“Rolling Back” the Medicaid Access Rule: Don’t Ask, Don’t Know

Last November, the CMS Administrator, Seema Verma, promised the National Association of Medicaid Directors she would “rollback” her agency’s regulations on access to care and managed care.

It was clear she didn’t like the regulations—she called them “burdensome,” a concern she does not have when it comes to beneficiaries who will be overwhelmed by work documentation requirements under the waivers her agency has been approving. But it wasn’t clear what she meant by “rollback.” Now we know: less transparency, and more flexibility for states to cut provider payment rates.

Let’s start at the beginning.

The federal Medicaid statute requires that payments to providers be “sufficient to enlist enough providers so that care and services are available under [each state’s Medicaid program] at least to the extent that such care and services are available to the general population in the geographic area.”  This requirement, known as the “equal access” rule, was the basis for provider challenges of low Medicaid payment rates in federal courts until the Supreme Court in 2015 decided that providers would no longer be allowed to bring such cases to enforce the rule themselves.  Later that year, CMS, which is responsible for ensuring that states comply with the requirements of the Medicaid statute, including the “equal access” provision, issued the final access regulation, effective January 4, 2016.

The basic point of the access regulation is to give CMS the information needed to determine whether proposed reductions in fee-for-service payment rates would reduce access to care by beneficiaries in that state so as to violate the “equal access” requirement. To that end, the rule requires that states develop and submit to CMS an Access Monitoring Review Plan (AMRP) that specifies the data elements the state will use in assessing beneficiary access to care.  If a state wants to cut its Medicaid fee-for-service payment rates, it has to submit to CMS an access review, conducted “in accordance with” the AMRP, that demonstrates sufficient access to the service that is the target of the cuts to comply with the equal access rule.  If the rate cut is approved, the state must have in place procedures, established in its AMRP, to monitor access for 3 years.  If access deficiencies are identified, remediation “should take place within 12 months.”

While the access rule applies to all services covered by a state’s Medicaid program for which payment is made on a fee-for-service basis, the AMRP must address only the following service categories: primary care services (including those provided by a physician, FQHC, clinic or dental care); physician specialist services (for example, cardiology, urology, radiology); behavioral health services (including mental health and substance use disorder); pre- and post-natal obstetric services (including labor and delivery); and home health services.  If a state wants to cut payments to providers of other services, an analysis of access to those services must also be included.  The AMRPs must be updated at least once every 3 years. The AMRPs for the first submission period (October 1, 2016) for all states except Tennessee, which does not pay for any services on a fee-for-service basis, are posted on the CMS website.

Shortly after the CMS Administrator spoke to NAMD, her agency issued a letter to State Medicaid Directors announcing “a wholesale review of the regulatory access to care requirements” along with “flexibilities available to us prior to finalizing new regulations.” Last week, CMS formally proposed to change the access regulation.  The proposal is open for comment until May 22.  It would make two major changes.

First, it would exempt any state with 85% or more of its Medicaid beneficiaries enrolled in managed care organizations (MCOs) from the requirement to develop and submit an AMRP.  These states could also seek CMS approval for cuts in fee-for-service provider payments without obtaining input from affected beneficiaries or providers in advance and without submitting an analysis informed by the AMRP of the effect on access. If these states implemented payment cuts they would not be required to monitor the effect of those cuts on access on access. These states would be required to submit to an “alternative analysis and certification of compliance with the statutory “equal access” requirements, but only if they are proposing rate cuts “in circumstances that may diminish access.”  The determination of those “circumstances,” and the content of the “alternative analysis,” would be at the discretion of the state.

These changes would make it far more difficult for CMS to determine whether an exempt state is in compliance with the statutory “equal access” requirement if it proposes cuts in fee-for-service payment rates, including rates for those services “carved out” of MCO contracts.  It would also make it far more difficult for beneficiaries and providers to know about rate cuts before they are implemented or to comment on their implications for access. As of July 1, 2017, 18 state Medicaid programs had at least 85% of beneficiaries enrolled in MCOs: AZ, DC, FL, HI, IA, KS, KY, LA, MD, NE, NJ, NM, OH, OR, RI, TN, TX, and WA. The proposed blanket exemption would mean far less transparency into the accessibility of services for beneficiaries not enrolled in MCOs in these states, including the elderly and individuals with disabilities.

The other major proposed change affects states not exempt because of high MCO enrollment.  These states would have to develop and periodically update an AMRP, but they would be exempt from a number of requirements if their payment cuts to fee-for-service providers do not exceed 4 percent in a state fiscal year or 6 percent over two consecutive state fiscal years.  States meeting these thresholds would no longer have to (1) follow a public process to obtain beneficiary and provider input on the effect of proposed cuts on access, (2) use the AMRP to inform their analysis of the effect of the proposed cuts on access, or (3) monitor access to care for 3 years after the implementation of a cut.  Instead, the state would merely be required to submit an “alternative analysis and supporting data,” determined at the discretion of the state, to support compliance with the statutory “equal access” provision.

In short, the proposal would create a “safe harbor” for fee-for-service payment cuts of 4% a year (6% over two years, 12% over four, etc.), regardless of whether the payment rates being cut are already too low and access is already compromised as a result.  If adopted by CMS in a final revision of the access rule, this new “safe harbor” would be a go-to policy option for non-exempt states looking for ways to reduce Medicaid spending.  (States with MCO enrollment of 85% or more would not be limited to cuts of 4% per year or 6% over two years in order to qualify for their exemption).

So now we know what the Administrator means by “rollback” of the access rule:  reduce transparency about access in fee-for-service Medicaid, and make it easier for states to cut provider payment rates in fee-for-service.   The effect of reduced transparency is that CMS will have less information to determine whether a state is in compliance with the statutory “equal access” requirement, both in the case of states with high MCO enrollment and states that cut their provider rates by up to 4% a year (or 6% over 2 years).  CMS will no longer have the benefit of the data in the AMRP or the input from providers and beneficiaries on proposed rate cuts received during the public process.  The underlying philosophy seems to be “don’t ask, don’t know.”  The federal courts will no longer hear provider challenges to low payment rates, and now CMS no longer wants information on the effect of payment cuts so that it can do its job.  This is an odd way for the Administrator to solve the “problems with access” that, she said in her speech to NAMD, Medicaid has faced “for decades.”

If “rollback” means the same for the current CMS managed care regulation as it does for the access regulation, the consequences for beneficiary access to care could be even more problematic.  That regulation contains a number of transparency and other provisions designed to protect MCO enrollees from arrangements (e.g., skinny provider networks) and care management techniques (e.g., overly tight prior authorization controls) that reduce access to services.  Dismantling those protections would put children and families—the large majority of whom are enrolled in MCOs—at great risk.

Andy Schneider is a Research Professor at the Georgetown University McCourt School of Public Policy.