As expected, the CMS’ sweeping rule to modernize the regulation of Medicaid managed-care plans is drawing flak from state Medicaid directors and insurers who say it would impose heavy-handed federal control and could hurt patient care.
But some consumer advocacy groups responded favorably to the proposed rules, saying they offer guidance to states and Medicaid plans in developing provider networks that offer better access to beneficiaries.
The 653-page rule released in May would cap how much premium revenue private plans could allocate for administration and profits; require states to more rigorously supervise the adequacy of plans’ provider networks; encourage states to establish quality rating systems for plans; allow more behavioral healthcare in institutional settings; and encourage the growth of managed long-term care.
The proposed rule was considered long overdue because Medicaid managed-care enrollment has soared by 48% to 46 million beneficiaries, according to consulting group Avalere Health. By year-end the firm estimates that 73% of beneficiaries will receive services through managed-care plans.
Currently, 37 states and the District of Columbia contract with Medicaid plans, according to Medicaid Health Plans of America.
States have turned to Medicaid managed-care plans hoping to reduce costs and get more budget predictability. Insurers, however, have faced criticism for offering inadequate provider networks and denying needed care to pad their bottom lines. Because of the wide variation in how states run their Medicaid managed-care programs, there have been “inconsistencies” and “less-than-optimal results,” the CMS said when it issued the proposed rule.
Last year, HHS’ Office of Inspector General reported that states were not enforcing their own rules to ensure Medicaid plans had enough providers to care for their patients.
The last federal regulation governing such plans was issued in 2002. The proposed rule received nearly 900 comments by the July 27 comment deadline.
The National Association of Medicaid Directors said in its written comments that the rule would reduce the role of state Medicaid agencies in supervising how Medicaid managed care operates in their states. “The overarching framework of the regulation appears to shift the balance of authority for Medicaid managed care to the federal government, driving a top-down model that runs counter to the goal of a modernized regulatory framework,” the group said.
That approach, the group added, “removes the ability of states to drive innovation in managed-care delivery, to fully leverage the relationship to improve plan performance, or to tailor the approach to reflect the needs and expectations of the local population.”
A CMS representative did not respond to a request for comment for this article.
The Medicaid directors criticized a provision that would require states to offer Medicaid beneficiaries at least 14 days of initial coverage under traditional fee-for-service Medicaid, during which time they could choose a managed-care plan. “This policy fails to recognize that many states no longer have (fee for service) delivery models in their program,” the group complained.
Medicaid plans objected to the CMS’ proposal that they be required to spend 85% of premium revenue on medical care, a threshold known as a medical loss ratio. The Affordable Care Act set minimum medical loss ratios of 80% and 85% for individual and large-group plans in the commercial sector; money spent on administrative costs and profit above those limits must be rebated to consumers or employer purchasers. As of 2015, health plans doing business with Medicaid and the Children’s Health Insurance Program are the only ones that are not subject to such thresholds.
The health insurance industry had lobbied against inclusions of a minimum medical loss ratio, but experts said the proposed Medicaid requirement would not have much effect on large national insurers. About three-quarters of states with Medicaid managed care already require average medical loss ratios of at least 85%, according to the Kaiser Family Foundation.
Still, the Blue Cross and Blue Shield Association argued in its written comments that the benefits and services offered by managed-care organizations do not easily fit into the commercial medical loss ratio calculation. For example, managed-care plans spend significant resources on beneficiary outreach, partnering with local organizations for health promotion activities, and services to enhance patient compliance with treatment plans.
“Accounting for these expenditures in the MLR methodology may be challenging,” the Blues association said. “In addition, federal and state Medicaid reporting requirements require significantly more administrative resources beyond what commercial and Medicare programs require, making meeting an 85% MLR more difficult.”
To ensure that Medicaid beneficiaries have adequate access to care, the CMS is proposing that states establish time and distance standards for enrollees’ access to providers. The agency mostly left the development of these standards to the states.
At a minimum, Medicaid plans’ provider networks must meet such standards for certain types of providers, including hospitals, primary-care physicians and OB-GYNs, according to the proposed rule. The CMS said time and distance more accurately capture whether beneficiaries have adequate access to care than provider-to-enrollee ratios. States must also consider whether plans offer an adequate number of providers who speak languages other than English. In addition, the CMS encouraged states to include pediatric primary, specialty and dental providers in their network rules because of the large number of children covered under Medicaid and CHIP.
