The federal government has crafted the first regulatory change to Medicaid managed care in a decade, as more health plans take the challenge from states to cover growing Medicaid populations at a sustainable cost.
The Centers for Medicare & Medicaid Services is proposing a litany of new regulations for Medicaid managed care to modernize the program for today's needs. Some 46 million Americans, around 70 percent of Medicaid beneficiaries, are now covered in Medicaid managed care plans.
Among the major changes proposed for Medicaid plans are new provider adequacy standards, new mandates for capitated rate setting, beneficiary protections in long-term care, forthcoming quality ratings, and an 85 percent medical cost administrative ratio--the idea that the industry is most likely to quibble with.
"A lot has changed in terms of best practices and the delivery of important health services in the managed care field over the last decade," said Andy Slavitt, acting administrator of CMS and a former executive at UnitedHealth Group's Optum company. "This proposal will better align regulations and best practices to other health insurance programs, including the private market and Medicare Advantage plans, to strengthen federal and state efforts at providing quality, coordinated care to millions of Americans with Medicaid or CHIP insurance coverage."
Medical cost ratio
The two trade groups representing insurers, America's Health Insurance Plans and Medicaid Health Plans of America, are generally supportive of the regulatory modernization and the thrust of CMS' proposals--except for the national 85 percent Medicaid MCR.
"This latest proposed guidance ensures that health plans and states have the flexibility to structure their programs and benefits to meet the unique health needs of their enrollees," said AHIP Interim CEO Dan Durham. "However, an arbitrary cap on health plans' administrative costs could undermine many of the critical services--beyond medical care--that make a difference in improving health outcomes for beneficiaries, such as transportation to and from appointments, social services, and more."
"We're encouraged to see CHIP included in the proposed rule given the fact that half of US births are covered by Medicaid," said MHPA's president and CEO Jeff Myers. "We're also glad that the rule seems to cover long-term care, actuarial soundness and rate-setting, and quality ratings of health plans. However, we urge CMS to rethink standards for a federal minimum medical loss ratio given that MLR is already built into health plans' contracts with the states."
CMS studied 167 managed care plans in 35 of the 39 states with Medicaid managed care and found that 10 percent had an MCR below 79 percent and 20 percent had an MCR below 83 percent.
Like the 85 MCR in the rest of the health insurance market, the Medicaid proposal would require by 2017 that 85 percent of the funding to be spent on beneficiary services, although instead of consumer rebates for plans that don't meet the MCR, states and CMS would make adjustments in the following year's rates.
CMS regulators argue that a "consistent methodology across multiple markets (private, Medicare, and Medicaid) would allow for administrative efficiency for the states in their roles regulating insurance and Medicaid and for issuers and managed care entities to collect and measure data necessary to calculate an MLR." And "a consistent standard would allow comparison of MLR outcomes consistently from state to state and among commercial, Medicare, and Medicaid managed care plans," they added.
"We also believe that it is appropriate to consider the (MCR) in rate setting to protect against the potential for an extremely high MCR. When an MCR is too high, it means there is a possibility that the capitation rates were set too low."
Provider adequacy
A long-simmering concern for Medicaid beneficiaries and patient advocates has been ensuring comprehensive provider networks in Medicaid plans, a challenge for all of Medicaid given its history of lower-than-average reimbursement in a range of clinical areas.
The new CMS proposal would transition to new provider access standards, but with a lot of flexibility for states to determine local needs with federal oversight. The proposal would require states to extend time-and-distance standards to OB/GYNs, behavioral health providers and dentists. The agency is particularly interested in increasing standards for CHIP, to make sure networks reflect pediatric primary, specialty, and dental providers.
"We propose that states, at a minimum, establish time and distance standards as such standards are currently common in the commercial market and many state Medicaid managed care programs," CMS regulators wrote. The proposal would also extend similar commercial health insurance requirements for beneficiaries to have digital access to regularly-updated provider directories.
Quality ratings
The proposed regulations would also set up a quality rating system for Medicaid plans, similar to Medicare Advantage and the forthcoming component of ACA exchange plans. The five star ratings would be based on factors including clinical effectiveness, patient safety, care coordination. prevention, member experience, plan efficiency, affordability and management.
"The use of a rating system" similar to the "Marketplaces and MA plans would make it easier for beneficiaries, who may be transitioning among these various coverage programs, to understand the quality rating of their health plan regardless of the payer," CMS regulators wrote. Aligning the rating systems would also "minimize the burden on health plans" operating Medicaid, exchange and Medicare Advantage plans, "and provide data for the various quality rating systems."
Rate setting
Medicaid capitated rates to health plans are supposed to be actuarially sound, accounting specifically for a variety of factors. As it happens, though, 26 states and Washington D.C. currently use somewhat opaque rate ranges rather than detailed, actuarially sound rates that justify each component.
Now, CMS is proposing to "alter past practices moving forward." Each individual rate paid to each Medicaid plan must be "certified as actuarially sound with enough detail to understand the specific data, assumptions, and methodologies behind that rate."
States can still use rate ranges "to gauge an appropriate range of payments on which to base negotiations, but states will have to ultimately provide certification to CMS of a specific rate for each rate cell, rather than a rate range." Payments "from any rate cell must not be expected to cross-subsidize or be cross-subsidized by payments for any other rate cell," CMS regulators wrote.
"While we understand that this will impact some states that rely heavily on rate ranges, we believe that requiring the details, including the specific data, assumptions, and methodologies, behind each contracted rate strengthens program integrity and transparency in the rate setting process."
Long-term care, services and supports
Today, some 26 states use managed care for long-term services and support benefits for elderly, disabled and at risk populations, and the number of beneficiaries in MLTSS plans has grown from 105,000 in 2004 to almost 400,000. That has led to concerns among patient advocates about beneficiary choice and access.
CMS is responding to those concerns by taking one of their ideas. The agency is proposing to allow MLTSS beneficiaries to switch plans, which sometimes are assigned, or to disenroll and opt for traditional fee-for-service coverage if their established physicians and providers aren't in network.
The regulations also propose a four-point beneficiary support system for LTSS: an access point for complaints and concerns; education on enrollees' grievance and appeal rights; assistance, upon request, in navigating the grievance; and oversight of LTSS program data to assist the state Medicaid agency on identification and resolution of systemic issues.
The proposals are now open for public comment, and some of the specifics may, of course, end up being changed.
A number of major changes, though, are bound to go forward. "Overall, this proposed rule supports the agency's mission of better care, smarter spending, and healthier people," CMS regulators wrote
Meyers, of the Medicaid Health Plans of America, believes most of the policy ideas are a sound foundation.
"With the majority of Medicaid beneficiaries being served by health plans using a risk-based capitated model, these regulations ultimately will serve to guide Medicaid through its next 50 years," he said.