Managed Care and Rural Health: Medicaid and CHIP Managed Care Final Rule

In FY 2016, total Medicaid Expenditures — including the US Territories, administrative costs, and accounting adjustments — exceeded $574 billion. Meanwhile,  rural health outcomes are poor, and the health care utilization rate among rural residents is low compared with the nation’s urban residents.

Rural Health Care

Provider shortages, poor transportation infrastructure, socio-cultural dynamics, and inadequate broadband internet access are factors that diminish rural health care access. As a strategy to contain rising health care costs and improve rural health outcomes, states across the country are transitioning rural Medicaid beneficiaries from fee-for-service health care arrangements to Medicaid managed care.

Medicaid Managed Care

Managed care organizations (MCOs) have demonstrated an ability to provide Medicaid coverage that results in efficiency in the provision of government-sponsored health care and effectiveness in improving the health outcomes of rural residents through features such as telemedicine (if possible), allied health professionals, community health workers, and non-emergency medical transportation (NEMT).

NEMT is a mandatory Medicaid benefit but states can, and do, limit the availability of NEMT services via federal waivers. However, full-risk capitation arrangements incentivize MCOs to provide services such as NEMT.

Medicaid and CHIP Managed Care Final Rule 

The extent of recent reports detailing the ways in which rural hospitals are struggling to stay open further illustrates the benefit of managed care.  Specifically, MCOs must adhere to network adequacy requirements as established by the CMS’ 2016 Medicaid and CHIP Managed Care Final Rule. The network adequacy provisions require states to establish and enforce certain time and distance standards with contracted MCOs.

Facts on Rural Health 

  • The incidence of diabetes among rural residents is 17% higher than urban residents.[1]
  • Mental health comorbidities are more common in rural, long-term care populations.[2]
  • Limitations in activities of daily living are more prevalent among rural residents.[3]
  • The prevalence of hypertension is higher in rural populations than in urban populations.[4]
  • Rural Medicaid beneficiaries are more likely than their urban counterparts to be dually eligible for Medicaid and Medicare, and are overwhelmingly low income, elderly and disabled; dual eligibles are considered the most costly, at-risk, and vulnerable population.[5]

[1] Lorenz, G., Levey, M., and Case, R. (2013). Integrated Care Through Education: Improving Care for Those with Serious Mental Illness and/or Intellectual Disability and Diabetes in Rural Indiana. Journal of Rural Mental Health.

[2] Quinn, M. (2016). New Medicaid Rules Could Ease Rural Health Care’s Problems. Governing. Retrieved from

[3]Rural Health Information Hub. (2016). Medicare and Rural Health. Retrieved from

[4] Ibid.

[5] CMS. (2015). People Enrolled In Medicare and Medicaid: Medicare-Medicaid Coordination Office Fact Sheet. Retrieved from -coordination-Office/Downloads/MMCO Factsheet.pdf.

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Olivia P. Walker

I’m an award winning public affairs and digital communications strategist. I am also a fusion bellydancer. Finally, I launched Public Affairs Digest, a current affairs magazine, public affairs blog and edutainment media website.