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Medicaid Mega Rule Tweaks Proposed

Medicaid Mega Rule Tweaks Proposed

While the Medicaid Mega Rule instituted by the former Obama administration will remain substantially intact, earlier this month the Centers for Medicare and Medicaid Services (CMS) proposed some small changes to the 2016 regulation. As we have said in the past, it was a surprise to us that the rule was implemented with no major changes by President Trump when he took office. The rule will bring a strict compliance and quality regime to Medicaid managed care in the future. Indeed, major portions of the rule look like what Medicare has today.

Today over two-thirds of all Medicaid recipients are now in Medicaid managed care. The vast majority of the TANF welfare program participants and related populations (usually single moms with children) are in managed care, with an increasing number of the aged and disabled SSI population in managed care as well. Even chronic long-term care (LTC) services are increasingly furnished through Medicaid managed care now. The majority of all chronic LTC services are now furnished by Medicaid nationally.

The changes to the 2016 Medicaid mega rule include:

  • Changes to the strict network adequacy standards in the rule. Medicaid managed care organizations objected to what they saw as very onerous time and distance requirements (distance that a member would need to travel to each provider). In the proposed amendment, states can set more flexible quantitative access standards. Examples include:
    • Minimum provider-to-member ratios
    • Maximum travel time or distance to providers
    • Minimum percentage of providers accepting new patients
    • Maximum wait times for an appointment
    • Allowing tele-health services to contribute toward adequacy
    • Allowing states to define various specialties
  • Plans believe strongly in the actuarial soundness of rates. This protects them from states arbitrarily underfunding rates due to budget constraints. The current rule allows states to set actuarially sound ranges for rate cells. The Mega Rule would have forced states to justify specific rates per cell. The proposed rule would allow ranges again but at the same time puts additional parameters and restrictions on how wide those corridors are, among other stipulations. Restrictions on the risk-sharing arrangements between states and plans in the rate-setting process would also be enacted.
  • As managed care programs are phased in to replace FFS, states would be allowed to require plans to make pass-through payments to providers (such as graduate medical education, federally qualified health center, and certain hospital reimbursement).
  • The 85 percent minimum medical loss ratio (MLR) requirement was not changed. Plans had hoped for more flexibility here given the already tight margins in the program (now about 2 percent nationally).
  • Plans will be able to use some electronic communication with members, including not having to re-print provider directories monthly. Medicare has this allowance already and the digital policy was just broadened significantly, meaning we could see the same with Medicaid down the road.
  • In an earlier blog found here we told you that CMS Administrator Verma announced federal financial audits of Medicaid managed care plans. This was in part sparked by a Government Accountability Office (GAO) finding a lack of oversight at the federal and state levels. The GAO stated that audit and oversight was disproportionately aimed at the fee-for-service system as opposed to private plans. Verma re-iterated the audit announcement when outlining the Mega Rule changes.
  • A few revisions are made to the quality bonus program requirement, but the Star-like mandate remains substantially in place.
  • The new case turnaround times remain in force. One change on this front: oral appeals from members do not require a follow-up written signed appeal. Another small change: the timeframe to request a State Fair Hearing was changed to no less than 90 days (from 120 days). This makes it consistent with the FFS program.
  • A series of changes to the State Children’s Health Insurance Program (SCHIP) were proposed as part of the rule as well.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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