CMS Final Rule Overview On April 25, 2016, CMS issued a final rule - - PowerPoint PPT Presentation

CMS Final Rule

• On April 25, 2016, CMS issued a final rule on managed

care for Medicaid and CHIP (published in the Federal Register on May 6, 2016).

• First Update to the Medicaid Managed Care regulations

since 2002.

• Seeks to modernize the Medicaid managed care

regulations to reflect changes in managed care delivery systems.

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Overview

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• Align the rules governing Medicaid managed care with
• ther health benefits programs.
• Strengthen actuarial soundness payment provisions.
• Promote quality of care.

–Strengthen efforts to reform delivery systems. –Ensure appropriate beneficiary protections.

• Enhance policies related to program integrity.
• Implement statutory provisions.

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Overview

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• To support State efforts to advance delivery system

reform and improve the quality of care

• To strengthen the beneficiary experience of care and key

beneficiary protections

• To strengthen program integrity by improving

accountability and transparency

• To align key Medicaid and CHIP managed care

requirements with other health coverage programs.

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Goals of the Final Rule

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• Publication of Final Rule – May 6th (81 FR 27498)
• Effective date of the Final Rule is July 5, 2016
• Phased implementation of new provisions primarily over

3 years, starting with contracts on or after July 1, 2017

• Compliance with CHIP provisions beginning with the state

fiscal year starting on or after July 1, 2018

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Key Dates

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There are a number of provisions that States must comply with as of the July 5th effective date of the Final Rule.

• Many of these provisions were unchanged from the 2002

rule.

• New Provisions of note include:

–438.3(a) and 438.7(a): CMS review and approval of contracts and rate certifications –438.3(e): In Lieu of Services –438.6(e): Capitation Payments to PIHPs for Enrollees with a Short Stay in an IMD

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Effective Date – July 5, 2016

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• In lieu of services are medically appropriate and cost

effective alternatives to state plan services or settings.

• Enrollees are not required to use the in lieu of service
• Approved in lieu of services are authorized and identified

in the PIHP contract.

• The utilization and cost is taken into account in

developing the capitation rates.

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In Lieu of Services

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• Permits state to make monthly capitation payment to the

PIHP for an enrollee, aged 21-64, that has a short term stay in an IMD

–Short term stay: no more than 15 days within the month –Establishes rate setting requirements for utilization and price of covered services rendered in alternative setting of the IMD

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Institution for Mental Disease (IMD)

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–438.3(s): Covered Outpatient Drugs –438.5: Rate Development Standards –438.6(b)(s): Withhold Arrangements –438.6(c): Delivery System and Provider Payment Initiatives –438.6(d): Pass-through Payments –438.8: Calculation and Reporting of Plan Medical Loss Ratio –438.242: Health Information Systems –438.330: Quality Assessment and Performance Improvement –Subpart F: Appeals and Grievances –Subpart H: Program Integrity

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Rating Period Starting On or After July 1, 2017

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–438.4(b)(3): Actuarial Soundness – Capitation rates adequate to meet 438.206, 438.207, and 438.208 –438.4(b)(4): Actuarial certification to capitation rate per rate cell –438.7(c)(3): Ability to increase or decrease certified capitation rate per rate cell by 1.5 percent without revised rate certification –438.62: Continued Services to Enrollees (Transition of Care Policies) –438.68: Network Adequacy Standards –438.71: Beneficiary Support System –438.206: Availability of Services –438.207: Assurance of Adequate Capacity and Services –438.602(b) & 438.608(b): Screening and Enrollment of Network Providers –438.818: Enrollee Encounter Data

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Rating Period Starting On or After July 1, 2018

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–438.4(b)(3): Actuarial Soundness – Development of capitation rates so that a managed care plan can reasonably achieve an MLR of at least 85 percent

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Rating Period Starting On or After July 1, 2019

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• Clarifies state payment-related tools for managed care

plan performance

–Establishes requirements for withhold arrangements –Retains requirements for incentive arrangements

• Acknowledges that states may require managed care

plans to engage in value-based purchasing initiatives

• Permits states to set min/max network provider

reimbursement levels for network providers that provide a particular services

• Transition period for pass-through payments to hospitals,

physicians and nursing facilities.

These provisions apply to rating periods starting on or after July 1, 2017.

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Approaches to Payment

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• Collect and submit encounter data sufficient to identify

the provider rendering the service

• Submit all encounter data necessary for the State to

meet its reporting obligation to CMS

• Submit encounter data in appropriate industry standard

formats (i.e., ASC X12N 837, ASC X12N 835, NCPDP)

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Encounter Data

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These provisions apply to rating periods starting on or after July 1, 2017.

