What Payers Need to Know About 2020 Medicaid Managed Care Changes

New CMS regulations around Medicaid managed care include several major changes regarding network adequacy, beneficiary protection, quality, and payment, according to the Kaiser Family Foundation (KFF).

Most of the changes go into effect on December 14, 2020.

“While the new final rule is not a wholescale revision of the comprehensive 2016 final rule, it does make changes in key areas,” the researchers explained. “Federal rules governing Medicaid managed care are important as managed care remains the predominant care delivery system in most states.”

Under the updated Medicaid managed care regulations, states can use other measures, apart from time and distance, to evaluate network adequacy. Newly permissible measures include provider-to-enrollee ratios and the share of providers taking on new patients.

Long-term services and supports and provider type regulations are looser under the 2020 CMS regulations as well.

When it comes to long-term services and supports, states can choose their own quantitative measurements for network adequacy. States also may establish their own rules around specialists’ network adequacy and restricted the agency’s own ability to maneuver the list of providers that must follow network adequacy regulations.

The 2020 rule also adjusts beneficiary protections around beneficiary information and appeals processes.

CMS has made it easier to access written materials for those with disabilities or language barriers. Providers will no longer have to certify cultural competence training. Furthermore, providers only have to update paper directories quarterly or, if a digital copy exists, on a monthly basis.

The rule also extends the amount of time that health plans have to alert beneficiaries that their provider is no longer in-network, from 15 days after contract termination notice to 30 days before the effective contract termination or 15 days after the contract termination notice.

Regarding appeals, beneficiaries now have a shorter period of time in which to appeal health plan coverage decisions and adds that beneficiaries must submit a written appeal after the oral appeal.

The 2020 final rule outlined four quality oversight changes.

First, state quality rating systems must align with the CMS quality rating system. Previously, CMS only enjoined states to provide data as similar as possible to CMS quality rating system data.

Second, states’ encounter data has to include both allowed and paid amounts. CMS has been transitioning toward encounter data for Medicare Advantage Star Ratings because it is a better indicator of quality than risk adjustment processing system (RAPS) data.

Third, states have more power over how they define disability status.

Decreasing health disparities in care quality for those with disabilities is a key aim for state Medicaid programs. In 2016, disability status was restricted to those who were eligible for Medicaid due to a disability.

Under the 2020 rule, Medicaid eligibility is the baseline and states can expand the definition from there.

The final quality oversight change is related to external quality reviews. States must make publicly available the names of health plans exempt from external quality reviews and when each plan’s exemption began.

CMS also made changes to both rate setting and payment methodologies.

Under the 2020 rule, states can establish capitation rate cell ranges. If states want to adjust the rate by one percent or less within that range, they may do so without a new certification. The adjustment must align with the health plan contract and other rate development guidelines.

“To address concerns about transparency, state websites must post certain information about the development of rate ranges,” the report stated. "States also must document the rates payable to health plans at points within the range prior to the start of the rating period. CMS will provide additional guidance on how to implement this requirement.”

Capitation rates for populations that receive federal funding cannot change in such a way that the rates increase federal spending.

“The 2020 final rule clarifies that states may adjust certified capitation rates within a rating period by +/-1.5 percent, without submitting a revised rate certification or justification to CMS,” the report added.

States cannot make changes to risk-sharing mechanisms once the rating period has started, however.

The 2020 final rule makes several payment adjustments as well, such as codifying specific guidance around approvals for multi-year value-based purchasing model.

The rule recognizes two minimum fee schedules for payer to provider directed payments.

To help state healthcare systems weather the transition from fee-for-service to managed care, states may make supplemental provider pass-through payments for up to three years.

“The 2020 final rule allows states to specify how health plans covering enrollees dually eligible for Medicare and Medicaid receive crossover claims, instead of requiring plans to have a coordination of benefits agreement and participate in the automated Medicare process,” the report stated.

The KFF researchers also noted that these changes to network adequacy and cultural competency measures occur amid a public health emergency. In particular, Medicaid managed care has been crucial to addressing social determinants of health and health disparities during the coronavirus pandemic.