Date

Fact sheet

Notice of Proposed Rulemaking: Medicaid and Children’s Health Insurance Program (CHIP) Managed Care Access, Finance, and Quality (CMS-2439-P)

The Centers for Medicare & Medicaid Services (CMS) today unveiled a notice of proposed rulemaking (NPRM), Managed Care Access, Finance, and Quality (Managed Care NPRM). This proposed rule aims to help states build stronger programs to better meet the needs of the Medicaid and CHIP populations by improving access to and quality of care provided to Medicaid and CHIP managed care enrollees. Medicaid and CHIP are the nation’s largest health coverage programs. If adopted as proposed, this rule would build on Medicaid’s already strong foundation as an essential program for millions of families and individuals, especially children, pregnant people, older adults, and people with disabilities.

Over 70 percent of the Medicaid and CHIP population are enrolled in managed care plans. In recent years, States have struggled to ensure beneficiaries’ access to high-quality care, ensure adequate provider payment during extreme workforce shortages, and provide adequate program monitoring and oversight. Executive Order 14009 in 2021 established the policy objective to protect and strengthen Medicaid and the Affordable Care Act (ACA), and to make high-quality health care accessible and affordable for every American. In 2022, Executive Order 14070 directed agencies to identify ways to continue to expand the availability of affordable health coverage, to improve the quality of coverage, strengthen benefits, and to help more Americans enroll in quality health coverage.

This proposed rule would advance CMS’s efforts to improve access to care, quality and health outcomes, and better address health equity issues for Medicaid and CHIP managed care enrollees. The proposed rule would specifically strengthen standards for timely access to care and states’ monitoring and enforcement efforts; enhance quality as well as fiscal and program integrity standards for Medicaid state-directed payments (SDPs); specify the scope of in lieu of services and settings to better address health-related social needs (HRSNs); further specify medical loss ratio (MLR) requirements; and establish a framework and other requirements for states to implement a quality rating system (QRS) to compare Medicaid and CHIP managed care plans.

The proposed rule includes significant regulatory revisions in the following areas:

Topic:

NPRM Proposes to:

Applicability and Compliance Deadline Dates

Access

 

 

Establish maximum appointment wait time standards for routine primary care (adult and pediatric), obstetric/gynecological services, outpatient mental health and substance use disorder services (adult and pediatric), and a state-selected service (adult and pediatric if appropriate).

By the first rating period beginning on or after 3 years after the effective date of the final rule.

Require states to use an independent entity to conduct annual secret shopper surveys to validate managed care plans’ compliance with appointment wait time standards and the accuracy of provider directories to identify errors as well as providers that do not offer appointments.

By the first rating period beginning on or after 4 years after the effective date of the final rule.

Require states to conduct an annual enrollee experience survey for each Medicaid managed care plan.

By the first rating period beginning on or after 3 years after the effective date of the final rule.

Require states to submit an annual payment analysis that compares managed care plans’ payment rates for certain services as a proportion of Medicare’s payment rate and, for certain home and community-based services, the state’s Medicaid state plan payment rate.

By the first rating period beginning on or after 2 years after the effective date of the final rule.

Require states to implement a remedy plan for any managed care plan that has an access issue that needs improvement.

By the first rating period beginning on or after 4 years after the effective date of the final rule.

Require states to maintain a single web page that is readily identifiable to the public, easy to use, and contains required information for public transparency.

By the first rating period beginning on or after 2 years after the effective date of the final rule.

Medicaid State Directed Payments (SDPs)

Note: The applicability and compliance dates noted below for SDPs are based on the rating period approved in the SDP, not the date of preprint submission.

 

Remove unnecessary regulatory barriers to help states use state directed payments to implement value-based payment arrangements and include non-network providers in state directed payments.          

By the first rating period beginning on or after the effective date of the final rule.

Eliminate written prior approval for state directed payments that are minimum fee schedules at the Medicare payment rate and include non-network providers in state directed payments.

By the effective date of the final rule.

Require that provider payment levels for inpatient and outpatient hospital services, nursing facility services, and the professional services at an academic medical center not exceed the average commercial rate.

By the first rating period after the effective date of the final rule. Note: CMS is proposing to codify our current operational practice.

Require states to condition state directed payment fee schedule payments upon the delivery of services within the contract rating period and prohibit the use of post-payment reconciliation processes.

By the first rating period beginning on or after 2 years after the effective date of the final rule.

Require states to report to CMS the total dollars expended for each state directed payment.

By the first rating period following the release of reporting instructions by CMS.

Require states to submit state directed payment evaluations every three years if the SDP costs (as a percentage of total capitation payments) exceed 1.5 percent.

 

Evaluation plans will have to comply with the proposed standards by the first rating period beginning on or after 3 years after the effective date.

Establish a process for states to appeal state directed payment disapprovals to the Department Appeals Board.

By the effective date of the final rule.

Require that states comply with all federal laws concerning funding sources of the non-federal share as a condition of state directed payment approval.