• 85% - Minimum MLR
• Annual audited financial reports specific to the Medicaid contract
• Managed care plans calculate and report their MLR consistent with

the contract period

– Calculated in accordance with 438.8 – Submit to state within 12 months of the MLR reporting year – Calculated over the entire population

• Numerator = incurred claims + activities that improve health care

quality + fraud reduction activities

• Denominator = premium revenue MINUS taxes, fees, assessments

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Medical Loss Ratio – Key Elements

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• 438.602

438.602(b)(1): The State must scree een a and d en enrol

• ll, and

periodically revalidate, all n ll network pr provider ers of MCOs, PIHPs, and PAHPs, in accor

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dance w with t the r requirem emen ents

• f p

f part 455, 455, subparts B a and E o

• f t

f this chapter.

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provider der t to ren ender der s ser ervices t s to

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Screening of Network Providers

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• Administrative and management arrangements or

procedures to detect and prevent FWA:

• Designation of a compliance officer who reports directly

to CEO and Board of Directors

• Establishment of a Regulatory Compliance Committee on

Board of Directors and at the Senior Management level.

• Establishment and implementation of procedures and a

system with dedicated staff for routine internal monitoring and auditing of compliance risks

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Provider Integrity Requirements

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• Each plan that receives annual payments under the

contract of at least 5 million must have policies and procedures written for all employees and any contractor

• r agent, that provide detailed information about the

false claims act including employees rights as whistleblowers.

• Prompt reporting of all overpayments identified or

recovered, specifying the overpayment due to potential fraud to the State.

• Contracts must specify:

–The retention of recoveries of all overpayments from the MCO to a provider. –Includes timeframes, process required for reporting the recovery

• f all overpayments.

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Provider Integrity Requirements

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• The subcontractor must agree that the state, CMS, Health

and Human Services (HHS) Inspector General, and Comptroller General have the right to audit, evaluate and inspect any books, records, contracts or electronic systems of the subcontractor that pertain to any aspect

• f services and activities performed or determination of

amounts payable.

• The subcontractor will make available for an audit,

evaluation or inspection its premises, equipment, books, records, contracts, computer or other electronic systems relating to its Medicaid enrollees.

• The right to audit will exist through ten years from the

final date of the contract period or from the date of completion of any audit, whichever is later.

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Right to Audit

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• A State’s managed care quality strategy (QS) must

include goals, objectives, metrics and performance targets for all types of managed care plans.

• Each MCO, PIHP, and PAHP must implement an ongoing

and comprehensive QAPI program including key provisions:

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Quality of Strategy

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• Two new EQR activities

–Mandatory: validation of network adequacy during the preceding 12 months –Optional: Assist with the quality rating of MCOs, PIHPs, and PAHPs under the QRS

• States must post on website:

–Accreditation status of each managed care plan (or that plan is not accredited) –State managed care quality strategy –Annual external quality review reports

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External Quality Review (EQR)

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• FFP at the 75 percent rate will be available only for EQR

(including the production of EQR results) and EQR-related activities performed on MCOs and conducted by EQROs and their subcontractors.

• FFP at the 50 percent match rate will be available for

EQR and EQR-related activities performed on entities

• ther than MCOs (including PIHPs, PAHPs, PCCM entities,
• r other types of integrated care models) or performed by

entities that do not meet the requirements of an EQRO.

• FFP at the 75 percent rate no longer available for EQR

activities for PIHPs

• This provision applies on May 6, 2016, the publication

date of the Final Rule

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External Quality Review (EQR)

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• The enrollee must request continuation of benefits before

the expiration of the original authorization

• Benefits must continue for the duration of the appeal or

State Fair Hearing rather than the current requirement of continued benefits for the length of the original authorization period

• Because enrollees may be held financially liable for

continued services if the final decision is adverse to the enrollee, States must create consistent rules for beneficiary financial liability for services in FFS and managed care

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Continuation of Benefits

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• The rule ensures that all beneficiaries who receive

services through managed care organizations, alternative benefit plans, or CHIP will have access to mental health and substance use disorder benefits regardless of whether services are provided through the managed care

• rganization or another service delivery system. It also

prevents inequity between beneficiaries who have mental health or substance use disorder conditions in the commercial market (including the state and federal marketplace) and Medicaid and CHIP, and helps promote greater consistency for these beneficiaries.

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Mental Health Parity

• The Mental Health Parity and Addiction Equity Act

(MHPAEA) requires group health plans to ensure that the financial requirements and treatment limitations that are applicable to mental health or substance use benefits are no more restrictive than the predominant financial requirements and treatment limitations applied to substantially all medical and surgical benefits covered by the plan.

• States will be required to include contract provisions

requiring compliance with parity standards in all applicable contracts for these Medicaid managed care arrangements, including prepaid inpatient health plans

• r prepaid ambulatory health plans.

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Mental Health Parity