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

Issue Brief
  1. 83 Fed. Reg. 57264-57299 (Nov. 14, 2018), https://www.federalregister.gov/documents/2018/11/14/2018-24626/medicaid-program-medicaid-and-childrens-health-insurance-plan-chip-managed-care.

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  2. 81 Fed. Reg. 27498-27901 (May 6, 2016), https://www.federalregister.gov/articles/2016/05/06/2016-09581/medicaidand-childrens-health-insurance-program-chip-programs-medicaid-managed-care-chip-delivered.

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  3. For a summary of the 2016 final rule, see Kaiser Family Foundation, CMS’s Final Rule on Medicaid Managed Care:  A Summary of Major Provisions (June 2016), https://www.kff.org/report-section/cmss-final-rule-on-medicaid-managed-care-issue-brief/.

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  4. Most provisions were effective July 2016, although some provisions became effective later. See id. 

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  5. Letter from HHS Sec’y Thomas E. Price and CMS Administrator Seema Verma to governors (March 14, 2017), https://www.hhs.gov/about/news/2017/03/14/secretary-price-and-cms-administrator-verma-take-first-joint-action.html.

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  6. CMCS Informational Bulletin, Medicaid Managed Care Regulations with July 1, 2017 Compliance Dates (June 30, 2017), https://www.medicaid.gov/federal-policy-guidance/downloads/cib063017.pdf.

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  7. The November 2018 NPRM also includes some proposals related to CHIP which are outside of the scope of this brief.

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  8. Medicaid Managed Care Enrollment Reports, Centers for Medicare and Medicaid Services, U.S. Department of Health and Human Services, 2018.

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  9. Share of Medicaid Population Covered under Different Delivery Systems, State Health Facts, Kaiser Family Foundation, https://www.kff.org/medicaid/state-indicator/share-of-medicaid-population-covered-under-different-delivery-systems/

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  10. This brief generally refers to “health plans.” Provisions in the proposed rule generally apply to MCOs, and some provisions also apply to PIHPs, PAHPs, and PCCM entities.

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  11. The 2016 final rule anticipated that CMS would have finalized the QRS by 2018. The proposed rule indicates that CMS has begun the early stages of a stakeholder engagement process and convened a technical expert panel.  83 Fed. Reg. 57280 (Nov. 14, 2018).

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  12. 83 Fed. Reg. 57281-57282.

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  13. Rate cell ranges would be allowed provided certain conditions are met. Proposed conditions include: 1) the rate certification identifies and justifies the assumptions, data, and methods specific to the upper and lower bounds of the rate range; 2) both the upper and lower bounds of the rate range are certified as actuarially sound; 3) the upper bound does not exceed the lower bound multiplied by 1.05; 4) the rate certification documents the state’s criteria for paying at different points within the rate range; and 5) the state does not use as criteria for payment the willingness or agreement of plans or their network providers to enter into intergovernmental transfer (IGT) agreements or based on the amount of funding plans or their network providers provide through IGT agreements.

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  14. The NPRM proposes that a state may not: 1) use a profit, operating, or risk margin to develop capitation rates that is higher than the margin used to develop capitation rates for the covered population, or contract, with the lowest average rate of FFP; 2) factor into the development of capitation rates the additional cost of contractually required provider fee schedules or minimum levels of provider reimbursement, above the cost of similar provider fee schedules, or minimum levels of provider reimbursement, used to develop capitation rates for the covered population, or contract, with the lowest average rate of FFP; and 3) lower the remittance threshold for a medical loss ratio for any covered population, or contract, below the threshold used for the covered population, or contract, with the lowest average rate of FFP.

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  15. On January 17, 2018 CMS posted a final rule clarifying pass-through payment transition periods and maximum allowable pass-through payments. See 82 Fed. Reg. 5415-5429 (Jan. 18, 2017), https://www.federalregister.gov/documents/2017/01/18/2017-00916/medicaid-program-the-use-of-new-or-increased-pass-through-payments-in-medicaid-managed-care-delivery.

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  16. For background about the Medicaid IMD payment exclusion, see Kaiser Family Foundation, Key Questions about Medicaid Payment for Services in “Institutions for Mental Disease” (June 2018), https://www.kff.org/medicaid/issue-brief/key-questions-about-medicaid-payment-for-services-in-institutions-for-mental-disease/.

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  17. To receive federal matching funds for “in lieu of” services, a state must identify the services in the plan’s contract and determine that they are medically appropriate and cost-effective. In lieu of services are offered at plan option, and an enrollee cannot be required to use them. Kaiser Family Foundation, CMS’s Final Rule on Medicaid Managed Care:  A Summary of Major Provisions (June 2016), https://www.kff.org/report-section/cmss-final-rule-on-medicaid-managed-care-issue-brief/.

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  18. In July 2015, the CMS issued a state Medicaid director letter describing Section 1115 IMD SUD payment waivers. In November 2017, the CMS issued a state Medicaid director letter revising the 2015 guidance. For current IMD state waiver activity, see Kaiser Family Foundation, Medicaid Waiver Tracker:  Approved and Pending Section 1115 Waivers by State (Jan. 3, 2019), https://www.kff.org/medicaid/issue-brief/medicaid-waiver-tracker-approved-and-pending-section-1115-waivers-by-state/.

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  19. CMS, SMD #18-011, Opportunities to Design Innovative Service Delivery Systems for Adults with a Serious Mental Illness or Children with a Serious Emotional Disturbance (Nov. 13, 2018), https://www.medicaid.gov/federal-policy-guidance/downloads/smd18011.pdf.

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