But Medicaid plans warned such requirements could hurt care for beneficiaries. “Requiring that states establish access standards based on the travel time and distance to a provider’s office relies on outdated notions of ‘traditional’ models of care delivery and does not take into account the variety of ways in which patients now commonly access healthcare, including via telemedicine,” Kaiser Permanente, which operates Medicaid plans, said in its comments. “Mandating the use of time and distance standards works to preserve the structure of geographically dispersed, disjointed provider networks and would do nothing to improve the quality of care provided to Medicaid beneficiaries.”
Geography-based standards also could discourage integrated delivery systems like ACOs, plans said.
But the National Health Law Program, a consumer advocacy group, praised the network adequacy provisions. “For too long, the Medicaid managed-care program has lacked specific network adequacy standards aimed at ensuring that consumers can access care from their Medicaid plans,” the group said. “These proposed provisions add significant detail to guide states and Medicaid plans in developing their networks to ensure adequacy.”
Medicaid Health Plans of America criticized a proposed provision eliminating the requirement that Medicaid plan enrollees provide written consent for a provider to file an appeal on their behalf following an adverse benefits decision. The CMS said requiring Medicaid enrollees to provide written consent is inconsistent with standards for the Medicare Advantage program.
“The language in the proposed rule may encourage providers to use the appeal process as a way to file claims payment disputes, which is not the intent of the grievance or appeal process,” the health plan group said in its comments.
Anthem wrote that “we believe that the proposed approach could potentially result in providers operating in furtherance of their own self-interest.”
Univita Health, which gained control of the entire Florida Medicaid home-care market a year ago, has suddenly lost all of its HMO contracts.
The Florida Agency for Health Care Administration made the announcement in an e-mail blast late Tuesday afternoon.
Univita, based in Miramar, stopped processing requests for home health-care services, durable medical equipment such as wheelchairs, and intravenous therapy “effective immediately,” AHCA said.
AHCA provided no reasons for its announcement, but released a statement this morning.
“We will continue to focus on ensuring Floridians have access to quality health care – this includes working to prevent any lapses in service for MMA health plan enrollees,” a spokeswoman said.
AHCA released a list of phone numbers for Medicaid providers, physician offices and health plan members to call in order to get authorization for equipment and services.
Earlier, United Healthcare of Florida and Sunshine Health had already announced their contracts with Univita were ending as of Aug. 1.
Several owners of mom-and-pop suppliers, who had regarded Univita as their nemesis, began celebrating as early as Monday, when rumors about what was happening began to leak.
As sole authorizer of home services for most Medicaid plan members, several suppliers said, Univita cut their Medicaid payments in half and redirected some of their business to its own home-care affiliate. Many said they had trouble getting paid at all.
They blamed the health plans for subcontracting with Univita and AHCA for failing to prevent it in the program rules.
“I hope they learned a lesson from what they did,” said Robert Junco of Miami’s Pediatric Suppliers Inc.
While the home-care vendors said they feel sorry for employees of Univita, who are expected to lose their jobs, they reacted to the AHCA announcement with exultation.
“I’m having so much fun!” said Ivonne Gonzalez, president and CEO of Health Medical Equipment Inc. in Miami. “I’m having a couple of margaritas!”
Gonzalez noted that it was almost exactly a year ago that home-care providers learned they were losing a big chunk of their Medicaid income because almost all the HMOs were subcontracting with Univita to handle their home care.
As Health News Florida reported at the time, this created a virtual monopoly in the most fragile sector of Medicaid business. It also raised questions of conflict of interest, as Univita was one of the suppliers competing for the Medicaid business.
State Medicaid Director Justin Senior said at the time that while the situation looked bad, there was nothing in the law to prohibit it. He said his team would warn the health plans to make sure that Univita didn’t take unfair advantage or cause problems for patients.
It is unclear whether the about-face in Florida’s home care contracts this week was instigated by the plans, by Medicaid officials who were tired of complaints, or the company itself deciding it could not make ends meet.
One home-care organization, the Florida Alliance of Home Care Services, sent a notice to its members Tuesday afternoon suggesting that Univita may be preparing to file for bankruptcy. The federal court bankruptcy files in South Florida offered no listing for Univita as of Tuesday.
Most company officials were unavailable. Robert Alonso, Univita marketing director, said at mid-afternoon that the company would release a statement, but nothing had appeared as of 6:30 p.m.
