Medicaid and CHIP Managed Care Network Adequacy

In mid-November 2018, the CMS, under the direction of the Trump administration, proposed highly anticipated modifications to managed care regulations that were put in place back in 2016. These modifications would grant states more flexibility in determining network adequacy standards for Medicaid managed-care plans, with intentions of aligning Medicaid regulations more closely with Medicare Advantage standards. Simply stated, the intent was to generally increase the privatization of Medicaid Managed Care and limit federal financial involvement.

Given that Medicaid Managed Care Organizations behave similarly to self-insured employer groups, states vary in the levels of financial risk taken when contracting with participating provider networks. This relationship creates a unique opportunity for provider networks to either solidify their network by aligning with other existent contracts, or more realistically, a chaotic scenario involving a misaligned blend of Medicaid, Medicare Advantage, and commercial participation within a provider network, or even individual physician office. This brings the all-too-familiar patient confusion, revenue cycle difficulties, front-office misunderstandings, and overall provider enrollment nightmares.

Of the many aspects of the proposed rule, that will soon be publicized as a final rule, include:

  • Pass-Through Payments – This proposal expands states’ authority to direct payments from plans to providers in states transitioning towards Medicaid managed care from traditional Fee-For-Service models. The proposal is a three-year period that permits states to require payments that equate Fee-For-Service reimbursements to ease the financial transition for provider organizations and healthcare facilities.
  • Testing Value-based payment reform – This proposal permits increased authority at the state level to offer value-based payment models potentially reflecting value-based methodologies used in Medicare Advantage and commercial markets. It is noteworthy that this does not directly mimic Medicare Advantage frameworks which reduces much-needed value-based synchrony but offers regional flexibility for provider groups to actively negotiate mirroring value-based contracts with a traditionally siloed payor class such as a CMO plan.
  • Provider Network Adequacy – Currently, states enforce network adequacy standards that include time and distance standards for various provider specialties. Many argue this deters telehealth and telemedicine capabilities that could allow networks to include distant professionals. This proposal eliminates this requirement completely and replaces it with quantitative network adequacy standards that may include loosely defined provider-to-patient network ratios. Completely removing the time and distance rules for even primary care providers caused significant concern with provider organizations, which is likely to be addressed in the final rule. Additionally, states would now maintain the authority to define “specialists” in terms of network adequacy standards.
  • Rate Ranges – The proposed rule allows rate to vary only by beneficiary or service characteristics, unlike the current reliance on the level of Federal Financial Participation (FFP). Importantly, this rule modifies the stipulation that payment modifications must be delivered based on sound actuarial principles. This means any revisions and underpaid reimbursement due to a variety of rate-related issues could be simply denied.
  • Coordination of Benefits (COB) – As managed care enrollees are often covered by multiple sources (Dual eligibility in Medicare Advantage, specialized behavior/dental care, etc). Currently, the proposal offers states the flexibility to route claims as they chose rather than the existent policy that leverages Medicare’s claims routing methodology.

Further Information provided by The Centers for Medicare and Medicaid Services can be found here.