Among provisions that providers hope to see included in the coming rule are national guidelines for the appeals process with Medicaid health plans.


Oct. 23—A so-called mega rule to overhaul federal standards for Medicaid health plans could come days after the midterm election, an industry leader said this week.

Matt Salo, executive director of the National Association of Medicaid Directors, told health insurer executives gathered this week in Washington, D.C., that he expects the Medicaid managed care rule to be issued within a week of the Nov. 6 election.

The proposed rule was sent to the Office of Management and Budget (OMB) in August after having been written by the Centers for Medicare & Medicaid Services (CMS). OMB review is typically the last step before a rule is publicly issued.

Salo told attendees at the Medicaid Health Plans of America conference that he suspected the rule was being held by the White House until after the election due to “purely political perspectives.”

Other industry advisers expected CMS to issue the managed care overhaul by late November or December.

The coming regulations are expected to overrule components of a 2016 managed care rule, issued by the Obama administration, that drew sharp criticism from Medicaid programs as being overbearing and impossible to comply with.

“You need to have a regulatory construct so that CMS understands what states are doing, where the money is going, how it’s being spent,” Salo said in an interview. “But almost universally, our folks went through [the 2016 rule] and said, ‘This is overreach.’”

State Medicaid programs have taken those concerns to CMS, but Salo expects the coming changes to address few of them.

Salo expected the guiding approach of the new managed care regulation to depend on whether changes seek to “enable or prohibit states and plans from finding loopholes somehow, and if it is cracking down on that, they’ll be inclined to go for it.”

The impact of the coming rule would be larger because the use of such plans has increased in recent years.

A total of 65 million Medicaid enrollees, or 81 percent, were in some form of managed care in 2016, according to the Kaiser Family Foundation.

Medicaid spent $171 billion—or half of all Medicaid expenditures—on managed care in FY17, according to a Government Accountability Office report.

Seema Verma, administrator of CMS, touted the coming rule changes for Medicaid plans in an address to the 2018 Medicaid Managed Care Summit, although she provided no details.

“With each of these proposed rules, we have worked closely with states in an unprecedented manner to promote individual choice and local control—leading to better health outcomes for Americans on Medicaid,” Verma said. 

2016 Rule Impact

Medicaid programs were most concerned about the 2016 rule because of its potential impact on the institutions for mental diseases (IMD) exclusion, which prohibits the use of federal funds for mental health and substance use disorder residential treatment facilities larger than 16 beds. The 2016 rule gave some states more options regarding the IMD exclusion but also created new barriers to “IMD workarounds” at the state level, Salo said.

Salo described the IMD exclusion as “one of the biggest barriers to really effective healthcare reform in this country.”

Sara Rosenbaum, JD, a health law and policy professor at George Washington University, doubted the new rule would loosen restrictions on the use of IMDs, citing the concern that doing so would drive large cost increases for the federal government.

In 2015, Congress considered but did not pass legislation to fully lift the IMD exclusion. A Congressional Budget Office estimate concluded the legislation would cost the federal government $40 billion to 60 billion over 10 years.

Other opposition to removing the IMD funding limitation has stemmed from concerns that lifting the ban would allow a return to “warehousing” Medicaid enrollees with serious mental illness, Rosenbaum said.

Hopes and Concerns

Among changes providers hope to see in the coming rule is the implementation of common standards regarding the ability to appeal denied claims.

“The provider needs to feel that he or she has been heard” on appeals of denied charges, Rosenbaum said.

State Medicaid programs are concerned the coming rule could limit state leverage in negotiations with Medicaid plans, Rosenbaum said.

“That’s a step backwards,” Rosenbaum said.

Despite the Trump administration’s repeated pledge to increase flexibility in federal rules for state Medicaid programs, Rosenbaum expected the coming rule to include no flexibilities that could increase federal Medicaid spending.

“The only flexibilities that will be allowed are ‘flexibilities’ where the bottom line is that the federal government will pay out less,” Rosenbaum.

The effect of such continuing limitations would restrict states from developing new types of partnerships with Medicaid plans, she said. 

Another concern is that the rule will be too rigid and “calcified,” Salo said, to allow Medicaid insurers and providers to effectively address newer opportunities, like the increasing focus on social determinants of health.

“If you’re a plan and you are trying to figure out how to provide targeted housing or nutrition services or strategies to address social isolation without running afoul of the medical-loss ratio—there are real dangers in an over-regulatory approach,” Salo said. “This is really, really hard because the 50 states are very different, the populations they serve are different, and we’re all evolving.”


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Wednesday, October 24, 2018