Vendors said their friends who worked at Univita were texting and calling, looking for a job. And it remains unclear who will handle the continued need to authorization services for Medicaid patients and pay the bills – either the plans or a different subcontractor.
The Statewide Medicaid Managed Care program was created by Florida’s legislature in hopes of gaining control of Medicaid costs of its 3.5 million residents by ending fee-for-service payments. Proponents argued it would improve quality of care because the state could hold plans accountable.
AHCA chose among the plans that bid for the business, and phased in the program over 2013 and 2014.
The private health plans that cover Florida’s poorest residents are seeking more money from the state.
The plans say they need a 12 percent rate increase to offset the rising cost of prescription drugs and an uptick in doctor’s visits.
But state officials have been reluctant to approve the rate increase, which could wipe out any savings Florida stands to gain from privatizing Medicaid in 2014.
In a scathing letter to the health plans sent Friday, state Agency for Health Care Administration Secretary Elizabeth Dudek said some of the plans had been paying hospitals more than is legally allowed.
“By setting higher contracting rates for hospitals than what is allowed for in state law, plans are likely jeopardizing their profitability, which could cause them to come back to the agency for higher state rate payments — increasing the cost to taxpayers for providing the same services,” Dudek wrote.
The two sides must reach consensus soon. The new rate year starts Sept. 1.
Florida’s $23 billion Medicaid program serves about 3.5 million low-income residents. Most of the plans are operated by private insurance companies that receive a set amount from the state for each recipient. The amount is adjusted based on age and certain medical conditions.
The push to privatize Medicaid in Florida dates back to 2006, when then Gov. Jeb Bush launched a pilot program in Broward and Duval counties. It went statewide last year.
AHCA used a competitive bidding process to award five-year contracts to health plans across the state. Deputy Secretary for Medicaid Justin Senior said the plans were offering a broad array of services and had increased the number of physicians participating in the program. What’s more, the revamped program was on track to reduce costs by 5.1 percent per member per month.
But earlier this year, the plans raised concerns that the rates were inadequate. They asked AHCA and the Legislature for a midyear adjustment — a request that was denied.
The Florida Association of Health Plans is asking for a 12 percent increase going into the 2015-16 rate year. President Audrey Brown said the increase is needed because prescription drug prices are increasing, and more people are accessing health care services than expected.
“The plans did not expect to make any money the first year of existence,” Brown said. “What was not expected was the substantial losses that the Medicaid plans are seeing.”
Senior said AHCA was surprised by the request, in part because the first-year rates were developed using the plans’ own proposals.
“In a year where the costs are unexpectedly high, if you capitulate to giving more money, what happens when the costs come in significantly lower?” he said.
The state has offered to increase rates by 6.4 percent, but conversations are ongoing, Senior said.
AHCA is exploring other ways the plans can control costs.
In her letter last week, Dudek said “several plans” reported average hospital contracting rates greater than 120 percent of the posted Medicaid rate — a violation of state law.
She has asked the Medicaid health plans and hospitals to certify that none of their contractual arrangements exceed the limit.
“Excessive reimbursement levels in hospital contracts are unsustainable and cannot be maintained,” she wrote.
Several groups have submitted comments on CMS’ proposed meaningful use modifications for 2015 through 2017, Clinical Innovation & Technology reports (Walsh, Clinical Innovation & Technology, 6/15).
Under the 2009 economic stimulus package, providers who demonstrate meaningful use of certified electronic health records can qualify for Medicaid and Medicare incentive payments.
Details of Proposal
In April, CMS released a proposed rule that would shorten Medicare and Medicaid meaningful use attestation for eligible professionals and hospitals to a 90-day period in 2015.
Overall, the proposed rule would:
- Realign the reporting period starting in 2015 to allow hospitals to participate on the calendar year instead of the current fiscal year period;
- Reduce the number of meaningful use objectives to improve advanced use of EHRs; and
- Remove redundant measures and those that have become widely adopted.
In addition, the proposed rule would change Stage 2 meaningful use requirements related to patient engagement. Specifically, CMS proposed reducing the requirement for patients to use technology to electronically download, view and transmit their medical records from 5% of eligible providers’ patients to just one patient (iHealthbeat, 4/13).
Comments on the proposed modifications were due June 15 (iHealthbeat, 5/28).
American Medical Group Association Comments
The American Medical Group Association in its comments praised CMS for easing the program’s reporting requirements, as well as for proposing a shorter 90-day reporting period.
