The CMS is moving forward with controversial provisions from the mega managed-care rule that expands federal oversight over Medicaid programs after refusing several states’ requests to delay implementation.
Managed care contracts that start on or after July 1, 2017 will have to comply with the new requirements, which the CMS says will improve the rate-setting process and make plans’ spending more transparent. The mega-managed care rule was finalized last year.
The agency refusal to delay enforcement may surprise some states, as the Trump administration hinted o— several occasions that it may roll back the Obama-era rulemaking which expands federal oversight over state Medicaid programs. Several states requested the CMS delay compliance with parts of the rule that kicked in this month, citing the administrative burden associated with the rollout, according to the agency.
But the CMS denied the requests and highlighted the impact the policies in question would have on Medicaid finances.
“These provisions in the final rule have significant federal fiscal implications for the Medicaid program and CMS will require compliance by the specified date in the final rule,” CMS Medicaid Director Brian Neale said in a June 30 notice to states.
If states decide to not comply with the rulemaking, the CMS may not approve their managed care contracts or proposed rates, according to regulatory attorneys. The agency could also reduce federal funding to the state Medicaid program until it complies with the requirements.
The new requirements in question, which impact contracts that start on or after July 1 include stricter standards to ensure that managed care rates are actuarily sound and cover all medical and aministrative costs, taxes and fees for which the health plan is responsible.
Managed care plans also must calculate and report their current medical loss ratio, a breakdown for what the plans spend on medical care versus other activities including employee salaries, marketing, profits and administrative tasks.
On July 1, 2019, managed care plans will be required to have an MLR of at least 85%.
The CMS also said it will enforce a provision to eliminate so-called pass-through payments, which Medicaid managed care plans receive on top of the base capitation rate. Those payments are used as incentives to attract providers to treat Medicaid enrollees if their base rates aren’t enough to ensure access in an area.
The CMS estimates that at least 16 states have paid out $3.3 billion in pass-through payments on average every year. Three others have distributed about $50 million a year for nursing facilities.
The CMS opposes pass-through payments because they are not actuarially sound and are not directly related to contracted services.