A Primer on Medicaid/CHIP Managed Care Reform

Posted on May 27, 2016 I Written By

The following is a guest blog post by Megan Renfrew, Director in the Cognosante Solutions Lab.
Megan Renfrew - Cognosante
On May 6, 2016, the Centers for Medicare and Medicaid Services (CMS) published a final regulation in the Federal Register concerning managed care in Medicaid and the Children’s Health Insurance Program (CHIP).  The first overhaul of Medicaid and CHIP managed care regulations in more than a decade, the rule “updates how Medicaid works for the nearly two-thirds of beneficiaries who get coverage through private managed care plans,” wrote CMS Acting Administrator Andy Slavitt and Vikki Wachino, CMS Deputy Administrator and Director for the Center for Medicaid and CHIP Services, in a CMS blog post.

Approximately 72 percent of Medicaid enrollees in 39 states and the District of Columbia are served through managed care plans, up 14 percent since 2013.  Combined Federal and state spending on Medicaid managed care exceeds $150 billion annually.  Those figures will grow steadily as states continue to expand Medicaid managed care coverage to include larger geographic areas, additional populations, and services previously covered through fee-for-service Medicaid, such as inpatient and Long-Term Services and Support (LTSS).

While the medical loss ratio and other financial requirements received the lion’s share of attention throughout the rule-making process, the rule’s focus on improving the beneficiary experience and increased reporting and data requirements are equally important.  Beneficiaries will benefit from quality improvement requirements, stricter provider access requirements, and stronger care management programs.  Plans and states will need to adjust contracts and IT systems to meet new data, reporting, and analytics requirements that support CMS’s goals of increased program integrity and transparency.

Beneficiary Experience & Protections

To strengthen the experience of beneficiaries, the rule requires states to address disparities and individuals who need long term care or have special health needs in their quality plans for the Medicaid managed care rule.  The final rule, which will be phased in over several years, also creates the first quality rating system for Medicaid managed care plans, aligning Medicaid with Medicare Advantage and Qualified Health Plans rules.  This will allow beneficiaries to better compare plans before enrollment.

On the care management front, 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 LTSS.  These rules are designed to make sure that beneficiaries receive appropriate care in the appropriate setting, and are assisted in navigating the complex healthcare system.

The rule helps ensure that beneficiaries have sufficient access to providers by strengthening provider network adequacy requirements.  States must add time and distance standards to their state network adequacy rule (31 states already have time and distance standards in place for primary care providers).  Under the final rule, however, CMS spells out the provider types subject to network adequacy requirements in greater detail.  As a result, states must now create standards for more than seven different provider types.  Plans must also report provider network data at least annually, and maintain an up-to-date provider directory for plan members.

Additional changes focus on targeted beneficiary education and outreach.  States must implement systems that support beneficiaries prior to and after enrollment, a role that will likely be played by enrollment brokers.  Under these systems, beneficiaries are educated about managed care, including benefits covered and choice of plans, and their rights and responsibilities under Medicaid.  The beneficiary support system also provides a venue for current managed care enrollees, including assistance navigating the grievance and appeals process.

Enhanced Data and Systems Needs

Under the final rule, states and plans are required to meet stronger data submission and reporting requirements to support program oversight, program integrity, and increased transparency.  To meet these requirements, states and plans must have adequate IT systems to ensure accurate and timely data delivery and reporting.  Some states and managed care plans will likely need to increase their data collection and analytics capabilities to comply with the new rule.

The most important change is that federal payment for Medicaid managed care is tied to the submission of accurate, complete, and timely encounter data to CMS in a CMS-specified format, likely TMSIS.  Historically, some states have struggled to collect complete and accurate encounter data from managed care plans, and to manage that data in legacy systems designed for fee-for-service claims.  Both states and plans will need to examine their current IT systems, data collection and submission processes, and contract language to ensure that they are well positioned to meet these requirements.

In addition to the encounter data requirements, CMS is requiring that states post information on their Medicaid managed care plans on a public website, including enrollee handbooks, provider directories, and plan contracts.  Also required is information about plan performance, including finances, operational performance, quality indicators, measures of customer satisfaction, and the results of program integrity audits.

To meet the stricter provider network adequacy requirements, plans will need to have, at a minimum, accurate data on their provider network.  As states revise their network adequacy rules to meet the CMS requirements and monitor their plans for compliance, they may benefit from using GIS-based tools that automate network adequacy analysis and allow for easy evaluation of policy options and plan performance.

To support program integrity goals, the CMS rule requires all providers in Medicaid managed care plan networks to enroll with the state Medicaid agency.  Enrollment in Medicaid was previously required only of those providers participating in the Medicaid fee-for-service program.  States may find that they need more automated provider enrollment and verification systems to handle the increased workload that this requirement will generate for state Medicaid agencies.  Luckily, provider enrollment solutions are available in the market.

To help ease the burden of implementing the systems necessary to manage the robust data collection, analysis, exchange, and reporting necessary under Medicaid managed care reform, states can leverage CMS’s previously issued final rule extending 90 percent federal matching funds for Medicaid enterprise system development.  In addition to ensuring the permanent availability of this funding, that rule extends its use to commercial-off-the-shelf and software-as-a-service solutions.  This allows states to take advantage of previously developed and tested products in the marketplace.

21st Century Medicaid

CMS and its stakeholders devoted thousands of hours to crafting sweeping reform that brings Medicaid manage care into the 21st Century, including supporting data-driven decision-making and oversight, and allowing for state innovation in delivery system and payment reform. Doing so solidifies Medicaid’s place as a key driver of health innovation and plans’ roles supporting and implementing that innovation.

About Megan Renfrew
Megan Renfrew is a Director in the Cognosante Solutions Lab.  An accomplished health policy expert who spent more than five years drafting healthcare bills for the U.S. House of Representatives, she previously served as the technical director at CMS responsible for collecting and analyzing Medicaid and CHIP eligibility and enrollment data from states.