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Texas releases STAR Kids RFP

This week’s second In Focus reviews the Texas STAR Kids request for proposals (RFP), which the Texas Health and Human Services Commission released on May 10, 2024. The STAR Kids Medicaid managed care program provides coverage to children and youth ages 20 and younger with disabilities. Nine plans currently participate in the program, with contracts worth approximately $4 billion annually.

STAR Kids Overview

The STAR Kids program operates under the Texas Healthcare Transformation and Quality Improvement Program 1115 demonstration project. To be eligible, individuals must receive Supplemental Security Income (SSI) and SSI-related Medicaid, participate in the Medically Dependent Children Program (MDCP) Section 1915(c) waiver, live in a community-based intermediate care facility, or participate in an intellectual or developmental disability (I/DD) waiver program.

Medicaid managed care organizations (MCOs) provide acute, behavioral, and long-term services and supports (LTSS) to children in the MDCP program and acute services only to children covered under the other home and community-based services/IDD waivers.

RFP

Texas plans to award contracts to at least two MCOs for each of the 13 service areas (SAs). Each MCO can be awarded up to six SAs.

MCOs will need to describe reimbursement strategies that incentivize high-quality and cost-effective healthcare while controlling spending and reducing ineffective service utilization in their proposals.

MCOs must demonstrate progress toward advancing alternative payment model (APM) initiatives within an APM performance framework. MCOs will need to provide a proposed APM and a means of tracking its effectiveness, including implementation of processes that support and incentivize providers to apply value-based care models and reward high performers.

Evaluation

Technical questions in the proposals are divided into five broad categories, representing a total of 1,800 points. Plans can score up to 2,000 points, including oral presentations (see table below).

Timeline

Proposals are due July 11, with awards expected to be made between December 2025 and February 2026. The contract start date is anticipated to begin between December 2026 and February 2027. Contracts will run for six years with three two-year renewal options.

Current Market

Incumbents CVS/Aetna, Elevance/WellPoint, Blue Cross Blue Shield of Texas, Centene/Superior Health Plan, Community First Health Plan, Cook Children’s Health Plan, Driscoll Children’s Health Plan, Texas Children’s Health Plan, and UnitedHealthcare served 150,000 beneficiaries as of November 2023.

Connect With Us

Texas has an active Medicaid procurement schedule, with key deadlines and additional developments expected in the coming months. HMA experts in Texas are monitoring these activities as the state works to reprocure all its Medicaid managed care contracts. These programs include the State of Texas Access Reform (STAR) and CHIP for traditional Medicaid members, STAR+PLUS for members who are aged and disabled, and STAR Kids for individuals younger than 20 years old with disabilities.

Through HMA’s Information Services, subscribers gain access to detailed information about the Texas and other state RFP landscapes and procurement documents, as well as historical data about plan contracts, enrollment, and financials.

For more information about HMA’s work in Texas and our HMAIS resources, contact our featured experts.

Takeaways from the ensuring access to Medicaid services final rule

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This week’s second In Focus section delves into the Ensuring Access to Medicaid Services final rule. The Centers for Medicare & Medicaid Services (CMS) published the access rule May 10, 2024, alongside the similarly significant Medicaid managed care final rule. The two rules include new flexibilities and requirements aimed at enhancing accountability for improving access and quality in Medicaid and the Children’s Health Insurance Program (CHIP) across the fee-for-service (FFS) and managed care delivery systems and provide targeted regulatory flexibility in support of this goal.

Five Takeaways from the CMS Medicaid Managed Care Final Rule, which Health Management Associates, Inc. (HMA), published April 24, 2024, outlined key issues and implications that CMS advanced in the Medicaid managed care program. The Ensuring Access to Medicaid Services final rule, meanwhile, focuses on the following:

Payment adequacy for direct care workers (80/20 rule)
The role of self-direction and the 80/20 rule
Establishment of a pathway to national benchmarking of Medicaid rates
Potential impacts of the rule on programs that serve individuals with dual eligibility

Overview

The Ensuring Access to Medicaid Services finalized policies are designed to create an updated federal framework for Medicaid’s home and community-based services (HCBS) programs. These changes come at a pivotal time, as states are facing workforce shortages, particularly among HCBS direct care workers (DCWs). Table 1 provides an overview of several significant final policies.

Table 1. Ensuring Access to Medicaid Services: Overview of Final Rule Policies

Below HMA reviews several key questions we are fielding regarding the impact of the rule.

Ensuring Payment Adequacy: How will states demonstrate that 80 percent of Medicaid payments go to direct care workers?

The final rule requires at least 80 percent of Medicaid payments be spent on compensation for DCWs workers, including homemaker, home health aide, and personal care services. In response to public comment, CMS adjusted the final rule to include some employer costs in the 80 percent calculation.

Recognizing it will take substantial time for providers to establish the necessary systems, data collection tools, and processes to collect the required information to report to states, CMS is providing states six years to implement the HCBS Payment Adequacy policy, and four years for reporting requirements. States and providers must ensure that that they are prepared to meet the payment adequacy requirements in the final rule. Being successful will require collaboration between states and providers, investments in systems, and analysis of – and potentially changes to – reimbursement levels.

