Hospital Association of Pennsylvania > Advocacy > Health Insurance Coverage Expansion > HAP Comment Letter on Medicaid Managed Care and CHIP Proposed Rule


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HAP Comment Letter to CMS on Medicaid Managed Care and CHIP Proposed Rule

July 27, 2015

Andy Slavitt
Acting Administrator
Centers for Medicare & Medicaid Services
Hubert H. Humphrey Building
200 Independence Avenue, S.W., Room 445-G
Washington, D.C. 20201

Re: Proposed Rule: RIN 0938-AS25 Medicaid and Children’s Health Insurance Programs (CHIP)—Medicaid and CHIP Managed Care

Dear Mr. Slavitt:

On behalf of The Hospital & Healthsystem Association of Pennsylvania (HAP), which represents approximately 240 member hospitals and health systems, we appreciate this opportunity to comment about the Centers for Medicare & Medicaid Services’ (CMS) Medicaid managed care and Children’s Health Insurance Program (CHIP) proposed rule.

On June 1, 2015, CMS published a proposed rule for Medicaid managed care and the Children’s Health Insurance Program (CHIP).The proposed rule is the first major update to Medicaid and CHIP managed care regulations in more than a decade. HAP appreciates CMS’ efforts to modernize Medicaid to reflect changes in the managed care delivery system.

More than 80 percent of Pennsylvania’s Medicaid beneficiaries now receive health care through a managed care organization (MCO). In addition, Pennsylvania has a successful CHIP program that has enabled our state to maximize enrollment of children and high participation by providers in the program.

Finally, Pennsylvania has recently proposed a managed long-term services and supports (MLTSS) program. Therefore, the proposed rule has significant implications for care delivery and reimbursement in Pennsylvania.

The Pennsylvania hospital community supports the approach to better align the rules governing Medicaid managed care with the rules governing the Medicare managed care program, the commercial insurance market, and qualified health plans provided pursuant to the Affordable Care Act (ACA).

However, in moving forward, HAP cautions CMS to carefully consider the need to strike the appropriate balance between federal standards and state flexibility, so that consumers have timely and appropriate access to quality health care services.

In addition, while aligning standards is to be applauded, it is still imperative in rule setting that CMS and states consider the unique differences in the populations served by Medicaid and CHIP.

Following are HAP’s comments about the proposed managed care rule:

Standards for Actuarial Soundness, Capitation Rate Development, and Certification (Sec. 438.3–438.7)

HAP supports CMS’ efforts to require that states adhere to greater transparency in developing actuarially sound Medicaid capitation rates for MCOs. The rule proposes to strengthen current regulations by adopting the American Academy of Actuaries’ practice standards for Medicaid managed care, which would lead to greater transparency and consistency in capitation rate development by states.

States would be required to document their rate-setting process in a more transparent manner. HAP believes this development will facilitate transparency in the rate setting process.

Moreover, we support CMS’ commitment to conduct review of the assumptions and methodologies used in the development of actuarially sound rates through its new rate certification process.

The rule requires states to submit to CMS the managed care contracts and all the necessary information for the rate certification review no later than 90 days before the effective date of the agreement.

While we support CMS’ proposal to examine how states and actuaries assess whether capitation rates are adequate to support provider reimbursement levels, we are concerned that:

  • Moving away from allowing a range of allowable rates may result in unintended consequences of diminishing a state’s ability to implement rate adjustments that support critical funding to providers that serve the Medicaid population
  • CMS does not have the necessary resources to conduct such a comprehensive review in a timely manner. This could have the unintended consequence of actually delaying the rate setting process and jeopardizing timely contract development and execution at the state level

MLR: Calculation, Reporting, and State Oversight (Sec. 438.8, 438.74)

HAP supports CMS’ proposed new uniform MLR standard for Medicaid MCOs at a minimum of 85 percent. Since the MLR measures how much of a managed care plan’s premium dollar is spent providing covered services, it serves as an important safeguard to help ensure adequate provider reimbursement.

