The New CMS Medicaid Managed Care Mega Reg Early Observations May 31, 2016 1
Presenters Biographies Bill Barcellona serves as the Senior VP for Government Affairs for CAPG. He is a former Deputy Director for Plan-Provider Relations at the Department of Managed Health Care in Sacramento. Bill has practiced law for 30 years in California and prior to joining the DMHC he spent 16 years at two major law firms in Newport Beach and Sacramento, primarily as a civil litigator. Bill s current legal experience includes general health law matters with an emphasis in Knox Keene Act and managed care issues. Bill also holds an MHA degree from USC and teaches graduate courses in the Price School MHA and MPA programs, as well as the Marshall School of Business MMM program. Margaret Tatar is a Managing Principal with Health Management Associates, responsible for the Sacramento and San Francisco offices. Prior to joining HMA, she served in the California Department of Health Care Services since 2012, most recently as interim Deputy Director for Health Care Delivery Systems. Previously, Ms. Tatar was the executive director of public affairs at CalOptima. She has also held positions in county government and as legislative staff counsel in a number of jurisdictions. She received her undergraduate degree from Bryn Mawr College and her law degree from Villanova University Law School. 2
Overview How to Navigate the Regulation 1. Landscape in general 2. Goals and Themes in Rule 3. Rule Implementation/Timing Generally 4. Key Issues 5. Concluding Thoughts 6. Questions and Answers 3
Landscape: ¾ of all Medicaid beneficiaries are in managed care as of 2014 Only 3 states do not have a managed care program, regardless of whether they have accepted ACA expansion CAPG Member States in 2016: 4
4 Main Goals of the Rule 1. Advance delivery system reform and improvements in quality of care for Medicaid and CHIP beneficiaries; 2. Strengthen the consumer experience of care and key consumer protections; 3. Strengthen program integrity by improving accountability and transparency; and 4. Promote alignment of rules across insurance programs to improve efficiency and help consumers who are transitioning between sources of coverage (complete alignment unlikely). 5
Related Rule and Policies: Themes CMS also released Advancing Care Information, that will implement the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA). The rule lays out the establishment of the Merit-based Incentive Payment System (MIPS) which consolidates components of the Physician-Quality Reporting System, the Physician Value-based Payment Modifier, and the Medicare EHR Incentive Program for eligible professionals. The proposed rule is published in the Federal Register on May 9. The proposal will be available for public comment for 60 days. MACRA removes the sustainable growth rate formula, which cut Medicare payments for services, and replaced it with a.5% year-over-year increase in the physician fee schedule. The proposal links payments to value via MIPS and measures physicians in four areas: Quality, Cost, Technology use, and Practice improvement. "This proposal, if finalized, would replace the current meaningful use program and reporting would begin January 1, 2017, along with the other components of the Quality Payment Program," wrote CMS acting Administrator Andy Slavitt and Karen DeSalvo, national coordinator at ONC. 6
Related Rule and Policies: Themes The rule proposed two types of alternative payment models (APM): Advanced APMs and Other- Payer Advanced APMs. Providers must meet three requirements for each model to be considered eligible. For the two tracks of APMs, requirements include participants to use certified EHR technology and provide payment for covered professional services based on quality measures compared to those used in the quality category of MIPS. The rule proposes to use 2017 as the performance period for the 2019 payment adjustment. Thus, the first performance period would start in 2017 for payments adjusted in 2019. "This time frame is needed to allow data and claims to be submitted and data analysis to occur," the proposed rule stated. "In addition, it would allow for a full year of measurement and sufficient time to base adjustments on complete and accurate information." "Under the new law, Advancing Care Information would affect only Medicare payments to physician offices, not Medicare hospitals or Medicaid programs," Slavitt and DeSalvo wrote. "We are already meeting with hospitals to discuss potential opportunities to align the programs to best serve clinicians and patients, and will be engaging with Medicaid stakeholders as well." 7
Related Rule and Policies: Themes Quality for QHPs Standardized plans are now simple choice plans. These are plans with standardized benefit and costsharing parameters. Although CMS has not yet decided how exactly these plan options will be displayed or described, it is the intention of CMS to display plan quality star ratings using a five-star scale for 2017. For 2017 open enrollment period, CMS intends to pilot quality ratings for five federally facilitated marketplace states with strong plan competition: Michigan, Ohio, Pennsylvania, Virginia, and Wisconsin. State-based marketplaces also have the option of displaying quality ratings. 8
Categories of Impact 1. Managed Care Contracts Requirements and Options 2. MLR 3. Actuarial Soundness 4. Payments 5. Grievance and appeal procedures 6. Consumer information requirements 7. Managed Care Networks and Oversight 8. Quality 9
