Medicaid Payment and Reimbursement

Seeking to improve healthcare for Medicaid beneficiaries, CMS issues a flurry of regulations

One of the rules aims to shore up home- and community-based services, while another has implications for hold-harmless tax arrangements.

May 1, 2024 3:36 pm

CMS over the last month published a trio of final rules intended to make the Medicaid program work better for beneficiaries, with implications for healthcare providers.

The three rules address eligibility and enrollment, access and Medicaid managed care.

Streamlining eligibility and enrollment

The first rule addresses administrative barriers in an effort to simplify enrollment processes and reduce coverage disruptions.

Medicaid eligibility no longer will require a prospective beneficiary to apply for other benefits, and projected medical expenses can factor into eligibility criteria related to income. Examples of such expenses include home- and community-based services that are included in a plan of care, as well as prescribed drugs for treating chronic conditions.

A state’s Medicaid, Children’s Health Insurance and Basic Health programs no longer can require individuals to sit for in-person interviews if their eligibility is based on age, blindness or disability.

Amid the ongoing redetermination of eligibility for millions of Medicaid enrollees following the end of the COVID-19 public health emergency, the rule also takes steps to protect coverage.

Before terminating a beneficiary’s coverage, for example, states must allow at least 30 days for the beneficiary to return the documentation needed to renew coverage. For beneficiaries who are 65 or older, are blind or have a disability, the period is 90 days, and those beneficiaries must have the option to renew by phone, mail, online or in person.

Enrollment also cannot be terminated unless a state Medicaid agency first checks specified categories of available data that could establish presumptive eligibility for beneficiaries who cannot be reached by mail.

Bolstering access to care

Another rule is intended to improve healthcare access in the Medicaid program. Among many other provisions of note, providers may face greater scrutiny of home- and community-based services (HCBS) as part of new requirements pertaining to medical-loss ratio (MLR).

By 2030, as part of an effort to ensure an adequate supply of direct-care workers, states must ensure that at least 80% of Medicaid HCBS payments in both fee-for-service (FFS) and managed care is used to compensate those workers (instead of going to providers’ administrative overhead or profit). The six-year window is an increase of two years from the proposed rule. In another change from the proposed rule, clinical supervisors will be counted as direct-care workers.

State tracking of compensation for direct-care workers as a share of Medicaid payments must begin by 2028 even though the 80% requirement does not kick in until two years later. Compensation can include overtime pay, paid time off and all categories of benefits, CMS clarified, but not costs for training, travel or personal protective equipment.

States can set up a transparent system of hardship exemptions to the MLR requirements for providers facing extraordinary circumstances and also can adjust standards for smaller providers.

In response to concerns about variation in Medicaid payment rates, states will have to publish all FFS rates on a publicly accessible website starting July 1, 2026. The published rates must be formatted to be comprehendible to the general public, including for the various components of a bundled payment. Variability must be accounted for by provider type, population (e.g., pediatric and adult) and geography.

A biannual analysis of differences between Medicare and Medicaid rates also must be published for primary care, OB-GYN services and outpatient mental health and substance-use disorder (SUD) services.

Fortifying Medicaid MCOs

A third rule was drafted to address access, financing and quality among Medicaid managed care organizations (MCOs).

For state-directed payments through MCOs, the new rule limits payments to the state’s average commercial rate for inpatient and outpatient hospital services, nursing facility services and professional services at an academic medical center.

The new rule also eventually requires that each provider receiving a state-directed payment attest that it does not participate in a hold-harmless tax arrangement.

The clause apparently is meant to prevent scenarios in which provider taxes are used to increase Medicaid provider payments. “In these arrangements, providers appear to have prearranged agreements to redistribute Medicaid payments … from the providers that furnish relatively higher percentages of Medicaid-covered services toward providers that provide lower percentages of, or even no, Medicaid-covered services, with the effect of ensuring that taxpaying providers are held harmless for all or a portion of their cost of the healthcare-related tax,” CMS explained in an April 22 bulletin.

Notably, in that bulletin CMS wrote that enforcement discretion of the hold-harmless policy will be in place until at least 2028 for all currently existing arrangements.

The rule establishes stepped-up oversight of plans’ adherence to appointment wait-time standards for “routine” outpatient mental health and SUD services (10 business days), primary care (15) and OB-GYN services (15). States must contract with independent entities to conduct annual secret-shopper surveys that gauge MCO adherence to wait-time standards and the accuracy of plans’ electronic provider directories, including whether listed providers are accepting new Medicaid enrollees.

Incentive agreements between MCOs and providers must include quality or performance metrics. For MLR purposes, a plan’s reported expenditures related to quality improvement activities no longer can include indirect expenses and overhead (similar to guidelines for Affordable Care Act marketplace plans).


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