As expected, the CMS' sweeping rule to modernize the regulation of Medicaid managed-care plans is drawing flak from state Medicaid directors and insurers who say it would impose heavy-handed federal control and could hurt patient care.
But some consumer advocacy groups responded favorably to the proposed rules, saying they offer guidance to states and Medicaid plans in developing provider networks that offer better access to beneficiaries.
The 653-page rule released in May would cap how much premium revenue private plans could allocate for administration and profits; require states to more rigorously supervise the adequacy of plans' provider networks; encourage states to establish quality rating systems for plans; allow more behavioral healthcare in institutional settings; and encourage the growth of managed long-term care.
The proposed rule was considered long overdue because Medicaid managed-care enrollment has soared by 48% to 46 million beneficiaries, according to consulting group Avalere Health. By year-end the firm estimates that 73% of beneficiaries will receive services through managed-care plans.
Currently, 37 states and the District of Columbia contract with Medicaid plans, according to Medicaid Health Plans of America.
States have turned to Medicaid managed-care plans hoping to reduce costs and get more budget predictability. Insurers, however, have faced criticism for offering inadequate provider networks and denying needed care to pad their bottom lines. Because of the wide variation in how states run their Medicaid managed-care programs, there have been “inconsistencies” and “less-than-optimal results,” the CMS said when it issued the proposed rule.
Last year, HHS' Office of Inspector General reported that states were not enforcing their own rules to ensure Medicaid plans had enough providers to care for their patients.
The last federal regulation governing such plans was issued in 2002. The proposed rule received nearly 900 comments by the July 27 comment deadline.
The National Association of Medicaid Directors said in its written comments that the rule would reduce the role of state Medicaid agencies in supervising how Medicaid managed care operates in their states. “The overarching framework of the regulation appears to shift the balance of authority for Medicaid managed care to the federal government, driving a top-down model that runs counter to the goal of a modernized regulatory framework,” the group said.
That approach, the group added, “removes the ability of states to drive innovation in managed-care delivery, to fully leverage the relationship to improve plan performance, or to tailor the approach to reflect the needs and expectations of the local population.”
A CMS representative did not respond to a request for comment for this article.
The Medicaid directors criticized a provision that would require states to offer Medicaid beneficiaries at least 14 days of initial coverage under traditional fee-for-service Medicaid, during which time they could choose a managed-care plan. “This policy fails to recognize that many states no longer have (fee for service) delivery models in their program,” the group complained.
Medicaid plans objected to the CMS' proposal that they be required to spend 85% of premium revenue on medical care, a threshold known as a medical loss ratio. The Affordable Care Act set minimum medical loss ratios of 80% and 85% for individual and large-group plans in the commercial sector; money spent on administrative costs and profit above those limits must be rebated to consumers or employer purchasers. As of 2015, health plans doing business with Medicaid and the Children's Health Insurance Program are the only ones that are not subject to such thresholds.
The health insurance industry had lobbied against inclusions of a minimum medical loss ratio, but experts said the proposed Medicaid requirement would not have much effect on large national insurers. About three-quarters of states with Medicaid managed care already require average medical loss ratios of at least 85%, according to the Kaiser Family Foundation.
Still, the Blue Cross and Blue Shield Association argued in its written comments that the benefits and services offered by managed-care organizations do not easily fit into the commercial medical loss ratio calculation. For example, managed-care plans spend significant resources on beneficiary outreach, partnering with local organizations for health promotion activities, and services to enhance patient compliance with treatment plans.
“Accounting for these expenditures in the MLR methodology may be challenging,” the Blues association said. “In addition, federal and state Medicaid reporting requirements require significantly more administrative resources beyond what commercial and Medicare programs require, making meeting an 85% MLR more difficult.”
To ensure that Medicaid beneficiaries have adequate access to care, the CMS is proposing that states establish time and distance standards for enrollees' access to providers. The agency mostly left the development of these standards to the states.
At a minimum, Medicaid plans' provider networks must meet such standards for certain types of providers, including hospitals, primary-care physicians and OB-GYNs, according to the proposed rule. The CMS said time and distance more accurately capture whether beneficiaries have adequate access to care than provider-to-enrollee ratios. States must also consider whether plans offer an adequate number of providers who speak languages other than English. In addition, the CMS encouraged states to include pediatric primary, specialty and dental providers in their network rules because of the large number of children covered under Medicaid and CHIP.
But Medicaid plans warned such requirements could hurt care for beneficiaries. “Requiring that states establish access standards based on the travel time and distance to a provider's office relies on outdated notions of 'traditional' models of care delivery and does not take into account the variety of ways in which patients now commonly access healthcare, including via telemedicine,” Kaiser Permanente, which operates Medicaid plans, said in its comments. “Mandating the use of time and distance standards works to preserve the structure of geographically dispersed, disjointed provider networks and would do nothing to improve the quality of care provided to Medicaid beneficiaries."
Geography-based standards also could discourage integrated delivery systems like ACOs, plans said.
But the National Health Law Program, a consumer advocacy group, praised the network adequacy provisions. “For too long, the Medicaid managed-care program has lacked specific network adequacy standards aimed at ensuring that consumers can access care from their Medicaid plans,” the group said. “These proposed provisions add significant detail to guide states and Medicaid plans in developing their networks to ensure adequacy.”
Medicaid Health Plans of America criticized a proposed provision eliminating the requirement that Medicaid plan enrollees provide written consent for a provider to file an appeal on their behalf following an adverse benefits decision. The CMS said requiring Medicaid enrollees to provide written consent is inconsistent with standards for the Medicare Advantage program.
“The language in the proposed rule may encourage providers to use the appeal process as a way to file claims payment disputes, which is not the intent of the grievance or appeal process,” the health plan group said in its comments.
Anthem wrote that “we believe that the proposed approach could potentially result in providers operating in furtherance of their own self-interest.”
