Health Reform WK-EDGE Nondiscrimination, Medicaid managed care, MSSP: agencies’ ACA focus for Q2 2016
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Monday, July 18, 2016

Nondiscrimination, Medicaid managed care, MSSP: agencies’ ACA focus for Q2 2016

By Sheila Lynch-Afryl, J.D., M.A.

Since April 2016, HHS’s Office for Civil Rights (OCR), CMS, and the Internal Revenue Service (IRS) have issued five final rules implementing the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). This Strategic Perspective provides a brief retrospective of these top stories.

During the second quarter of 2016, the agencies issued the following rules implementing the ACA: (1) prohibiting discrimination in federal health programs; (2) modernizing Medicaid managed care; (3) modifying the Medicare Shared Savings Program (MSSP); (4) making minor changes to the Consumer Operated and Oriented Plan (CO-OP) program and special enrollment periods; and (5) revising medical loss ratio (MLR) requirements.

Nondiscrimination in federal health programs

Section 1557 of the ACA prohibits discrimination on the basis of race, color, national origin, sex, age, or disability in certain health programs and activities. On May 18, 2016, OCR released a Final rule (81 FR 31376) implementing sec. 1557 (see Final rule eyes equity and an end to discrimination in health care, May 18, 2016).

The Final rule adds 45 C.F.R. Part 92 and is effective July 18, 2016, except that provisions requiring changes to health insurance or group health plan benefit design have an applicability date of the first day of the first plan year (in the individual market, policy year) beginning on or after January 1, 2017.

Specific protections. New 45 C.F.R. Sec. 92.206 provides that a covered entity must provide individuals equal access to its health programs or activities without discrimination on the basis of sex and treat individuals consistent with their gender identity. A covered entity may not deny or limit health services that are ordinarily or exclusively available to individuals of one sex to a transgender individual based on the fact that the individual’s sex assigned at birth, gender identity, or gender otherwise recorded is different from the one to which such health services are ordinarily or exclusively available.

The Final rule also requires covered entities to do the following:

  • provide meaningful access to each individual with limited English proficiency eligible to be served or likely to be encountered in its health programs and activities (45 C.F.R. Sec. 92.201);
  • ensure that communications with individuals with disabilities are as effective as communications with others in health programs and activities (45 C.F.R. Sec. 92.202);
  • ensure that health programs or activities provided through electronic and information technology are accessible to individuals with disabilities (45 C.F.R. Sec. 92.204);
  • make reasonable modifications to policies, practices, or procedures when such modifications are necessary to avoid discrimination on the basis of disability (45 C.F.R. Sec. 92.205); and
  • not discriminate on the basis of race, color, national origin, sex, age, or disability (45 C.F.R. Sec. 92.207).

Enforcement. The enforcement mechanisms available for and provided under title VI of the Civil Rights Act of 1964title IX of the Education Amendments of 1972sec. 504 of the Rehabilitation Act of 1973, and the Age Discrimination Act of 1975 apply for purposes of sec. 1557 of the ACA. An individual or entity may bring a civil action to challenge a violation of sec. 1557, and compensatory damages are available.

Notice requirements. 45 C.F.R. Sec. 92.8 requires covered entities to notify beneficiaries, enrollees, applicants, and the public of the various protections provided by the Final rule. In response to industry comments, such as those by the American Hospital Association, covered entities are required to post taglines in at least the top 15 languages spoken by individuals with limited English proficiency of the relevant state(s) instead of nationally, as initially proposed (see Proposed rule80 FR 54172, September 8, 2015).

Medicaid managed care

In May 2016 CMS issued a major Final rule (81 FR 27498, May 6, 2016) modernizing Medicaid managed care and aligning it with other health insurance coverage programs, the first major update in more than a decade (see CMS modernizes Medicaid managed care, May 11, 2016).

Parts of this Final rule implement the ACA. For example, amended 42 C.F.R. Sec. 438.3(s)(3) provides that, pursuant to sec. 2501(c) of the ACA, which amended Soc. Sec. Act Sec. 1927(j)(1), Medicaid managed care organizations, pre-paid inpatient health plans, and pre-paid ambulatory health plans must have procedures in place to exclude utilization data for drugs subject to discounts under the 340B Drug Pricing Program from utilization reports submitted under 42 C.F.R. Sec. 483.3(s)(2).

Amended 42 C.F.R. Sec. 438.3(f)(1) requires all contracts with Medicaid managed care organizations, pre-paid inpatient health plans, pre-paid ambulatory health plans, primary care case managers (PCCMs), and PCCM entities to comply with sec. 1557 of the ACA.

Finally, under new 42 C.F.R. Sec. 438.340, as required by sec. 4302 of the ACA, a state’s quality strategy must include the state’s plan to identify, evaluate, and reduce, to the extent practicable, health disparities based on age, race, ethnicity, sex, primary language, and disability status.

Medicare Shared Savings Program

Section 3022 of the ACA established the MSSP. Under the MSSP, providers and suppliers that participate in an accountable care organization (ACO) receive traditional fee-for-service payments and the ACO might be eligible to receive a shared savings if it satisfies quality and savings requirements.

