CMS floats new network adequacy requirements for Medicaid managed care programs

A CMS proposed rule would give states more flexibility in negotiating capitated payments and meeting network adequacy requirements. (Getty/juststock)

The Trump administration wants to give more freedom to states overseeing Medicaid managed care and shift network adequacy standards.

On Thursday, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule (PDF) that updates a 2016 regulation, giving states more control over setting rates for capitated payments and providing a three-year transition period for pass-through payments to shift providers from fee-for-service to managed care.

Under Medicaid managed care, states contract with insurers to administer coverage. The program makes up a huge chunk of overall Medicare spending with more than two-thirds of beneficiaries enrolled in managed care in 2016.

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Perhaps the biggest shift is a proposal to reform state network adequacy standards by replacing the current time and distance standards with “a more flexible requirement that states set a quantitative minimum access standard for specified health care providers” including long-term care.

Those quantitative standards could include minimum provider-to-enrollee ratios, maximum travel time or distance to providers, a minimum percentage of providers accepting new patients or maximum wait times for an appointment.

CMS would also allow states to include access to telehealth providers and create their own definition of what qualifies as a “specialist” in determining network adequacy standards.

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“Today’s action fulfills one of my earliest commitments to reset and restore the federal-state relationship, while at the same time modernizing the program to deliver better outcomes for the people we serve,” CMS Administrator Seema Verma said in a statement.

Additionally, the proposed rule would strengthen program integrity by preventing states from retroactively changing risk-sharing mechanisms to boost federal reimbursement. The Government Accountability Office has previously said CMS needs to do a better job of auditing state managed care contracts that represented half of all Medicaid expenditures in 2017. 

Verma has also said her agency will begin targeted audits of Medicaid managed care plans “to ensure that provider claims for actual health care spending matches what the health plans are reporting financially.”

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To build scale and drive greater savings, providers in some regions are banding together in statewide Medicare accountable care organizations. 

CMS issued updated Medicaid guidance on regulations for state-run home and community-based services.

Regulators warn that suggestions to address surprise bills, such as rate setting and payment caps, come with significant downsides for states.