The Centers for Medicare & Medicaid Services (CMS) published two significant updates to its Medicaid regulations on May 10, 2024. The two Final Rules, a Medicaid Access Rule and a Medicaid Managed Care Rule, impose new requirements on states and Medicaid managed care plans that will enhance and standardize reporting, monitoring, and evaluation of Medicaid access to services.
Medicaid Access Rule
This rule includes provisions that create new transparency and consultation requirements for fee-for-service (FFS) provider payment rates, including a requirement for states to publish analyses comparing the Medicaid FFS rates for certain services against corresponding Medicare FFS rates, the establishment of an “interested parties’ advisory group” to advise and consult on payment rates for certain HCBS, and significant new procedural requirements for certain types of FFS rate changes. These provisions replace the current requirements for triennial Access Monitoring Review Plans, which are rescinded as of the rule’s effective date.
The rule modifies the procedures for requesting federal approval to reduce or restructure FFS rates, by requiring additional supporting analyses with respect to state plan amendments (SPAs) that, based on a preliminary review, present potential risks to beneficiaries’ access to services.
It also strengthens program advisory groups. States must create and support a Medicaid Advisory Committee (MAC) comprising diverse stakeholders, and a Beneficiary Advisory Council (BAC) comprising solely of people with lived experience and reflecting the diverse population in the Medicaid program. These two groups—which replace the currently required Medical Care Advisory Committee (MCAC)—will provide input to the state Medicaid agency on a broad scope of program issues such as eligibility, coverage, access to care, and quality of care.
Furthermore, the rule updates HCBS program standards and processes regarding care access, quality, and payment, including a requirement that at least 80% of Medicaid payments for certain home-based services go to compensation for the individual direct care workers who provide these services (a proposal that drew a large volume of comments both for and against, and which was modified in several respects in the final rule); new standards and reporting requirements related to person-centered service plans, waiting lists, and other access measures; a requirement to establish an HCBS grievance system and incident management system in FFS (similar to what is already required for HCBS delivered through managed care); and a new regulatory framework to require state reporting of performance measures from the HCBS Quality Measure Set (which has, to date, been voluntary). CMS estimates that, for states, implementing the updated critical incident system will be by far the costliest component of these two final rules.
Medicaid Managed Care Rule
The rule strengthens access to care and access monitoring requirements in managed care programs by establishing federal minimum standards for appointment wait times for certain services, enhancing state requirements for access monitoring, and requiring states to publish analyses of managed care plans’ aggregate provider payments for certain services. Recognizing the rise of telehealth, CMS also provides new clarity to states and managed care plans about how to account for telehealth when monitoring for timely access and network adequacy.
The rule codifies and revises federal regulations governing State Directed Payments (SDPs)—through which states can establish parameters for managed care plans’ provider payments—by creating new flexibilities for certain types of SDPs while codifying or strengthening the guardrails around others. It also builds on recent CMS policy changes regarding “in lieu of services” (ILOS), a mechanism through which managed care plans can provide alternatives to standard covered services when it is medically appropriate and cost-effective. The rule further modifies Medical Loss Ratio (MLR) methodologies and processes to align more closely with comparable MLR requirements for the commercial health insurance market, increase accuracy of plan reporting for rate-setting purposes, and allow for more consistent comparisons across each plan’s different managed care business lines and from state to state.
Finally, the rule establishes a national framework and enhance requirements for managed care quality rating systems (QRS) to increase accountability for plans, assist beneficiaries with plan selection, and make various other changes to the existing provisions governing states’ managed care quality strategies and quality monitoring. Out of all the provisions in the Managed Care Final Rule, CMS expects that implementing these QRS requirements will require the greatest investments in technology and staff time, for both states and managed care plans.
Conclusions From Both Rules
Ultimately, these rules will significantly increase transparency for Medicaid and CHIP program data related to provider payments and access to care. States and managed care plans must soon begin publishing several new types of data sets and reports, which must be publicly available in a standardized format and with relevant context. The final rules also show CMS’s continued emphasis on addressing health disparities and advancing health equity. Consistent with the U.S. Department of Health and Human Services’ (HHS) overall focus on equity in its administration of Medicaid and CHIP, Medicare, and the Marketplaces, these rules evince an effort to identify and disclose health disparities (e.g., by requiring states to stratify data based on race and other demographic factors), emphasize meaningful engagement of people enrolled in Medicaid and CHIP (e.g., by supporting enrollee participation in advisory groups, requiring enrollee experience surveys, and requiring that program data be easy for the public to find and understand).
CMS is seeking to align standards and approaches across federally regulated health care programs. Across multiple provisions, CMS looks to existing standards for Medicare and the Marketplace to inform and align Medicaid and CHIP with these standards. Examples include the Medicaid/Medicare comparative payment analyses mentioned above, as well as CMS’s efforts to align the standards and quality measures for Medicaid and CHIP managed care more closely with Qualified Health Plans sold on the Marketplace.
Furthermore, the rules impose significant new requirements on states and managed care plans, which CMS seeks to mitigate through regulatory design, phased-in implementation, and technical assistance. CMS estimates that states, plans, and providers will collectively spend almost $500 million to implement these rules over the next 10 years. Many of CMS’s reforms require new or expanded analyses and reporting by states and plans, upgraded IT infrastructure, and additional state monitoring and oversight responsibilities. For states already stretched thin as they unwind the COVID-19 continuous coverage requirement, these new requirements could pose significant challenges, especially in light of CMS’s recently finalized reforms for eligibility and enrollment systems. In certain areas, CMS also attempts to mitigate administrative burdens on states.