CMS push­ing for­ward with Med­i­caid man­aged-care rule

Modern Healthcare - - NEWS - By Vir­gil Dick­son

The new re­quire­ments in­clude stricter stan­dards to en­sure that man­aged-care rates are ac­tu­ar­i­ally sound and cover all med­i­cal and ad­min­is­tra­tive costs, taxes and fees for which the health plan is re­spon­si­ble.

De­spite prom­ises to shift more reg­u­la­tory au­ton­omy to the states, the Trump ad­min­is­tra­tion is let­ting some con­tro­ver­sial Obama-era Med­i­caid man­aged-care rules stand.

The CMS in late June opted to move for­ward with a mega-rule on man­aged care that ex­pands fed­eral over­sight of Med­i­caid pro­grams af­ter re­fus­ing sev­eral states’ re­quests to de­lay im­ple­men­ta­tion.

Man­aged-care con­tracts that start on or af­ter July 1, 2017, will have to com­ply with the new re­quire­ments, which the CMS says will im­prove the rate-set­ting process and make plans’ spend­ing more trans­par­ent. The rule was fi­nal­ized last year.

The new re­quire­ments in­clude stricter stan­dards to en­sure that man­aged-care rates are ac­tu­ar­i­ally sound and cover all med­i­cal and ad­min­is­tra­tive costs, taxes and fees for which the health plan is re­spon­si­ble.

Man­aged-care plans also must cal­cu­late and re­port their cur­rent med­i­cal loss ra­tio, which is a breakdown of what the plans spend on med­i­cal care ver­sus other ac­tiv­i­ties, in­clud­ing em­ployee salaries, mar­ket­ing, profits and ad­min­is­tra­tive tasks.

By July 1, 2019, man­aged-care plans will be re­quired to have a med­i­cal loss ra­tio of at least 85%.

The agency’s re­fusal to de­lay en­force­ment may sur­prise some states, as the Trump ad­min­is­tra­tion hinted on sev­eral oc­ca­sions that it may roll back the Obama-era rule­mak­ing. Sev­eral states asked the CMS to de­lay com­pli­ance with parts of the rule that kicked in this month, cit­ing the ad­min­is­tra­tive burden as­so­ci­ated with the roll­out.

“Th­ese pro­vi­sions in the fi­nal rule have sig­nif­i­cant fed­eral fis­cal im­pli­ca­tions for the Med­i­caid pro­gram and CMS will re­quire com­pli­ance by the spec­i­fied date in the fi­nal rule,” CMS Med­i­caid Di­rec­tor Brian Neale said in a June 30 no­tice to states.

If states don’t com­ply with the rule­mak­ing, the CMS may not ap­prove their man­aged-care con­tracts or pro­posed rates, ac­cord­ing to reg­u­la­tory at­tor­neys. The agency could also re­duce fed­eral fund­ing to the state Med­i­caid pro­gram un­til it com­plies with the re­quire­ments.

The CMS also said it will en­force a pro­vi­sion to elim­i­nate so-called passthrough pay­ments, which Med­i­caid man­aged-care plans re­ceive on top of the base cap­i­ta­tion rate. Those pay­ments are used as in­cen­tives to at­tract providers to treat Med­i­caid en­rollees if their base rates aren’t enough to en­sure ac­cess in an area. At least 16 states have paid out $3.3 bil­lion in pass-through pay­ments on av­er­age ev­ery year. Three oth­ers have dis­trib­uted about $50 mil­lion a year for nurs­ing fa­cil­i­ties, ac­cord­ing to the agency, which op­poses pass-through pay­ments be­cause they are not ac­tu­ar­i­ally sound and are not di­rectly re­lated to con­tracted ser­vices.

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