How does the 80/20 rule apply to self-directed care?

CMS finalized its proposal to require that at least 80 percent of all payments for homemaker, home health aide, and personal care services in HCBS programs, including managed care programs, be spent on compensation for DCWs. In a change from its proposed policy, CMS limits the 80/20 compensation mandate to certain types of self-directed models. Specifically, the 80/20 rule will apply to models in which the beneficiary directing services does not set the payment rate for the worker, such as Agency with Choice and other self-directed models that use a fiscal intermediary or fiscal employer agent, in both managed care and FFS delivery systems. The compensation rule does not apply to self-directed models in which the beneficiary sets the rates paid to workers.

CMS will hold states accountable for compliance with the 80/20 rule, regardless of whether their HCBS are delivered through an FFS delivery system, managed care delivery system, or both. States will need to determine an approach to track compliance with the minimum performance requirement at the provider level, not the managed care plan level. States and managed care plans should collaborate to determine their respective roles in activities such as the data collection and mandatory reporting, and they should continue to seek and monitor clarifying guidance from CMS.

How will the Ensuring Access final rule affect national benchmarks in Medicaid rates? State Medicaid programs have many nuances that make it difficult to obtain applicable comparison data and best practices. Beginning July 1, 2026, the final rule requires that states publish their payment rates, specifically the average hourly Medicaid FFS fee schedule payment rates, separately identified for payments made to individual providers and provider agencies, if the rates vary. States also must conduct a comparative analysis of their base Medicaid FFS fee schedule payment rates with the Medicare non-facility payment rate. CMS does not, however, require that states change their payment rates based on the comparative analysis.

Payment rate transparency publications, comparative payment rate analyses, and payment rate disclosures present opportunities for states, MCOs, and providers to assess the adequacy of payment rates and their impact on access to services. The forthcoming data also will help federal and state level policymakers in their efforts to improve quality, access, and affordability. States will need to do baseline assessments comparing Medicaid and Medicare rates. States, managed care plans, and providers should monitor for CMS sub-regulatory guidance, including hypothetical examples of the service codes that would be subject to the comparative payment rate analysis.

Does the final rule affect integrated models of care for people who are dually eligible for Medicaid and Medicare? CMS finalizes policies that will have a variable impact on states and individuals dually eligible for Medicare and Medicaid because of differences in state approaches to integrated care for this population. For example, the new grievance system policies apply differently depending on the level of integration the state requires of Medicare Advantage (MA) dual-eligible special needs plans (D-SNPs) programs. Like grievance systems, states, providers, and MCOs should monitor how states address the final rules for critical incidents for individuals with dual eligibility when a Medicaid managed care plan is unable to access Medicare data.

CMS intends to provide additional sub-regulatory guidance and technical assistance to support implementation of policies that affect dually eligible individuals. States should verify their access to and readiness to use Medicare data related to the new requirements, and seek technical assistance to maximize use of these data for individuals enrolled in non-integrated D-SNPs. Commentors have also asked how the changes to the HCBS quality measure set may work in programs for dually eligible members.

Connect with Us 

HMA is ready to support your efforts to understand and take action to account for the Ensuring Access to Medicaid Services final rule’s effects on your state’s or organization’s strategy and operations. Our experts are developing policies and procedures at the intersection of the access and managed care final rules. Please contact our featured experts on this vital set of issues.

HMA opens registration for fall conference, “Unlocking Solutions in Medicaid, Medicare, and Marketplace”

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Unlock Solutions in Medicaid, Medicare, and the Marketplace at HMA’s Fall Conference, October 7−9

This week, we preview what to expect at the 7th annual Health Management Associates, Inc. (HMA) Fall Conference “Unlocking Solutions in Medicaid, Medicare, and Marketplace,” October 7−9, 2024, at the Marriott Marquis Chicago, IL. Learn more about our Keynote Speaker and take advantage of our Early Bird Registration.

Keynote Speaker Announced

We are pleased to announce our Keynote Speaker will be Darshak Sanghavi, MD, program manager at the Advanced Research Projects Agency for Health (ARPA-H)—a newly created multibillion dollar federal agency tasked with developing health programs that are “so bold no one else, not even the private sector, is willing to give them a chance.” His talk, “Unlocking Health Solutions through Innovation,” will highlight the innovative collaborations and projects ARPA-H is advancing. A trained clinician who has served in high level public and private sector advisory roles, Dr. Sanghavi will discuss how this new wave of research and innovations is changing how we think about healthcare’s challenges and will address why the agency is so important at this time. He will highlight ARPA-H investments and commitments and the timeline for impact, including how healthcare systems and states should be thinking about ARPA-H funded innovations and preparing for scaling breakthroughs that improve outcomes.

