NOVEMBER MEDICAID NEWS RECAP

Syrtis Solutions distributes a monthly Medicaid news summary to help you stay informed. The monthly summary concentrates on developments, analysis, and legislation that relates to Medicaid integrity, cost avoidance, coordination of benefits, third party liability, improper payments, fraud, waste, and abuse. Below is a summary of last month's noteworthy Medicaid news.

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MEDICAID MANAGED CARE FINAL RULE

Medicaid's Managed Care Final Rule, CMS-2408-F, was finalized in November. The new rule implements recommendations from the Notice of Proposed Rule Making from last November. Provisions from the policy will begin taking effect as early as December 14, 2020.

According to Medicaid enrollment data from 2018, 66 million people are enrolled in managed care, making managed care arrangements the primary delivery system for Medicaid benefits. To assist these programs, the rule cuts back administrative burdens on Medicaid managed care plans and provides states more flexibility to determine capitation rates and appropriate payment rates.

These regulations were last finalized by the Obama administration in 2016. Shortly after the Trump administration transitioned into office it started a "full review of managed care regulations to prioritize beneficiary outcomes and state priorities." The administration sent letters to state governors for input on how to more effectively manage the Medicaid program and improve health outcomes.

In response, states pointed out that the 2016 regulations added cost and additional administrative burdens to Medicaid programs. With the support of state Medicaid directors and the National Association of Medicaid Directors (NAMD), CMS determined the problematic areas from the 2016 regulations. In the Notice of Proposed Rule Making in 2018, the group proposed methods to improve federal oversight, state flexibility, beneficiary protections, fiscal integrity, and the delivery of quality care.

According to CMS, "This rule finalizes many of those proposals and helps ensure that state Medicaid and CHIP agencies are able to work efficiently and effectively to design, develop, and implement Medicaid and CHIP managed care programs that best meet each state's local needs and populations."

CMS-2408-F makes changes in the following managed care regulations: setting actuarily sound capitation rates, pass-through payments, state-directed payments, network adequacy standards, risk-sharing mechanisms, quality rating system appeals and grievances, and requirements for beneficiary information.

That being said, the new rule does not fully revise the 2016 regulations. The most notable revisions appear in capitation rates and payments, network adequacy standards, requirements for beneficiary information, and quality ratings and oversight.

Capitation Rates and Payments-
States are authorized to set capitation rate cell ranges as opposed to a single rate per cell. States are restricted from changing capitation rates based upon the amount of federal aid for a population that would raise federal costs. States cannot add or adjust risk-sharing mechanisms after the beginning of a rating period. The rule establishes two minimum fee schedules for directed payment arrangements from plans to providers. States transitioning a population from FFS to managed care are authorized to make supplemental pass-through payments for up to 3 years.

Network Adequacy Standards-
States are no longer obligated to create and enforce enrollee travel time and distance standards. Alternatively, states can set a quantitative adequacy standard.

Requirements for Beneficiary Information- 
Mandated taglines are only necessary for materials that are critical to receiving services instead of all written materials. Provider directories are to be updated quarterly rather than month-to-month. Managed care plans can issue notice of provider terminations to the later of 30 days before the effective date of the termination or 15 days after the receipt or issuance of a termination notice.

Quality Rating System (QRS)-
The rule only requires that states alternative managed care quality rating systems (QRS) secure information comparable to the CMS QRS whenever it is feasible. States can now expand the definition of disability in regard to health disparities within their quality strategy, however, they are not obligated to. On a yearly basis, states must post which plans are exempt from external quality review.

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OCTOBER MEDICAID NEWS RECAP

Syrtis Solutions publishes a monthly Medicaid news summary to help you stay informed. The monthly summary focuses on developments, analysis, and legislation that pertains to Medicaid integrity, cost avoidance, coordination of benefits, third party liability, improper payments, fraud, waste, and abuse. Below is a summary of October's notable Medicaid news.

Read it here. 

MEDICAID ENROLLMENT SPIKED 5.7%

Data from the federal government shows that more than 4 million individuals enrolled in the Medicaid program this spring due to the pandemic driven economic downturn. The 5.7% spike came after the swell in unemployment and the loss of corresponding employer-sponsored healthcare. In response to the Coronavirus and the economic decline, the CARES Act was passed in March. The bill restricted states from disenrolling beneficiaries and scaling back program eligibility during the course of the public health crisis.

Prior to the Coronavirus pandemic, there had been a decline in Medicaid enrollment since 2017. This year's rise in enrollment amounted to over 2.4 million adults and 1.4 million children. By June, CMS determined that 68 million people were enrolled in the Medicaid program, and 6.7 million children enrolled in CHIP.

Even with the considerable flux, healthcare analysts anticipated an even higher Medicaid enrollment rate. However, their predictions were not met since some employees were only temporarily laid off and retained their employer-sponsored coverage. Furthermore, Medicaid enrollment normally trails behind unemployment in an economic decline.