Rule Implementation/Timing 2016 2017 2018 2019 and ff. May 2016 - Final MLR Network standards 2022: pass through phase out July 5, 2016 Grievances Appeals 2027:pass through phase out Consumer Info Parity Oct 2017 10
1. Managed Care Contract Terms A. State Plan contracts in general must: Contain minimum required elements between states and plans and remain subject to CMS review and approval; Identify capitation payment amounts based only upon services covered under the State plan, as well as services deemed by the State to be necessary to comply with federal mental health parity requirements set forth under federal regulations issued on March 30, 2016; Have payments that adequately support efficient delivery of care; Include a requirement for annual audited statements specific to the Medicaid contract; 11
1. Managed Care Contract Terms A. State Plan contracts in general must (continued): Include requirements to comply with home- and community-based care waiver requirements in the event that such services are included in the contract; To the extent that covered outpatient drugs are part of the contract, require compliance with Medicaid s federal drug coverage rules on amount, duration, and scope of drug coverage and management and reporting requirements; To the extent that contracts cover duals, require coordination of benefits; Bar discrimination based on health status or need for health services or on race, color, national origin, sex, sexual orientation, gender identity, or disability; and Prohibit not only intentional but de facto discrimination, meaning any policy or practice that has the effect of discriminating on the basis of the prohibited characteristics. 12
1. Managed Care Contract Terms B. States may allow in lieu of services under plan contracts: States can allow inclusion of in lieu of services costs of which are calculated in rates and qualify for FFP. Contracts can specify the voluntary provision of substitute services in lieu of state plan services, meaning services or settings that are in lieu of services or settings covered under the State plan. If states do this, the permission has to be explicit and there must be a determination by the state that an alternative service or setting is a medically appropriate and cost effective substitute for the covered service. Such services in lieu of covered services must be voluntary for members. CMS notes that an in lieu of service is a substitute service or setting for a service or setting covered under the State plan. As such, in lieu of services would seemingly need to be related to covered state plan services. An exception would be the new authority to states to cover short stays in institutions for mental diseases (IMD). 13
1. Managed Care Contract Terms C. States may exercise new authority for persons who reside in Institutions for Mental Diseases (IMDs) Although federal funding is generally not available for services furnished to people who reside in IMDs, the rule just like the draft makes an exception. It allows states to make capitation payments to plans for adults ages 21-64 who receive inpatient treatment in an IMD, so long as the IMD meets provider participation standards and the stay is no longer than 15 days during the capitation period. This provision represents a crucial recognition by CMS of the severe shortage of short-stay residential treatment services for beneficiaries, while at the same time guarding against lengthy stays that discourage treatment in the most integrated setting. 14
1. Managed Care Contract Terms D. Parity: Plans must ensure the total benefits package aligns with mental health parity requirements, regardless of the service delivery system. States can continue to operate carved-out alternate delivery systems for state specialty mental health and substance use disorder treatment services, but they must align with the rule as well. Parity protections apply to Medicaid LTSS: states must include LTSS in the appropriate classification of benefits covered under the rule for the purposes of a parity analysis. Arguably, states cannot classify services such as residential treatment centers for psychiatric or substance use treatment as being long-term care and not subject to parity. Plans must disclose information on benefits for mental illness and substance use treatment upon request, including the criteria for determinations of medical necessity. States must disclose the reason for any denial of reimbursement or payment for services with respect to mental illness and substance use disorder benefits. Depending on how the state structures the total benefits package for managed care enrollees, either the MCO or the state must conduct a parity compliance analysis. 15
1. Managed Care Contract Terms What does all of this mean? At a minimum: States must analyze whether current contracts are Rule-compliant States and CMS will rethink contract review-approval timelines Plans should look for longer review and approvals times for Contracts States and/or plans will have to complete a parity compliance analysis States will have to make decisions on: In Lieu of Services IMD authority If States exercise these new options, Plans and Providers need to: Look for that contract language Look for, and seek out, all relevant policy guidance Ensure that Plan Networks understand the new guidance 16
