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CMS’s 2018 Proposed Medicaid Managed Care Rule: A Summary of Major Provisions

Executive Summary

Managed care is the predominant Medicaid delivery system in most states, with over two-thirds of beneficiaries enrolled in comprehensive risk-based managed care organizations as of July 2016, and millions of others covered by limited-benefit risk-based plans or primary care case management programs. On November 14, 2018, the Centers for Medicare and Medicaid Services (CMS) proposed revisions to the Medicaid managed care regulations with public comments due by January 14, 2019. CMS previously finalized a major revision to these regulations in 2016. The November 2018 proposed rule is not a wholesale revision of the 2016 final rule but proposes changes in the following key areas:

CMS has proposed changes to #Medicaid #managedcare regulations in the areas of network adequacy, beneficiary protections, quality oversight and rates and payment. 68% of Medicaid beneficiaries were enrolled in managed care organizations (MCOs) in 2016.

Network adequacy. The proposed rule would remove the requirement that states use time and distance standards to ensure provider network adequacy and instead let states choose any quantitative standard.

Beneficiary protections. The proposed rule would relax requirements for accessibility of written materials for people with disabilities and those with limited English proficiency; modify some provider directory requirements; and change the timeframe within which plans must tell enrollees that a provider is leaving the network. It also would let states shorten the timeframe for enrollees to request a state fair hearing and eliminate the requirement to submit a written appeal after an oral appeal.

Quality oversight. The proposed rule would revise the requirement that a state’s alternative managed care quality rating system (QRS) yield information substantially comparable to the CMS-developed QRS; clarify that health plan encounter data must include allowed and paid amounts; broaden the definition of disability when addressing health disparities under states’ managed care quality strategies; and require states to annually post online which health plans are exempt from external quality review.

Rates and payment. The proposed rule would allow states to set capitation rate cell ranges instead of a single rate per cell. It also would expressly prohibit states from varying capitation rates based on the amount of federal financial participation for covered populations or any other way that increases federal costs and from retroactively adding or modifying risk-sharing mechanisms after the start of a rating period. The proposed rule would recognize two minimum fee schedules for directed payment arrangements from health plans to providers; allow states to direct the amount or frequency of plan expenditures; codify sub-regulatory guidance for multi-year approvals of value-based purchasing models; and allow states to make new supplemental provider pass-through payments for a time-limited period when transitioning populations or services from fee-for-service to managed care.

Table 1: Key Provisions in CMS’s November 2018 Medicaid Managed Care Rule
Topic 2016 Final Rule 2018 Proposed Rule
Network adequacy Requires states to develop and enforce enrollee travel time and distance standards. Would allow states to choose any quantitative standard.
Beneficiary information Requires taglines in large print and locally prevalent non-English languages on all written materials.

Requires paper plan directories to be updated monthly.

Establishes timeframe for plans to notify enrollees when provider leaves network.

Would require taglines only on written materials determined critical to obtaining services.

Would require paper directories to be updated quarterly unless mobile-enabled electronic version is available.

Modifies timeframe within which plans must notify enrollees when provider leaves network.

Appeals Requires states to provide enrollees with 120 days to request a state fair hearing after the health plan appeal notice of resolution.

Requires enrollees to submit a written signed appeal after an oral appeal submitted.

Would allow states to provide enrollees with 90 to 120 days to request a state fair hearing after the health plan appeal notice of resolution.

Would eliminate requirement for written signed appeal after oral appeal submitted.

Quality rating system Allows states to adopt an alternative quality rating system (QRS) that yields information substantially comparable to the CMS-developed QRS. Would require a state alternative QRS to yield information substantially comparable to the CMS-developed QRS only to the extent feasible.
Encounter data Conditions federal matching funds on state reporting of encounter data. Clarifies that plan submission of encounter data must include allowed and paid amounts.
Quality strategy Requires state quality strategy to address health disparities for enrollees with disabilities, identified as those who are eligible for Medicaid based on a disability. Would require state quality strategy to address health disparities for enrollees with disabilities, using a broader definition of disability.
External quality review Requires states to have an external quality review (EQR) for health plans. Would require states to annually post online which health plans are exempt from EQR.
Capitation rate development Requires states to set a single rate per cell. Would allow states to set a rate range per cell.

Would expressly prohibit states from varying rates based on the amount of federal financial participation for a covered population or another way that increases federal costs.

Would clarify that states can adjust certified rates within a rating period by +/-1.5% without submitting a revised certification to CMS.

Would prohibit states from retroactively adding or modifying risk-sharing mechanisms after the start of the rating period.

Payment Allows states to adopt minimum or maximum fee schedules for plan payments to providers.

Prohibits states from directing the amount or frequency of plan expenditures.

Phases out pass-throughs of state supplemental provider payments in capitation rates.

Would recognize 2 minimum fee schedules for states’ directed payment arrangements from health plans to providers.

Would allow states to direct the amount or frequency of plan expenditures.

Would codify guidance on multi-year approvals of value-based purchasing models.

Would allow new pass-throughs of supplemental provider payments during a time-limited period when states are transitioning populations or services from fee-for-service to managed care.

Issue Brief