Proposed Changes to Medicaid Managed Care Rule Will Reduce Access to Providers

One year ago, CMS Administrator Seema Verma gave a major policy address to state Medicaid directors in which she promised to “rollback burdensome regulations that the federal government has imposed on states.”

She specifically targeted two, both of which were issued by the prior administration: the Access Rule (November 2015), and the Managed Care Rule (May 2016).   In March of this year, Administrator Verma signed a proposal to gut the Access Rule, which relates to fee-for-service Medicaid.  The public comment period on that proposal has closed, and no final rule has yet been issued.  Earlier this month, she signed a proposal to dilute the managed care rule.  The public comment period is open until January 14, 2019.

Let’s give credit where credit is due (since there have not been all that many opportunities to do so).  The Administrator is proposing—at least for now—to leave most of the Managed Care Rule in place. Among the provisions still standing are those relating to enrollee rights and protections, program integrity, and sanctions for noncompliance with contract requirements.  Given the Administrator’s open antipathy to federal “regulation” of state Medicaid programs, that is remarkable. (The federal government pays over 60 percent of the cost of the program, and one would normally expect the majority partner in a joint venture to set the terms of engagement).  That said, her proposed changes to the Managed Care Rule, viewed in conjunction with her proposed changes to the Access Rule, are hardly benign.

A common thread runs through both proposals: the weakening of access protections for beneficiaries, regardless of whether they are in fee-for-service or managed care Medicaid.  This is entirely consistent with Administrator Verma’s cavalier approach to mounting coverage losses in Arkansas due to the imposition of work requirements.

As she told reporters last week, she is “looking closely” at what happened to over 12,000 beneficiaries who have lost coverage so far — but not so closely that she is willing to call a halt to further disenrollments now projected in Arkansas, much less those projected in Kentucky.

Let’s start with the Access Rule.  The federal Medicaid statute requires that payments to providers be sufficient to attract enough providers “so that care and services are available [to Medicaid beneficiaries] at least to the extent that such care and services are available to the general population in the geographic area.”  The Access Rule implements this “equal access” standard by requiring state Medicaid agencies to submit to CMS an access monitoring review plan (AMRP) for services provided on a fee-for-service basis. The purpose of the AMRP is to use data to determine the accessibility of certain types of services, including primary care, physician specialist, behavioral health, and obstetric services, to Medicaid beneficiaries.  Accessibility depends in part on the availability of providers—no provider, no service—and provider participation is in turn related to the adequacy of reimbursement. Thus, the Access Rule also requires that states consider the data collected through the AMRP to assess the effect on access when proposing a reduction or restructuring of provider payment rates.

Under Administrator Verma’s March proposal, states with enrollment in Medicaid managed care organizations (MCOs) of 85% or more would be exempt from both requirements.  As we noted in our comments on the rule, this would result in 18 states no longer being required to monitor or document access to care by beneficiaries in fee-for-service, with that number likely to grow in the future as more states meet the threshold.  (The proposal sought comment on whether the threshold should be lower, so that even more states would be exempt).

Underlying the March proposal is the unstated premise that Medicaid beneficiaries enrolled in MCOs have access to covered services, and that any access issues for the residual fee-for-service population can be resolved simply by moving them into MCOs, where they will receive access.  Now Administrator Verma is proposing to change the Managed Care Rule in a way that directly attacks that premise by diluting the requirement that MCOs have adequate provider networks. (Her proposal would make other changes not discussed in this blog to give states additional flexibility relating to capitation rates, state quality strategy, grievances and appeals, etc.).

The Managed Care Rule requires that state Medicaid agencies that contract with MCOs ensure that MCO provider networks are adequate to meet the needs of their enrolled beneficiaries.  Specifically, the Rule requires that states develop and post time and distance standards for eight different types of providers, including primary care (adult and pediatric) and specialist (adult and pediatric).  The Rule does not specify a national benchmark (e.g., 30 miles or 30 minutes); instead it allows each state to develop its own standards. The standards may vary from provider type to provider type and, within each provider type, differ by geographic area   As part of the general 3-year phase in the Managed Care Rule, this requirement took effect for contract rating periods starting on or after July 1 of this year, so there has been less than 6 months of operational experience with the current policy.

Ideology, however, does not see the need to wait for evidence; it knows that it is right.  In this spirit, Administrator Verma’s proposal would eliminate the recently-effective requirement for time and distance standards.  Instead, states would be required only to establish a “quantitative network adequacy standard.” This could be a requirement for certain hours of operation, or a maximum wait time for an appointment, or any other metric a state Medicaid agency might want to use.  In addition, states would be allowed to define “specialist” in whatever way they choose. As a result, states could exempt their contracting MCOs from demonstrating adequate access to entire groups of specialists, like cardiologists or oncologists or orthopedic surgeons.

Of course, even under this diluted network adequacy standard, states could still make the choice to hold MCOs accountable to meaningful time and distance standards for all of their primary care practitioners and specialists.  The question is whether states will do so in the face of budget constraints and MCO demands for capitation rates sufficient to support provider networks that meet robust adequacy standards. Why, in the midst of implementation of the current Managed Care Rule, is the CMS Administrator even asking this question?  Given her stunning silence on the Dallas Morning News series on the real-life consequences of “sham” provider networks, there is little doubt about her answer.  

The proposed changes to both Rules, if adopted, will put beneficiaries—and especially children—at risk for inadequate access to care, whether they are in fee-for-service or managed care Medicaid.  Children are at particular risk from the proposed dilution of the network adequacy standard because in most of the states that contract with MCOs (35 of the 39), at least three quarters of all Medicaid children are enrolled in MCOs.  And in those 18 or so states with 85% or more managed care enrollment overall, any children (including high-cost, medically complex children) remaining in fee-for-service, as well as the providers now serving them, would no longer have the procedural protections of the current Access Rule.  

Neither the current Access Rule nor the current Managed Care Rule is perfect.  With some additional operating experience, each Rule could almost certainly be improved to reduce unnecessary burden on states, MCOs, and beneficiaries alike, without jeopardizing, and perhaps even improving, access.  But the changes that Administrator Verma is proposing to each Rule will do nothing to increase provider participation in MCO networks, improve fee-for-service payment rates, or improve access by children or other beneficiaries. It is most unfortunate that in the rhetoric of the CMS Administrator, to “rollback burdensome regulations” has become code for dismantling access protections.  

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