1. Managed Care Contract Terms What does all of this mean for CAPG members? Consider your position and advocacy relating to In Lieu of Services IMD authority If States exercise these new options, consider your position and advocacy relating to: State-plan contract language All relevant policy guidance Consider your position and advocacy relating to any state process relating to the review/update of Plan contracts to ensure Rule compliance Consider your position and advocacy relating to any state or plan parity compliance analysis Consider any impacts on your risk and operations from such parity compliance analysis 17
A. Background 2. MLR Since 2012, all insurers in the individual, small group, and large group markets have been required to spend a minimum percentage (80% for individual and small group, 85% for large group) of their adjusted premium revenue on health care and quality expenses. Insurers that spend less have to rebate the difference between the amount they actually spent in a given year and their minimum medical loss ratio (MLR) target to their enrollees. 18
2. MLR B. Consistent with alignment themes, the Rule requires plans to calculate/report MLR using a formula like the one applied to private insurers for plan years starting July 1, 2017. MLR target for MMC plans is 85%; States can set higher MLR target ratios; The Rule does not obligate plans, as a matter of contract compliance, to meet the target. Rather, if an MMC insurer does not meet the MLR target, the state must take that into account in setting capitation rates for subsequent periods; The Rule also does not require remittance. States can, but not required to, to require plans that fail to meet the MLR target to pay remittances to the state. Such remittances must be shared with the federal government to the extent that payments were originally attributable to federal financial participation. The method of calculating the remittances is left to the state. 19
2. MLR C. Key differences in Medicaid MLR: In private coverage, MLR focuses on ensuring enrollee value; In Medicaid, MLR works as a function of actuarial soundness; Medicaid MLRs are calculated annually tied to annual rate setting process; Credibility adjustments are calculated differently (take into account the fact that MLRs for small plans for one year may not accurately reflect plan experience, given the variability of health claims); When calculating the MLR numerator and denominator, there are differences: i. Plans can take into account additional quality improvement costs that do not apply to private plans, including the cost of external quality review. ii. Regulatory fees and taxes specific to MMC plans that do not apply to private plans can be subtracted from the MMC MLR denominator. iii. CMS considered allowing MMC plans to include fraud prevention costs in the numerator in the proposed rule; however, HHS decided not to consider fraud prevention costs as part of the numerator for private plans and so it will not allow MMC plans to count them either. 20
2. MLR D. Treatment of MLR: States must take into account plans past MLRs, as calculated and reported, in the development of the capitation rates, and consider the projected MLRs. States can request an exception if unable to use the required methodology. The development of the non-benefit component of the rate must include appropriate and reasonable expenses related to plan administration, taxes, licensing and regulatory fees, contribution to reserves, profit margin, cost of capital, or other operational costs. 21
2. MLR What does this all mean? At a minimum: Beginning with contracts starting on or after July 1, 2017, plans must calculate and report their MLRs, the basis for actuarial soundness. States will have to provide guidance to plans regarding the MLR standard, what goes into the calculation, what is required in MLR reporting, and what is the rating year. States must take into account plans-specific past MLRs, as calculated and reported, in the development of the capitation rates, and consider the projected plan-specific MLRs. States may require that plans make repayments if they vary from the MLR. If they do so, they will have to provide guidance to plans with regard to the timing, process, and dispute processes for such remittances. 22
2. MLR What does this all mean for CAPG members? Consider your position and advocacy regarding MLR guidance and reporting: How and when will States issue guidance on MLR? How and when will plans issue guidance? Consider your position and advocacy regarding state authority to secure remittances 23
3. Actuarial Soundness A. Under the rule, actuarial soundness principles must relate to the specific sub-populations to be enrolled. B. The rule bars cross-subsidization from one rate cell to another. Rates must be developed in such a way that the MCO, PIHP, or PAHP would reasonably achieve a medical loss ratio standard... of at least 85 percent for the rate year, with the MLR acting as a floor to ensure that capitation rates are adequate for reasonable, appropriate, and attainable nonbenefit costs. C. The process of rate development (along with rate certification submission requirements) aims to ensure that rates are fair and that methods for developing rates are consistent across plans. The rate development methodology includes: i. Base utilization and price, ii. Trend data tied to the actual experience of the Medicaid population or a similar population, and iii. Non-benefit component that accounts for reasonable expenses related to plan administration, taxes, licensing and regulatory fees, contribution to reserves, risk margin, cost of capital, and other operational costs associated with provision of covered services. 24
