New CMS guidelines intended to ensure Medicaid managed care plans are adequately reimbursed will frustrate state agencies and create paperwork the CMS might not have the staff to handle, according to the National Association of Medicaid Directors.
The agency issued an under-the-radar 17-page Medicaid managed care rate guidance (PDF) on June 5 that wasn't posted through traditional policy channels like the Federal Register or Medicaid.gov's home page.
In the document, the agency advises states on how to ensure next year's payments are actuarially sound—meaning they cover all medical and administrative costs, taxes and fees for which the health plan is responsible.
The agency says the guide is in response to feedback that states wanted to better understand what the CMS considers to be a sufficient rate for plans.
Ensuring plans are adequately paid is crucial to retaining and expanding access to providers. Some states like California report challenges finding clinicians who will accept Medicaid beneficiaries.
A benefit of managed care versus fee-for-service Medicaid is that plans can use their capitated payments to pay some doctors more to have them tend to beneficiaries, but that can be hard to do if reimbursement from states isn't adequate, according to Jeff Myers, president and CEO of the trade group Medicaid Health Plans of America.
Roughly 58% of all Medicaid beneficiaries in 39 states and the District of Columbia accessed part or all of their Medicaid benefits through capitated health plans in 2011, the most recent year for which complete data is available, according to the CMS.
The guidance was published just days after the CMS released a sweeping proposed rule intended to modernize the regulation of Medicaid managed-care plans. The last regulation governing such plans was issued in 2002.
The proposed rule suggests an 85% medical-loss ratio for Medicaid managed-care plans, the same amount the government demands of large group plans in the private market.
The new rate guidance outlines lengthy data requirements that states must cite so that the CMS is able to determine whether rates are sound. This includes citations to studies, research papers, other states' analyses, or similar secondary data sources.
Medicaid directors were taken aback by the documentation that the agency was requesting.
“The magnitude of this documentation is more akin to an audit process for rates, rather than a review of the rate development process,” NAMD says in a June 19 letter to the CMS Medicaid Director Vikki Wachino. “This undermines the rationale for securing the services of professional actuaries to develop rates and certify them. It is also likely that the volume of information will only exacerbate the unrestricted follow-up questions that have impeded timely rate approvals to date.”
The association also pointed out that given CMS's limited staff, it “is unlikely to have the ability to thoroughly review the array of information and data required under the draft guide.”
If the agency truly wants to ensure adequate rates, it should work with states and their actuaries to strike a reasonable balance in the level of documentation required and ensure CMS oversight of a feasible rate review process, the association said