How to Make Proper Payments to Out-of-State Providers for Medicaid Children with Special Health Care Needs

As readers of Say Ahhh! Blog know, Medicaid covers over 35 million children, more than any other health insurer.  And as readers also know, Medicaid does not exclude children with pre-existing conditions. In fact, having a disability is one pathway to Medicaid eligibility for a child. As a result, an estimated 2 million “medically complex” children are enrolled in Medicaid, which offers comprehensive coverage through the EPSDT benefitIn some cases, these children require specialized diagnostic or treatment services that are not available from providers in their state.  

Federal regulations try to ensure access in these circumstances. More specifically, they require that, if a state Medicaid agency, on the basis of medical advice, determines that needed medical services are “more readily available” in another state, the state must pay for services furnished in the other state “to the same extent that it would pay for services furnished within its boundaries…”. The payment to the out-of-state provider is subject to the same federal matching rate as the state receives when it pays an in-state provider, which means that the state pays the same share in either case. As a result, some states have been reluctant to pay out-of-state providers because it means their state’s own matching funds are flowing to another state.  The reluctance can grow as the cost of the specialized out-of-state service increases.

One inadvertent barrier to payment for needed out-of-state services is the requirement that providers be screened before they are enrolled in a state’s Medicaid program.  The purpose of these requirements is to keep bad actors out of Medicaid, thereby reducing the risk of fraud and substandard care for beneficiaries. A number of states have not fully implemented these requirements, leading to high rates of Medicaid improper payments.  At the same time, some states have reportedly been using provider enrollment requirements to create administrative barriers for participation by out-of-state providers.  

A recent blog by Nick Manetto, Joshua Greenberg, and Mathieu Gaulin at Boston Children’s Hospital describes some of these barriers.  Many states, they write, require out-of-state providers to go through the provider screening and enrollment process even though they have been approved and enrolled in their home state Medicaid program and by Medicare.  This redundant enrollment can involve Mickey Mouse techniques like lengthy paper applications processed only via U.S. mail and requests for an individual’s original Social Security card (as occurred in the case of a nationally recognized specialty surgeon).  

These barriers are demonstrably effective at delaying access to medically necessary services. The blog gives the following example:

A child with a significant narrowing of the esophagus required dilation every other week. That intensive procedure involves passing a tube down her throat and into her esophagus. The child was scheduled to travel to Boston Children’s for surgery to fix the problem. But her care was delayed for months because the lead surgeon had to be screened and enrolled in the child’s state first, a requirement that was not explained until days before the patient’s scheduled arrival in Boston. Although the patient eventually had her surgery here, the delay resulted in additional uncomfortable dilations in her home state.”

The basic problem here is that the child and the child’s family is caught in a bureaucratic battle between the child’s Medicaid program and the out-of-state provider.  The child’s need for the specialized service is clear; it has been determined by a physician who has referred the child to a specialized provider who happens to be out-of-state.  The specialist and the hospital are qualified to perform the service, are enrolled in their own state’s Medicaid program, and are willing to accept payment from the child’s state Medicaid program.  The child’s state Medicaid agency is unwilling to pay because the specialist or the hospital are not enrolled in its program, and the child’s state has put in place administrative barriers to enrollment by the out-of-state provider.  This can get even more complicated if the child is enrolled in a Medicaid managed care organization.

The CMS Administrator, Seema Verma, has promised to “rollback” federal regulations like the Access Rule in order to reduce “administrative burden.”  This is really unfortunate.  Rather than using “administrative burden” as a rhetorical smokescreen for enabling cuts in provider payments that will only decrease access to care, Administrator Verma should be working to eliminate actual administrative burdens that create real live barriers to access by children and youth with special health care needs.

The Boston Children’s blog lays out those barriers and makes constructive proposals to reduce them. The Administrator should take a look. As she told the state Medicaid directors last November, Medicaid “is more than a safety net, it’s a lifeline, one that needs to be protected for those who truly need it.” Streamlining out-of-state provider enrollment would be a two-fer: she could reduce unnecessary administrative burden and at the same time improve access to specialized services for those children who “truly” need it.

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