AMGA CEO Donald Fisher said, “This proposed rule reflects that CMS has been sensitive to the struggles that the health care industry has had with meaningful use by simplifying some of the reporting requirements through 2017.”
The group also urged CMS to help strengthen the health IT infrastructure to support future data sharing requirements (AMGA release, 6/15).
College of Healthcare Information Management Executives Comments
Russell Branzell, president of the College of Healthcare Information Management Executives, in his comments called for a middle ground on patient engagement. He wrote that rather than requiring every specialist to demonstrate that patients can “view, download and transmit” their health information, those data should be aggregated into a single location for patients.
He added, “I definitely want patient data made accessible to patients or those taking care of them. But I don’t want to get every note out of some subspecialty office” (Pittman et al., “Morning Health,” Politico, 6/16).
Consumer Partnership for eHealth Comments
Meanwhile, a group of 50 advocacy groups organized by the Consumer Partnership for eHealth and the Consumer-Purchase Alliance in its comments expressed disappointment, saying CMS’ proposal to reduce patient engagement requirements would undermine patient engagement efforts (Clinical Innovation & Technology, 6/15). Specifically, CPeH said, “CMS’ proposed amendments constitute a dramatic retreat from essential efforts to make patients and family caregivers true and equal partners in improving health through shared information, understanding and decision making” (“Morning eHealth,” Politico, 6/16).
Debra Ness — president of the National Partnership for Women & Families, which was part of the coalition — said the groups “urge CMS to keep the existing patient engagement thresholds.”
Meanwhile, Bill Kramer, co-chair of the Consumer-Purchase Alliance, noted that maintaining efforts to give patients and caregivers “electronic access to and use of their health information” is key to achieving interoperability in the U.S. health care system (Clinical Innovation & Technology, 6/15).
Healthcare Information and Management Systems Society Comments
The Healthcare Information and Management Systems Society in a letter to CMS supported the agency’s proposal to ease reporting requirements but urged CMS to be cautious moving forward with other proposals, Health Data Management reports.
Among other things, HIMSS recommended that CMS:
- Phase-in the new thresholds for the Patient Electronic Access Objective;
- Reconsider the “unrealistic goal” of the 2016 hospital electronic prescribing requirement; and
- Take into account the timing of the release of the final rule in terms of the “short turnaround in meeting” its requirements (Slabodkin, Health Data Management, 6/16).
The CMS has released a sweeping proposed rule intended to modernize the regulation of Medicaid managed-care plans. The Medicaid managed-care population is growing rapidly, but the last regulation governing such plans was issued in 2002.
In one provision that generated frustration among health insurers in the hours after the draft was posted, the CMS called for health plans to dedicate a minimum portion of the rates they receive toward medical services, a threshold known as a medical loss ratio.
As of 2015, plans doing business with Medicaid and the Children’s Health Insurance Program are the only health plans that aren’t subject to an MLR. The Obama administration is proposing an 85% threshold for Medicaid managed-care plans, the same as the government demands of large group plans in the private market.
America’s Health Insurance Plans, the largest trade group representing health insurers, quickly responded that applying an MLR to Medicaid managed care fails to reflect much of what the plans do to hold down costs.
“An arbitrary cap on health plans’ administrative costs could undermine many of the critical services—beyond medical care—that make a difference in improving health outcomes for beneficiaries, such as transportation to and from appointments, social services, and more,” interim AHIP CEO Dan Durham said in a statement.
The MLR that the CMS has proposed for Medicaid plans is a suggestion rather than an enforceable mandate. Still, many plans will be affected if states follow through on the agency’s suggestion. In a CMS review of 167 managed care plans in 35 states, one in 10 plans had an MLR below 79% and one in four had one below 83%.
Medicaid managed-care enrollment has soared by 48% to 46 million beneficiaries over the past four years, according to consulting firm Avalere Health. By the end of this year, Avalere estimates that 73% of Medicaid beneficiaries will receive services through managed-care plans.
“A lot has changed in terms of best practices and the delivery of important health services in the managed care field over the last decade,” acting CMS Administrator Andy Slavitt said in a statement. “This proposal will better align regulations and best practices to other health insurance programs, including the private market and Medicare Advantage plans, to strengthen federal and state efforts at providing quality, coordinated care to millions of Americans with Medicaid or CHIP insurance coverage.”
