CMS Proposes Significant Medicaid Policy Changes for Access Monitoring, Managed Care, and HCBS

In addition to the noted authors, thank you to Manatt Health’s contributors and thought leaders who supported the development of this summary, including Stephanie Anthony, Alix Gould, Avi Herring, Anne Karl, Cindy Mann and Kinda Serafi. 

Introduction

On Thursday, April 27, the Centers for Medicare & Medicaid Services (CMS) released two highly anticipated proposed rules. Together, these would reshape the federal regulatory landscape for Medicaid and the Children’s Health Insurance Program (CHIP), particularly with respect to standards for ensuring access to care, transparency and oversight of provider payment rates, engagement of people enrolled in Medicaid and the public, quality measurement, and program accountability.

The first proposed rule, which focuses on managed care delivery systems, is titled “Managed Care Access, Finance, and Quality“ (or the “Managed Care Proposed Rule”). The second proposed rule, which focuses on fee-for-service (FFS) delivery systems and program improvements for home- and community-based services (HCBS) across delivery systems, is titled “Ensuring Access to Medicaid Services“ (or the “Access Proposed Rule”). Although the two rules largely focus on different delivery systems, they share common goals and themes, with some provisions in each applying across multiple delivery systems.

If finalized, these proposals would represent the most significant changes to federal Medicaid and CHIP regulations since CMS established the existing regulatory framework for managed care in 2016. These proposed changes are all the more noteworthy because of the magnitude of these programs: together, Medicaid and CHIP provide health coverage to more than 90 million low- and middle-income people nationwide. Nearly three out of four of these individuals receive their Medicaid or CHIP benefits through managed care plans.

These proposals follow a request for information (RFI) that CMS published in 2022 to inform the development of a “comprehensive access strategy … to improve health outcomes, advance health equity, and address disparities in access to health coverage and care.” The RFI solicited public comments on access to coverage and access to care, in both FFS and managed care delivery systems, and garnered over 7,000 responses. Last fall, CMS released a proposed rule to improve access to coverage through revisions in eligibility, enrollment, and renewal processes.¹ These latest regulatory proposals address the second portion of the RFI, regarding strategies to improve access to care for those who are already enrolled in Medicaid and CHIP, along with other proposed program reforms for both FFS and managed care delivery systems. 

CMS seeks public input on all aspects of these proposed rules and specifically invites comment on a number of potential alternative or additional provisions that are not part of the current proposals. Comments on both proposed rules are due on July 3. Proposed changes are briefly summarized below. 

Key Provisions in the Proposed Rules

The Managed Care Proposed Rule would, among other things:

• Strengthen access to care and access monitoring requirements in managed care programs by establishing federal minimum standards for appointment wait times, enhancing state requirements for access monitoring, and requiring states to publish analyses of managed care plans’ provider payment rates for certain services.
• Codify and revise the federal regulations governing State Directed Payments (SDPs)—through which states can establish parameters for managed care plans’ provider payments—by providing new flexibility for states, addressing aspects of the nonfederal source of financing for SDPs, codifying guardrails on certain SDP methodologies, and modifying the requirements for SDP evaluation reports and reporting. 
• Codify and build on recent CMS policy changes regarding “in lieu of services”, a mechanism through which managed care plans can provide alternatives to standard covered services when it is medically appropriate and cost-effective.
• Modify Medical Loss Ratio (MLR) methodologies and processes to align more closely with comparable MLR requirements for the commercial health insurance market, increase accuracy of plan reporting for rate-setting purposes, and allow for more consistent comparisons across each plan’s different managed care business lines and from state to state.
• Establish a national framework and enhance requirements for managed care quality rating systems to increase accountability for plans, assist beneficiaries with plan selection, and make various other changes to the existing provisions governing states’ managed care quality strategies and quality monitoring.

The Access Proposed Rule would, among other things:

• Create new transparency and consultation requirements for FFS provider payment rates, including a requirement for states to publish analyses comparing the Medicaid FFS rates for certain services against corresponding Medicare FFS rates, as well as the establishment of an “interested parties’ advisory group” to advise and consult on payment rates for certain HCBS. These provisions would replace the current requirements for triennial Access Monitoring Review Plans.
• Modify the procedures for requesting federal approval to reduce or restructure FFS rates through a State Plan Amendment (SPA), by requiring additional supporting analyses with respect to SPAs that, based on a preliminary review, present potential risks to beneficiaries’ access to services.
• Strengthen program advisory groups. States would be required to create and support a Medicaid Advisory Committee comprising diverse stakeholders, and a Beneficiary Advisory Group comprising solely people with lived experience and reflecting the diverse population in the Medicaid program, to provide input to the state Medicaid agency on a broad scope of program issues such as eligibility, coverage, access to care, and quality of care. These two groups are intended to replace the current requirement that states establish a Medical Care Advisory Committee.
• Update HCBS program standards and processes regarding care access, quality, and payment, including new standards and reporting requirements related to person-centered service plans, waiting lists, and other access measures; a requirement to establish an HCBS grievance system and incident management system in FFS (similar to what is already required for HCBS delivered through managed care); a requirement that at least 80 percent of Medicaid payments for certain home-based services go to compensation for the individual direct care workers who provide these services; and a new regulatory framework to require state reporting of performance measures from the HCBS Quality Measure Set (which has, to date, been voluntary). 

