New Rules, New Opportunities: Medicaid Managed Care Regulations

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Jeffery Conley
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1 New Rules, New Opportunities: Medicaid Managed Care Regulations Lindsey Browning National Association of Medicaid Directors Alicia Smith HMA Rebecca Farley National Council for Behavioral Health

2 Medicaid Managed Care Rule In 2015, CMS proposed the first major update to applicable regulations since Intended to align the managed care regulations across Medicaid, Medicare and the private market in light of major changes made by the ACA.

3 New Administration, New Rules The Trump Administration may revisit this rule in environment of less regulation, increased state flexibility Questions to consider: How could state flexibility be increased? What ACA provisions could be removed? To what extent would rule changes be used to simplify regulatory requirements on states, MCOs?

4 Future of the Rule The effective date of the Final Rule was July 5, 2016; however, the implementation date for many of the provisions is based on a future date or contract cycle. Future is uncertain, but for now the rule is the law of the land.

5 Medicaid Managed Care Regulations: The State Perspective April 5, 2017 Lindsey Browning Program Director National Association of Medicaid Directors

6 Outline Medicaid managed care context Exploring three aspects of the rule o Intersection with value-based purchasing o Short-term stays in IMDs o Mental health/sud parity Working with your Medicaid agency

7 National Association of Medicaid Directors Represent 56 state and territorial Medicaid Directors Non-profit, bi-partisan association Core functions include: Serving as consensus voice of Directors in federal policy process Facilitating peer-to-peer learning and sharing of best practices

8 The Medicaid Context Nation s largest public health insurance program o 73 million people, including most complex and costly populations o 16% of health spending nationally Major role in serving those with behavioral health conditions o Largest payer of mental health services o Growing responsibility for those with SUD: by 2020, expected to account for 28% of SUD spending. Nearly 80% of all Medicaid beneficiaries in some form of managed care Movement to drive additional value in managed care

10 Managed Care Final Rule Released April 25, 2016 Major overhaul of existing regulations o Last updated in 2002 o Recognizes managed care predominant delivery model o Seeks broad alignment with QHPs and Medicare Advantage Phased-in implementation NAMD & state engagement with federal partners

11 Three Aspects of the Rule: 1. Value-based purchasing

12 What are value-based purchasing and alternative payment models? Value-based purchasing: business strategy to maximize benefit received when buying a good or service Alternative Payment Models (APMs): a value-based purchasing strategy that rewards providers with higher/better payment based on provider s performance relative to cost & quality

13 Alternative payment models in managed care State Managed Care Organizations APMs change the way MCOs pay their providers Providers

14 Alternative payment models in managed care Many states require or encourage MCOs to increase use of alternative payment models State approaches vary in how directive they are: o Promote use of alternative payment models by MCOs o Financial incentives for MCOs to use alternative payment models o Contractually require MCOs to implement MCO-defined alternative payment models o Medicaid agency designs an alternative payment model and contractually requires MCOs to implement it Early efforts focused on acute care; desire to design alternative payment models for behavioral health

15 Most common alternative payment models Additional Payments to Providers in Support of Delivery System Reform o Per member per month payment on top of fee-for-service payments for care management or to fund practice transformation o Typically supports patient-centered medical homes and/or Health Homes Episode-based Payments o Provider financially accountable for a defined and discrete set of services over limited time o Focused on identifying and improving clinical pathways Population-based Payments o Providers responsible for comprehensive set of services for a patient population o Potential to share in savings/risk based on actual costs & quality

16 Value-based purchasing and managed care rule Rule s Provision: States cannot direct MCOs expenditures under the contract, with a few exceptions: o Value-based purchasing arrangements o Multi-payer delivery system reform or performance improvement initiatives; o Minimum or maximum fee schedule, uniform dollar or percentage rate increase, or for providers delivering a particular service under the contract. How provision is interpreted has major implications for how states drive alternative payment models in managed care

17 Value-based purchasing and managed care rule Rule s provisions: adds new limitations on incentive and withhold arrangements for MCOs o A withhold arrangement is where a state retains a portion of capitation payment and only pays it to the MCO when it satisfies a given target o Incentive arrangement: MCO receives funds in addition to capitation rate for meeting given targets New limitations may restrict states ability to use withholds and incentives to support value-based purchasing

18 Three Aspects of the Rule: 2. Institutions for mental disease provision

19 Institutions for mental disease provision Rule s provision: Allows MCOs to pay for short-term stays in institutions for mental disease (up to 15 days/mo.) o MCOs can provide it as cost-effective alternative to state plan service (a.k.a. inpatient stay in community hospital) o Clarifies existing authority Effective date: MCO contracts starting on or after July 2017

20 Institutions for mental disease provision The IMD provision comes with its own set of challenges and opportunities Opportunities: creates a clear pathway for states with MCOs to use in lieu of authority Challenges: o 15 day limit didn t exist prior to final rule o Doesn t reflect needs of those with SUDs o Appears to conflict with parity o Difficult to operationalize (recouping capitation payments, rate setting, pricing IMD services, etc.)

21 Three Aspects of the Rule: 3. Mental health/sud parity

22 Managed care rule and parity Notable lack of discussion in regulation on how managed care rule intersects with parity Where states see the intersection: o IMD 15 day limit in direct conflict with parity - Non-quantitative treatment limit based on setting - 15 days does not account for medical need o Operationalizing contract changes for parity and managed care rule in concert

23 Managed care rule and parity Other parity issues and considerations o Complexity of parity analysis, especially when some services carved out o Application to long-term services and supports o Non-quantitative treatment limits

24 Working with your Medicaid agency Recognize your Medicaid Director is o Implementing many complex new regulations, not just managed care and parity o Dealing with budget constraints and limited staff capacity o Facing significant uncertainty at federal level, including with managed care rule Opportunities for providers o Engage with your state & MCOs in design of value-based purchasing strategies. o Be a partner. Offer your expertise to agency on quality metrics, best practices, etc.

The Landscape of Medicaid Value-based Purchasing

The Landscape of Medicaid Value-based Purchasing CSG Medicaid Policy Academy Sept. 22, 2016 Lindsey Browning Senior Policy Analyst Overview Background State Medicaid Landscape of Value-based Purchasing