Before joining ARPA-H, Dr. Sanghavi was global chief medical and clinical operating officer for Babylon, the global end-to-end digital healthcare provider serving more than a dozen countries and 24 million-plus people, with the mission of bringing “affordable and accessible healthcare to everyone on earth.” He also has served in senior roles at UnitedHealthcare’s Medicare & Retirement, OptumLabs, the R&D hub of UnitedHealth Group, and in the Obama Administration as the Director of Preventive and Population Health at the Center for Medicare and Medicaid Innovation, where he directed the development of large pilot programs designed to improve the nation’s healthcare costs and quality. He is an award-winning medical educator, who has worked in medical settings around the world. He will draw on these diverse experiences to inspire and challenge attendees to unlock solutions to some of our healthcare system’s most complex issues.

Network with Leaders in Healthcare

This is an important moment for ever-changing publicly sponsored healthcare programs like Medicaid, Medicare, and the Marketplace, with greater focus on value and federal initiatives that encourage improved health equity, affordability, quality, and outcomes. Don’t miss out on this opportunity to form new partnerships as you dig into today’s urgent issues and immerse yourself in insightful discussions, networking opportunities, and engaging workshops on the new Medicaid managed care rule, applications for AI in healthcare, approaches to meet rural workforce needs, value-based care contracting, and insights from state Medicaid services.

Preconference tactical workshops will focus on exclusive tools, insights, and strategies to guide program design, navigate new regulatory frameworks, and advance value-based care. HMA’s premier national conference plenary and breakout sessions will focus on the landscape for innovation in healthcare, emerging service delivery models, and growth strategies in pursuit of improved value, quality, and better outcomes.

Who should attend?

Executives and leaders from federal, state, and local government agencies, health plans, payers, managed care, hospitals and health systems, provider and provider enablement organizations, community-based organizations, IT companies, life sciences organizations, investment firms, foundations, and associations.

New HMA report using VRDC data analyzes hip fracture outcomes in Dual Eligible population

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In this new report, “Answering Questions Using Virtual Research Data Center (VRDC): How using Home and Community-Based Services (HCBS) Impacts Hip Fracture Outcomes“, HMA is now using Centers for Medicare & Medicaid Services (CMS) Virtual Research Data Center (VRDC) to answer important healthcare questions. One contractual obligation for use of CMS data is the release of a publicly available research paper using the dataset, which contains all Medicare fee for service (FFS) and Medicaid FFS and managed care organization (MCO) claims. HMA used the VRDC data to examine the relationship between Long-Term Services and Supports (LTSS) and Home and Community-Based Services (HCBS) on hip fracture outcomes for people who are dually eligible for Medicare and Medicaid benefits. The analysis found that patients who receive HCBS were less likely to incur a future inpatient stay. The report and data analysis are detailed below.

VRDC Medicare and Medicaid claims data can be used to develop best practices for the healthcare system, looking at patient demographics, including eligibility/enrollment types (including dual-eligibles), race/ethnicity, age, and other critical subgroups to inform equity analyses. These data can be used longitudinally to measure the effect of interventions as well as to inform population health strategies. HMA’s nationally renowned subject matter experts can now incorporate VRDC data analysis and analytics into their recommendations to help your organization solve your toughest challenges.

The 2024 Presidential Election and its long-term impact on Medicaid

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The prospect of new leadership due to a presidential election brings with it the potential for significant shifts in priorities, policies, and programs within federal agencies. Medicaid now provides healthcare coverage for more than 84 million Americans. Since 2010, Medicaid has been subject to significant federal policy changes, starting with expansion as part of the Affordable Care Act, pandemic-related continuous eligibility provisions, expanded coverage for postpartum women, and just recently updated rules for managed care plans. The 2024 election will have a significant impact on Medicaid in the coming years, although you won’t hear much about it on the campaign trail (but our DC Direct subscribers get a steady stream of insight to stay on top of what’s coming next).

Medicaid’s political salience has been quiet but steadily increasing since 2010, with now 41 states (including DC) having expanded access, changing the political narrative about the program. Medicaid coverage churn due to the unwinding of the pandemic related continuing-coverage provisions has been politically fraught for governors and legislatures, even bringing some states like Mississippi to finally consider the expansion opportunity to improve stability of coverage.

States each have their own approach to designing Medicaid coverage, but federal rules set the parameters within which they choose how to maintain access and quality of healthcare for low-income individuals and families. New CMS rules are requiring require more from managed care plans who contract to administer Medicaid in many states, increasing network adequacy, quality measurement standards, consumer protections and tailored approaches for long-term services and supports. These changes will shape the future of procurements for managed care services.

The election is very likely to touch on broad issues of affordability and equity, which are relevant to all healthcare programs but especially to Medicaid. Current policy priorities that center on equity have resulted in program design features that can impact the social determinants of health, including initiatives to address housing insecurity, food access, and mental health services. Increasingly these concerns have been bipartisan, although the proposed approaches will differ based on who is in charge.

Changes in national leadership – whether at CMS, HHS, or in the White House – will inevitably result in changes to the Medicaid program that impacts states and the agencies that serve the millions of Americans who rely on the program for essential healthcare services. Our Leavitt Partners colleagues provide regular intelligence on all the federal activity in D.C. that impacts Medicaid and other state health programs. Learn more about DC Direct and how this steady stream of insight can help inform your strategic decisions.

