Federal regulations are finally catching up with a decade of seismic change in the delivery of Medicaid services. More than 650 pages of proposed new rules are aimed at overseeing managed care, which has become the standard health care delivery system for low-income adults and children, and is now being expanded to include both medical care and long-term supports and services for older adults and younger people with disabilities.

Many of the new regulations are aimed at boosting consumer protections for those enrolled in these managed care plans, including frail elders.

Two dozen states are in the process of developing managed long-term supports and services (MLTSS) models. Currently 15 of them are already operating managed care demonstration programs that are available to about 1.8 million frail elders and younger people with disabilities who are eligible for both Medicare and Medicaid benefits.

Once the proposed regulations are approved—probably later this year—they will set the ground rules for the growth in managed LTSS and control the ongoing managed care experiment for those eligible for both Medicare and Medicaid (the dual eligibles). And that test could, in turn drive future models of care for higher-income seniors through Medicare Advantage managed care programs.

The key question: Will these regulations strike the necessary balance among three sometimes competing interests: High-quality person-centered care, flexibility for states and managed care organizations (MCOs), and reasonable compensation for the MCOs. Without the former, the managed care experiment is not worth doing. Without the latter two, neither states nor managed care organizations—whether non-profits or for-profits—will participate and the experiment will fail.

An initial look at the 653 pages of regulations suggests that the Administration is primarily focused on consumer protections. Perhaps the most important change is simply that the new rules acknowledge the importance of managed care for long-term supports and services.  Some key proposals:

Medical Loss Ratios. Managed care organizations would have to dedicate at least 85 percent of their revenues to member care (known as medical loss ratio), as opposed to profits and administrative costs. States would not have to require the 85 percent standard but could take the loss ratio into account when setting rates. While this proposal has generated the most attention, Bob Herman of the newsletter Modern Healthcare reports that many plans already reach or even exceed the 85 percent target.

A framework for future rules.  In 2013, Medicaid regulators released a list of 10 “essential elements” for managed LTSS. The proposed new rules explicitly recognize this list as the benchmark for integrated care. The elements include: expanded home and community-based services, independent counseling and advocacy for beneficiaries, full integration of medical and social care, a full range of qualified and accessible providers, and person-centered care.

Consumer protections. To achieve some of those goals, the proposed regulations include specific requirements to protect consumers. MCOs must make available adequate networks of service providers that are geographically accessible to members. Participants could switch plans, or even move back to fee-for-service Medicaid if providers are no longer in their plan’s network. Members must also have access to a standardized grievance and appeals process.

Common quality measures:  Medicaid managed care plans, private insurance available on the Affordable Care Act health exchanges, and Medicare Advantage plans would all be rated based on common quality measures. This is more important for working age Medicaid enrollees (who may shift from Medicaid to exchange insurance as their income rises) than for frail elders, who rarely leave the program. However, as I have written in the past, quality measures for social supports are weak. And consistent metrics across all managed care could encourage efforts to improve those measures.

Some of the specifics of these proposals are likely to change before the rules are finalized, but the Administration seems to be on the right track with a package that seeks to balance the interests of consumers, states, and plans.