On April 22, 2024, the Centers for Medicare & Medicaid Services (CMS) released the final rule, Medicaid Program; Medicaid and Children’s Health Insurance Program (CHIP) Managed Care Access, Finance, and Quality. The rule aims to promote consistency and transparency, with an increased focus on improving access, driving quality, and advancing equity for Medicaid beneficiaries. CMS has been moving in this direction for several years, and states managed care organizations, and providers have been keeping a close eye on the finalization of the rule since it was proposed in May 2023. Now that the rule is final, stakeholders need to prepare for its wide variety of implications including how it will change standards for access, finance, and quality within the Medicaid program.
Throughout the final rule, there are several key provisions regarding access that present great opportunities for collaboration between states and managed care plans. Before the final rule, states were able to establish their own appointment wait time standards. The final rule, however, establishes federal appointment wait time standards for specific classes of services, like primary care, mental health, and substance use disorder. This gives states and managed care plans an excellent opportunity to work in tandem to meet the updated requirements.
Additionally, the final rule requires states to use independent “secret shoppers” to validate provider networks. As a result, states will be looking at best practices for securing and utilizing the results of independent secret shopper surveys. This presents another opportunity for collaboration as managed care plans can share data on their provider networks with states. Similarly, managed care plans can share their current payment rates compared to Medicare as the final rule requires states to conduct an analysis comparing managed care plan payment rates to fee-for-service rates for specific services including homemaker services, home health aide services, personal care services, and habilitation services.
With every change, there are positives and negatives. The positive here is the opportunity for collaboration. The negative, however, is the investment in resources needed to implement and comply with the various final rule requirements. Managed care plans are entering new territory. Conducting payment analyses comparing the total amount paid for certain services to Medicare payment rates may raise payment questions and concerns.
Plans will also need to develop new remediation solutions to mitigate any negative outcomes related to appointment wait time standards as states will report these results to CMS and will publish the outcomes on the state’s website. The same applies to negative results from secret shopper surveys and/or enrollee experience surveys. Overall, there will need to be engagement across multiple sectors to find solutions to mitigate negative outcomes; this will not be a simple task.
Regarding quality strategy and external quality review (EQR) requirements, the final rule increases public engagement around states’ managed care quality strategies; eliminates EQR requirements for primary care case management entities; makes it easier for states to use accreditation reviews for EQR; and requires more meaningful data and information to be included in the annual EQR reports.
The final rule requirements formalize what many states are already doing around quality, but they make the process much more transparent for beneficiaries and other stakeholders. Now, beneficiaries have access to more information to select and compare their health plan, while plans gain insight into how they’re performing against their peers as well as opportunities for improvement. States will also have more data to evaluate each health plan’s performance.
The final rule also establishes requirements for medical loss ratio (MLR) standards and quality improvement standards for provider incentive arrangements which may be a significant change in how plans calculate revenue and will heighten the focus on provider outcomes. Similarly, the requirement for states to publicly report plan performance data and scorecards will further plans’ efforts to work with and support providers to help drive improvement in those measurement areas.
In the final rule, CMS requires State Directed Payments (SDPs) to be included in MLR calculations. This provision, unlike other elements in the SDP provisions, goes into effect soon, by September 2024. For states and plans to be compliant they will need to work more closely around the design and implementation of SDPs to ensure these critical funds continue to support access and coverage for Medicaid beneficiaries to high-quality providers. The final rule makes MLR reporting requirements consistent with commercial plans’ reporting requirements resulting in potential implementation challenges for certain plans. For example, large national plans may have products on the private insurance market and be familiar with this type of reporting, versus local plans that may have no reporting experience for this. With that, smaller plans may have a steeper learning curve and need more assistance to get up to speed. Overall, this provision supports transparency and alignment across plan-led and provider-led efforts to improve quality, access, and equity.
Another significant change included in the final rule related to the SDP provisions is the prohibition for the use of separate payment terms by 2027. Given that a significant amount of current CMS-approved SDP programs support payments to providers through separate payment terms, states, plans, and providers will need to prepare for this major transition. The most foundational step for states is to facilitate open, honest dialogue with providers that are part of SDP programs, as well as the manage care plans that states work with to administer funds, to understand and address the needs and concerns of all stakeholders. Now more than ever, this will require stronger partnerships and trust among all involved parties.
Ultimately, all of these stakeholders have a common goal – to increase access to high-quality care for Medicaid beneficiaries. It’s important to focus on that as stakeholders work through some of the more technical details of compliance.
The final CMS Medicaid Managed Care rule represents a significant advancement in the ongoing effort to improve access, quality, and equity within Medicaid and CHIP. Through its various key provisions, the rule promotes greater consistency and transparency. The final rule presents substantial opportunities for collaboration among states, managed care plans, and providers, though the final rule also demands considerable investment in resources and adaptation to new requirements. As stakeholders navigate these complexities, maintaining a shared commitment to improving care for Medicaid beneficiaries is crucial. Through robust partnerships and a focus on this common goal, stakeholders can successfully implement these changes, ensuring that Medicaid beneficiaries receive the high-quality, accessible care they deserve.
About Gary Jessee
Gary Jessee currently serves as Senior Vice President of Sellers Dorsey, one of the nation’s leading healthcare consulting firms. As a former Medicaid Director, Gary leverages his extensive experience with Medicaid managed care, long-term services and supports, Medicaid market advisory research, and healthcare policy to design and implement creative solutions for clients including state Medicaid agencies, managed care organizations, private equity firms, and solutions partners.