Medicare Physician Fee Schedule Reform: Structural Topics and Recommendations to Strengthen the System for the Future

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Recent years have witnessed a growing bipartisan call to reform how Medicare reimburses for physician and other health professional services. Stakeholders assert that the current system—the Medicare Physician Fee Schedule (PFS)—is misaligned to today’s practice patterns and market dynamics. Many constituencies maintain that the current approach is insufficiently updated, embeds known pricing distortions, and does not appropriately effectuate value-based care principles, such as providing cost-conscious, high-quality care that prioritizes performance measurement and patient experience. Calls for reform are further prompted by increasing concern about the viability of independent physician practices, including the implications of consolidation and private equity acquisition of physician offices. Finding a workable comprehensive solution to updating physician payments is an uphill battle stymied by the significant cost of doing so, competing stakeholder positions, and the complexities of restructuring payment.

The original design of the Medicare PFS, still in use today, is based on the resources typically needed to provide services to patients. First implemented in 1992, the PFS is a fee-for-service (FFS) system of payment premised on the idea that services should be separately valued in relation to each other. This requires information on the effort and costs incurred to perform those services and how those variables change over time. The Centers for Medicare & Medicaid Services’ (CMS’s) efforts to update data used to set rates in the required budget neutral manner often result in system instability and may take years to fully implement due to concerns about redistribution. These innate vulnerabilities have been compounded by three decades of policy decisions, statutory changes, and advancements in care delivery.

While established metrics suggest that physicians’ participation in the Medicare program and beneficiary access is currently adequate, the Medicare Payment Advisory Commission (MedPAC) raises concerns that beneficiaries may experience more access to care barriers moving forward. For the past two years, MedPAC has recommended physician payment updates based on changing economic conditions, as well as additional “safety net” payments to physicians treating low-income beneficiaries. Reducing health disparities and improving the foundation of care is a top priority for many in this country, and payment reform within the PFS and more broadly that expands technology while also investing in person-centered, community-oriented care (especially for populations that are underserved and/or living with multiple chronic conditions) is central to that cause.

As robust policy discussions are taking place to explore these issues and identify solutions, Arnold Ventures engaged HMA to provide accessible background and context on the PFS for people who may be unfamiliar with the payment system, including a review of how the stakeholder community got to the point of needing to “fix” the fee schedule. Through a thorough assessment of the most pressing policy and payment concerns, we identified several key structural issues within the physician fee schedule that should be considered and balanced when making policy changes to the payment system.

Medicaid unwinding check-in: data-driven insights for future action

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In this week’s In Focus section, HMA Managing Director Matt Powers and Associate Principal Lora Saunders discuss observations and perspectives as we approach completion of the Medicaid unwinding.

Overview

In response to the COVID-19 pandemic, CMS offered states an enhanced federal match in exchange for states pausing Medicaid disenrollments. As a result, Medicaid enrollment increased from around 71 million at the start of the pandemic to more than 92 million in December 2022, when Congress passed a bill to end the “continuous eligibility” provision. States began to resume normal (pre-pandemic) redetermination activities in early 2023—a massive undertaking of attempting to reach and verify eligibility for the then 94 million Medicaid enrollees known as “unwinding.”

More than 70 percent of the efforts that will precipitate the largest one-year drop in enrollments since the program’s inception in 1965 have been completed. The enrollment reductions to date have been virtually identical to HMA’s aggregate projections, and overall enrollment remains well above pre-pandemic levels. Perhaps most importantly, the Medicaid unwinding has put policymakers in a position to better evaluate how to improve enrollment and redetermination processes going forward.

Figure 1 summarizes pre-pandemic enrollments, unwinding enrollments, and the projected end of 2024 enrollment. If the current trend holds, national Medicaid enrollment will be approximately 80 million enrollees—down from the 94 million pre-unwinding enrollment peak and nearly 10 million greater than the 71 million pre-pandemic enrollment.

Our team’s assessment of the status of and data related to the Medicaid unwinding has led us to the following observations:

Arkansas, Iowa, Nebraska, Utah, and West Virginia have completed the redetermination process. More than half of the states are within two months of finishing the process.
The states that saw Medicaid enrollment grow the most under the continuous coverage policy are generally the same ones that are experiencing the greatest enrollment declines during the Medicaid unwinding.
Some larger states—including California, New York, and Texas—have sizeable outstanding redeterminations.
Nationally, more than 70 percent of all Medicaid enrollees have completed the redetermination process. Figure 2 points out how far along states are with the redetermination process as of late April 2024.

Medicaid Unwinding: The Road Ahead

As the Medicaid unwinding process enters its final phase in most states, we are looking back at the experiences and lessons that can be applied to make impactful changes to Medicaid eligibility policies, systems, and procedures.