On June 10, 2016, CMS issued a Final rule (81 FR 37950) modifying the benchmarking methodology and establishing a policy for reopening payment determinations to make corrections (see New ACO benchmarks to take effect in 2017, June 15, 2016).

Reopening. Pursuant to new 42 C.F.R. Sec. 425.315, if CMS determines that the amount of shared savings due to an ACO or the amount of shared losses owed by the ACO has been calculated in error, CMS may reopen the initial determination or a final agency determination and issue a revised initial determination: (1) at any time in the case of fraud or similar fault; or (2) not later than four years after the date of the notification to the ACO of the initial determination of savings or losses for the relevant performance year, for good cause.

Benchmarks. For an ACO’s first participation period, the ACO's fixed historical benchmark is adjusted at the time of reconciliation for a performance year to account for changes in severity and case mix for newly and continuously assigned beneficiaries using prospective hierarchical condition category (HCC) risk scores and demographic factors as described by 42 C.F.R. Secs. 425.604(a)(1) through (3), 425.606(a)(1) through (3), and 425.610(a)(1) through (3). For performance years before 2017, CMS updates the historical benchmark annually for each year of the agreement period based on the flat dollar equivalent of the projected absolute amount of growth in national per capita expenditures for Part A and Part B services under the original Medicare fee-for-service (FFS) program. For the 2017 performance year and later, CMS updates the historical benchmark annually for each year of the agreement period based on the flat dollar equivalent of the projected absolute amount of growth in national per capita expenditures for Part A and Part B services under the original Medicare FFS program for assignable beneficiaries identified for the 12-month calendar year corresponding to the year for which the update is calculated.

New 42 C.F.R. Sec. 425.603 provides that an ACO’s benchmark is reset at the start of each subsequent agreement period. For second agreement periods beginning in 2016, CMS establishes, adjusts, and updates the rebased historical benchmark in accordance with 42 C.F.R. Sec. 425.602(a) and (b) with two modifications: (1) each benchmark year is weighted equally, and (2) an additional adjustment is made to account for the average per capita amount of savings generated during the ACO’s previous agreement period. For second or subsequent agreement periods beginning in 2017 and later, CMS establishes the rebased historical benchmark by determining the per capita Part A and Part B FFS expenditures for beneficiaries who would have been assigned to the ACO in any of the three most recent years before the agreement period using the certified ACO participant list submitted before the start of the agreement period.

Special enrollment periods and CO-OP program

A May 11, 2016, interim Final rule with comment period (81 FR 29146) altered the parameters of certain special enrollment periods and revised rules concerning the CO-OP program (see Special enrollment rules tightened, improving financial viability of CO-OPs, May 11, 2016).

Section 1311(c)(6) of the ACA established enrollment periods, including special enrollment periods for qualified individuals, for enrollment into qualified health plans (QHPs) through an Exchange. Amended 45 C.F.R. Sec. 155.420 provides that the Exchange must allow a qualified individual or enrollee or his or her dependent to enroll in or change from one QHP to another if the individual or dependent gains access to new QHPs as a result of a permanent move and either had minimum essential coverage for one or more days during the 60 days preceding the date of the permanent move or was living outside of the U.S. or in a territory at the time of the permanent move.

ACA sec. 1322 created the CO-OP program to foster the creation of new consumer-governed, private, nonprofit health insurance issuers. Amended 45 C.F.R. Sec. 156.515 provides that a CO-OP must be governed by an operational board with a majority of directors elected by a majority vote of a quorum of the CO-OP’s members that are age 18 or older. Each director has one vote and must meet ethical, conflict-of-interest, and disclosure standards.

Medical loss ratio

A June 2016 Final rule (81 FR 40518, June 22, 2016) amended 26 C.F.R. Sec. 1.833-1 to give guidance to Blue Cross and Blue Shield organizations and certain other organizations on computing the MLR (see IRS revises rules for computing and applying the medical loss ratio, June 29, 2016).

Pursuant to Internal Revenue Code Sec. 833(c)(5), as added by sec. 9016 of the ACA, effective for taxable years beginning after December 31, 2016, an organization’s MLR numerator is the total premium revenue the organization expended on reimbursement for clinical services and activities that improve health care quality provided to enrollees under its policies for the taxable year. An organization that has an MLR of less than 85 percent: (1) is not allowed the special deduction under Sec. 833(b); and (2) must take into account 80 percent, rather than 100 percent, of its unearned premiums.

Conclusion

In the second quarter CMS, the IRS, and OCR issued five final rules implementing the ACA. According to HHS’s spring Agency Rule List, during the third quarter, CMS will issue its annual updates to various payment systems, parts of which implement the ACA.

MainStory: StrategicPerspectives NewsFeed AccountableCareNews EnrollmentNews HealthInsuranceExchangeNews ManagedCareNews MedicaidNews GeneralNews GroupMarketReformNews

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