Advocates split with health plans, states over Medicaid managed-care rules

The CMS' sweeping rule to modernize the regulation of Medicaid managed-care plans is facing pushback 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 plans in developing provider networks, giving 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; and encourage the growth of managed long-term care.

Medicaid managed-care enrollment has soared 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.

Insurers have faced criticism for offering inadequate provider networks and denying needed care. 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 that Medicaid plans had enough providers to care for their patients.

The proposed rule received nearly 900 comments by the July 27 comment deadline.

The National Association of Medicaid Directors complained that the rule “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.”

A CMS representative did not respond to a request for comment for this article.

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. That is similar to what the Affordable Care Act requires for plans in the commercial sector.

The Blue Cross and Blue Shield Association argued that the benefits and services offered by managed-care organizations do not easily fit into the commercial medical-loss ratio calculation. “Accounting for these expenditures in the MLR methodology may be challenging,” the Blues association said.

To ensure that Medicaid beneficiaries have adequate access to care, the CMS proposed that states establish time and distance standards for enrollees' access to providers. At a minimum, Medicaid plans' provider networks would have to meet such standards for certain types of providers, including hospitals, primary-care physicians and OB-GYNs.

But Medicaid plans warned such requirements could hurt care for beneficiaries. “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,” said Kaiser Permanente, which operates Medicaid plans.

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.

The CMS included a provision requested by patient advocates that allows beneficiaries enrolled in managed long-term care to switch plans or switch to fee-for-service Medicaid if their provider is out of network. But health plans blasted that provision. “Simply allowing the individual to disenroll from the managed-care plan to fee-for-service will undermine the use of managed-care plans in the Medicaid program, and may cause adverse effects to the managed-care entity,” according to Aetna.

Justice in Aging, a senior advocacy group, praised the CMS' proposed training requirements for plans and providers on community-based services. “The care coordinators, case managers and staff leading the interdisciplinary team need a clear understanding of the community-based supports network,” the group said.

But the Medicaid directors association expressed concern about a proposal requiring states to establish credentialing and re-credentialing policies for providers, including those caring for beneficiaries receiving long-term care. “It is operationally unfeasible for the CMS to require credentialing for all LTSS provided in Medicaid,” the group said, noting that many in-home providers of long-term services and supports are family caregivers.