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Chuck Ingoglia

Senior Vice President, Public Policy

CMS Releases Medicaid Managed Care Regulation: Addresses Provider Networks, Beneficiary Access, and More

May 27, 2015 | Medicaid | Comments
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On Tuesday, May 26, the Centers for Medicare and Medicaid Services (CMS) released an extensive proposed rule on Medicaid and Children’s Health Insurance Program (CHIP) managed care.  This is the first major update to applicable regulations since 2003, and seeks to align the managed care regulations across Medicaid, Medicare and the private market.

The new proposed regulation addresses a number of key elements in managed care systems, including (click the links for CMS fact sheets on each):

Highlights include:
  • Network Adequacy – CMS proposes that states must establish network adequacy standards for specified provider types, including behavioral health professionals. These network adequacy standards must identify time and distance standards for consumers to access behavioral health care, adult and pediatric primary care, adult and pediatric specialist care, hospital services, pharmacy, and more. The proposed regulation also outlines factors that must be considered in these standards’ development and transparency. CMS adds that “given the large number of pediatric Medicaid enrollees, we believe it is important for states and plans to specifically include pediatric primary, specialty, and dental providers in their network adequacy standards.” See pages 176-181 of the proposed rule for more details.
  • Institutions for Mental Disease – Citing the high prevalence of mental health and substance use disorders among Medicaid beneficiaries, CMS proposes to permit managed care entities to receive a capitation payment from the state for certain services that might otherwise be subject to the Institutions for Mental Disease (IMD) payment exclusion. Under the proposed regulation, managed care entities may receive payment for services provided to an enrollee aged 21 to 64 who spends a portion of any month as a patient in an IMD, so long as the IMD is either: 1) a hospital providing psychiatric or substance use disorder inpatient care; or 2) a sub-acute facility providing psychiatric or substance use crisis residential services. This payment is only permitted when the patient’s stay in the IMD is for less than 15 days in that month. See pages 71-78 of the proposed rule for more details.
  • Beneficiary Choice – The new regulation proposes definitions and standards for voluntary and mandatory enrollment systems. For example, CMS proposes “a specific enrollment standard applicable to both voluntary and mandatory managed care programs that all states must provide a period of time of at least 14 calendar days of fee-for-service coverage for potential enrollees to make an active choice of their managed care plan” except where there is only one contracted plan. Among other issues, the rule also addresses a new Beneficiary Support System through which a state would “provide support before and after managed care enrollment” to ensure that beneficiaries are informed about their choices and supported in selecting a plan that meets their needs. See pages 136 and 144-145 of the proposed rule for more details.
  • Appeals and Grievances – CMS proposes revisions to align Medicaid managed care appeals and grievance processes with those of Medicare Advantage and private plans. Among other changes, this includes limiting managed care entities to only one level of appeal for enrollees before beneficiaries exhaust the managed care plan’s internal appeal process, and adopting a 60-day timeline from receipt of an “adverse benefit determination” for enrollees and providers to file appeals. CMS also proposes to shorten the timeframe for managed care appeal decisions from 45 days to 30 calendar days, “which would achieve alignment with MA standards while still allowing adequate time for decision-making and response.” See pages 22-38 of the proposed rule for more details.
  • Medical Loss Ratio – Citing the use of medical loss ratios (MLR) in commercial and Medicare Advantage plans, CMS proposes that Medicaid managed care plans be held to at least an 85 percent MLR standard (meaning that at least 85 percent of the managed care entity’s revenue goes to patient care rather than profit or administrative overhead). CMS notes that a national standard aligned with Medicare and commercial plans “would provide the most consistent approach to calculating and reporting MLR.” MLR-related requirements would apply to contracts with any risk-based managed care entity that begin on or after January 1, 2017. See pages 38-59 of the proposed rule for more details.
  • MCO Standard Contract Provisions; Actuarial Soundness – CMS proposes restructuring standards for managed care contract terms and actuarial soundness to include “Standard Contract Provisions.” CMS details the four standards – Actuarial Soundness; Rate Development Standards; Special Contract Provisions Related to Payment; Rate Certification Submission – that pertain to setting actuarially sound capitation rates. These provisions will also encompass standards unrelated to payment, including plans’ coverage of outpatient drugs and reporting of drug utilization data for state billing of rebates. The proposed changes would no longer allow states to certify rate ranges, instead requiring states to certify specific capitation rates. See page 59 of the proposed rule for more details.
  • Managed Long-term Services and Supports Programs – The proposed rule codifies 10 key principles from the May 2013 guidance to all Managed Long-term Services and Supports (MLTSS) programs. The 10 guiding principles are: adequate planning; stakeholder engagement; enhanced provision of home and community based services; alignment of payment structures and goals; support for beneficiaries; person-centered processes; comprehensive, integrated service package; qualified providers; participant protections; and quality. Additionally, CMS proposes State “creation and maintenance of a stakeholder group so that opinions of beneficiaries, providers, and other stakeholders are solicited and addressed during the design, implementation, and oversight of the MLTSS program.” See page 158-164 of the proposed rule for more details.
  • Quality Rating System – The rule would require a quality strategy for the state’s overall Medicaid program, as well as establish a Medicaid managed care quality rating system, to include performance information on “all health plans [that] align[s] with the existing rating systems in Medicare Advantage and the Marketplace.” See page 187 of the proposed rule for more details.
  • CHIP – CMS notes “the proposed rule would align the CHIP managed care regulations, where appropriate, with the proposed revisions to the Medicaid managed care rules in order to ensure CHIP beneficiaries the same quality and access in managed care programs.” Specifically, CHIP-related provisions include: conditions for receiving federal financial participation; contracting requirements; informational materials for enrollees; non-emergency medical transport; marketing activities for plans; and beneficiary protections such as network adequacy standards, enrollee rights, access standards, quality measurement standards, and procedures for beneficiary grievances, among others. CMS notes that existing rate-setting standards for CHIP managed care would remain the same. The proposal also adopts a minimum medical loss ratio (MLR) in CHIP that is the same as the Medicaid proposal. Certain provisions, such as those related to rate development certification, would not apply to CHIP. See page 265 of the proposed rule for more details.
  • Trauma Codes – CMS proposes replacing the reference to ICD-9 with a “general description of the types of medical diagnoses indicative of trauma for which states are expected to edit claims,” noting that it will “allow states greater flexibility to focus on identification of claims likely to have [third party liability].” See page 285 of the proposed rule for more details.
  • Medicaid MCO Marketing – CMS proposes select revisions to the definition of MCO marketing, including to “specifically exclude communications from a QHP to Medicaid beneficiaries even if the issuer of the QHP is also the entity providing Medicaid managed care” and to address regulation of social media and electronic communication, among other provisions. See page 20 of the proposed rule for more details.
  • Program Integrity –  The rule amends a host of existing program integrity requirements to address program integrity risks, as well as makes clarifications to regulations imposing sanctions on plans. See pages 113 and 127 of the proposed rule for more details.

Comments on the proposed rule are due by July 27, 2015. The National Council continues to review the proposed rule and will be preparing comments. We welcome your thoughts and suggestions and will share our comments with our members before submission.