3. Actuarial Soundness D. If a risk adjustment methodology is used, rates must use generally accepted models and apply it in a budget neutral manner across all MCOs, PHIPs, and PAHPs... E. The rule recognizes that plans assume certain roles in Medicaid: MMC plans administer key aspects of the program that are related to managed care but exist outside the capitation rate. In this regard, the rule exempts certain pass-through payments from actuarial soundness principles, including specified services for specified enrollees, delivery system reform payments, GME payments, and supplemental payments to FQHCs and RHCs as required under law. 25
3. Actuarial Soundness F. Rate adjustments: Retroactive rate adjustments are permissible. States have to support them by a rationale and the data, assumptions, and methodologies. CMS has to approve the adjustments. 26
3. Actuarial Soundness What does all this mean for States and Plans? States will have to implement the new standards with CMS approval. States will have to issue guidance to Plans. For States that implement retroactive adjustments, they have to: Support them by a rationale and the data, assumptions, and methodologies, and Secure CMS approval. What does this mean for CAPG members Consider your position and advocacy regarding state rate-setting guidance Consider your position and advocacy regarding state authority to implement retroactive adjustments 27
4. Payment rules A. Provisions Related to Payment Sets minimum standards governing contract payment and incentive arrangements; Requires that contracts describe applicable risk sharing mechanisms and incentive arrangements, with incentive payments still capped (as under prior law) at 105 percent of the approved capitation amount. Incentive arrangements, including those for network providers, must be specific with respect to time and performance, cannot be renewed automatically, and must be available to both public and private contractors. Conditions incentive payments that are necessary for specified activities, targets, performance, measures, or quality-based outcomes that support program initiatives under the rule s state quality strategy: Incentive payments cannot be something for nothing. States cannot condition incentives on contractors entering into IGTs key for public plans. Withhold arrangements must be actuarially sound and that they take a plan s operating needs into account given the size and characteristics of the plan and its enrollment, as well as capital reserve requirements. 28
4. Payment rules B. Payment and delivery system reform Section 1115 waivers authorize Medicaid delivery system reform efforts. Rule restates prohibition on directed payments. It also permits states to require pass-through payments and targeted delivery system payments. However, it eliminates states' ability to use pass-through payments for physicians and nursing facilities by 2022 and phases out the payments for hospitals by 2027. The Rule supports two state practices: (1) setting minimum reimbursement standards or fee schedules for providers that deliver a particular covered service, and (2) raising provider rates in an effort to enhance the accessibility or quality of covered services. Any contract arrangement that directs expenditures made by the plan for delivery system or payment provider initiatives must use a common set of performance measures across all payers and providers so that CMS can evaluate the degree to which multi-payer efforts achieve the stated goals of the collaboration. 29
5. Grievances and Appeals A. The Rule aligns appeal rights for MMC enrollees more closely with those available to private and Medicare Advantage plan enrollees. MMC plans, like private plans, must make available to their enrollees an internal process to appeal adverse benefit determinations. Adverse benefit determination is defined for the MMC program much as it is for private insurance plans, but also includes specifically Medicaid issues. MMC plans must also provide an internal process for reviewing grievances involving plan conduct other than benefit determinations, a requirement imposed on Medicare Advantage plans but not private insurance plans. Appeals from an adverse MMC internal review decision must be made to the state appeals entity. States can offer an opportunity for independent external review to MMC enrollees, but it is optional. 30
5. Grievances and Appeals B. Specifics, starting for plan years beginning July 1, 2017: Plans must give enrollees notice of adverse benefit determinations, including information on the right to appeal the determination and its reasoning. Internal appeals of adverse benefit determinations must be filed within 60 days. (Enrollees in private plans have 180 days to appeal). Internal appeals must be decided by a person who has appropriate clinical expertise (where relevant) and who was not involved in, or subordinate to a person who was involved in, the initial decision. Enrollees must have a reasonable opportunity to present evidence and testimony and must have access to information considered by the reviewer. There is no time limit on filing grievances. Grievances must be resolved within 90 calendar days and internal appeals within 30 calendar days (compared to 60 days for private plans). 31