Key Themes Across the Two Proposed Rules.

Several key themes emerge from the hundreds of pages of text that constitute the two proposed rules and their accompanying preambles:

• If finalized, these proposals would significantly increase transparency for Medicaid and CHIP program data related to provider payments and access to care. The proposed rules would require states and managed care plans to publish several types of data sets and reports, with the aim of making access to care data readily available in a standardized format and with relevant context. In addition to facilitating state and federal oversight of Medicaid and CHIP (consistent with other CMS reforms in recent years that trend toward more quantitative, data-driven oversight), CMS seeks to ensure that the public has access to these data, as well.
• These rules show CMS’ continued emphasis on addressing health disparities and advancing health equity. Consistent with the U.S. Department of Health and Human Services’ overall focus on equity in its administration of Medicaid and CHIP, Medicare, and the Marketplaces, these proposed rules evince an effort to identify and disclose health disparities (e.g., by requiring states to stratify data based on race and other demographic factors), emphasize meaningful engagement of people enrolled in Medicaid and CHIP (e.g., by supporting enrollee participation in advisory groups, requiring enrollee experience surveys, and requiring that program data be easy for the public to find and understand), and focus state and federal oversight apparatus on key areas of known concern for marginalized populations (such as maternal mortality and access to behavioral health care).
• CMS seeks to align standards and approaches across federally regulated health care programs. Across multiple provisions, CMS looks to existing standards for the Marketplace and Medicare to inform and align Medicaid and CHIP with these standards. For example, CMS proposes that states benchmark certain provider payment rates (in both FFS and managed care) against Medicare’s FFS rates, which may strengthen the Medicare program’s existing anchoring effect on payment rates. CMS also proposes to align Medicaid and CHIP managed care network adequacy and MLR standards more closely with newly established standards for Qualified Health Plans. Similarly, with respect to HCBS, many proposed reforms would apply across multiple types of Medicaid HCBS programs and delivery systems.
• The rules would impose significant new requirements on states and managed care plans, implemented over time. Many of CMS’ proposed reforms would require new or expanded analyses and reporting by states and plans, and additional state monitoring and oversight responsibilities. For states already stretched thin in the wake of the COVID-19 public health emergency, these new requirements could pose significant challenges. In certain areas, CMS attempts to mitigate administrative burdens by, for example, focusing required analyses on a subset of key services or issues. For example, some of the new access standards and provider payment analyses (for both FFS and managed care) do not apply to all services but rather apply only to primary care, behavioral health, and OB/GYN services. CMS also has proposed different compliance dates for different requirements, ranging from a few months to four years or more, recognizing that many provisions will require time for states and managed care plans to implement. CMS has specifically solicited comments on feasibility and potential alternative approaches and timelines. For many proposals, CMS itself has additional work to do in the form of guidance and technical support to states. 

Conclusion

Stakeholders have until July 3, 2023 to review and comment on these consequential proposals, which—taken together with the yet to be finalized Medicaid and CHIP Eligibility and Enrollment rule—represent seismic changes in federal regulation of the Medicaid and CHIP programs. After July 3, CMS will work to respond to stakeholder comments, and finalize its suite of three rules that provide a more holistic access framework in Medicaid and CHIP.

To learn more, register for Manatt’s free webinar, Proposed Rules to Enhance Access and Quality for Medicaid HCBS and Strengthen the HCBS Workforce. Join us on June 1 for an in-depth discussion of the key reforms that CMS has proposed for Medicaid HCBS. 

This summary was also published on the Robert Wood Johnson Foundation’s State Health and Value Strategies webpage.

A full summary of the proposed rules is available through Manatt on Health, Manatt’s premium information service that provides in-depth insights and analysis focused on the legal, policy and market developments that matter to you. For more information, please reach out to Barret Jefferds at bjefferds@manatt.com.

_{¹ The proposed rule would streamline verification requirements for all Medicaid and CHIP enrollees; establish new timeliness and process requirements at application, at renewal, and upon changes in circumstances for Medicaid and CHIP enrollees; extend for the first time modernized processes currently used to determine eligibility for Modified Adjusted Gross Income (MAGI) populations to non-MAGI populations (e.g., aged, blind, and disabled); eliminate access barriers for children enrolled in CHIP by prohibiting premium lockout periods, waiting periods, and benefit limitations; and secure transitions of enrollee accounts between Medicaid, CHIP, and the Basic Health Program.}