The rule would impose new standards to ensure beneficiaries have adequate provider networks. For example, plans typically require that enrollees can reach a primary care physician within a certain time or distance. The CMS wants states to extend such time-and-distance standards to OB/GYNs, behavioral health specialists and dentists.
And given the large number of children enrolled in Medicaid, the CMS also is proposing that states’ rules for provider networks specifically reflect pediatric primary, specialty, and dental providers.
“Network adequacy is often assessed without regard to practice age limitations which can mask critical shortages and increase the need for out-of-network authorizations and coordination,” the agency says in the regulation.
States would be allowed some leeway, however, to vary those standards in different geographic areas to account for the number of providers practicing in a particular area.
The rule also would require greater transparency in how states determine whether the rates they pay plans are actuarially sound, meaning that the payments are sufficient to cover the services required under the contract.
States would have to provide the CMS enough detail for the agency to understand the specific data, assumptions and methodologies behind that rate. This will likely trouble the 26 states and the District of Columbia that currently certify ranges instead of specific rates for their managed care programs.
As expected, the rule also includes a section on managed Medicaid long-term care. Traditionally, state Medicaid programs have paid long-term-care providers on a fee-for-service basis even as they moved more nondisabled beneficiaries into managed care. But as of 2014, 26 states were using managed long-term care, up from eight in 2004, according to the CMS. The number of beneficiaries in managed long-term care has grown from 105,000 in 2004 to 389,000 in 2012.
A key passage, requested by advocates, would allow participants enrolled in Medicaid Long Term Services and Supports, or MLTSS, to switch plans or disenroll and switch to fee-for-service if their provider is not in-network for the managed care plan.
The Association of Community-Affiliated Plans, which represents not-for-profit safety net health plans, applauded the scope and spirit of the proposed regulation.
“Safety net health plans support the commitment to transparency, accountability and improvement that animates this proposal,” ACAP CEO Margaret Murray said. “So much so that we believe these provisions should be extended to the entirety of the Medicaid system, including fee-for-service and primary care case management arrangements.”
State officials warned on Monday that if Florida legislators fail to reach a deal on a new state budget, everything from child abuse investigations to money for teachers could be halted in coming weeks.
Gov. Rick Scott last week ordered agencies to give him a list of the state’s critical needs if a new budget is not in place by the end of June. Some agencies responded with a list of what needs to be funded, while others said what would happen without a spending plan.
The list of services that could be impacted by a shutdown was daunting with top agency officials saying that child support payments could be halted, Florida would no longer participate in the Medicaid program, the state would no longer respond to any hurricanes, and that the Florida National Guard would not be available in an emergency. Even Florida lottery ticket sales could be suspended.
State legislators ended their session abruptly last month without passing a new state budget because the House and Senate have been at odds over the budget and health care spending. House Republicans oppose a Senate proposal to extend health care coverage to 800,000 Floridians by tapping into federal money linked to President Barack Obama’s health care overhaul.
Scott is also opposed to Medicaid expansion and — since the session ended — has taken a more antagonistic approach to legislators, especially those in the Senate.
Late last week legislative leaders officially announced they would return to the state Capitol in June to pass a budget and also reconsider other items including health care coverage. That decision went against Scott’s own recommendation to focus on the budget only.
“Governor Scott is glad the Legislature issued a call for a special session and remains cautiously optimistic that we will have a budget that will help our economy grow and create more jobs,” said Jackie Schutz, a spokeswoman for Scott.
Earlier this year legislators entered the session with a projected budget surplus of more than $1 billion. But the two chambers have been divided over the budget because a program that now provides more than $1 billion in federal aid to hospitals is to set to expire this summer although the state has asked for approval of an alternative program. Hospitals are predicting severe cutbacks if the money is lost.
The feds want Florida to expand Medicaid insurance as part of the agreement to extend the hospital funds, which it says is a more efficient use of federal funds than paying hospitals retroactively for caring for the uninsured.
But that push has drawn the ire of Scott. Scott has sued the federal government, alleging it is coercing him to expand Medicaid by withholding hospital funds. The budget stalemate has forced Scott to concede that he may not be able to win passage of any of his priorities this year, including a boost in school funding and tax cuts.
While some agencies listed dire warnings about a government shutdown, some they could go on for a little while without a new budget. The state’s public universities told the Scott administration they have enough in reserves to pay employees anywhere from one to six months.
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