From AIS Health: CMS Delivers Wins to Medicaid MCOs in Final Rule

Reprinted with AIS Health permission from the November 13, 2020, issue of Health Plan Weekly

The Trump administration has finalized its long-awaited rewrite of an Obama-era Medicaid rule, delivering wins on network adequacy and rate adjustments to managed care organizations (MCOs) operating in state Medicaid programs.

The final rule, released Nov. 9, was four years in the making and is intended to reduce administrative and regulatory burdens on Medicaid/CHIP managed care agencies and plans while offering states additional flexibility, according to CMS.

The final rule likely was pushed out the door so that it would be in place before the President-elect Joe Biden’s administration takes over, says Jeff Myers, senior vice president, reimbursement strategy and market access, at Catalyst Healthcare Consulting. The majority of the provisions will take effect in December.

One main win for MCOs is a provision in the rule that allows states to adjust risk scores only by a “de minimis” amount without review by CMS, Myers says. This provision takes effect with rating periods beginning on or after July 1, 2021. “That’s important because the plans really didn’t get hit by COVID, and so their profit margin this year is insane,” Myers says. Meanwhile, “states have the largest deficit ever, so the states are in desperate need of money,” he says.

Therefore, states would be tempted to adjust actuarial tables downward, reducing payments to states, Myers says. “And so I think the win for the plans is that if [the states] want to get outside a very small change to the actuarial table, it requires submitting it back to CMS,” he adds.

In a nod to the increasing importance of telehealth, particularly during the COVID-19 pandemic, CMS also scrapped “time and distance” requirements for network adequacy, establishing “quantitative” standards that allow states to use alternative metrics such as a “provider to enrollee ratio.” CMS also is clarifying that states have the authority to define “specialists” in whatever way they deem most appropriate for their programs.

“Insurers will be happy with the final rule’s provision on network adequacy,” says Abner Mason, CEO of ConsejoSano, a health tech startup that specializes in linguistically and culturally aligned Medicaid and Medicare patient outreach for health plans and health systems. “States being allowed to set standards like using provider-to-enrollee ratios instead of minimum time-and-distance can facilitate plans and states adopting innovations like telemedicine,” Mason tells AIS Health.

The final rule also makes changes to the Medicaid and CHIP (MAC) Quality Rating System (QRS). It adds a requirement that CMS develop a minimum set of mandatory performance measures that will apply equally whether a state chooses to implement the CMS-developed QRS or a state alternative QRS, and also expands the “scope of alignment of the MAC QRS and this minimum measure set with the Medicaid Scorecard initiative and other CMS managed care rating systems, as appropriate, such as Medicare Advantage,” CMS said.

Myers says it’s possible that this final rule could see additional regulatory changes once the Biden administration takes over (see story, p.1). However, he says adjustments may come as part of broader shifts in Medicaid and health care policy, which would require federal legislation.

by Jane Anderson

View a fact sheet on the CMS Medicaid Managed Care rule. Contact Myers and Mason via Joe Reblando.