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From Health Law Daily, May 27, 2015

Proposal would overhaul Medicaid managed care

By Michelle L. Oxman, J.D., LL.M.

CMS has released an advance copy of its long-awaited proposed rule to update the standards and requirements for Medicaid managed care plans. Scheduled to appear in the Federal Register on Monday, June 1, 2015, the proposal would: (1) increase states’ responsibilities to oversee and monitor the activities of Medicaid managed care plans; (2) impose medical loss ratio (MLR) requirements similar to those governing qualified health plans (QHPs) available through the state and federal Health Insurance Exchanges or Marketplaces pursuant to Section 1311 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148); and (3) align other requirements of Medicaid managed care with those applicable to commercial plans, QHPs, and Medicare Advantage (MA) plans. The agency has paid particular attention to strengthening the controls over rate-setting, including the determinations of actuarial soundness, the appeal and grievance process, quality reporting, and marketing to current or potential Medicaid beneficiaries.

Rate-setting. The agency describes a six-step process for the development of capitation rates, beginning with the acquisition and development of base data from historical experience. The agency must analyze the data and trends to project both the costs of benefits and other costs not directly related to benefits, addressing both historical and projected medical loss ratios (MLR). Rate development also includes selection of a risk adjustment process, which must be applied in a budget neutral manner.

The proposed rule would require states to submit their capitation rates using specific rate cells; the term “rate cells” is defined as “mutually exclusive categories” of beneficiaries defined by specific characteristics. Each beneficiary must be assigned to one rate cell. Moreover, the actuary would be required to certify the actuarial soundness of each rate cell. The proposed rule would not allow cross-subsidization of any group of beneficiaries by any other group. It also specifically prohibits the assignment of beneficiaries or beneficiary groups to rate cells based upon the percentage of federal financial participation (FFP) available.

Actuarial soundness. To be considered actuarially sound, each rate must be sufficient to meet the reasonable, appropriate, and attainable costs projected for the applicable population and result in an MLR of 85 percent. The proposed rule incorporates Actuarial Practice Standard No. 49, published by the American Academy of Actuaries in March 2015, which was developed specifically for use with Medicaid managed care plans.

Prepaid ambulatory health plans (PAHPs). In the preamble to the proposed rule, CMS explained that PAHPs would be treated like other Medicaid managed care organizations. The agency noted that since the issuance of the 2002 final rule, PAHPs are no longer owned by small groups of professionals who could not be expected to have the organizational structure of large commercial plans. PAHPs have become specialized organizations that manage carved out benefits such as behavioral health or dental care. Therefore, they should be held to the same standards as other managed care organizations.

Grievances and appeals. The proposal would standardize the timeline for grievance procedures to bring them in line with the rules that apply to QHPs, Medicare Advantage and commercial plans. States would no longer have the discretion to choose the time within which grievances must be brought to the managed care organization (MCO). In addition, the state fair hearing procedure would be available to beneficiaries only after completion of the MCO’s procedure. The proposal also specifies that the individuals reviewing an adverse benefit determination may not be subordinates of any of the individuals who participated in the challenged determination. The state’s contracts with MCOs would be required to address the question whether the plan may recoup its expenditures for a beneficiary whose grievance is ultimately rejected in the state fair hearing process.

Network adequacy. CMS did not adopt the adequacy standards used in the MA program. Rather, it would require states to set measures of travel time, distance, and wait times for appointments for primary care for adult and pediatric patients, obstetrical/gynecological services, specialists, and pediatric dental services. The agency noted that the network adequacy findings in existing plans often mask the inaccessibility of services for pediatric patients because the data made available do not include limitations set by individual professional practices.

If states allow for exceptions to the network adequacy requirements, the proposed rule would require the standard for granting exceptions to be stated in the contract between the state and the MCO, as well as ongoing monitoring of beneficiaries’ access whenever an exception has been granted. States would be required to publish their standards for network adequacy on their web sites and make them available to beneficiaries with disabilities or limited English proficiency without any charge.

Long-term care services and supports (LTSS). One of the most far-reaching changes in Medicaid managed care has been the transition of individuals who receive home and community-based services or other forms of long-term care into managed care plans. These individuals, who usually are elderly or have disabilities that interfere with their abilities to live independently, have needs that are more complex than the typical adult or child beneficiary who is not disabled. Therefore, the proposed rule would require an added level of support similar to ombudsman services, which would include an access point for complaints and concerns about enrollment, education about enrollees’ rights and responsibilities in the grievance and fair hearing process; assistance with the grievance and fair hearing process, and review and oversight of state program data concerning LTSS.

MainStory: TopStory MedicaidNews ManagedCareNews

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