Medicaid & Children’s Health Insurance Program (CHIP) Managed Care Final Rule - CMS-2408-F

1. Setting Actuarially Sound Capitation Rates

• The rate range provisions with a modification to permit states to move rate cells a de minimis amount (+/- 1 percent) within the 5 percent rate range to address minor program changes during the rating period without the need to submit a revised rate certification. This provision will take effect with rating periods beginning on or after July 1, 2021.
• The provisions specifying that differences in the assumptions, methodologies, or factors used to develop capitation rates for covered populations must be based on valid rate development standards that represent actual cost differences in providing covered services to the covered populations and that any differences in the assumptions, methodologies, or factors used must not vary with the rate of federal financial participation associated with the covered populations in a manner that increases federal costs.

2. Pass-Through Payments

• The provision to permit states transitioning Medicaid populations or services from a fee-for-service delivery system to a managed care delivery system to require managed care plans to make pass-through payments for up to 3-years at an amount that is less than or equal to the amount of their current upper payment limit payments under fee-for-service. This provision will take effect with rating periods beginning on or after July 1, 2021.

3. State-Directed Payments

• The provision to allow states to require managed care plans to adopt payment models that are based on a state plan approved fee-for-service fee schedule without having to receive written approval from CMS and to provide for the approval of multi-year payment arrangements when specified criteria are met.
• CMS is not finalizing some of the technical changes proposed in the 2018 NPRM based on the diverse range of public comments and continued experience with state directed payments since the NPRM was published. CMS will consider addressing these and other state directed payment policies in a future rulemaking.

4. Network Adequacy Standards

• The provision to remove the requirement for states to set time and distance standards and to add a more flexible requirement that states set a quantitative network adequacy standard as well as remove “other provider types…as determined by CMS” as a provider type subject to state network adequacy standards. CMS is also clarifying that states have the authority to define “specialists” in whatever way they deem most appropriate for their programs.

5. Risk-Sharing Mechanisms

• The provision to explicitly prohibit states from adding or modifying risk-sharing mechanisms described in the managed care contract or rate certification documents after the start of the rating period.

6. Quality Rating System (QRS)

• Provisions that make four changes to the Medicaid and CHIP (MAC) QRS:

1.) To add a requirement that CMS develop, as part of the MAC QRS framework, a minimum set of mandatory performance measures, that will apply equally whether a state chooses to implement the CMS-developed QRS or a state alternative QRS.

2.) To expand the scope of alignment of the MAC QRS and this minimum measure set with the Medicaid Scorecard initiative and other CMS managed care rating systems, as appropriate, such as Medicare Advantage.

3.) To make explicit our intention to take feasibility into consideration when assessing whether an alternative state QRS produces substantially comparable information to that yielded by the CMS-developed QRS.

4.) To make explicit CMS’ intention to consult with states and other stakeholders in developing the MAC QRS including developing the sub-regulatory guidance on the “substantially comparable” standard for alternative QRS.

7. Appeals and Grievances

• The provisions to eliminate the requirement for enrollees to submit a written, signed appeal after an oral appeal is submitted; to change the timeframe for enrollees to request a state fair hearing to no less than 90 calendar days and no greater than 120 calendar days to better align with Medicaid fee-for-service requirements; and to revise the definition of an adverse benefit determination to exclude claims denied solely because they do not meet the definition of a “clean claim” and thus eliminate the requirement for written notices to enrollees.

8. Requirements for Beneficiary Information

• The provisions to delete the definition of large print and adopt “conspicuously-visible font size” as well as the requirement to print taglines on all written materials and instead only require taglines on materials that are critical to obtaining services. We are also finalizing the provision to permit quarterly provider directory updates, if the managed care plan offers a mobile-enabled provider directory. Lastly, we are finalizing the change that requires managed care plans issue notices for provider terminations to the later of 30 calendar days prior to the effective date of the termination or 15 calendar days after the receipt or issuance of a termination notice.

Additional Changes

Coordination of Benefits

• The provision that allows states to determine the most appropriate method for coordination of benefits with the Medicare program for dually eligible enrollees.  States will be will be able to require their managed care plans to enter into a COBA with CMS and participate in the automated claims crossover process directly or, if more appropriate for their program, by using an alternative method by which the state forwards crossover claims it receives from Medicare to the appropriate managed care plan. 

CHIP

• Many of the updates to the Medicaid regulations will also apply to CHIP, including network adequacy standards, medical loss ratio standards, quality rating system and other quality standards, appeals and grievances, and requirements for beneficiary information. CMS is also finalizing CHIP-specific technical and clarifying edits, including for appeals and grievances, sanctions, and program integrity safeguards.