Unfortunately, these temporary furloughs are becoming permanent in many cases. The CBO predicts that in 2021 Medicaid and CHIP enrollment will grow by an additional 9 million people. Their estimate takes into account the stipulations of the CARES Act and the pandemic's economic impact.

Earlier this year, the federal healthcare exchange also experienced additional activity. Compared to 2019, enrollment rose by 46% in the first two quarters of 2020. Almost half a million people who lost health insurance turned to the exchange for coverage. State-run exchanges with special enrollment periods also had higher utilization.

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MEDICAID NEWS SUMMARY - SEPTEMBER 2020

Syrtis Solutions distributes a monthly Medicaid newsletter to help you stay informed. The newsletter focuses on legislation, insights, comments, and industry developments pertaining to Medicaid integrity, cost avoidance, improper payments, fraud, waste, and abuse. Here is a summary of last month's noteworthy stories.

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MEDICAID NEWS RECAP - AUGUST 2020

Syrtis Solutions publishes a monthly Medicaid newsletter to help you stay informed. The newsletter concentrates on legislation, insights, comments, and industry developments pertaining to Medicaid integrity, cost avoidance, improper payments, fraud, waste, and abuse. Here is a summary of last month's noteworthy stories.

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PRESCRIPTION DRUG COSTS LEAD TO CARVE-OUT IN OHIO

Aside from the pandemic driven economic recession and the consequential surge in Medicaid enrollment, rising prescription drug costs in the Medicaid program have caused tremendous fiscal pressure on state budgets throughout the years. In 2017, prescription drugs accounted for 5.1 percent of Medicaid benefit spending, and this expenditure continues to rise. States typically utilize managed care organizations and pharmacy benefit managers (PBMs) to deliver pharmacy benefits and lower prescription drug costs. That being said, a handful of states have opted to carve-out pharmacy benefits and move to fee-for-service (FFS) models. In July, Ohio became the most recent state to shift from its managed care model and released a RFP for a single pharmacy benefit manager (SPBM).

The carve-out approach reduces drug costs by centralizing a state's purchasing power, allowing it to take advantage of the size of its population to negotiate drug prices with pharmaceutical manufacturers directly. Right now, Tennessee, West Virginia, Wisconsin, and Missouri have carved-out their pharmacy benefits. Because of the potential savings from FFS models, some other states are now considering carve-outs and other methods to drive pharmacy costs down.

OHIO RFP FOR SINGLE PHARMACY BENEFIT MANAGER 

Over the last five years, there has been criticism of how Ohio Medicaid PBMs oversee the state's prescription drug program. After complaints of overcharging, double-dipping, anti-competitive practices, and transparency concerns, the state legislature mandated that the state selects a SPBM to manage prescription drugs. In addition, the SPBM would contract with the state directly to increase transparency.

Last month, the Ohio Department of Medicaid (ODM) released a request for proposal to change the agency's managed care program and carve-out pharmacy benefits. Ohio intends to improve and build on administrative efforts that will increase transparency and financial accountability. According to ODM, implementing a SPBM will help the Medicaid program by reducing costs, alleviating administrative burdens, and improving fiscal oversight.

CALIFORNIA Rx CARVE-OUT

California's governor authorized an executive order at the beginning of the year to move all of Medi-Cal's pharmacy benefits from managed care to a FFS model starting January 2021. According to the state, the carve-out is an economical way to negotiate prices and purchase medications. State officials believe that the new model will also standardize drug access for all Medicaid beneficiaries.

The state's FFS move has been controversial, and there are concerns over its possible effect on MCOs, PBMs, pharmacies, and the coordination of care. Critics contend that it will make the coordination of care difficult. While purchasing in bulk directly from manufacturers could drive down costs, it's uncertain how drugs will be dispensed and how local pharmacies will maintain profitability.

MICHIGAN CARVE-OUT TO SINGLE PDL

In October, Michigan's Department of Health and Human Services announced that outpatient prescription drug coverage would no longer be a Michigan Health Plan (MHP) benefit. MHP would change to a FFS model. The state anticipated saving $10 million in general funds under the FFS model through Rx rebates and the elimination of MHP administrative capitation costs.

At that time, healthcare payers and PBMs opposed the decision. They insisted that the move would impair the delivery of whole-person integrated care by increasing out-of-pocket costs, and members wouldn't have the proper overview of their medications.

A couple months later, the state decided against the carve-out and rather decided to implement a single Medicaid preferred drug list while also increasing MHP's dispensing fee to $3 for independent pharmacies.

State budgets are experiencing fiscal pressure from the public health crisis and skyrocketing prescription drug costs. Each year pharmacy spend accounts for a larger portion of state budgets. Because of this, some Medicaid plans are carving-out pharmacy benefits and transitioning to FFS models to lower costs. While this is one approach to save money, states should also look for opportunities to improve efficiency and cost avoid in their Medicaid plans.

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