Update: Medicaid mandates are now final


In late April, the Centers for Medicare and Medicaid Services (CMS) published the final rules for remaking Medicaid managed care, starting a huge reform process that will impact the majority of Medicaid recipients.

In late April, the Centers for Medicare and Medicaid Services (CMS) published the final rules for remaking Medicaid managed care, starting a huge reform process that will impact the majority of Medicaid recipients. (See "CMS proposes Medicaid program change," Contemporary Pediatrics, April 2016.)

The rules, proposed in fairly similar form a year ago, set new mandates for the states to develop rules for managed care plans serving Medicaid recipients.

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That's big, because as of 2013, 46 million - almost three-fourths - of Medicaid beneficiaries had all or part of their benefits in managed care, according to the CMS. The Government Accountability Office in December said that as of fiscal 2013, 39 states were using comprehensive, risk-based managed care in their Medicaid programs.

Even Medicaid experts are still combing through the CMS' 1230 pages of explanations and responses to public comments and (at the end of the document) the almost 200 pages of actual rules. The regulations cover a large number of topics including what information should go to patients, how to ensure provider networks are adequate to take care of patients, and what enrollment protections should be available patients.

Joseph Zickafoose, MD, a senior researcher at the Mathematica Policy Research group and a practicing pediatrician, said that as far as he has analyzed the rules, "I think that CMS worked hard and I think probably did a good job at trying to strike the balance" between federal regulatory authority and state ownership of the Medicaid program.

"What these rules really do is direct the states to get more specific about certain things that they haven't had to be specific about in the past," he notes. This is only the beginning because states will now begin to set their own rules based on the regulations, with some of the implementation beginning almost immediately and other parts coming in over several years.

Information to consumers

"The rule is going to require more consumer information than we have ever had before," says Kelly Whitener, associate professor at the Georgetown University Health Policy Institute Center for Children and Families, Washington, DC. That will be very important in helping consumers to understand their plans, she notes.

Among other things, the rules require that managed care plans frequently update provider directories and post them on the plan's website, "which will ensure managed care plans are actively monitoring the status of their contracted providers."

Provider directories are to include information such as the provider's group/site affiliation, website URL and physical accessibility for enrollees with physical disabilities, and certain information about the plan's formularies.

The CMS says the rules will permit both states and managed care plans to use a variety of electronic communication methods while requiring that beneficiaries also be able to get the information by paper for free. Plans must provide information "in each state's prevalent languages explaining the availability of oral interpretation services or written translations, if requested."


"The importance of rapid enrollment and access to a network provider can hardly be overstated," says Sara Rosenbaum, a national expert on Medicaid, in an analysis of the rules in a recent HealthAffairs blog.

She explains, "The rule allows states to use a passive enrollment approach in which beneficiaries are assigned to plans through a process that simultaneously provides a period of time 'for the enrollee to make an active choice of delivery system' or select a different plan."

Zickafoose of Mathematica explains that families are offered the opportunity to pick a managed care plan and a primary care provider, but many times they don't and they get automatically assigned to both a plan and primary care provider.

In these new rules, he notes, if states do that assigning they need to take into account the needs of the child and the family in some way. The examples that the CMS uses include trying to preserve an existing patient provider relationship, says Zickafoose. That suggests to him that states should try to assign those kids to a plan that allows them to go to a doctor they have seen before.

NEXT: Network adequacy


Network adequacy

There has been a lot of concern about whether plans provide adequate networks to serve the patients. Zickafoose says that in some cases for the first time these regulations are requiring states to have rules for the types and numbers of providers in a network.

Next: Report on ACA's impact for uninsured kids

Under the new mandates, the states will develop their travel time and distance standards for managed care and the Children's Health Insurance Program (CHIP) to ensure that patients don't have to do inordinate travel. The providers covered by these standards include primary and specialty care as well as behavioral health for both adult and pediatric patients, and "OB/GYN, pediatric dental, hospital, and pharmacy providers if these providers' services are covered under the managed care contract."

It's important that the CMS has called for standards for pediatric providers specifically, says Zickafoose, but providers should remember these new regulations don't set specific standards: "They tell states that the states need to set standards." 

Whitener points out there is an extended period for the network adequacy standard, as with other elements in the plan, to be worked out at the state level. That allows time, she notes, for stakeholders including pediatricians to reach out to states and managed care plans to push for better standards.

Medical loss ratio

The regulations' provision that probably has received the most attention is the medical loss ratio (MLR). Under the rules, the managed care plans must develop rates in such a way that "would reasonably achieve a medical loss ratio standard . . . of at least 85% for the rate year," Rosenbaum states. That would mean that at least 85% of funds would be spent on claims and quality improvement activities rather than on administrative expenses.

The CMS says Medicaid and CHIP are the only coverage programs in which an MLR standard does not apply to managed care plans, although some states have their own or similar measures of health plans' administrative expenditures and profits. 

Family planning

As Rosenbaum notes, under the rules, "Plans must specifically demonstrate a sufficient family planning network (although enrollees have the right to seek family planning services from the provider of their choice, regardless of network status)."

In an e-mail, Jamie Poslosky, director of the American Academy of Pediatrics (AAP) Division of Advocacy Communications, says the regulations "could have gone further in requiring plans to cover all [US Food and Drug Administration]-approved contraceptive drugs/devices and services without prior authorization, but it did give states welcome guidance about what services they can and cannot restrict."

Posting of contracts

Whitener of Georgetown points out that for the first time the rules require that the managed care contracts be posted on the state website. That will be "really important" in helping research and advocacy groups understand what is happening, she says. Currently, the documents must be obtained through a Freedom of Information Act request, she says.

Links to the CMS discussion and the final rule (found at the end of the document), summary fact sheets, and the timeline for implementation dates are on www.medicaid.gov


Ms Foxhall is a freelance writer in the Washington, DC, area. She has nothing to disclose in regard to affiliations with or financial interests in any organizations that might have an interest in any part of this article.

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