“Pain & Profit:” How Not to Do Medicaid Managed Care

We know that CMS Administrator Seema Verma doesn’t think Medicaid should cover “able-bodied” adults. But she does believe that coverage of the “society’s most vulnerable citizens” is the right thing for Medicaid to do.  In her major policy address to state Medicaid directors last November, she opened with the stories of Richard, a para-pelagic, and Kristy, who has autism and epilepsy.  For them, she said, “Medicaid is more than a safety net, it’s a lifeline, one that needs to be preserved and protected for those who truly need it.” 

Last week, the Dallas Morning News published “Pain & Profit,” a 5-part investigative report detailing what happens to “society’s most vulnerable citizens” in Medicaid managed care in Texas, and why.  

The Morning News reporters examined two particular cases: that of D’ashon Morris, a foster child born prematurely and dependent on a tracheostomy tube, and that of Heather Powell, almost completely paralyzed from the neck down by a gunshot wound.  The reporters exhaustively documented how, as the result of the utilization management tactics of one Medicaid managed care company, D’ashon is now in a persistent vegetative state, and Ms. Powell at one point considered suicide.  

The reporting raises a host of important questions about the behavior of individual managed care organizations (MCOs), the oversight (or lack thereof) by the state Medicaid agency that contracts with them, and the oversight (or lack thereof) by CMS, which is responsible for the federal government’s 57 percent share of the payments to the MCOs.  Because of something else Administrator Verma told the Medicaid directors in November, I want to focus on the questions about CMS. She promised: “CMS is also going to rollback burdensome regulations that the federal government has imposed on states….we will start this effort beginning with both the managed care and access rules.”

Administrator Verma has already kept her promise on the 2015 Access Rule.  In March, CMS proposed changes to the Access Rule that would effectively gut its protections for beneficiaries in fee-for-service Medicaid. For bonus points, it would also make the process of cutting payments to providers who serve them less transparent

To date, CMS has not formally proposed changes to the 2016 Managed Care Rule, so we don’t know exactly how Administrator Verma plans to roll it back, although her proposal to gut the Access Rule is not a good sign.  She did tell the Medicaid directors that CMS “would focus on modifying regulations that dictate processes but don’t meaningfully contribute to improving outcomes to beneficiaries.”

Here’s a suggestion as to how CMS could improve outcomes for beneficiaries in a meaningful way.  The 2016 Managed Care Rule is still being implemented; the third of four-year phase-in begins on July 1.  Instead of rolling it back, how about rolling it forward by enforcing the requirements designed to protect truly vulnerable enrollees like D’ashon and Ms. Powell?   

For example, the Morning News reporters documented how the provider networks of some of the Medicaid MCOs were not only inadequate, but “sham,” leaving beneficiaries without access to critically needed services.  Let’s set aside for now the question as to whether telling the state Medicaid agency that you had an adequate network when in fact you did not is a violation of the Federal (or State) False Claims Act.  Instead, let’s focus on the current Managed Care Rule, which requires MCOs to have adequate provider networks.  

The compliance date for this requirement starts this coming July 1.   CMS should be enforcing this and other access protections for managed care enrollees, not rolling them back or allowing states to further delay compliance, as CMS did for the requirements scheduled to take effect last July 1.  

Are D’ashon and Ms. Powell just one-offs?  Is the Texas Medicaid agency an outlier among states in its “Look Ma, No Hands” approach to oversight? Or are these the canaries in the Medicaid managed care mine in Texas and other states?  

For children and families, this is a hugely important question. Over two-thirds of the 37 million children enrolled in Medicaid nationally are enrolled in MCOs.  As the “Pain & Profit” series demonstrates, if MCOs don’t properly manage care for their enrollees, Medicaid beneficiaries will not get access to the services they need, with potentially gut-wrenching results.

You won’t find the answer to this question in the new CMS Medicaid Scorecard, which misses the mark entirely on this question.  The Scorecard does not provide any data on MCO compliance with access requirements or MCO-specific patient outcomes, much less information on the performance of state Medicaid agencies in overseeing MCOs.   

What CMS does in response to the “Pain & Profit” series will speak volumes about whether Administrator Verma is serious about “meaningfully contribut[ing] to improving outcomes for beneficiaries,” especially “those who truly need” Medicaid.  If CMS proposes to “rollback” the current Managed Care Rule protections, we will know all that we need to know.

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