November 13, 2020
Yesterday HHS published a final rule today that rolls back regulatory restrictions and extends greater flexibility to Medicaid managed care plans, particularly on issues of network adequacy. The final rule also gives states more flexibility around actuarial soundness. We can only hope that with the incoming Biden Administration, there will be a new opportunity to restore many of the restrictions that have been relaxed or omitted entirely in the new Rule. The NYS Council will work aggressively to ensure the restrictions are renewed.
The National Council submitted comments on the proposed rule in January, 2019. CMS guidance to states on the final rule is forthcoming.
Below is a summary of the final rule from Inside Health Policy:
Final Medicaid Managed Care Rule Eases Network Adequacy Standards
By Chelsea Cirruzzo / November 9, 2020
The Trump administration on Monday finalized a rule to roll back Obama-era Medicaid and Children’s Health Insurance Plans managed care regulations by, among other things, easing network adequacy requirements, which the agency said will reduce administrative burden.
The rule was first proposed in 2018 with provisions to give states more freedom to define network adequacy in Medicaid managed care and to set the capitation rates paid to Medicaid plans.
The changes are aimed at easing various requirements that kicked in under a 2016 rule by the Obama administration, which the Trump administration said states and stakeholders found overly prescriptive. With a Biden administration incoming, it’s not clear what might happen to the rolled back regulations. President-elect Joe Biden (D) was vice president at the time of the 2016 rule.
The final rule eases the 2016 regulation on network adequacy, which had required states to establish time and distance standards to determine whether networks of Medicaid providers are adequate. The final rule would allow states to replace time and distance measures with a variety of alternative standards, as well as remove provider types that CMS said were subject to network adequacy standards. Under the final rule, states can define specialists as they see fit, CMS said.
The final rule gives also states more leeway in setting the rates that are paid to managed care plans. Within certain parameters, states will be able to develop and certify actuarially sound capitation rates in a 5 percent range. States adjusting their rates within a 5% range will not have to submit a revised rate certification or actuarial justification. This provision will kick in July 2021 and is a step up from the original proposal that rates be adjusted within a 1.5% range.
CMS also finalized a provision to allow states transitioning Medicaid populations into managed care to require managed care plans to make pass-through payments for up to three years at an amount that is less than or equal to the amount of their current upper payment limit payments under fee-for-service, starting July 2021.
The rule will also allow managed care plans to adopt payment models based on a state plan amendment for fee-for-service populations without receiving written approval from CMS, with the option for multi-year payment arrangements. CMS said it wasn’t finalizing some technical changes it proposed on state directed payments due to mixed public comments. These proposed changes had to do with specifying different types of directed payments, including arrangements based on Medicare or commercial equivalent rates.
The final rule prohibits states from changing risk-sharing mechanisms described in the managed care contract or rate certification documents after the start of the rating period, which CMS has said will increase program integrity and keep states from modifying contracts to increase federal reimbursement.
The final rule keeps the requirement for states to develop a quality rating system that beneficiaries can use to assess health plans, but the rule gives states more freedom to develop alternative rating systems while requiring a minimum set of mandatory measures that align with the Medicaid and CHIP Scorecard.
The final rule also eliminates the requirement to submit a written, signed appeal after an oral appeal is submitted, as well as changes the timeframe for enrollees to request a state fair hearing to no less than 90 calendar days and no greater than 120 calendar days, which CMS says better aligns with Medicaid fee-for-service requirements.
The final rule also revises the definition of an adverse benefit determination “to exclude claims denied solely because they do not meet the definition of a ‘clean claim’ and thus eliminate the requirement for written notices to enrollees,” CMS says in a fact sheet.
The final rule also makes other changes to requirements for beneficiary information materials, including changing the description of “large print” to “conspicuously-visible font size,” and permitting quarterly provider directory updates if managed care plans offer a mobile-enabled provider director.
The rule also finalizes a requirement that managed care plans issue notices for provider terminations to the later of 30 calendar days prior to the effective date of the termination or 15 calendar days after the receipt or issuance of a termination notice.
CMS said many of these changes will also apply to CHIP. The final rule also allows states to determine the most appropriate process for coordinating dually eligible beneficiaries, with states able to require managed care plans to enter into a Coordination of Benefits Agreement with CMS. Most provisions will go into effect July 2021.
Managed care plans enroll at least 50% of all Medicaid beneficiaries in 38 states, CMS says. Based on 2018 state Medicaid and CHIP enrollment data, 83% of people were enrolled in managed care arrangements. CMS says it formed a working group with the National Association of Medicaid Directors (NAMD) and state Medicaid Directors to help it craft the rule.
— Chelsea Cirruzzo