By the effective date of the final rule.

Require that states ensure each provider receiving a state directed payment attest that it does not participate in any arrangement that holds taxpayers harmless for the cost of a tax in violation of federal requirements.

By the first rating period beginning on or after 2 years after the effective date of the final rule.

Medical Loss Ratio

 

 

Require Medicaid managed care plans to submit actual expenditures and revenues for state directed payments as part of their medical loss ratio reports to states, and require states to submit these amounts as separate line items in their annual medical loss ratio summary reports to CMS.

By the first rating period beginning on or after 60 days following the effective date of the final rule.

Specify when managed care plans are required to resubmit medical loss ratio reports to states.

Sixty (60) days after the effective date of the final rule.

Specify that states must provide medical loss ratios for each managed care plan.  

Sixty (60) days after the effective date of the final rule.

Make technical revisions for quality improvement expenditures, provider incentive payments, and expense allocation reporting to align with recent regulatory changes for Marketplace plans.

Sixty (60) days after the effective date of the final rule.

Require managed care plans to report any identified or recovered overpayments to states within 10 business days.

By the first rating period beginning on or after 60 days following the effective date of the final rule.

In Lieu of Service and Setting (ILOS)

 

 

Specify that ILOSs can be used as immediate or longer-term substitutes for a covered service or setting under the state plan, including an acute care episode, or when the ILOSs can be expected to reduce or prevent the future need for such service or setting to better support HRSNs (e.g., certain allowable housing and nutritional supports that are medically appropriate and cost effective).

By the first rating period beginning on or after 60 days following the effective date of the final rule.

Require that an ILOS be considered approvable as a service or setting through the Medicaid state plan or a Medicaid section 1915(c) waiver.

By the first rating period beginning on or after 60 days following the effective date of the final rule.

Require specific information to be documented in managed care plan contracts for each ILOS.

By the first rating period beginning on or after 60 days following the effective date of the final rule.

Require additional documentation from states on their processes to determine an ILOS medically appropriate and cost effective if the ILOS costs (as a percentage of total capitation payments) exceed 1.5 percent.

By the first rating period beginning on or after 60 days following the effective date of the final rule.

Impose a limit of five percent on total ILOS costs as a percentage of total capitation payments for each program.

By the first rating period beginning on or after 60 days following the effective date of the final rule.

Require ongoing monitoring of each ILOS and an evaluation after five years if the ILOS costs (as a percentage of total capitation payments) exceed 1.5 percent.

By the first rating period beginning on or after 60 days following the effective date of the final rule.

Require states to develop a transition plan to arrange for state plan services and settings to be provided timely if an ILOS will be terminated.

By the first rating period beginning on or after 60 days following the effective date of the final rule.

Quality:

Quality Strategy and External Quality Review (EQR)

 

 

Increase public engagement around states’ managed care quality strategies.

One year following the effective date of the final rule.

Eliminate EQR requirements from PCCM providers.

The effective date of the final rule.

Make it easier for states to use accreditation reviews for EQR.

The effective date of the final rule.

Establish consistent 12-month review periods for the annual EQR activities to ensure the reports contain the most recent data and information.

By December 31, 2025.

Establish that each state’s annual EQR report be submitted to CMS by December 31.

By December 31, 2025.

Require more meaningful data and information to be included in the annual EQR reports.

No later 1 year from the issuance of the associated protocol.

Quality: Medicaid and CHIP Quality Rating System (MAC QRS)

 

 

Establish the MAC QRS website as a state’s “one-stop-shop” where beneficiaries could access information about Medicaid and CHIP eligibility and managed care; compare plans based on quality and other factors key to beneficiary decision making, such as the plan’s drug formulary and provider network; and ultimately select a plan that meets their needs.

States would be required to implement the website and publish certain information on it by the end of the fourth calendar year following the effective date of the final rule.

Establish the MAC QRS framework and state requirements for the MAC QRS (including an initial set of mandatory measures for the quality ratings), and the process by which the mandatory measures would be updated in the future.

States would be required to display quality ratings for the initial set of mandatory measures by the end of the fourth calendar year following the effective date of the final rule. Such ratings must be for the performance year that is two calendar years following the effective date of the final rule.

Establish the methodology for calculating the quality ratings displayed on each state’s MAC QRS.

The effective date of the final rule and applied beginning with the first set of ratings under these rules.

Broaden flexibility for states to implement an alternative QRS.

The effective date of the final rule.

Children’s Health Insurance Program

 

 

Require separate CHIPs to align with Medicaid on most proposed provisions related to access, ILOS, medical loss ratio, and quality.

Aligns with proposed Medicaid applicability dates.

For more information, the proposed rule is available at https://www.federalregister.gov/public-inspection. Public comments are due by July 3, 2023.

Additional Medicaid managed care resources are available at: https://www.medicaid.gov/medicaid/managed-care/index.html.

For questions regarding Medicaid managed care, email: ManagedCareRule@cms.hhs.gov

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