The Centers for Medicare and Medicaid Services (CMS) earlier this week released the
Medicaid Managed Care final rule, marking a substantial update in the framework governing Medicaid and the Children’s Health Insurance Program managed care plans. The rule introduces enhancements aimed at improving care access, quality, and outcomes, with implications for long term and post-acute care (LTPAC) providers.
Below is a summary of the final rule, which will be finalized in the Federal Register on May 10, 2024, and will take effect on July 9, 2024. Please contact AHCA Director of Medicaid Policy Grant Beebe with questions.
Critical Aspects of the Final Rule
- Improvement Initiatives: The rule sets new benchmarks for timely access to care. It enhances state monitoring and enforcement capabilities, ensuring care standards are consistently met, and simplifies the implementation of directed payment systems and quality reporting requirements. These changes may reduce administrative burdens for State Medicaid Agencies and their Managed Care partners.
- Specific Standards and Requirements: The rule introduces standards for services provided in lieu of traditional settings, highlighting that these services offer more flexibility in patient care and service delivery. Additionally, it specifies medical loss ratio requirements and establishes a quality rating system, aiding providers in benchmarking and improving their services. Substantive changes to State-Directed Payments and compliance requirements are also included.
- Effective and Applicability Dates: The key provisions of the rule and related implementation timelines will take effect on July 9, 2024. These details are available in a supplemental factsheet.
Services Provided in Lieu of Traditional Settings (ILOS)
These provisions within the final rule introduce several important regulations designed to streamline and enhance the flexibility of care delivery.
- Flexibility in Service Delivery: The rule allows managed care organizations (MCOs) to offer alternative services or settings that differ from traditional Medicaid services but are cost-effective and appropriate for meeting the individual needs of enrollees.
- Standards and Oversight: Despite the flexibility offered, ILOS must meet specific Medicaid standards, ensuring that the services are not only cost-effective but also meet the quality and safety requirements equivalent to traditional Medicaid services.
- Approval and Documentation: MCOs must receive prior approval from state Medicaid agencies for ILOS, and these services must be clearly documented in the managed care plan.
- Evaluation and Monitoring: States must monitor and evaluate the use of ILOS to ensure it effectively meets the intended outcomes and does not lead to unintended negative consequences for enrollees.
Impact on State-Directed Payments (SDPs)
SDPs, now comprising approximately 15.6 percent of total managed care payments and 9.0 percent of total Medicaid expenditures, are subject to several changes to streamline processes, ensure compliance with federal standards, and enhance their effectiveness.
- Prior Approval Requirements: Certain types of SDPs will require prior CMS approval, ensuring alignment with Medicaid goals.
- Increased Documentation and Transparency: States must submit detailed documentation for new or renewing SDPs, promoting transparency and more closely aligning SDP processes with administrative provisions for supplemental payments under Medicaid Fee-for-Service reimbursement methodologies.
- Annual Reporting and Revisions: Mandatory annual reporting on SDPs will keep providers accountable and allow for periodic adjustments to maintain alignment with program goals.
Strategic Goals and Health Equity
The rule aligns with broader federal objectives, emphasizing increasing accessibility to high-quality health care and addressing health disparities. This focus is particularly relevant for LTPAC providers serving racially, ethnically, and geographically diverse populations.
Long Term and Post-Acute Care Provider Implications
For LTPAC providers, the rule’s emphasis on SDPs and enhanced payment structures could directly impact how services are reimbursed. Providers may need to adjust to new quality and performance metrics, engage in more detailed data reporting, and potentially reevaluate how they meet network adequacy and accessibility standards.