In or Out: An Examination of Medicaid's Coverage Determination Policies

Prepared for the California HealthCare Foundation

Medicaid, the joint federal and state program that provides health insurance for low-income individuals, is rapidly becoming the largest purchaser of healthcare services in the United States.

Given Medicaid's size and scope, and the central role it plays in the health insurance market, information on how it determines which healthcare services and interventions to cover has significant implications, not only for Medicaid enrollees but also for the entire healthcare system, including developers of emerging technologies.

In a new report prepared for the California HealthCare Foundation, Manatt Health reviews how Medicaid agencies determine whether to cover specific health interventions (e.g., procedures, therapies, technologies, and devices) within a covered benefit category. It highlights themes from research on and interviews with select state Medicaid agencies regarding their coverage determination processes and standards, including approaches to covering behavior-change interventions. Finally, it discusses policies and procedures for achieving greater rigor and transparency in this decision making.

The authors conclude that state agencies should consider incorporating the following core features into their coverage determination policies:

  • A defined process by which third parties may initiate a coverage review
  • A systematic evaluation of high-cost, high-utilization services
  • A systematic approach to securing and evaluating evidence of the effectiveness and value of the new intervention
  • A defined standard by which the state will evaluate whether to cover the intervention

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