The medical loss ratio (MLR) is the share of Medicaid premium dollars a health plan spends on member care instead of administration and profit, and the federal benchmark is 85 percent. In Georgia, that 85 percent standard binds the three Care Management Organizations (CMOs) that run Georgia Families through state law rather than through their contracts: since July 1, 2023, O.C.G.A. § 33-21A-14 has required each CMO to meet a minimum 85 percent MLR. If you have ever wondered where your Medicaid plan's money actually goes, the MLR is the number that answers it.

One point gets lost almost everywhere this topic is explained, so it is worth stating plainly up front. Federal law does not order every Medicaid plan to spend 85 percent on care or pay the difference back. Under 42 CFR 438.4(b)(9), the 85 percent figure is a rate-setting standard: a state's capitation rates must be built so that each plan would reasonably achieve an MLR of at least 85 percent for the rate year. Whether a plan that misses 85 percent actually owes money back is a separate, optional state choice under 42 CFR 438.8. Georgia has made that choice by statute, and the statute says so in as many words: its stated intent is "to implement the state option in subdivision (j) of 42 C.F.R. Section 438.8."

This guide explains the MLR the way it actually works in Georgia: what the 85 percent standard is, what counts as care versus overhead, how a remittance works when a plan falls short, and what any of it means for a family enrolled with Amerigroup Community Care, CareSource, or Peach State Health Plan.

What is the Georgia Medicaid medical loss ratio?

A medical loss ratio is, at its simplest, the percentage of premium revenue an insurer spends on medical care. Georgia pays its Medicaid CMOs a fixed per-member-per-month (PMPM) capitation rate for each enrolled member, and the plan is paid that rate whether or not the member uses services in the period. Because the payment is fixed, the plan carries the financial risk: it profits if member care costs come in under the capitation it collects and loses money if costs run over.

The MLR is the check on that arrangement. If a CMO receives $100 in capitation and spends $87 on medical claims plus approved quality-improvement work, its MLR is 87 percent. The remaining $13 covers everything else the plan does: claims processing, member services, provider relations, marketing, executive pay, and profit. A higher MLR means more of each premium dollar reached care; a lower one means more went to overhead.

Is the 85 percent MLR a federal requirement?

This is the question most pages get wrong, so it is worth answering precisely.

Federal law treats 85 percent as a rate-setting projection target, not a flat command that every plan hit it. Under 42 CFR 438.4(b)(9), a state's capitation rates must be "developed in such a way that the MCO, PIHP, or PAHP would reasonably achieve a medical loss ratio standard, as calculated under § 438.8, of at least 85 percent for the rate year." In other words, the federal government uses 85 percent to judge whether a state built its rates soundly, applied to how the rates are designed rather than to any single plan's actual result.

A binding minimum MLR (the kind where a plan that lands below 85 percent must pay the shortfall back) is a state option under 42 CFR 438.8. The rule says that if a state elects to mandate a minimum MLR, that floor must be at least 85 percent (438.8(c)), and a plan must provide a remittance only "if required by the State" (438.8(j)). What federal law does require of every plan, everywhere, is that it calculate and report its MLR to the state each year (438.8(a)).

Georgia is a state that has elected the binding version, and it did so by legislation rather than by contract. House Bill 1013 (2022), the Georgia Mental Health Parity Act, enacted O.C.G.A. § 33-21A-14, under which, beginning July 1, 2023, care management organizations "shall comply with a minimum 85 percent medical loss ratio or such higher minimum percentage as may be set out in a contract between the department and a care management organization consistent with 42 C.F.R. Section 438.8." The ratio is calculated and reported for each MLR reporting year consistent with 42 CFR 438.8.

The distinction is not academic, because before that statute took effect the contract carried no floor at all. Georgia's Office of Health Strategy and Coordination reported in October 2022 that there were "no Medical Loss Ratio (MLR) provisions in the Georgia Families contract." So in Georgia the floor is real and enforceable, but it binds because Georgia law says so, not because federal law forces every state to impose it, and not because a contract clause created it. Note the statute's own qualifier: 85 percent is the minimum, and a contract between the Department of Community Health and a CMO may set a higher one.

