Perspective

CMS proposes revisions to improve Medicaid, CHIP managed care

November 16, 2018

CMS recently proposed a new rule to relieve regulatory burdens, strengthen accountability, enhance program integrity and promote transparency, innovation and flexibility in the Medicaid and CHIP managed care regulatory framework, according to a press release.

“Today’s action 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,” Seema Verma, administrator of CMS, said in the release.

Many states and stakeholders argued that the 2016 managed care final rule included many unnecessary provisions that added costs and administrative burdens without improving health outcomes, according to the release. In response, CMS created a group with the National Association of Medicaid Directors and state Medicaid Directors to review areas of concern.

The proposed changes to the 2016 final rule include:

  • allowing a 3-year period for states to transition new services and populations into managed care and comply with requirements related to pass-through payments;
  • giving more flexibility to states to create meaningful network adequacy standards;
  • eliminating requirements that regulate how plans communicate with beneficiaries;
  • holding CMS accountable to offer guidance to states in moving through the federal rate review process efficiently;
  • requiring states to create a unique Quality Rating System for their program to help facilitate beneficiary choice and promote transparency;
  • maintaining essential elements of the regulatory framework for program and fiscal integrity, such as the security of rate setting, provider screening and enrollment standards and medical loss ratio standards; and
  • strengthening protections for federal taxpayers regarding cost shifting by banning states from modifying risk-sharing mechanisms.

CMS noted that states also expressed concerns with the 15-day limitation on the length of stay in an institution for managed care beneficiaries for mental disease, but stated that it is not proposing changes to the requirement now and is soliciting data from states to support revisions of the policy.

Disclosure: Verma is the administrator of CMS.

CMS recently proposed a new rule to relieve regulatory burdens, strengthen accountability, enhance program integrity and promote transparency, innovation and flexibility in the Medicaid and CHIP managed care regulatory framework, according to a press release.

“Today’s action 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,” Seema Verma, administrator of CMS, said in the release.

Many states and stakeholders argued that the 2016 managed care final rule included many unnecessary provisions that added costs and administrative burdens without improving health outcomes, according to the release. In response, CMS created a group with the National Association of Medicaid Directors and state Medicaid Directors to review areas of concern.

The proposed changes to the 2016 final rule include:

  • allowing a 3-year period for states to transition new services and populations into managed care and comply with requirements related to pass-through payments;
  • giving more flexibility to states to create meaningful network adequacy standards;
  • eliminating requirements that regulate how plans communicate with beneficiaries;
  • holding CMS accountable to offer guidance to states in moving through the federal rate review process efficiently;
  • requiring states to create a unique Quality Rating System for their program to help facilitate beneficiary choice and promote transparency;
  • maintaining essential elements of the regulatory framework for program and fiscal integrity, such as the security of rate setting, provider screening and enrollment standards and medical loss ratio standards; and
  • strengthening protections for federal taxpayers regarding cost shifting by banning states from modifying risk-sharing mechanisms.

CMS noted that states also expressed concerns with the 15-day limitation on the length of stay in an institution for managed care beneficiaries for mental disease, but stated that it is not proposing changes to the requirement now and is soliciting data from states to support revisions of the policy.

Disclosure: Verma is the administrator of CMS.

    Perspective
    Philip A. Verhoef

    Philip A. Verhoef

    The proposed changes to Medicaid/CHIP recently released by CMS are intended to “let states focus more on delivering quality health care to their beneficiaries.” These changes will not achieve this goal, and they come at the cost of undermining protections for Medicaid beneficiaries, who are the most vulnerable in our population.

    First, these changes are designed to encourage states to move from traditional fee-for-service Medicaid to managed care programs provided by private health insurers. The problem with Medicaid managed care plans is that, in fact, they are less efficient, more expensive and deliver poorer outcomes compared with traditional Medicaid. If Ms. Verma seeks to help states deliver quality care, she would be wise to stop encouraging privatization of Medicaid.

    Second, these changes will eliminate time/distance standards for provider networks, which limit how far an enrollee must travel to see a provider and are used to measure network adequacy. Elimination of these standards will narrow Medicaid managed care networks further; while telemedicine may be an innovative solution to this problem, why must it come at the expense of the standards as currently written?

    Finally, by relaxing standards for how states determine actuarial soundness, they will effectively lower the actuarial value of Medicaid plans, which will mean a race to the bottom: as the actuarial value of these plans drop, they will cover fewer services, thereby reducing care for our most vulnerable.

    In sum, clinicians can expect that the care of our Medicaid/CHIP patients will suffer as a result of these changes.

    • Philip A. Verhoef, PhD, MD, FAAP, FACP
    • Assistant Professor of Medicine and Pediatrics
      Department of Medicine
      University of Chicago

    Disclosures: Verhoef reports no relevant financial disclosures.