Managed Care

On May 26, 2015, the Centers for Medicare & Medicaid Services (CMS) put on display at the Federal Register the Medicaid and CHIP Managed Care Notice of Proposed Rulemaking (CMS 2390-P), which proposes to modernize Medicaid and Children’s Health Insurance Program (CHIP) managed care regulations to update the programs’ rules and strengthen the delivery of quality care for beneficiaries. This proposed rule is the first major update to Medicaid and CHIP managed care regulations in more than a decade.

Summary of Key Provisions

• Improving the Beneficiary Experience
• Quality Improvement
• Program and Fiscal Integrity Improvement and Alignment
• Strengthening the Delivery of Managed Long Term Services and Supports (MLTSS)
• Children's Health Insurance Program (CHIP) Provisions
• Alignment with Medicare Advantage and Private Coverage Plans
• Strengthening States' Delivery System Reform Efforts

State Guide to CMS Criteria for Managed Care Contract Review and Approval

This guide covers the standards that are used by CMS Regional Office staff to review and approve State contracts with managed care organizations (MCO), prepaid inpatient health plans (PIHP), prepaid ambulatory health plans (PAHP), primary care case managers (PCCM) and health insuring organizations (HIO). This guide is based on existing requirements and CMS policy at 42 CFR §438.

Health Insurance Providers Fee for Medicaid Managed Care

Section 9010 of the Affordable Care Act imposes a fee on specified covered entities engaged in the business of providing health insurance. This fee is referred to as the Health Insurance Providers Fee, and covered entities include health insurance issuers, health maintenance organizations, private insurance companies, and insurers that provide coverage under Medicare and Medicaid. For more information, see the Internal Revenue Service website at http://www.irs.gov/Businesses/Corporations/Affordable-Care-Act-Provision-9010

For information to assist states as they consider the implications of the Health Insurer Providers Fee for their managed care plans and for Medicaid managed care rate setting, see our Frequently Asked Questions.

2016 Medicaid Managed Care Rate Development Guide

The 2016 Medicaid Managed Care Rate Development Guide has been released by CMS for states to use when setting rates with respect to any managed care program subject to federal actuarial soundness requirements in 42 CFR 438.6 during rating periods starting January 1, 2016. The Guide provides detail around CMS' expectations of information to be included in actuarial rate certifications and the Guide will be used as a basis for CMS’ review.  Please direct any questions related to this Guide to MMCratesetting@cms.hhs.gov.

 

Previous years rate setting guidance is also available:

• 2015 Managed Care Rate Setting Consultation Guide
• 2014 managed Care Rate Setting Consultation Guide

Medicaid Managed Care Marketing Regulations

With the implementation of the Marketplaces, states and managed care plans have been requesting clarification on the Marketing regulations at 42 CFR 438.104 and how those regulations may impact their marketing activities.  To respond to these inquiries, we are providing this list of Frequently Asked Questions.  They address activities by issuers that offer both a qualified health plan (QHP) and a Medicaid managed care plan; responding to consumer inquiries; and plans' ability to conduct outreach for eligibility renewal.

Managed Care Encounter Data Toolkit

This toolkit provides a practical guide to collecting, validating, and reporting Medicaid managed care encounter data.  It is designed as a step-by-step guide for state Medicaid staff responsible for managing the daily operations involved  in encounter data, as well as for senior managers and policymakers who oversee this function. It contains case studies, checklists, and links to resources that provide helpful tips and tools.

 

Request Technical Assistance 

Direct technical assistance is available from the Centers for Medicare & Medicaid Services (CMS) to assist state Medicaid agencies in developing, enhancing, implementing, and evaluating managed care programs.  States are encouraged to submit these requests for any managed care question, but some examples of requests include: managed care authorities, rate setting, contract language, benefit design, access to care or data.  Request Technical Assistance

Federal Managed Care regulations at 42 CFR 438 recognize four types of managed care entities:

• Managed Care Organizations (MCOs)

  • Comprehensive benefit package
  • Payment is risk-based/capitation

• Primary Care Case Management (PCCM)

  • Primary care case managers contract with the state to furnish case management (location, coordination, and monitoring) services
  • Generally, paid fee for service for medical services rendered plus a monthly case management fee    

• Prepaid Inpatient Health Plan (PIHP)

  • Limited benefit package that includes inpatient hospital or institutional services (example: mental health)
  • Payment may be risk or non-risk

• Prepaid Ambulatory Health Plan (PAHP)

  • Limited benefit package that does not include inpatient hospital or institutional services (examples: dental and transportation)
  • Payment may be risk or non-risk

Federal Authorities

States can implement a managed care delivery system using three basic types of federal authorities:

• State plan authority [Section 1932(a)]
• Waiver authority [Section 1915 (a) and (b)]
• Waiver authority [Section 1115]

Regardless of the authority, states must comply with the federal regulations that govern managed care delivery systems. These regulations include requirements for a managed care plan to have a quality program and provide appeal and grievance rights, reasonable access to providers, and the right to change managed care plans, among others.

