Managed care has become the backbone of healthcare delivery for millions of Americans, particularly within programs like Medicaid and the Children’s Health Insurance Program (CHIP). In fact, over 70% of Medicaid and CHIP beneficiaries receive their healthcare services through managed care plans. This significant figure underscores the importance of understanding how these programs operate and the impact they have on access to care, quality, and overall healthcare experiences for enrollees.
Recognizing the critical role of managed care, the Centers for Medicare & Medicaid Services (CMS) and individual states have been actively working to strengthen these programs. Their efforts are focused on several key areas, including ensuring timely access to high-quality care, guaranteeing adequate payments to healthcare providers, and implementing robust program monitoring and oversight. These initiatives reflect a broader commitment to making healthcare more accessible and affordable for all Americans, as highlighted in recent Executive Orders aimed at protecting and strengthening Medicaid and the Affordable Care Act (ACA).
A recent final rule from CMS represents a significant step forward in these efforts. This rule introduces crucial updates designed to enhance managed care programs and better serve the needs of individuals enrolled in Medicaid and CHIP. The core objective is to improve both access to and the quality of healthcare services provided through these programs. This article will delve into the key aspects of this final rule and what they mean for Americans relying on managed care.
The final rule targets several critical areas within managed care, each with the potential to significantly impact the experiences of enrollees. These areas include:
- Access to Care: Implementing stricter standards for timely access to healthcare services and bolstering state monitoring and enforcement to ensure these standards are met.
- State Directed Payments (SDPs): Enhancing the quality, fiscal responsibility, and program integrity of state directed payments, which are mechanisms states use to strategically direct funds within their managed care programs.
- In Lieu of Services and Settings (ILOSs): Clarifying the scope of ILOSs to better address health-related social needs (HRSNs) of enrollees. ILOSs offer alternative services and settings that can substitute for traditional medical care when appropriate.
- Medical Loss Ratio (MLR): Further defining MLR requirements to ensure that managed care plans are spending an appropriate portion of their revenue on actual healthcare services and quality improvements.
- Quality Rating System (QRS): Establishing a Quality Rating System for Medicaid and CHIP managed care plans to provide beneficiaries with transparent information about plan quality and performance.
These revisions are designed to work in conjunction with other initiatives, such as the Ensuring Access to Medicaid Services final rule, to create a stronger and more responsive healthcare safety net for millions of Americans.
Let’s explore some of these key improvements in more detail:
Enhancing Access to Timely Care
One of the most significant aspects of the final rule is its focus on improving timely access to care. Recognizing that waiting too long for appointments can negatively impact health outcomes, the rule establishes clear maximum appointment wait time standards for critical services.
Specifically, states are now required to ensure that managed care plans offer appointments within:
- 15 business days for routine primary care (for both adults and children) and obstetric/gynecological services.
- 10 business days for outpatient mental health and substance use disorder services (for both adults and children).
States also have the flexibility to select another service and establish an appointment wait time standard for that service, tailored to the specific needs of their population.
To ensure these standards are actually being met, the final rule mandates states to conduct annual “secret shopper” surveys using an independent entity. These surveys will assess managed care plans’ compliance with the new appointment wait time standards and verify the accuracy of provider directories. Accurate provider directories are crucial for enrollees to find in-network providers who are actually accepting new patients.
Furthermore, states must now conduct annual enrollee experience surveys for each managed care plan. These surveys will gather direct feedback from enrollees about their experiences with their managed care plans, providing valuable insights into areas for improvement.
To promote transparency and accountability, states are also required to perform an annual payment analysis comparing managed care plans’ payment rates to Medicare rates and state Medicaid plan rates for certain services. This analysis will help ensure that provider payment rates are adequate to support access to care.
Finally, the rule emphasizes proactive problem-solving. States are required to implement a remedy plan for any managed care plan that is found to be underperforming in meeting the required access standards. This ensures that issues are addressed promptly and effectively to improve access for enrollees.