Special Contract Provisions Related to Provider Payments that Support State Delivery System Reform Efforts and Direct Pay Prohibition (Sec. 438.6 (C))

In general, HAP supports CMS’ proposed exceptions to the special contracting provisions in which states are prohibited from directing payment to providers in a managed care setting. CMS proposes three exceptions to this prohibition that would allow states to direct plans to participatein multi-payer delivery system reform and performance improvement initiatives, value-based purchasing models for provider reimbursement, or integrated care delivery.

However, HAP proposes that CMS grant states greater flexibility in its use and design of special contracting provisions. Although well intended, the three proposed exceptions to the special contracting provisions may be too limiting and fail to encompass all current and future provider payment innovations that may be needed to address beneficiary access to quality care.

There are significant differences between states in demographics, geography, health care delivery systems, and population health needs. It is imperative that states be given flexibility to design special contracting provisions that address Medicaid beneficiary timely access to services that address health care needs. HAP recommends that CMS modify the exceptions to allow states to pay providers differently if it meets specified performance metrics.

Provider Network Adequacy Standards and Provider Directory (Sec. 438.68, 438.10 (H))

HAP supports CMS’ proposal to require states to set minimum provider network adequacy standards for their managed care programs. We believe this is critical to ensure that all medically necessary services are accessible without unreasonable delay.

The proposed rule seeks to align the provider network adequacy standards for Medicaid with network standards for Qualified Health Plans (QHP) sold in the ACA health insurance marketplace and Medicare Advantage plans.

HAP supports the use of time and distance standards for provider networks, but notes that such standards could actually deter the use of specialty providers that serve consumers with complex medical conditions. These include beneficiaries with unique care needs, including high-risk pregnant women; children with complex medical, physical, cognitive, and behavioral health needs; and adults with more complex behavioral health needs.

It is imperative that network adequacy standards enable that all of these vulnerable populations are able to access medically necessary services and that MCOs are accountable for assuring such access.

HAP supports CMS’ proposal to require states to ensure that MCOs maintain and update provider directories and make the directories available in electronic form. The maintenance and updating of provider directories is an important component of ensuring an adequate network.

HAP believes that the primary obligation for maintaining and updating the provider directories lies with the MCOs. Accordingly, MCOs should continue to be required to periodically update their provider directories.

Medicaid Capitation Payments for Enrollees Subject to the Institutions for Mental Disease (IMD) Exclusion (Sec. 438.3 (U)

HAP recognizes that the IMD exclusion in section 1905(a)(29)(B) of the Social Security Act acts as a barrier to providing inpatient psychiatric care to populations with significant behavioral health issues.

In Pennsylvania, where state psychiatric facilities have closed, the hospital community is concerned that timely access to inpatient psychiatric care is not assured in all parts of the state.

HAP supports continued Congressional efforts to repeal the IMD exclusion in order for states to provide individuals needing inpatient psychiatric or substance abuse treatment access to the full continuum of care. HAP appreciates CMS’ effort to provide states some relief by proposing a policy that affords states flexibility to provide inpatient treatment.

Nevertheless, HAP believes that 15 days does not go far enough to meet the complex needs of those with significant mental health and substance use disorders. HAP encourages CMS to consider supporting repeal of the IMD exclusion.

Furthermore, HAP recommends CMS consider stronger standards to foster the integration of behavioral and physical health, including considering the elimination of the state option to allow behavioral health services to be carved out of Medicaid managed care.

While this approach may have been merited as managed care began to develop, in Pennsylvania, we have seen that the carve-out can create barriers to the integration of behavioral and physical health care and inhibit the sharing of critical information across health care settings.

Quality Improvement and Measurement (Sec. 438.310 and 438.370)

The proposed rule requires states to establish a Medicaid and CHIP managed care quality rating system that would include performance information about all health plans. States would be required to post at their website plan quality ratings.

