Medicaid Managed Care Rule: What’s Next for States and Managed Care Plans?

On April 22, 2024, the Centers for Medicare & Medicaid Services (CMS) released the Managed Care Access, Finance, and Quality final rule (Managed Care Rule). The Managed Care Rule aims to improve access to care, strengthen the quality of care, and better address health equity issues for Medicaid and Children’s Health Insurance Program (CHIP) managed care enrollees. CMS posted a Managed Care Rule fact sheet and an effective dates chart. This is the fifth post in our Aurrera Health blog series on the Access and Managed Care final rules. It focuses on the Managed Care Rule provisions regarding access, in-lieu of services, and quality to help states and partners consider this information as they determine how to operationalize new requirements.

What Are the New Managed Care Rule Requirements?

The Managed Care Rule includes significant policy revisions across several areas, with a consistent focus on increasing transparency and accountability for states and managed care plans to advance the managed care delivery system. Most importantly, the new regulations are intended to enhance the Medicaid managed care beneficiary experience, increase the quality of care, and improve access to care. The policy revisions include:

• Improving beneficiary access which requires states to conduct annual enrollee experience surveys; set appointment time standards; validate provider networks using “secret shoppers”; and conduct and submit an annual managed care plan payment analysis.

• State Directed Payments which increase flexibilities for states to implement value-based purchasing payment arrangements and include non-network providers in state directed payment, and require provider payment levels for state directed payments for different types of health care services to not exceed the average commercial rate.

• Medical Loss Ratio (MLR) standards which provide flexibility to allow incentive payments between plans and providers based on a percentage and require managed care plans to submit actual expenditures and revenues for state directed payments as part of their MLR. The regulation required managed care plans to report any identifiable or recovered overpayments to states within 30 calendar days and states to submit MLR reports for each managed care organization, Prepaid Inpatient Health Plan, and Prepaid Ambulatory Health Plan under contract.

• In Lieu of Services and Settings (ILOS) which formalizes previous CMS ILOS guidance, including making an ILOS approvable as a service or setting through the Medicaid state plan or Medicaid section 1915(c) waiver and defining key ILOS principles. States must appropriately document each ILOS in managed care contracts, showing how each ILOS is medically appropriate and cost effective, and identifying specific codes and modifiers for each ILOS and providing them to managed care plans. Each ILOS will be subject to ongoing monitoring requirements and when applicable, a retrospective evaluation.

• Quality strategy and External Quality Review (EQR) which allow managed care plans that exclusively serve individuals dually eligible for Medicare and Medicaid to use a Medicare-Advantage Chronic Care improvement program in place of a Quality Improvement Program (QIP); require the solicitation of public comment on managed care quality strategy every three years; remove primary care case management entities from EQR review; specify more meaningful data and information for inclusion in EQR reports; and establish a 12-month review period for annual EQR activities.

• Medicaid and CHIP Quality Rating System which establishes a Medicaid QRS framework and finalizes 16 measures for the initial mandatory measure list.

What Are Implementation Considerations?

States and managed care plans will need to consider and strategically examine several operational areas and determine how to achieve timely compliance. 

• Oversight and monitoring — The increased accountability and transparency of the Medicaid enrollee experience within the managed care delivery system will require states and managed care plans to update their oversight and monitoring policies and procedures, particularly in response to the access provisions within the Managed Care Rule.

• Service delivery enhancements — In exploring ways to increase efficiencies, states and managed care plans may consider how to expand the types of services available to Medicaid enrollees that address the social drivers of health (e.g., ILOS) and consider different payment methodologies to incentive providers.

• Managed care provider network development — Leveraging non-traditional health care provider organizations, such as community-based organizations, will be essential when considering different ILOS options and approaches.

• Managed care quality — Engaging Medicaid enrollees, providers, and managed care plans will be instrumental to helping inform the execution of the quality strategy and external quality review; additional information regarding the Medicaid and CHIP QRS and experience of care surveys can be seen in a previous Aurrera Health blog post.

What are Promising Practices for Implementation?

Since 2016, states have used ILOS to cover a range of services, and in 2023, CMS issued additional guidance that allows for innovation to address health-related social needs. Given the focus on improving population health, reducing health inequities, and lowering health care costs in Medicaid, state experience with ILOS can be instructive when considering the Managed Care Rule broadly. 

• California was the first Medicaid program to use ILOS to address health-related social needs. It launched Community Supports in 2022, inclusive of a wide range of services such as housing supports and navigation, medical respite, medically tailored meals, sobering centers, asthma remediation, and more. California publishes a quarterly Community Supports implementation report that is publicly available via an online dashboard that includes data at the state, county, and plan level on the total Medicaid enrollees served, utilization, and provider networks.

• Kansas identified a detailed diverse ILOS list that includes some behavioral health and substance use disorder services, as well as home-delivered meals and home modifications.

• Florida, North Carolina, and Oregon offer approved ILOS specific to behavioral health and substance use disorder services.

• New York offers medically tailored meals and institution for mental disease under ILOS. 

Aurrera Health Blog Series on Access and Managed Care Final Rules

The Managed Care Rule represents an opportunity for states and managed care plans to improve access to care, accountability, and transparency for the more than 70 percent of Medicaid and CHIP beneficiaries enrolled in Medicaid managed care. It will require significant resource investments for states and managed care plans.  Aurrera Health Group looks forward to helping states, managed care plans, providers, and other stakeholders understand and implement requirements to support Medicaid beneficiary access and experience.  If you would like to discuss how we can help, please reach out to Aurrera Health Managing Principals Megan Thomas or Kristal Vardaman. Please visit the Aurrera Health Group blog to read other entries in the series.

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Author

Kristin Mendoza-Nguyen [Director]