For greater public transparency, states must maintain a single, easily accessible webpage containing essential information about their managed care programs. This centralized resource will make it easier for the public to understand how these programs operate and access relevant data.
Strengthening State Directed Payments
State Directed Payments (SDPs) are a mechanism that allows states to strategically direct payments to providers within their managed care programs. The final rule aims to streamline and enhance the effectiveness of SDPs.
The rule removes regulatory barriers that previously hindered states from using SDPs to implement value-based purchasing (VBP) arrangements. VBP models reward healthcare providers for delivering high-quality, cost-effective care, shifting away from traditional fee-for-service models. This change encourages states to use SDPs to promote innovative payment models that incentivize better health outcomes.
The rule also eliminates the need for written prior approval from CMS for SDPs that are based on minimum fee schedules set at the Medicare payment rate. This simplifies the process for states to implement SDPs that align with Medicare payment levels.
To ensure fiscal responsibility, the final rule sets limits on provider payment levels for certain SDPs. Specifically, for inpatient and outpatient hospital services, nursing facility services, and professional services at academic medical centers, SDP payment levels cannot exceed the average commercial rate.
The rule clarifies payment timelines for SDPs, requiring that fee schedule-based SDPs are tied to service delivery within the contract rating period. However, it allows VBP-based SDPs to link payment to performance for up to one year prior, recognizing the longer timeframe often needed to measure performance in VBP models.
To enhance financial accountability, the rule prohibits the use of post-payment reconciliation processes for fee schedule-based SDPs. It also prohibits separate payment terms and requires that all SDPs are included in actuarially sound capitation rates, ensuring that these payments are properly accounted for within the overall financial structure of managed care programs.
The final rule establishes clear submission timeframes for SDP preprints and for including SDPs in rate certifications and managed care plan contracts. It also requires provider-level reporting on actual SDP expenditures in the Transformed Medicaid Statistical Information System (T-MSIS), improving data collection and transparency.
States are now explicitly required to develop evaluation plans for each SDP and submit evaluation reports to CMS every three years if the SDP costs exceed 1.5% of total capitation payments. This ensures that SDPs are being carefully evaluated for their effectiveness and impact. A process for states to appeal SDP disapprovals to the Department Appeals Board is also established, providing a mechanism for dispute resolution.
The rule explicitly codifies the existing requirement that SDPs must comply with all federal laws concerning the funding sources of the non-federal share and requires providers receiving SDPs to attest that they do not participate in tax schemes that inappropriately shift costs to taxpayers.
Clarifying Medical Loss Ratio Requirements
The Medical Loss Ratio (MLR) is a key metric that ensures managed care plans are spending a sufficient portion of their revenue on healthcare services and quality improvement activities, rather than administrative costs or profits. The final rule introduces several clarifications and updates to MLR requirements.
Medicaid managed care plans are now required to include actual expenditures and revenues for SDPs in their MLR reports to states. This ensures that SDPs are properly accounted for in MLR calculations, providing a more complete picture of how plan revenue is being spent. States are also required to provide MLRs for each managed care plan, enhancing transparency and comparability.
The rule makes technical revisions to align MLR reporting requirements for quality improvement expenditures, provider incentive payments, and expense allocation with recent regulatory changes for Marketplace plans, promoting consistency across different healthcare programs.
To strengthen program integrity, managed care plans are required to report any identified or recovered overpayments to states within 30 calendar days, ensuring prompt return of funds. The rule also specifies contractual requirements for provider incentive payments, promoting clarity and accountability in these arrangements.
Defining In Lieu of Services and Settings (ILOSs)
In Lieu of Services and Settings (ILOSs) offer flexibility within managed care to address enrollees’ health-related social needs (HRSNs). ILOSs are alternative services or settings that can be provided in place of traditional covered services when they are medically appropriate and cost-effective. The final rule clarifies the scope and requirements for ILOSs.
