AM