Did you know that 20 percent of U.S. residents are covered by Medicaid and 17 percent of state spending finances Medicaid programs? These numbers are expected to rise in 2010 and beyond. Currently, actuaries play a significant role in covering this population and will certainly be asked to do more as states seek ways to control the costs of these populations. This session will provide a brief introduction to the CMS Managed Medicaid Rate checklist, the Actuarial Practice Note on Medicaid Rate Setting and the Medicaid funding mechanism. We will also discuss the mechanisms that states use to control Medicaid spending during difficult budget times and how these put pressure on rate development, leaving the state to struggle with meeting state budget goals while paying actuarially sound rates. This can put pressure on actuaries to certify rates that may not meet some definitions of actuarial soundness. In this session, speakers will discuss the challenges actuaries face when state budget issues come into play. You will leave the session understanding CMS requirements for actuarial sound rate development for Managed Medicaid rates, current state budget problems around Medicaid funding and challenges and best practices for setting Managed Medicaid rates.