Despite the challenges that the pandemic presented, the safety net was tested and responded well. In early 2020, the number of employed Americans decreased from 158 million to 133 million, and unemployment levels quickly reached 15 percent. Many new healthcare policies targeted direct access issues (e.g., financial supports to providers and telehealth regulatory relaxations), whereas the Medicaid continuous coverage requirement was intended to mitigate the effects of the abrupt spike in unemployment and potential effects on healthcare insurance. Table 1 shows how HMA projects national coverage patterns to change by type of coverage from before the pandemic through the end of the Medicaid unwinding. While the number of people with employer-sponsored insurance (ESI) or uninsured remains essentially flat, Medicaid enrollment grows significantly, and marketplace enrollment nearly doubles. Myriad federal and state policy changes contributed to a remarkably stable uninsurance rate during one of the most volatile economic periods in the past century.

A next question for policymakers is whether, or to what extent, the rate of uninsured people can be sustained or reduced. The broad state adoption of policies to expand postpartum coverage to 12 months from two months and the nationwide January 2024 requirement for states to offer 12 months of continuous Medicaid coverage for children provide a coverage and continuity boost, especially given that nearly 40 million children will benefit from the new law. Other policy levers have the potential to be widely accepted and provide a further incentive to move people who are uninsured toward coverage, more stable insurance products, and more predictable outcomes and costs relative to the inefficiencies and ineffectiveness of non-coverage.

Pivoting to best practices and making policy changes permanent. Just as the relaxation of relatively rigid telehealth policies has become more accepted, post-Medicaid unwinding will provide a natural opportunity to assess best practices and consider permanent policy changes.

Making Ex Parte Durable Policy. Evidence suggests that ex parte policies effectively reduce churn. Further refinement of longstanding ex parte policies is within reach. Ensuring ex parte appropriately manages both the complexities of household versus individual eligibility issues and addresses the weaknesses of unreliable member contact information can improve the likelihood that ex parte can effectively serve as durable policy.
Pivoting from Paper to Electronic Communications. The Medicaid unwinding has seen more partnerships and innovation with state and federal workers, providers, managed care organizations, and consumer advocates, and allowed the increased use of mobile devices for outreach and engagement. Making more deliberate strides to simplify eligibility and move the eligibility platform, patient engagement, and member outreach to more reliable communication methods (e.g., email, text, and member portals rather than paper communication) while adhering to privacy and security requirements is a logical next step.
Continuing to Measure Better. Call abandonment rates, call center wait times, and application processing times—metrics that focused on some of the key challenges to a successful redetermination and timely access to care—received greater attention during the unwinding but were frequently overshadowed by other primary metrics like “disenrollments” and “procedural terminations.” Though disenrollment data and procedural terminations could be used to identify potential areas of concern, their emergence as primary metrics often diverted energy from innovative engagement and redetermination efforts. A focus on contextualized metrics that provide actionable information will support effective oversight and monitoring.

Marketplace growth may be the real story. Throughout the pandemic, marketplace enrollment has steadily increased, jumping nearly 90 percent from 2020 to 2024 and 30 percent from 2023 to 2024, to reach more than 21 million enrollees. Driving the growth in marketplace enrollment are temporarily increased marketplace subsidies and Medicaid unwinding public awareness campaigns.

The marketplaces are proving to be a reliable source of coverage for consumers without health insurance access through ESI or other public programs, particularly in times of significant change such as the Medicaid unwind. With more marketplace enrollees and, therefore, broader risk pools, more health insurers are considering offering marketplace plans and are assessing competitive advantages like lower costs, broader provider networks, and more robust drug formularies.
Figure 3 shows that marketplace growth in non-expansion states is far outpacing marketplace growth in Medicaid expansion states, suggesting that the key elements of the Affordable Care Act have developed deep roots.

HMA’s experts continue to monitor Medicaid unwinding developments. We are taking a comprehensive approach to assessing lessons learned and opportunities to improve Medicaid as state and stakeholder experiences and data continue to become available over the next two quarters.

For more information or questions about Medicaid unwinding developments, contact our featured experts.

Five takeaways from the CMS Medicaid managed care final rule

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This week, our In Focus section reviews significant Medicaid policy announcements from the Centers for Medicare & Medicaid Services (CMS). For example, both the Medicaid and Children’s Health Insurance Program Managed Care Access, Finance, and Quality Final Rule (CMS-2439-F) (CMS fact sheet available here) and the separate Ensuring Access to Medicaid Services Final Rule (CMS-2442-F) (CMS fact sheet available here) were released April 22, 2024.

Taken together, these two final rules create new flexibilities and requirements aimed at enhancing accountability for improving access and quality in Medicaid and the Children’s Health Insurance Program (CHIP) across the fee-for-service and managed care delivery systems and provide targeted regulatory flexibility in support of this goal.

HMA’s April 11, 2024, “What to Watch For” article outlined several proposed changes that CMS was poised to advance in the Medicaid managed care program. We focus today on the approved changes, including:

In lieu of services and settings (ILOSs)
The Medicaid and CHIP quality rating system (MAC QRS)
Medical loss ratios (MLRs)
Network adequacy
State directed payments (SDPs)

Following are HMA’s insights on the key takeaways in each of these major areas for states, managed care organizations (MCOs), providers, and other stakeholders. In addition, HMA experts will discuss the final rule during a LinkedIn Live on event at 2:00 pm (EDT) April 25, 2024. Go to the HMA LinkedIn feed to watch.