How 42 CFR 438.8 defines the math

The federal regulation at 42 CFR 438.8 sets out how the MLR is calculated. The ratio is medical and quality spending (the numerator) divided by adjusted premium revenue (the denominator).

What counts in the numerator (care)

The numerator captures spending that benefits members:

  • Incurred medical claims for covered services delivered during the reporting year: inpatient and outpatient hospital, physician and professional services, behavioral health, prescription drugs, durable medical equipment, home health, long-term services and supports, and other covered care. Claims are counted on an incurred basis, with adjustments for claims incurred but not yet reported.
  • Activities that improve health care quality (QIA), such as care coordination, chronic-disease and readmission-prevention programs, patient-safety work, and health-information technology that demonstrably improves quality.
  • Fraud-prevention activities, which are included to a limited extent under the regulation.

Two adjustments to the numerator are written directly into the rule and matter in practice. Prescription drug rebates received and accrued must be deducted from incurred claims, and amounts paid to third-party vendors for network development, administrative fees, claims processing, and utilization management are excluded from incurred claims (42 CFR 438.8(e)(2)). That second rule is why a pharmacy benefit manager's retained "spread" cannot be counted as member care to inflate a plan's MLR.

What counts in the denominator (premium)

The denominator is the plan's adjusted premium revenue for the year: its premium revenue, chiefly the capitation it received, reduced by federal, state, and local taxes and by licensing and regulatory fees. Dividing the numerator by this adjusted figure produces the reported MLR.

Credibility, aggregation, remittance, and reporting

42 CFR 438.8 carries several more pieces that shape how the number is treated:

  • Credibility adjustment (438.8(h)). A plan whose experience for the MLR reporting year is only partially credible may add an upward credibility adjustment before any remittance is calculated, because one large claim can swing a small plan's ratio. A fully credible plan may not add one, and a plan whose experience is non-credible is presumed to meet the standard.
  • Aggregation of data (438.8(i)). A plan aggregates all Medicaid eligibility groups covered by its contract with the state into a single MLR, unless the state requires separate reporting and a separate calculation for specific populations.
  • Remittance (438.8(j)). Where a state has set a minimum MLR, a plan that misses it must provide a remittance for that reporting year.
  • Reporting (438.8(a)). Every plan calculates and reports its MLR to the state for each reporting year.

Care versus administration: where the line sits

The hardest part of MLR compliance is classifying spending, because the line between quality improvement (which counts as care) and administration (which does not) can be genuinely contested.

Activities that generally count as quality improvement include care-management and disease-management programs that improve outcomes, hospital-readmission prevention, patient-safety and provider-training initiatives, and health-information technology that specifically supports quality. Activities that count as administration include general overhead, claims processing as an operational function, general marketing and sales, lobbying, executive compensation, and routine member outreach.

The contested zone is where audits focus. A care-management program may sit between quality improvement and administration; general technology is overhead while technology built for a specific quality measure can count as care; routine outreach is administration while a true educational program can qualify. The regulation itself draws some of these lines, requiring that amounts paid to third-party vendors for administrative fees, claims processing, and utilization management be excluded from claims (42 CFR 438.8(e)(2)). Because moving spending from the administration column into the care column raises a plan's reported MLR, a state's review of these classifications is the main guardrail against a plan dressing up overhead as care.

How a remittance works in Georgia

For contract rating periods beginning on and after July 1, 2023, a Georgia CMO must provide a remittance for any MLR reporting year in which it fails to meet the 85 percent minimum.

The statute does not publish a single arithmetic formula. It instead directs the Department of Community Health to determine the remittance plan-specifically, by rating region. Where the money goes next is set out too: DCH returns the federal share to CMS and transfers the remaining amounts to the state general fund.

This is what gives the 85 percent floor teeth. Without a remittance obligation, a plan could underspend on care and simply keep the difference.

What the Georgia Medicaid medical loss ratio means for a family

For a member, the MLR is invisible day to day but it shapes the experience underneath. A plan spending most of its premium on care has more room to pay providers well, keep the network broad, and invest in care coordination; a plan operating near the floor has thinner margin for those things. The relationship is not perfect (a plan can post a high MLR through inefficient spending rather than good care), so MLR is best read alongside actual quality measures like Healthcare Effectiveness Data and Information Set (HEDIS) scores and member-experience surveys, not on its own.