All three types of authorities give states the flexibility to not comply with the following requirements of Medicaid law outlined in Section 1902:

• Statewideness: Lets states implement a managed care delivery system in specific areas of the state (generally counties/parishes) rather than the whole state.
• Comparability of Services: Lets states provide different benefits to people enrolled in a managed care delivery system.
• Freedom of Choice: Lets states require people to receive their Medicaid services from a managed care plan.

A list of approved managed care waivers is available here

1932(a) State Plan Basics

States can use a managed care delivery system by getting a state plan amendment approved by CMS. The state plan preprint includes information such as the types of entities that will be used and what groups of people will be enrolled. Once a state plan amendment is approved, the state can run its managed care program without needing a renewal on a periodic basis by CMS.

This authority does not allow states to require dual eligibles, American Indians, or children with special health care needs to enroll in a managed care program.

1915(a) Waiver Basics

States can implement a voluntary managed care program simply by executing a contract with companies that the state has procured using a competitive procurement process. CMS must approve the state in order to make payment.

13 states (and Puerto Rico) use 1915(a) contracts to administer 24 voluntary managed care programs.

1915 (b) Waiver Basics

States can also implement a managed care delivery system using waiver authority under 1915(b). There are four (4) 1915(b) waivers:

• (b)(1) Freedom of Choice - restricts Medicaid enrollees to receive services within the managed care network
• (b)(2) Enrollment Broker - utilizes a "central broker"
• (b)(3) Non-Medicaid Services Waiver - uses cost savings to provide additional services to beneficiaries
• (b)(4) Selective Contracting Waiver - restricts the provider from whom the Medicaid eligible may obtain services

The biggest differences between a 1915(b) waiver program and a state plan program are that

• States are able to require dual eligibles, American Indians, and children with special health care needs to enroll in a managed care delivery system.
• States must demonstrate that the managed care delivery system is cost-effective, efficient and consistent with the principles of the Medicaid program.
• The approval period for the state's 1915(b) waiver program is limited to 2 years. (Medicaid state plan authority does not have an expiration date

1115 Demonstration Basics

Section 1115 of the Social Security Act gives the Secretary of Health and Human Services authority to approve experimental, pilot, or demonstration projects that promote the objectives of the Medicaid and CHIP programs. The purpose of these demonstrations, which give States additional flexibility to design and improve their programs, is to demonstrate and evaluate policy approaches such as:

• Expanding eligibility to individuals who are not otherwise Medicaid or CHIP eligible
• Providing services not typically covered by Medicaid
• Using innovative service delivery systems that improve care, increase efficiency, and reduce costs.

Additional information about 1115 Demonstrations is available here

Under managed care arrangements, states contract with organizations to deliver care through networks and pay providers. Approximately 70% of Medicaid enrollees are served through managed care delivery systems, where providers are paid on a monthly capitation payment rate. 

Primary Care Physician Fee Increase

To help shore up and enhance physician participation in Medicaid, the health reform law requires states to raise their Medicaid fees to at least Medicare levels, for family physicians, internists, and pediatricians for many primary care services in both fee-for-service and managed care settings. The primary care fee increase, which applies in 2013 and 2014, is fully federally funded up to the difference between a state's Medicaid fees in effect on July 1, 2009 and Medicare fees in 2013 and 2014.

Many states are expanding their managed care programs to deliver care to people with complex medical needs, as well as behavioral health, substance abuse, and developmental disabilities.

Individuals with special health care needs are at greater risk for developing secondary conditions than the general Medicaid population and are known to have higher utilization of emergency departments and inpatient hospital care.

Innovative managed care programs utilizing health homes and collaborative care models present opportunities to pay for services previously difficult to reimburse. There is significant interest across the states in implementing models with demonstrated ability to improve outcomes and reduce costs.

