CMS is overhauling and modernizing requirements for Medicaid managed care and the Children’s Health Insurance Program (CHIP). The regulatory changes are set out in an advance release of a Final rule designed to (1) support state efforts to improve care quality through delivery system reforms; (2) improve consumer care experiences; (3) strengthen program integrity and transparency; and (4) align managed care plan rules with rules that govern Qualified Health Plans (QHPs) and Medicare Advantage (MA) plans. The Final rule is set to publish in the Federal Register on May 06, 2016. The majority of the new regulations will take effect 60 days after the Final rule’s publication.
Modernization. In part because of individual coverage gains under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), CMS determined that it is important to align and coordinate Medicaid and CHIP standards with private insurance market standards. CMS indicated that the modernization of managed care requirements was necessary due to states’ increasing reliance on managed care, which provides some or all of the Medicaid benefits for 73.5 percent of all Medicaid beneficiaries.
Alignment. To promote alignment, and to ensure that managed care capitation rates are actuarially sound, CMS is requiring that—like MA and private health insurance plans—Medicaid and CHIP managed care plans calculate and report a (MLR) medical loss ratio. The Final rule also modernizes managed care appeals and aligns them with MA and private plans by requiring enrollees to use internal managed care organization (MC) processes before appealing to a state fair hearing. CMS is also aligning rules related to consumer information and provider screening and enrollment. From a communication standpoint, the Final rule permits states to use a wider range of dissemination practices—mail, email, texts, and website posting—to reach consumers. Additionally, the Final rule enhances program integrity by requiring that all providers in Medicaid, who order, refer, or furnish services under the managed care program, are appropriately screened and enrolled.
Transparency. In addition to the MLR calculation and reporting, the Final rule promotes transparency by requiring that managed care capitation rates are actuarially sound. Now, in addition to the mandate that capitation rates be developed in accordance with generally accepted actuarial principles and be certified by a qualified actuary, capitation rates must be set using specific types of data—trend factors, adjustments and the development of non-benefit costs. The goal is to make CMS’ review and approval of rates more consistent, streamlined, and effective.
Program integrity. Other program integrity changes include the implementation of procedures for prevention, monitoring, and identification of suspected provider fraud. The Final rule also implements ACA requirements designed to strengthen encounter data submissions. Specifically, the Final rules requires that managed care plan contracts require specific, accurate, and timely data submissions to states, in a format designated by CMS.
Adequacy. CMS is taking steps to broadly improve managed care plan standards. For example, the Final rule requires states to set and monitor network adequacy standards. Under the new regulations, states must develop and implement time and distance standards for primary and specialty care providers. Additionally, states must assess the adequacy of managed care plan’s provider networks on, at least, an annual basis.
Quality rating system. The Final rule addresses quality by establishing authority for the implementation and development of a Medicaid and CHIP managed care quality rating system (QRS) that is comparable to the one used by the ACA marketplace. The QRS is designed to help states measure quality and assist consumers with shopping for quality plans. CMS will establish much of the QRS system. However, states will be given the opportunity to request approval for alternative rating systems. The Final rule also requires states to provide choice counseling—unbiased information on managed care plan or provider options and answers to related questions for Medicaid beneficiaries.
Delivery system reforms. Under the Final rule, states are permitted to encourage managed care plans to develop contracts with broad-ranging delivery system reform or performance improvement initiatives. CMS is hoping to develop managed care plan structures that support timely access to care, value-based purchasing, and incentives based upon performance targets. The Final rule makes other unique payment changes to facilitate new kinds of care delivery, such as allowing states to make a capitation payment for enrollees with a short-term stay in an Institution for Mental Disease.
LTSS. The Final rule also strengthens policies related to the long-term services and supports (LTSS) that are provided to seniors and people with disabilities enrolled in Medicaid. Individuals who receive LTSS usually are elderly or have disabilities that interfere with their abilities to live independently. As a result they usually have needs that are more complex than the typical adult or child beneficiary who is not disabled. The Final rule codifies policies including those that encourage: stakeholder monitoring of LTSS programs, payment methodologies that are consistent with LTSS program goals, the creation of an independent beneficiary support system that provides choice counseling, person-centered processes, network adequacy monitoring, and the inclusion of LTSS-specific elements in quality strategies.
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