Plans, providers split on easing Medicaid network adequacy standards

Health plans clashed with provider and consumer groups in their reactions to the CMS' proposal to give states more flexibility in regulating the adequacy of provider networks in Medicaid managed-care plans.

But others firmly disagreed, pointing to reported Medicaid patient access problems in states like Iowa and Texas. They urged tougher federal standards and oversight. "We believe the CMS should specify some type of geographical requirement or that ratio may be meaningless," wrote the Association for Community Affiliated Plans, which represents not-for-profit, provider-linked safety net plans.

Another contentious issue was pass-through payments from plans to providers in states that are transitioning to Medicaid managed care. The CMS proposed granting states a three-year period during which they can require plans to make such payments to ease the transition. The National Association of Medicaid Directors supported that proposal, while Medicaid Health Plans of America and the American Hospital Association urged lengthening that to at least five years.

Those provisions were included in a broader, complex proposal by the CMS to give states greater leeway in regulating managed-care plans serving people in Medicaid and the Children's Health Insurance Program. Nearly 55 million Medicaid beneficiaries—68.1% of all beneficiaries—were enrolled in comprehensive managed care in 2016, as states continue moving new populations into managed care.

Through the rule, the Trump administration is seeking to encourage the growth of private health plans within Medicaid and CHIP, reduce regulations including those protecting beneficiaries, and limit federal exposure to healthcare costs.

There were 208 comments filed when the public comment period closed Monday.

CMS Administrator Seema Verma said in November that the proposed rule "fulfills one of my earliest commitments to reset and restore the federal-state relationship, while at the same time modernizing the program to deliver better outcomes for the people we serve."

But the proposal doesn't go as far as some patient advocates feared, for instance leaving in place the Obama administration's requirement that Medicaid and CHIP plans spend at least 85% of government payments on healthcare rather than administrative costs or profits.

Health plans pushed back hard on the CMS' proposal to give states more room to set capitation rate ranges—with variances up to 5%—for competitive bidding, which was barred by the 2016 rule.

"We believe rate ranges increase the risk that Medicaid managed care plan payment levels will be set at levels that are not actuarially sound as required by statute, thereby jeopardizing the ability of plans to deliver care coordination, disease management, and other necessary coverage and services," America's Health Insurance Plans wrote.

Plans also criticized the CMS proposal to bar states from varying risk factors used for setting capitation rates for different Medicaid populations with different federal matching contributions.

"Actuarial principles and sound rate development practices sometimes require the variation of rate assumptions consistent with the characteristics of different Medicaid populations," AHIP wrote.

The National Association of Medicaid Directors shared this concern. "States which may have less experience in developing rates for a given population, such as a state newly expanding its Medicaid program, may have good reason to build in higher margins or assumptions to address uncertainty regarding actual experience," NAMD wrote.

AHIP also questioned the CMS' proposal to keep the Obama administration's rule requiring plans to meet an 85% medical-loss ratio for all Medicaid populations. It argued that in states that implement a work requirement for expansion enrollees, plans will face higher administrative costs and should be granted a lower MLR to cover those costs.

Some commenters, including the AHA, urged the CMS to loosen the restriction on federal payments to Medicaid plans when patients need an inpatient mental health stay for more than 15 days in a month.

The CMS argued that it did not need to ease that rule because it is encouraging states to apply for demonstration waivers for substance use disorder treatment and is developing new pathways for states to expand behavioral health capacity.

"The 15-day limit continues to create inappropriate incentives for timing (institution for mental disease) admissions around basis of payment rather than the medical needs of an individual," the National Association of Medicaid Directors wrote. "We continue to believe that a medical necessity standard is the most appropriate path forward for IMD coverage in a managed care context."

Brent McGinty, CEO of the Missouri Coalition for Community Behavioral Healthcare, expressed concern about the overall impact of the proposed rule and the growth of Medicaid managed care on access to mental health and substance abuse treatment.

"Allowing states to privatize to (managed care organizations), take 15-20% out of the provider payments, plus restrict costs of care through lower actuarial processes will greatly reduce access to behavioral healthcare—including medication-assisted treatment and other opioid treatment options," he wrote.