Understanding CMS’s proposed Medicaid and CHIP regulations
The access-related portions of the proposed rule show the intent to bolster Medicaid services, improve CHIP and aid accessibility to managed care.
There have been many point-by-point analyses of CMS’s Ensuring Access to Medicaid Services and Managed Care Access, Finance and Quality proposed rules. This will not be another and will alternatively provide additional insight beyond the pages of the Federal Register.
Touted by the Biden administration as “historic advancements,” these two pieces of legislation address some of the more common-sense concerns in our constantly growing government-sponsored healthcare programs – specifically, Medicaid and CHIP.
Providing historical perspective, the Social Security Act, passed in 1935, (“The Act”) ultimately established Medicare and Medicaid as Titles XVIII and XIX respectively, and the State Children’s Health Insurance Program (CHIP) as Title XXI. The Health Maintenance Organization Act of 1973 was passed by the Nixon administration with the initial goal of reducing healthcare inflation. These programs have undergone myriad modifications and have been substantially duplicated in portions of the Affordable Care Act.
Data underscores growth
Enrollment in these programs, both traditional and managed care options, has steadily increased with expanded eligibility, an aging population and advances in benefit design – particularly in the managed care options. To put the importance of any rule that applies to these programs into perspective, a look at enrollment in government-sponsored healthcare programs is helpful.
Recently available (2021) statistics from the federal government indicate slightly more than 90.5 million individuals are enrolled in Medicaid and 65 million individuals are covered by Medicare. This comprises 47 percent of the U.S. population that relies on government-sponsored healthcare coverage in these two programs. Of those Medicaid beneficiaries, approximately 77.2 million (85 percent) are enrolled in some type of managed care organization, leaving roughly 13.3 million Medicaid enrollees in state fee-for-service (FFS) populations. Adding the 51 percent of Medicare eligible individuals who are enrolled in Medicare Advantage (30.8 million), 108 million people – or one-third of the population – is covered in these managed care programs.
Both proposed rules apply to the state FFS Medicaid populations and, either directly or indirectly, to Medicaid managed care organizations. These proposed rules borrow heavily from Medicare Advantage (MA) which has stringent requirements for network adequacy (read “access”) and is subject to CMS secret shoppers as part of the overall quality ratings.
Goals for the changes
One of the stated goals of these proposed rules is to promote “economy, efficiency and effectiveness.” Large portions of these proposed rules are devoted to price transparency and extensive reporting requirements, delineated by provider type, service, specialty, geography and public accessibility. Unlike these proposals, MA plans’ fee schedules are not subject to public transparency requirements, and reimbursement is determined according to market forces and confidential negotiation; these fees are exempt from disclosure and comparison. These proposed rules use provider participation and acceptance of rates as a proxy for adequacy of reimbursement and access.
What is lacking is an understanding of market dynamics and providers’ financial pressures and options. As noted earlier, nearly one half of the population is covered by either Medicare or Medicaid. Depending on the provider’s location and specialty, these two government-sponsored programs may constitute the vast majority of the practice’s revenue stream.
For instance, a cardiologist is likely to have a practice comprising a significant number of aged and disabled individuals. It would not be financially feasible to not participate in the Medicare and Medicaid programs and accept the fee schedule dictated by the state and the CMS. Additionally, there may be a high concentration of certain specialties, particularly in some of the MSAs by which the CMS proposes rate reporting and transparency. The competition generated by this concentration also applies downward pressure on “acceptable” reimbursement.
In an analogous example, pediatricians may find themselves heavily dependent on Medicaid payments – even more so in population areas where easy access to pediatric and preventive care is critical. While the proposed rules point out the research demonstrating the inflection point at which most providers will accept the reimbursement rates of these programs (roughly the third quartile), this should truly not be interpreted as an indication of rate adequacy but only of provider acceptance of a minimally tolerable situation in many cases.
The tight linkage between Medicaid and Medicare reimbursement rates in these proposed rules comes with some risk, as the government proposes to reduce Medicare provider reimbursement. In acknowledging the third quartile “threshold” in the reimbursement-provider participation relationship, these proposals set the Medicaid reimbursement at no less than 80 percent of the corresponding Medicare fee schedule for each of the categories defined, unless the state can demonstrate it does not affect access in terms of metrics, such as provider participation, network adequacy, the legislated upper payment limit or other considerations.
