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Insights Into the Medicaid Managed Care Final Rule

On November 9, 2020 Centers for Medicare & Medicaid Services (CMS) released the 2020 Medicaid & Children’s Health Insurance Program (CHIP) Managed Care final rule, which seeks to streamline the Medicaid and CHIP managed care regulatory framework while reducing administrative burdens and federal regulatory barriers. CMS worked with the National Association of Medicaid Directors (NAMD) and state Medicaid directors to address some of the challenges introduced in the 2016 Managed Care final rule.

CMS administrator Seema Verma indicated, “This rule represents a concerted effort to transform Medicaid to improve quality and access for its beneficiaries. This will remove the burden on states while ensuring appropriate oversight of managed care organizations. The government should identify expected outcomes, results and standards —not micromanage processes. The rule strikes a balance between federal oversight and state flexibility.”

Most of this rule relates to policy and contracting with little impact on processing systems. The rule goes into effect 30 days after publication (effective date is December 9, 2020) except where noted.

The 2020 final rule makes the following changes:

Network Adequacy Standards. Eliminates the current policy requiring mandatory time and distance standards for MCO provider networks. Instead the rule allows states to set alternative quantitative network adequacy standards. Bolsters efforts to provide access and quality care to rural beneficiaries by changing the minimum standards for network adequacy to support state adoption of telehealth.

Appeals and Grievances. No longer requires a written appeal when an enrollee submits an oral appeal. Identifies that only “clean claims” need be included in “adverse benefit determination” reporting. Sets the timeframe for requesting a state fair hearing to be no less than 90 calendar days and no greater than 120 calendar days, aligning with fee-for-service policy.

Publishing Beneficiary Information. Simplifies the prescriptive font size and timeliness of providing beneficiary publications, including network provider termination notices. Permits quarterly provider directory updates if the managed care plan offers a mobile-enabled provider directory.

Rate Range Setting. Allows a rate range option of 5% so long as the upper and lower bounds of the rate range are certified as actuarially sound under current CMS requirements. This provision will take effect with rating periods beginning on or after July 1, 2021.

  • States using the rate range option may not use the currently available de minimis 1.5%rate adjustment. These options are mutually exclusive.
  • States must develop and publish the criteria by which specific rates within the five percent rate range will be selected.
  • States may adjust a previously selected rate by 1% during the rating period without submitting a rate recertification so long as the new rate is within the previously certified 5% rate range.

Quality Rating System. Requires the future development of the Quality Rating System (QRS) to include a mandatory minimum measure set that is adopted in the federal system and any state-adopted alternative system. Eliminates the requirement that states obtain prior approval from CMS before implementing a state-alternative QRS.

Standard Contract Requirements. Eliminates the requirement that managed care plans that cover Medicare-Medicaid dually eligible enrollees enter into a Coordination of Benefits Agreement directly with Medicare and participate in the automated crossover claim process administered by Medicare. States may submit the crossover claims to Medicare for the MCOs. The contract must indicate how crossover claims will be processed.

Risk Sharing Mechanisms. Requires that risk-sharing mechanisms be documented in the contract and rate certification documents prior to the start of the rating period. Explicitly prohibits retroactively adding or modifying risk-sharing mechanisms after the start of the rating period.

State Directed Payments. Allows states to require managed care plans to adopt payment models that are based on a state plan-approved FFS fee schedule without first receiving written approval from CMS and provides for the approval of multi-year payment arrangements when specified criteria are met.


CMS Fact Sheet

Medicaid and the Law Review

NAMD Newsletter November 18, 2020

On Topic posts are recaps of current topics, issues or regulations.

About the Author

Jeff Strand is a business solution architect with more than 30 years of healthcare industry experience. He is a member of the MITA Governance Board and is a co-chair of the National Medicaid EDI HIPAA (NMEH) sub-workgroup on MITA. At Gainwell he helps define modular healthcare solutions to align to the CMS Medicaid Information Technology Architecture and evolving State and Federal requirements.