Mental Health Parity

Starting in 1996, Congress enacted several laws designed to improve access to mental health and substance use disorder services under health insurance or benefit plans that provide medical/surgical benefits.  The Mental Health Parity Act of 1996 (MHPA, Pub.L. 104-204) addressed aggregate lifetime and annual dollar limits for mental health benefits and medical/surgical benefits offered by group health plans (or health insurance coverage offered in connection with such plans).

The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) extended the MHPA requirements to substance use disorder benefits in addition to mental health benefits. MHPAEA also added new requirements regarding financial requirements and treatment limitations in addition to the limitations on aggregate annual and lifetime dollar limits.

MHPAEA requirements apply to MCOs (defined in section 1903(m) of the Act) that contract with the state to provide both medical/surgical and mental health or substance use disorder benefits. However, MCOs and states will not be deemed out of compliance if the MCOs fulfill the requirements set forth in the Medicaid state plan regarding financial limitations, quantitative treatment limitations, non- quantitative treatment limitations, and disclosure requirements. States can amend MCO contracts to promote parity. MCOs must meet the following set of standards to provide health care services in Medicaid:

• MCO's medical management techniques, such as preauthorization, for mental health and substance abuse services must be comparable to that for medical/surgical benefits.
• Any benefits that the MCO offers, beyond what is specified in the Medicaid state plan, must also be compliant with MHPAEA.
• An MCO's criteria for or denial of mental health or substance abuse benefits based on medical necessity reasons must be provided to participants, beneficiaries or network providers upon request.
• An MCO's out-of-network coverage for mental health benefits and medical/surgical benefits must be made equally available.

States or MCOs that are out of compliance should take steps to come into compliance.

As of 2012, 39 states, the District of Columbia, and Puerto Rico contract with either a Medicaid managed care organization (MCO) or a prepaid inpatient health plan (PIHP) to provide medical or behavioral health care to at least half of the approximately 60 million Medicaid beneficiaries. These updated resources (described below) are intended to support states and their partners in providing better care, improving the health outcomes, and reducing the cost of care to Medicaid beneficiaries enrolled in MCOs or PIHPs:

• Quality Strategy Toolkit for states
• EQR Toolkit for states and External Quality Review Organizations (EQRO), and
• Revised CMS Protocols for External Quality Review (EQR)

Quality Strategy Toolkit for States

All states contracting with a MCO or PIHP must have a written and CMS-approved strategy for assessing and improving the quality of managed care services offered by the state. To assist in this effort, CMS has updated the State Quality Strategy Toolkit to guide states through the development, writing, and implementation of the quality strategy. 

External Quality Review Toolkit for States

All states contracting with a MCO or PIHP must conduct an annual EQR of each managed care entity. An EQR includes the analysis and evaluation of aggregated information on quality, timeliness, and access to the health care services that a MCO, PIHP, or their contractors, furnish to Medicaid beneficiaries. CMS has created a new EQR Toolkit to assist states and EQROs in completing the annual EQR technical report. The EQR Reports are available here

External Quality Review Protocols

CMS has revised its series of protocols for use in conducting Medicaid external quality review activities. Each protocol describes why the activity is important to EQR, what the activity accomplishes, and how to conduct the activity. The updated EQR Protocols are available here.

States may perform EQR tasks directly, or may contract with independent entities called EQROs to conduct the external quality review. We request that states have final EQR technical reports available to CMS and the public by April of each year, to align with the collection and annual reporting on managed care data by the Secretary of Health and Human Services each Fall.

Additional information about Medicaid State Quality Strategies can be found here.

Managed care federal rules guarantee plan members numerous rights, including the right to receive information on plan options and benefits, enrollment and disenrollment procedures, and available treatment options and alternatives, and to participate in decisions regarding their services. States are required to review MCO member handbooks and other member documents for consistency with federal and state policies. They also review and approve marketing and member education materials to ensure that they are clear and accessible to all members, as well as linguistically and culturally appropriate.

Members also have the right to file grievances and appeals if they believe they have been unfairly denied benefits or access to services. Federal law requires MCOs to administer a system for members to file grievances and appeals, and all states are required to review MCO reports on frequency and nature of grievances filed, as well as the steps MCOs take to remedy such grievances. States must also provide an opportunity for a fair hearing to members whose grievance or appeal is denied or not acted upon promptly.