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Much Anticipation but Few Hints at Medicaid Managed Care Rule


The most sweeping overhaul of Medicaid regulations since 2002 is due soon. So far there are few hints at what CMS may require states to do as they award managed care contracts in an effort to better coordinate care and control costs.

Healthcare leaders across the country have their eyes on CMS these days, as the agency is set to roll out its overhaul of regulations for Medicaid managed care, which has swept through states like wildfire in recent years.

Rules for Medicaid managed care have not been updated since 2002, so the policy update will have to reflect all that has changed in technology, politics, law, and the culture. For starters, managed care has passed the point of no return; CMS reports that more than half of all beneficiaries receive some or all of their care through managed care organizations, or MCOs.

Since that time, the Internet has become a dominant form of communication. Smartphones are ubiquitous, and the poor have embraced this technology. There’s really no excuse, consumer advocates say, for problems like outdated doctors’ directories that aren’t continually updated online.

Also, this will be the first update since the passage of the 2010 Patient Protection and Affordable Care Act (ACA). The law forced a US Supreme Court ruling that addressed how far the federal government can go with Medicaid, which has always involved a blend of state and federal dollars and governance. In 2012, the justices ruled that the federal government could not compel states to expand Medicaid to 138% of the federal poverty line.

However, the distinction between the court’s 2012 ruling, compared with the long history of Medicaid mandates from Congress and the US Department of Health and Human Services (HHS), is that the ACA fundamentally altered the nature of Medicaid to an income-driven program, according to Matt Salo, executive director of the National Association of Medicaid Directors.

“In short, it’s not just that you can’t compel the states to expand coverage—which has been done numerous times—it’s that you can’t compel the states to fundamentally alter the nature of the program,” Salo told The American Journal of Managed Care in an email. He does not expect the Medicaid managed care rule to meet that standard, but he noted he has not seen it.

In the current climate, however, it makes sense for CMS to carefully address current problems in Medicaid managed care without overstepping the agency’s bounds. A March analysis by the Kaiser Family Foundation (KFF) on the upcoming rules takes this into account; for example, recommendations for increased oversight of MCO payments and practices will likely involve states doing their own enforcement and reporting.

In some ways, CMS is playing catch-up to all the activity that has occurred in the states. Governors and state Medicaid officials are motivated by both policy reasons—the desire to deliver better care—and financial ones—the recognition that Medicaid was eating up increasingly large shares of their budgets; unlike the federal government, states cannot run deficits.

A review by KFF of the Medicaid managed care landscape in December 2014 found some form of it 39 states, with varying levels of market penetration and many plans for expansion. Its growth does not come easy, however. In Iowa, Governor Terry Branstad has engaged in a tough battle with Democrats in the legislature over his Medicaid managed care proposal. In Kentucky, a state auditor’s report of dwindling provider availability in rural areas—blamed in part on low Medicaid reimbursement rates—prompted Governor Steve Beshear to rebid the managed care contracts. Yet as states move forward, they continue to promise a future of better care coordination for the most vulnerable, and better outcomes for the increasing share of Medicaid clients with chronic conditions.

As Salo wrote in The American Journal of Accountable Care in December 2014, states are where the innovation is: “Transforming the delivery system into a better-coordinated, holistic approach that creates greater accountability for improved health care outcomes, and converting the payment incentives from volume to value will all have much more significant impacts on the future of the Medicaid program and the US healthcare system as a whole.”

So what will CMS do? Based on its announcement in October 2014, the rules should cover the following areas:

Access. Problems with finding a primary care doctor and getting an appointment account for the bulk of beneficiary complaints, and this is why the many newly insured under Medicaid expansion still end up seeking care in the emergency department. States will likely receive standards for how quickly patients should be able to get an appointment, and this will guide other matters such as network adequacy and rates. Other issues include how frequently doctor directories are updated, putting directories online, and additional rules on making materials usable for persons with disabilities.

Network adequacy. The KFF analysis predicted that states would be asked to conduct “secret shopper” tests to ensure that a patient needing a particular type of specialist could see one in a reasonable period of time.

Setting rates. Low reimbursement rates are the heart of the problem in states where access is most acute. On this issue, the court has spoken recently: in March, the justices voted 5-4 to overturn a ruling from an Idaho case, in which a federal appeals court had allowed a provider to sue the state over inadequate reimbursement. According to Salo, however, this ruling merely confirmed that an adequate regulatory process exists to address rate disputes.

Beneficiary protections. KFF and other experts anticipate that CMS will clarify how MCOs must handle appeals when they deny care, with an emphasis on spelling out time frames for decisions. Some predict requirements for better training and education of MCO employees.

Enrollment and notice. Some expect rules that ask states to give beneficiaries more assistance in selecting a plan their fits their needs and avoids separating them from longtime providers if the plan changes, or if a key provider moves to a different plan. More real-time information about which doctors are in which plans will help, but there are also calls for “matching” clients with plans based on provider and health history.

Persons with special needs. Some of the most alarming complaints have involved cases of clients who are severely disabled, homebound, or require other costly long-term care. Stories have flowed in from around the country of fragile patients being separated from longtime providers; the biggest problems seem to occur during a state’s transition to managed care. A story from Ohio featured a disabled woman whose home health aide finally took another job after the managed care contractor failed to pay her for weeks. CMS is expected to specifically address how MCOs must manage these cases.

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