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DSS proposes phased risk-sharing and revenue caps for Medicaid maternity bundle; providers press for retroactive rate clarity
Summary
Connecticut's Department of Social Services outlined proposals to shift maternity bundle case rates toward a 50/50 provider–state blend, phase in provider liability for shared losses, and cap upside and downside payouts; providers asked DSS to clarify whether recent 2026 rate increases will be applied retroactively and raised concerns about 'shadow' claims underreporting.
The Department of Social Services told providers at a May forum that it plans to transition maternity bundle case rates toward a 50/50 mix of provider historic experience and an acuity‑adjusted statewide average, phase in provider responsibility for shared losses beginning in performance‑year (PY) 3, and apply revenue caps to both shared savings and losses.
"The maternity bundle case rate became effective in January of 2025," Caroline Scott, actuary with Mercer, said during the forum as she explained that case rates are prospective payments reconciled retrospectively against a target price that blends provider and statewide experience. She described a phased approach to risk adjustment that will reach a 50/50 mix by calendar year 2028.
Why it matters: the changes alter how much of any savings or losses providers can keep or owe, and they tie distributions to quality and improvement tiers. Under the proposals, the state retains half of total savings and may distribute up to 50% of the remaining half to providers based on performance. Beginning in PY3, providers would begin to share losses (phased 20% in PY3, 40% in PY4, 60% in PY5), and both savings and losses are subject to a revenue cap that limits payouts as a percentage of annual maternity revenue.
Mercer illustrated the math with worked examples. In one example, a provider with $10,250,000 in annual maternity revenue that generated $250,000 in savings would have $125,000 available for distribution; a top‑performing provider (Tier S) could receive 90% of that distributable amount (an example payout of $112,500), subject to the revenue cap. In a loss example, a $2,750,000 loss would be split and then phased to providers according to the proposed schedule; if phase‑in liabilities exceed the revenue cap they would be truncated to the cap.
Providers raised implementation concerns about how recent rate increases and shadow claims affect case‑rate calculations. "How does you know that the shadow claiming is complete, since if it's not tied to payment, there could be less claiming than there was before?" one attendee asked. DSS said it is monitoring shadow claims via CHN dashboards and will provide provider‑specific illustrative modeling so practices can see how payments and liabilities would have been calculated under each scenario.
A provider also pressed DSS on the timing of recently announced rate investments. "I think that would be contrary to the intent of the statute," the provider said, arguing that investments intended for services rendered in CY2026 should be applied to CY2026 reimbursement. DSS representatives acknowledged the question, said the repricing for 2026 was done in late 2025, and committed to take the question back and follow up with providers.
DSS said it will provide illustrative reconciliations, run both old and new measure specifications in parallel where applicable, and hold additional forums and one‑on‑one follow‑ups. Written feedback on the proposed changes was requested by providers with a June 3 deadline and contact details for Kim Osno were provided on the meeting materials slide.
The Department said it will announce further details, distribute illustrative models to providers, and return with follow‑up information after verifying the timing and application of recent rate investments.