Consequently, as Medicare rates decrease, so will the corresponding Medicaid rates. There are additional requirements for states to designate certain percentages of the HCBS reimbursements for personal care, homemaker and home health aide services. At some point, it is likely reimbursement will hit a level that will no longer sustain even the most efficient providers, and access and quality may irrevocably deteriorate as current providers no longer participate and the pipeline of physicians dries up. The proposed rules recognize there are many types and levels of providers, yet certain services (such as surgery) are the sole province of physicians.
Reporting requirements
The reporting requirements in these proposed rules are extensive. States are required to report and make these data available on public websites in a consumer-friendly format.
While some of the administrative burden is removed with the proposed elimination of access monitoring review plans, states are required to submit much of the information in their state plan amendments, including data from their Medicaid managed care organizations. The proposed rules place significant emphasis on any anticipated reduction in reimbursement rates and the anticipated impact on the covered population – similar to CMS beneficiary impact analyses.
Recognizing the administrative impact of these proposed changes, the CMS has allowed variable implementation timelines of from one to six years. To provide enforcement ability and penalties for non-compliance, the CMS has linked compliance with federal financial participation. The proposed rules empower the CMS to withhold a proportionate amount of funding related to the degree of non-compliance. On the flip side, states are eligible for as much as 90 percent of federal matching funds to enact parts of the proposed rules.
Related to similar requirements in both the MA and Managed Medicaid spaces, these proposals call out the need for beneficiary input and protections. Beneficiary Advisory Groups (BAGs) and Medical Care Advisory Committees are constituted with requirements regarding composition, public notification and meeting frequency.
While most existing programs have appeal rights, options for fair hearings and grievances are also mandated. Similarly, the CMS has adopted NCQA quality measures in the form of HEDIS, CAHPS and HOS metrics to report on MA plan quality and establish the Star Ratings. These metrics are available to the public, provide the CMS with an objective way to evaluate the care enabled by MA plans, are the basis for bonus financial payments and are used to determine the ability of an MA Plan to continue offering services to the CMS’s beneficiaries.
NCQA extends these metrics to the Home and Community Based Services (HCBS) addressed in these proposed rules. Managed Medicaid has similarly adopted these surveys and established quality programs, typically with financial withholds that the Managed Medicaid organizations can recoup through quality performance. These quality scores are already publicly available. The proposed rules extend these programs to the FFS populations.
Questions about feasibility, intent
Reviewing these proposed rules raises some additional questions regarding feasibility and intent. Experience in both MA and Managed Medicaid demonstrates the difficulties in engaging these populations in meaningful dialog regarding access and benefits.
Just as many of the MA and Managed Medicaid requirements are well-intentioned, they remain largely impractical. State plan amendments may document policies and procedures for compliance with these and other requirements, but even so, actual performance will be challenging.
Another question is how willing states will be to undertake the additional burdens of these proposed rules or instead delegate them to the managed care organizations. The number of individuals remaining in FFS Medicaid is comparatively small. While the proposed rules acknowledge this and make some accommodations for states with significant managed care penetration, states will still need to make value judgements between the funding available and the burden entailed in meeting the requirements, along with the risks of non-compliance. Given the fact they will still need to report many of these metrics from their managed care organizations, it is possible there may be a shift of some or all the remaining FFS populations to managed care.
There are also implications for Medicaid expansion in consideration of the current Medicaid redeterminations as the COVID Public Health Emergency regulations expire. There will undoubtedly be pressure for expanded eligibility for those re-entering the workforce albeit in low-wage jobs, as well as those who are described as the “working poor.” Despite errors in redetermination, Managed Medicaid organizations are losing members, along with associated revenue, and would certainly be in favor of expanding their membership opportunities to retain and grow their populations as the pool of newly eligible Medicaid beneficiaries grows.
On their face, it is difficult to argue with these proposed rules. Realistically, little in these proposed rules can be considered historic advancements. Closer examination reveals a move to more closely align the Medicaid FFS programs with the Medicare Advantage and Managed Medicaid programs, mirroring many of the requirements of MA; significantly increasing the data reporting requirements to the CMS actuaries; and more than subtly advocating for both Medicaid expansion and the privatization of Medicaid under the cover of stated aims of economy, efficiency and efficacy – perhaps even a merger of all government-sponsored programs into a new model.
David J. Sand, MD, MBA, is chief medical officer of ZeOmega.