In future weeks, HMA will review the Ensuring Access to Care final rule.

ILOSs

The final rule makes clear that CMS remains committed to the conviction that ILOSs can play an important role in supporting state and MCO efforts to address many of the unmet physical, behavioral, developmental, long-term care, and other enrollee needs. At the same time, CMS continues to put forward requirements in this area to ensure adequate assessment of these substitute services and settings in advance of approval, ongoing monitoring for sufficient beneficiary protections, and financial accountability for related expenditures.

The final rule presents an opportunity to leverage ILOSs to improve population health, reduce health inequities, and lower total healthcare costs in Medicaid and CHIP, including by addressing unmet health-related social needs as well as through other avenues. To take full advantage of this opportunity, states and MCOs must ensure that that they are prepared to meet the accountability measures outlined in the final rule and partner with existing providers and community-based organizations that already provide such services and settings.

Medicaid and CHIP Quality Rating System

CMS finalized most proposed provisions related to mandatory quality measures, the process used to update these measures, the ability of states to include additional measures, and the ability of states to apply an alternative QRS if desired. On this last point, CMS is making several modifications to its MAC QRS proposal to clarify the scope of and to reduce the implementation resources needed for an alternative MAC QRS if a state elects to implement one.

States will be required to collect from MCOs the data necessary to calculate ratings for each measure and ensure that all data collected are validated. This will require MCOs to assess their capability to produce the mandated data upon request by states and, to the extent possible, to assess baseline performance on measures and proactively operationalize strategies to improve performance where necessary.

Medical Loss Ratios

The final rule aligns Medicaid and CHIP MLR QIA reporting requirements with the private market to ensure that only those expenses that are directly related to healthcare QIAs are included in the MLR numerator. CMS notes that this provision will allow for better MLR data comparisons between the private market and Medicaid and CHIP markets as well as reduce administrative burden for MCOs participating across these markets.

MCOs will need to model the impact of QIA expenditures that are no longer available for inclusion in the MLR numerator to ensure that a resulting failure to meet any minimum MLR requirements can be avoided, and, if it is projected to occur, a strategy can be developed and executed to avert the problem. CMS made this requirement effective as of the effective date of the final rule with no delay because it believes it is critical to the fiscal integrity of Medicaid and CHIP, adding urgency to MCO compliance action here.

Network Adequacy

The final rule makes clear that CMS has been persuaded that it needs to increase oversight of network adequacy and overall access to care through a new quantitative network adequacy standard. To measure network adequacy, the agency intends to implement wait time standards, complemented by secret shopper surveys to support enforcement.

Wait time standards and secret shopper surveys present opportunities for states, MCOs, and providers to collaborate to enhance access where needed and ensure compliance with the final rule. Undertaking secret shopper surveys ahead of implementation of the wait time standards (effective the first rating period beginning on or after three years after the effective date of the final rule) to determine the current performance relative to maximum wait times is a proactive step that is worth consideration by states and MCOs and can also be employed to foster dialogue with providers to address any areas of concern identified.

State Directed Payments

CMS is adopting its proposal in the final rule to use the average commercial rate as a limit for SDPs for inpatient and outpatient hospital services, nursing facility services, and professional services at academic medical centers. CMS believes that this approach represents a reasonable limit that is supportive of appropriate fiscal guardrails, while still affording states the flexibility to achieve SDP policy goals. States and providers will need to account for this requirement, along with others, as SDPs are developed going forward.

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HMA is ready to support your efforts to understand and take action to account for the managed care final rule’s effects on your state or organization’s strategy and operations. Please reach out to [email protected] to connect with our expert team members on this vital set of issues.

Medicaid managed care enrollment update—Q4 2023

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This week, our In Focus section reviews recent Medicaid enrollment trends in capitated, risk-based managed care in 30 states.1 Many state Medicaid agencies post monthly enrollment figures by health plan for their Medicaid managed care population on their websites. These data allow for timely analysis of enrollment trends across states and managed care organizations. All 30 states highlighted in this review have released monthly Medicaid managed care enrollment data into quarter four (Q4) of 2023. The analysis that follows reflects the most recent data posted. HMA continues tracking enrollment as states work towards concluding their Public Health Emergency (PHE) unwinding-related redeterminations and resuming normal eligibility operations.

Health Management Associates, Inc., (HMA) has reviewed the Q4 enrollment data (see Table 1) and offers the following observations:

Across the 30 states tracked in this report, Medicaid managed care enrollment declined by 7.3 percent year-over-year as of December 2023.
Of the 30 states, 26 experienced decreased enrollment in December 2023, compared with the previous year, as the result of Medicaid redeterminations.
A total of 23 of the states—Arizona, California, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Virginia, Washington, and West Virginia—saw net Medicaid managed care enrollment decrease by 469,000 (0.9%) to 51.5 million members at the end of Q4 2023. (Note: North Carolina expanded Medicaid in December 2023 and was added to the expansion group, in part inflating the change).
The seven states that had yet to expand Medicaid as of December 2022—Florida, Georgia, Mississippi, South Carolina, Tennessee, Texas, and Wisconsin—have seen Medicaid managed care enrollment decrease 25.2 percent to 13.9 million members at the end of Q4 2023.