The practical takeaways for a Georgia family are simple. The 85 percent floor means most of what Georgia pays your CMO is supposed to reach care, and the state can claw back a remittance when a plan misses. If you are choosing among Amerigroup Community Care, CareSource, and Peach State Health Plan, compare them on network, covered benefits, and quality ratings (the day-to-day things you can feel) rather than on MLR alone.

The 2024 federal rule and what changed

In 2024, the Centers for Medicare and Medicaid Services (CMS) issued the Medicaid and CHIP Managed Care Access, Finance, and Quality Final Rule (CMS-2439-F), published in the Federal Register on May 10, 2024 and effective July 9, 2024. Alongside new appointment-wait-time standards, network-adequacy oversight, and a managed-care quality rating system, the rule specifies medical loss ratio requirements as part of its finance changes. The 85 percent standard itself was not lowered; the rule refines how the MLR is calculated and how it interacts with state-directed payments. The interaction with access matters: a plan that meets its MLR has the margin to pay providers at rates that sustain an adequate network, which is what the rule's wait-time standards ultimately depend on.

How to verify your plan's standing in Georgia

The Georgia Department of Community Health (DCH) administers Georgia Families and oversees CMO MLR reporting and any remittance. For the current list of CMOs and member-facing details, DCH publishes the Care Management Organizations page at medicaid.georgia.gov. For coverage questions tied to MLR-adjacent concerns such as network access, prior authorization, or denials, start with your CMO's member services line, printed on your member ID card, and then DCH if the plan does not resolve it. If a denial may reflect an access problem, the appeals process and outside legal-aid organizations are your next step.

Frequently Asked Questions

Is the 85 percent MLR required of every Medicaid plan?

Not as a flat federal mandate. Federal law sets 85 percent as a rate-setting standard: a state's capitation rates must be built so each plan would reasonably achieve at least an 85 percent MLR for the rate year (42 CFR 438.4(b)(9)), and every plan must calculate and report its MLR annually (42 CFR 438.8(a)). A binding floor with a payback for missing it is a state option (42 CFR 438.8(c) and (j)). Georgia requires that floor by statute, in O.C.G.A. § 33-21A-14.

What happens if a Georgia CMO's MLR falls below 85 percent?

For contract rating periods beginning on and after July 1, 2023, the plan must provide a remittance for any MLR reporting year in which it misses the 85 percent minimum. The Department of Community Health determines the remittance plan-specifically, by rating region; it then returns the federal share to CMS and transfers the remaining amounts to the state general fund.

What counts as medical care versus administration in the MLR?

Care (the numerator) is incurred medical claims for covered services plus approved quality-improvement activities and limited fraud-prevention spending. Administration (which does not count) is general overhead, claims processing, marketing, sales, lobbying, and executive compensation. The rule also requires that prescription-drug rebates be deducted and that third-party vendor administrative fees be excluded from claims (42 CFR 438.8(e)(2)), so a pharmacy benefit manager's retained spread cannot be counted as care.

Which CMOs run Georgia Medicaid managed care in 2026?

Georgia Families is delivered by three current Care Management Organizations: Amerigroup Community Care, CareSource, and Peach State Health Plan. Their contracts were extended through June 30, 2027 while a 2024 reprocurement works through the protest phase, so the roster could change if new contracts go live.

Does the MLR tell me which CMO is best?

It is one signal, not the whole answer. A higher MLR generally means more premium reached care, which can support a broader network and more coordination, but a plan can post a high MLR through inefficient spending rather than high-quality care. Compare plans on network, covered benefits, and quality measures like HEDIS, not on MLR alone.

Where to get help with Georgia Medicaid managed care

Georgia Department of Community Health (DCH) Administers Georgia Families and oversees CMO MLR reporting and remittance; the current CMO list and program info live here. medicaid.georgia.gov
Your CMO member services The number is printed on the back of your member ID card (Amerigroup Community Care, CareSource, or Peach State Health Plan). Start here first for coverage, network, prior-authorization, or denial questions; escalate to DCH if the plan does not resolve it.
Georgia Gateway Apply for and manage Georgia Medicaid eligibility and enrollment. gateway.ga.gov

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Find personalized help understanding Georgia Medicaid managed care at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.

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