Modernizing Medicaid managed care

The “mega” Medicaid managed care rule released this spring by the Centers for Medicare and Medicaid Services (CMS) set in motion a long-overdue overhaul of managed care programs in Medicaid and the Children’s Health Insurance Program. As managed care plans oversee larger percentages of enrollees and benefits, the pressure on state Medicaid agencies to ensure that those plans are providing quality services for a good value increases, as does the need to ensure program integrity is maintained.

The Medicaid managed care rule improves beneficiary protections, increases the focus on quality of care, strengthens financial management and program integrity efforts, and provides states with support for delivery and payment system reform efforts within managed care (e.g. value-based purchasing). In addition, this rule strengthens data submission and reporting requirements to support program oversight, program integrity, and increased transparency.

Driven to modernize

CMS’s drive to reform Medicaid managed care is based, in part, on the growing role of managed care in Medicaid programs across the country. In fiscal year (FY) 2014, states and the Federal government spent $162 billion on Medicaid managed care. Currently, 39 states use comprehensive managed care programs to deliver Medicaid benefits. According to CMS, nearly 80 percent of Medicaid beneficiaries nationwide are in some form of managed care program, a tremendous change from 1990 when that share was just 10 percent of the Medicaid population.

States continue to expand their Medicaid managed care programs; 13 states planned to expand existing programs to cover new services or populations (including populations with complex needs) in FY 2016. Further, the Congressional Budget Office (CBO) projects that Federal spending on Medicaid managed care will increase 53% between FY 2014 and FY 2018, an amount that is matched at the state level.

Given the scale of Medicaid managed care and the rapid pace of change, it is clear why CMS determined a new regulatory approach was necessary. The 1,400-page final Medicaid managed care rule touches on nearly every aspect of the program. However, two areas stand out: the beneficiary experience and reporting and data requirements.

Protecting beneficiaries

The CMS regulation strengthens protections for beneficiaries by improving communication between plans and beneficiaries, improving access to care, care management, care coordination, and counseling on plan options. The rule also encourages plans to improve quality and reduce disparities.

Under the new rule, plan communications must be offered in multiple formats including email, and must be available in multiple languages. Most importantly, key pieces of information like provider directories must be kept up to date and publicly accessible.

The rule improves patient access to providers by requiring states to strengthen network adequacy rules to include time and distance standards for seven provider types, with separate consideration of adult and pediatric providers for some specialties. While 31 states already have time and distance standards in place for primary care providers, we expect that most will have to revisit their network adequacy rules to comply with these new requirements. As they do, policymakers may benefit from using data analytics tools (including GIS-based tools) that automate network adequacy analysis and allow for easy evaluation of policy options and plan performance.

The rule includes standards for care coordination, health assessments for new plan enrollees, and treatment plans for enrollees with special healthcare needs or who receive long-term services and support. These rules help ensure that beneficiaries are assisted in navigating the complex healthcare system and receive appropriate care in the appropriate setting.

All new and renewing managed care beneficiaries must also receive counseling from the state or a neutral enrollment broker about their plan choices. This neutral beneficiary support system also provides education and support to current managed care enrollees, including assistance navigating the grievance and appeals process.

The rule’s quality provisions authorize CMS to create the first quality rating system for Medicaid managed care plans, which is intended to allow beneficiaries to better compare plans before enrolling, similar to the quality rating system used for Medicare Advantage and Qualified Health Plans. States also must measure plan performance with respect to reducing disparities and providing appropriate care to individuals who are eligible for long term services and support in addition to existing quality goals.

Upping the data and systems ante

Under the final rule, states and plans are required to meet stronger data submission and reporting requirements to support program oversight, integrity, and increased transparency. Compliance with these mandates will require adequate IT systems to provide the required data and reporting in an accurate and timely manner. Some states and managed care plans will likely need to upgrade their IT systems to comply.

Most importantly, CMS is tying Federal payment for Medicaid managed care to the successful state submission of accurate, complete, and timely encounter data. Historically, many states have struggled to collect complete and accurate encounter data from managed care plans and to manage that data in legacy IT systems designed for processing fee-for-service claims. Both states and plans will need to examine their current systems, data collection and submission processes, and contract language to ensure that they are well positioned to meet CMS’s encounter data reporting rules.

CMS is also requiring that states post information about their Medicaid managed care plans on a public website, including enrollee handbooks, provider directories, and plan contracts. States must also post information about plan finances, operational performance, quality indicators, measures of customer satisfaction, and the results of program integrity audits.

States may find they need new system modules to comply with the rule’s data collection and reporting and other requirements. For example, the CMS rule requires all providers in Medicaid managed care plan networks to enroll with the state Medicaid agency. In the past, in some states, only providers participating in the Medicaid fee-for-service program have enrolled in Medicaid. Having both fee-for-service and managed care providers enrolled supports key program integrity goals. States may want to consider more automated provider enrollment, verification, and data systems to handle the increased workload that this requirement will generate for their Medicaid agency. Fortunately, provider enrollment solutions with built-in data verification and provider directory functionality are available in the market.

To help ease the burden of implementing systems for Medicaid managed care reform, states can leverage CMS’s previously issued final rule extending 90 percent federal matching funds for Medicaid enterprise system development. That rule also encourages the use of commercial-off-the-shelf and software-as-a-service solutions which allow states to take advantage of previously developed and tested products in the marketplace, reducing risk and, hopefully, development time and costs.