Table 1. Monthly MCO Enrollment by State, October 2023−December 2023

Note: In Table 1, “+/- m/m” refers to the enrollment change from the previous month. “% y/y” refers to the percentage change in enrollment from the same month in the previous year.

It is important to note the limitations of the data presented. First, not all states report the data at the same time during the month. Some of these figures reflect beginning of the month totals, whereas others provide an end of the month snapshot. Second, in some cases the data are comprehensive in that they cover all state-sponsored health programs offering managed care; in other cases, the data reflect only a subset of the broader managed Medicaid population, making it the key limitation to comparing the data described below and figures that publicly traded Medicaid MCOs report. Consequently, the data in Table 1 should be viewed as a sampling of enrollment trends across these states rather than a comprehensive comparison, which cannot be developed based on publicly available monthly enrollment information.

Expand Your Awareness about Medicaid and Medicare Advantage via HMAIS

If you are interested in gaining access to detailed information on the Medicaid managed care landscape, an HMAIS subscription is the key to unlock important data. The HMA Information Services (HMAIS) collects Medicaid and Medicare Advantage Special Needs Plan (SNP) enrollment data, health plan financials, as well as developments on expansions, waivers, and demonstrations. Your HMAIS login also provides access to a library of public documents all in one place, including Medicaid RFPs, responses, model contracts, scoring sheets and other procurement related materials. HMAIS combines this publicly available information along with HMA expert insights on the structure of Medicaid in each state, as well as a proprietary HMA Medicaid Managed Care Opportunity Assessment.

For information on how to subscribe to HMA Information Services, contact our featured experts.

Medicaid managed care final rule: what to watch for

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Our second In Focus section provides a refresher on the Medicaid and Children’s Health Insurance Program managed care access, finance, and quality proposed rule that the Centers for Medicare & Medicaid Services (CMS) published in May 2023. As Health Management Associates, Inc. (HMA), has noted, the final rule is expected to be published later this month. If finalized as proposed, several provisions in the rule will signal the start of a new era of accountability and transparency for the Medicaid program.

The policy changes are expected to fall into the following major categories: in lieu of services (ILOS), the Medicaid and CHIP Quality Rating System (MAC QRS), medical loss ratios (MLRs), network adequacy, and state directed payments (SDPs). These revised policies will affect Medicaid coverage and reimbursement for years to come. Following is a summary of the proposed policy changes to watch for in the final rule.

ILOS

CMS has proposed to expand upon and codify the sub-regulatory guidance around ILOS outlined in State Medicaid Director Letter #23-001. The letter advised state that they have the option to use the ILOS authority in Medicaid managed care programs to reduce health disparities and address unmet health-related social needs, such as housing instability and nutrition insecurity. The final rule would expand upon and codify that guidance.

For example, although the ILOS proposal adds reporting requirements and guardrails to address fiscal accountability, the proposed rule also noted that the substitution of an ILOS for a state plan service or setting should be cost-effective but does not need to meet budget neutrality requirements. States are also permitted to specify that an ILOS can be an immediate or longer-term substitute for a state plan service or setting.

MAC QRS

CMS has proposed a MAC QRS framework that includes: (1) mandatory quality measures, (2) a quality rating methodology, and (3) a mandatory website display format. State Medicaid agencies and managed care organizations (MCOs) will be required to adopt and implement the MAC QRS framework that CMS develops or adopt and implement an alternative but equivalent managed care quality rating system. CMS will update the mandatory measure set at least every two years. Any planned modifications to measures will be announced publicly through a call letter or similar guidance, with measures based on: (1) value in choosing an MCO; (2) alignment with other CMS programs; (3) the relationship to enrollee experience, access, health outcomes, quality of care, MCO administration, or health equity; (4) MCO performance; (5) data availability; and (6) scientific acceptability.

State Medicaid agencies will be required to collect from MCOs the data necessary to calculate ratings for each measure and ensure that all data collected are validated. In addition, state Medicaid agencies will be expected to calculate and issue ratings to each MCO for each measure.

Lastly, state websites will be required to contain the following elements: (1) clear information that is understandable and usable for navigating the website itself; (2) interactive features that allow users to tailor specific information, such as formulary, provider directory, and ratings based on their entered data; (3) standardized information so that users can compare MCOs; (4) information that promotes beneficiary understanding of and trust in the displayed ratings, such as data collection timeframes and validation confirmation; and (5) access to Medicaid and CHIP enrollment and eligibility information, either directly on the website or through external resources.

MLRs

CMS has proposed three areas for revision to its existing MLR standards, which require MCOs to submit annual MLR reports to states, which, in turn, must provide CMS with an annual summary of those reports. Areas for revision include: (1) requirements for clinical or quality improvement standards for provider incentive arrangements, (2) prohibited administrative costs in quality improvement activity (QIA) reporting, and (3) additional requirements for expense allocation methodology reporting.