5. Grievances and Appeals B. Specifics, starting for plan years beginning July 1, 2017 (continued): Expedited appeals involving urgently needed care must be decided within 72 hours. Under limited circumstances, time frames can be extended by 14 calendar days. If Plan decides against an enrollee in an internal review, the enrollee can request a state fair hearing within 120 days of the decision. As with private coverage, an enrollee must normally exhaust internal appeal remedies before proceeding with a further appeal. If a Plan fails to make a decision within the prescribed time frames, however, the internal appeal process will be deemed exhausted and the appellant can proceed directly to a fair hearing. At an enrollee s request, the Plan must continue or reinstate coverage during the pendency of an appeal, although the MCC can recover costs paid for the enrollee s care during the interim if the Plan s decision is upheld. 32
6. Consumer information A. The Rule contains consumer information requirements, effective July 1, 2017: States must provide general information about the program, including information about their rights to enrollment and disenrollment, the basic features of managed care, and the benefits that are covered by the program and how they are covered. Potential enrollees also must receive information about the service areas of Plans; any cost-sharing obligations; provider directories and formularies; quality and enrollee satisfaction information on Plans; and information on how to obtain counselling or referral services for plans that do not cover certain services because of moral or religious objections. 33
6. Consumer information Provider directories must be updated at least monthly and no later than 30 days after the plan receives updated provider information. Plans have to make their formularies available electronically and in paper form. Language and accessibility requirements only apply to threshold languages. By contrast, most QHP language requirements apply specifically to the top 15 non- English languages in a state. 34
7. Network A. These standards apply for plan years July 1, 2018. B. States must develop and make publicly available time and distance network adequacy standards for primary care (adult and pediatric), OB/GYN, behavioral health, adult and pediatric specialist, hospital, pharmacy, and pediatric dental providers, and for additional provider types as determined by CMS. This includes MLTSS standards. C. If states create exceptions to standards, they must monitor enrollee access on an ongoing basis. 35
7. Network D. The Rule lists factors States must consider in setting standards, including: Ability of providers to communicate with limited English proficient enrollees, Accommodation of disabilities, and Availability of triage lines or screening systems, Use of telemedicine, e-visits, and/or other evolving and innovative technological solutions. 36
7. Network E. Downstream Contractors. The Rule add expectations for delegated model plans for first tier, downstream, and related entities under the MA program. 37
8. Quality A. States must implement quality improvement strategies for assessing and improving the quality of MMC services. Quality improvement strategies must address: Improving quality and performance outcomes; A plan to identify, evaluate, and reduce health disparities; and Mechanisms to identify individuals who need long-term services and supports or who have special health care needs. B. States must require that Plans establish/implement an ongoing quality assessment and performance improvement program. These programs focus on the quality and appropriateness of care provided enrollees, particularly those with special needs or requiring long-term care services and supports. Performance improvement projects must be designed to achieve significant, sustained, and objectively measureable improvement in health outcomes and enrollee satisfaction. 38
8. Quality C. States must require Plans to report their accreditation status, and must in turn report Plan accreditation information on the state s website. The rule does not require states to mandate Plan accreditation, however, although accredited Plans can be deemed to meet certain external review requirements. D. CMS is developing a quality rating system for Plans that will presumably resemble the system it has developed for QHPs. States can either adopt this system or develop their own quality rating systems, must rate Plans, and must publish quality rating information on Plans. 39
Conclusions/Take-aways Potential for CAPG members to leverage Medicare Advantage care delivery infrastructure for MMC? Will new rate-setting rules encourage broader participation? Potential to move to percentage of premium capitation in MMC? CAPG will continue analysis of the rule during the remainder of 2016 You can participate through the CAPG State Programs Committee Sept. 13 Sacramento (in person only) Nov. 13 Los Angeles (call-in and webex) 40
CAPG Colloquium 2016 September 28 30, 2016 Hyatt Regency on Capitol Hill, Washington, DC Registration: https://capg.cvent.com/events/capg-colloquium-2016/registration-19 2da1356cd448869bd7e597b7120622.aspx Join us for a further analysis of the new MMC Rule: The CMS Medicaid Managed Care Mega Regulation Alignment with Medicare Advantage Standards Colloquium Panel: Tim Englehardt, Director, Medicare-Medicaid Coordination Office, CMS Margaret Tatar, Esq. Managing Principal, Health Management Associates Ceci Connolly, CEO, Alliance of Community Health Plans Bill Barcellona, Moderator, CAPG 41
Contact Us William Barcellona Sr. VP Government Affairs (916) 443-4152 wbarcellona@capg.org Margaret Tatar Managing Principal (916) 446-4601 mtatar@healthmanagement.com 42