The rule specifies that ILOSs can be used as immediate or longer-term substitutes for covered services or settings under the state plan, or when they are expected to reduce or prevent the future need for such services. This allows for the use of ILOSs to proactively address HRSNs, such as housing and nutritional supports, that can significantly impact health outcomes.
To be approvable, an ILOS must be a service or setting that could be provided through the Medicaid state plan or a Medicaid section 1915(c) waiver. Managed care plan contracts must include specific documentation for each ILOS, ensuring transparency and accountability.
States are required to provide additional documentation if ILOS costs exceed 1.5% of total capitation payments, outlining their processes for determining medical appropriateness and cost-effectiveness. A limit of 5% is imposed on total ILOS costs as a percentage of total capitation payments for each program, ensuring that ILOSs remain a targeted and fiscally responsible component of managed care.
Ongoing monitoring of each ILOS is required, and states must conduct an evaluation after five years if ILOS costs exceed the 1.5% threshold. If an ILOS is to be terminated, states must develop a transition plan to ensure enrollees continue to receive necessary state plan services and settings in a timely manner.
Enhancing Quality and Establishing a Quality Rating System
The final rule includes provisions to enhance the quality of care within managed care and establish a Quality Rating System (QRS) to provide beneficiaries with valuable information for plan selection.
States are now required to increase public engagement around their managed care quality strategies, ensuring that these strategies are informed by diverse perspectives and needs. The rule eliminates External Quality Review (EQR) requirements for primary care case management entities, streamlining quality oversight. It also makes it easier for states to use accreditation reviews for EQR, reducing administrative burden.
To improve data consistency and comparability, the rule establishes consistent 12-month review periods for annual EQR activities, ensuring reports contain the most up-to-date data. It also requires more meaningful data and information to be included in annual EQR reports, enhancing the value of these reports for quality improvement efforts.
Perhaps most significantly, the final rule establishes the framework for a Medicaid and CHIP Quality Rating System (MAC QRS). The state’s MAC QRS website will serve as a “one-stop-shop” for beneficiaries to access information about Medicaid and CHIP eligibility and managed care, compare managed care plans based on quality and other factors, such as drug formularies and provider networks, and ultimately select a plan that best meets their needs.
The rule establishes the CMS framework and state requirements for the MAC QRS, including an initial set of mandatory quality measures and a process for updating these measures in the future. It also outlines the methodology for calculating the quality ratings displayed on each state’s MAC QRS. States are provided with greater flexibility to implement alternative QRS approaches, allowing for innovation and tailoring to state-specific contexts.
Impact on Children’s Health Insurance Program (CHIP)
The final rule extends many of the Medicaid managed care provisions to separate CHIPs, ensuring greater alignment between these programs in areas such as access, ILOS, MLR, and quality. Notable exceptions, consistent with previous rulemaking, include not adopting Medicaid provisions for SDPs and the Managed Care Annual Report (MCPAR) for separate CHIPs.
Uniquely for separate CHIPs, the final rule requires states to post summary Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey data by plan, annually, on state websites. States must also review CAHPS results in their annual analysis of network adequacy within two years of the effective date of the Final Rule, further emphasizing the importance of enrollee experience and access to care within CHIP.
Conclusion
This final rule represents a comprehensive effort to strengthen Medicaid and CHIP managed care programs, which serve a significant portion of the American population. By focusing on enhancing access to timely care, improving the effectiveness of state directed payments, clarifying financial and program integrity requirements, defining the scope of ILOSs, and establishing a Quality Rating System, CMS aims to create managed care programs that are more responsive to the needs of enrollees and promote better health outcomes. These changes are crucial for ensuring that the millions of Americans enrolled in managed care programs receive the high-quality, accessible, and affordable healthcare they deserve.
For more detailed information, you can review the final rule and the applicability date chart. Additional resources on Medicaid managed care are available at https://www.medicaid.gov/medicaid/managed-care/index.html.