With regard to provider incentive arrangements, CMS proposes to require that contracts between MCOs and providers: (1) have a defined performance period that can be tied to the applicable MLR reporting period(s), (2) include well-defined quality improvement or performance metrics that the provider must meet to receive the incentive payment, and (3) specify a dollar amount that can be clearly linked to successful completion of these metrics as well as a date of payment. MCOs would be required to maintain documentation that supports these arrangements beyond attestations.

In terms of QIA reporting, CMS proposes to explicitly prohibit MCOs from including indirect or overhead expenses when reporting QIA costs in the MLR. CMS also intends to add requirements regarding how MCOs can allocate expenses for the purpose of calculating the MLR by requiring MCOs to offer a detailed description of their methodology.

Network Adequacy

CMS has proposed a range of new network adequacy requirements intended to improve timely access to care for managed care enrollees. Those related to appointment wait time standards and secret shopper surveys are among the most prominent.

For appointment wait time standards, CMS proposes that state Medicaid agencies develop and enforce wait times associated with routine appointments for four types of services: (1) outpatient mental health and substance use disorder (SUD) for adults and children, (2) primary care for adults and children, (3) obstetrics and gynecology (OB/GYN), and (4) an additional service type determined by each state Medicaid agency using an evidence-based approach. The maximum wait times must be no longer than 10 business days for routine outpatient mental health and SUD appointments and no more than 15 business days for routine primary care and OB/GYN appointments. State Medicaid agencies could impose stricter wait time standards but not more lax ones. The wait time standard for the fourth service type will be determined at the state level.

State Medicaid agencies also will be required to engage an independent entity to conduct annual secret shopper surveys to validate MCO compliance with appointment wait time standards and the accuracy of provider directories to identify errors, as well as providers that do not offer appointments. For an MCO to be compliant with the wait time standards, as assessed through the secret shopper surveys, it would need to demonstrate a rate of appointment availability that meets the wait time standards at least 90 percent of the time.

SDPs

CMS has proposed several important changes to the requirements governing the use of SDPs, strengthening both the accountability required of and flexibility afforded to states. For example, CMS proposes to require that provider payment levels for inpatient and outpatient hospital services, nursing facility services, and the professional services at an academic medical center not exceed the average commercial rate. Furthermore, states would be required to condition SDPs upon the delivery of services within a contract rating period and prohibited from using post-payment reconciliation processes.

With regard to flexibility, CMS proposes to remove unnecessary regulatory barriers to support the use of SDPs by states to implement value-based payment arrangements and include non-network providers in SDPs. The proposal also permits states to implement, without prior approval, minimum fee schedules in Medicaid consistent with Medicare provider rates.

What’s Next

CMS is expected to publish the final rule in April. In addition, CMS plans to publish a separate final rule addressing new regulations pertaining to access to care, which will have equally significant impacts on states, MCOs, and providers. If you have questions about how HMA can support your efforts related to the managed care final rule’s implications and the context of other federal regulations for states, MCOs, or providers, contact our featured experts.

Medicaid managed care final rule anticipated soon

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HMA has previously reviewed and discussed some of the implications of provisions put forward in the Medicaid and Children’s Health Insurance Program managed care access, finance, and quality proposed rule published by the Centers for Medicare & Medicaid Services (CMS) back in May 2023. It is now anticipated that the final rule will be published later this month in April 2024. Given that the final rule, if it codifies many of the proposed provisions as written, will have a significant impact across Medicaid stakeholders including states, managed care organizations (MCOs), and providers, and that its publication appears imminent, it is valuable to recall the major areas that the final rule will likely address.

The final rule is anticipated to include policy changes in several major areas. These include in lieu of services (ILOS), the Medicaid and CHIP Quality Rating System (MAC QRS), medical loss ratios (MLRs), network adequacy, and state directed payments. When taken together, the policymaking in each of these areas represents the start of a new era of accountability and transparency in the Medicaid program and will affect Medicaid coverage and reimbursement for years to come.

HMA is on the alert for the final rule and will provide analysis and expertise relevant to states, MCOs, and providers, both before and following its release. Whether it is understanding the opportunities to leverage ILOS to address health-related social needs, ensuring operational readiness for data collection and calculation obligations for the MAC QRS, or preparing to comply with MLR requirements related to provider incentive arrangements and quality improvement activity reporting, as well as a host of other topics, HMA will be able to provide insight.

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If you have questions about how HMA can support your efforts related to the final rule’s implications for states, MCOs, or providers, please contact our featured experts.

Is food the missing link in healthcare’s cost crisis?

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R.J. Briscione is a principal with the HMA Strategy and Transformation Practice. R.J. shares insights gained from his experience in Medicaid managed care, CVS business development, and how he made the leap into healthcare from aeronautics. R.J. shares key insights on addressing food insecurity, nutrition education, and tailored food interventions that measurably drive better health outcomes. Join us as we highlight the vital role of food in healthcare and uncover actionable strategies for community organizations looking to impact patient outcomes by improving upstream determinants of health.

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