In addition, plans serving only consumers dually eligible for Medicare and Medicaid could use the Medicare five-star rating system. As HAP has learned from the ACA health insurance marketplace, building an interactive health care website is no easy endeavor. CMS should stand ready to provide states with significant technical support in this regard.

Beneficiary Protection: Marketing, Authorizations, Appeals & Grievances, and Care Coordination (Sec. 438.54, 438.104, 438.210, 438.230)

Marketing: HAP supports CMS’ proposal to allow issuers that offer both Medicaid and health insurance marketplace QHPs to market their QHP plan product to Medicaid enrollees in the event the enrollee loses their Medicaid eligibility.

This proposed change would allow greater access to coverage for a low-income population that may lose Medicaid coverage due to a change in income, but would be eligible to purchase subsidized coverage through the marketplace.

HAP notes that CMS should be vigilant in protecting consumers because this type of marketing can be particularly confusing. This is especially true for consumers who are new to the complex health insurance arena as a result of coverage provided through the ACA.

Authorizations and Beneficiary Protections: HAP supports CMS’ proposed changes to adopt new standards for plans regarding coverage authorizations if there is a change in plan coverage; new expedited timeframes for authorization requests, including drug authorizations; a new requirement that states cover drugs excluded from the managed care contract; and the inclusion of early and periodic screening and diagnosis treatment (EPSDT) in the definition of medically necessary services.

These changes provide greater protections for consumers by facilitating timely access to medically necessary care.

Appeals and Grievances: HAP supports CMS’ efforts to better align the appeals and grievance process for Medicaid managed care with Medicare and private insurance. Specifically, HAP supports the ability of providers to appeal a coverage decision on behalf of the consumer without obtaining written consent.

However, HAP does not support requiring consumers to exhaust administrative remedies prior to filing a fair hearing. This has been an effective tool for consumers in obtaining covered services and HAP does not believe this tool should be taken away from consumers.

Care Coordination: HAP supports CMS’ proposals to strengthen care coordination standards imposed on states when a beneficiary moves into a new managed care plan.

In addition, the proposed rule would require MCOs to coordinate benefits and claims for managed care enrollees who are dually eligible for Medicare and Medicaid. Plans would be required to sign a Coordination of Benefits agreement and participate in Medicare’s automated crossover process if the state uses the automated crossover process for its Medicaid fee-for-service program.

HAP supports this proposal because it would alleviate the administrative burden many hospitals face when having to submit separate bills for their dually eligible patients.

Long-Term Services and Support: Pennsylvania is just beginning to explore the potential for a managed long-term services and support (MLTSS) program. HAP appreciates that the proposed rule provides standards for MLTSS, as these programs will be serving some of our state’s most vulnerable citizens.

HAP appreciates the inclusion of requirements that foster a person-centered process for assessing a beneficiary’s needs and developing a service plan. Further, the rule requires states to establish a stakeholder engagement process for MLTSS, which HAP believes is essential for assuring that there is on-going input from beneficiaries, providers, plans, and other stakeholders.

Program Integrity Provisions (Sec. 438.600–438.610)

Program Integrity: The proposed rule requires states to screen, enroll, and periodically verify all network providers of plans, as well as primary care case managers that are not already enrolled with the state, according to current federal Medicaid program integrity standards.

CMS also proposes that states require plans to provide for a method to verify whether reported services have actually been delivered by network providers.

HAP recommends that CMS provide states clear and consistent guidance regarding the methods they can use to verify the delivery of services by network providers. The verification process and methods should be the same for all plans in the state. This would be important in minimizing the administrative burdens of providers.

Thank you for consideration of our comments about the Medicaid managed care and CHIP proposed rule. If you have any questions, please feel free to contact me at (717) 561-5344, or Norris Benns, vice president, Insurance and Managed Care at (215) 575-3737.


Paula A. Bussard
Chief Strategy Officer

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