CMS Releases New Medicaid Rule, OMB in Final Review

Last week, the Centers for Medicare & Medicaid Services (CMS) finalized the new Medicaid rule — a 653-page proposal requiring Medicaid managed care organizations (MCOs) to enhance their network adequacy, establish quality ratings, set a medical loss ratio (MLR) threshold of 85%, and develop a robust managed long-term care program. The new Medicaid rule has now been sent to the Office of Management and Budget (OMB) for final review. This means the new Medicaid rule could be published by mid- to late May. There are 39 states and the District of Columbia that currently outsource their Medicaid programs and about 46 million lives that will be affected by this new change.

Some of the proposed changes that were up for consideration:

1. Medical Loss Ratio — CMS proposed an MLR of 85% for Medicaid managed care plans, the industry standard for Medicare Advantage (MA) plans. CMS proposed to mostly use commercial rules in calculating and reporting MLR due to the “need for consistency” between plans in the Marketplace and in Medicaid.
2. Appeals and Grievances — The proposed rule made a few updates to the appeals and grievances process to align with MA plans. For example, the rule seeks to shorten the time frame in which MCOs and Prepaid Inpatient Health Plans (PIHPs) have to make a decision about a standard appeal from 45 days to 30 days, the same as MA plans. The expedited appeal time frame would be shortened from 3 days to 72 hours, also the same as MA.
3. Beneficiary Protections — Under current regulations, coordination and continuity of care focus on primary and acute medical care. The proposed rules aim to reduce coordination issues beneficiaries with chronic and complex conditions face. The proposed rule also seeks to align enrollment practices between Medicaid fee-for-service, Medicaid managed care, and Marketplace coverage.
4. Create standards to evaluate network adequacy and ensure beneficiaries are receiving accurate network information.
5. Medicaid Managed Care Quality Rating System — Align with existing MA and Marketplace rating systems. Standardize quality metrics among states and plans.
6. Updates to rate development standards and actuarial soundness of capitation rates, with a focus on federal oversight and a more detailed process to ensure actuarial soundness.
7. Calls on states to update quality strategies at least once every three years. Currently, some states are operating on strategies drafted more than five years ago. States are called on to develop a description of quality metrics and performance targets the state will use to assess Medicaid managed care quality.

Let the team of experts at Gorman Health Group (GHG) help you prepare for the upcoming changes that could impact your organization. GHG’s risk adjustment experts can help analyze the financial impact, develop feasibility models to help with meeting the new MLR requirements, and provide guidance on streamlining operations. GHG’s Compliance Solutions can assist in the development and monitoring of these new contract requirements, and our clinical team can assist with reviewing and developing integrated care models to provide quality initiatives that are effective and efficiently managed to get optimal results.

For more information, contact me directly at sjanicek@ghgadvisors.com.

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