Friday Five – 5 Key Provisions of the CMS Medicaid Managed Care Final Rule

Karen Brach, Managing Director, Sellers Dorsey
LinkedIn: Karen Brach
LinkedIn: Sellers Dorsey

Healthcare professionals and other industry stakeholders are now familiar with CMS’ final rule, “Medicaid Program; Medicaid and Children’s Health Insurance Program (CHIP) Managed Care Access, Finance, and Quality (CMS-2439-F).” They’re also familiar with the rule’s intention — to build stronger managed care programs to better meet the needs of beneficiaries by improving healthcare access and quality.

From reporting and network adequacy to quality rating systems and more, the new rule’s requirements are likely to present challenges for various stakeholders. So, what do managed care organizations (MCOs) need to consider to successfully comply with the various requirements and achieve the goals the final rule sets out to accomplish? Here are 5 critical considerations for MCOs.

1. Reporting requirements — collaboration is key

The final rule’s provisions change a variety of reporting requirements for MCOs and states. Prior to the final rule, there were specific reporting requirements that states established on their own, for example, appointment wait time standards. With those requirements now being established at the federal level, one of the most important considerations for MCOs will be collaborating with state agencies and participating health plans to facilitate consistency in defining various data elements. Collaboration and consistency will ensure an apples-to-apples comparison of data across health plans and states.

Another general consideration is the timing associated with some of the new reporting requirements. For instance, states need to begin reporting on their analysis of provider payment rates in 2026. This is quite aggressive given the amount of work that will be required to ensure reporting is consistent. Both MCOs and states will need additional resources to modify existing reports or create new reports to comply. Similarly, the final rule’s reporting provisions regarding secret shopper surveys, contract term requirements, and requirements to support oversight are also sure to present challenges as creating these reports will be a heavy lift for MCOs.

2. New appointment wait time standards — MCOs need to leverage all resources

The final rule sets maximum appointment wait time standards for certain services, including outpatient mental health and substance use disorder services, adult and pediatric primary care, adult and pediatric obstetrics and gynecology, and one additional service to be defined by the state. Before the final rule, states were able to establish their own appointment wait time standards. While CMS considers these new standards groundbreaking, the ongoing workforce shortages will present challenges for MCOs and providers, especially for specific provider types.

Here, there are exciting opportunities for states and plans to work with community partners, including academic institutions and provider associations to think through what is needed to make some of these healthcare professions more attractive and sustainable for the next generation of healthcare workers. Without a strong workforce, MCOs and providers will find it difficult to comply with the new wait time standards.

MCOs will also need to develop new solutions including remediation support if they encounter negative appointment wait time standard results as these results will be reported by the state to CMS and also on the state’s website.

Leveraging all resources available will also be crucial for MCOs. Resources like telemedicine and non-emergency medical transportation (NEMT) will ensure timely access to critical healthcare services. There is no simple solution, however, engagement across multiple sectors and leveraging all available resources will certainly help.

3. Secret shopper surveys — How to overcome provider network data challenges

The final rule requires states to use independent “secret shoppers” to validate provider networks. There is an opportunity here for collaboration as managed care plans share data on their provider networks with states. However, MCOs recognize that their provider data may have accuracy issues resulting from numerous contributing factors, including, the lack of notification of when provider changes occur, untimely system updates, provider training challenges, and MCO participation awareness.

Additionally, the final rule requires states to receive information on all provider directory data errors identified in secret shopper surveys no later than three business days from identification by the entity conducting the secret shopper survey and that states must then send that data to the applicable managed care plan within three business days of receipt. The timeliness of exchanging information is critical here. To meet these various requirements, MCOs and providers will need to collaborate on preparing for secret shopper phone calls including training on the provision, timely notification of provider changes, and system updates. And this collaboration will require significant investments to make it all happen.

4. In Lieu of Services and Settings (ILOS) — formal definitions and key principles require additional collaboration

LOS allows Medicaid MCOs and states to leverage alternative services without the need for waiver approval. Plans can be more innovative in how they address health-related social needs (HRSN) or non-medical drivers of health such as housing and food insecurity. The services must be medically appropriate, cost-effective, and completely voluntary.

The final rule formalizes previous guidance from CMS which establishes formal definitions and key principles to qualify as an ILOS. MCOs will need to collaborate with states, actuaries, and providers in defining the services that meet these principles, calculating costs and their impact on MCO rates, and codifying these services while ensuring enrollees’ rights are protected.

5. Medicaid and CHIP Quality Rating System (QRS) — The Core Set

The final rule’s provisions regarding Medicaid and CHIP QRS, finalizes 16 measures for the mandatory measure list, which many have been referring to as “The Core Set.” The Core Set includes requirements for states to publicly post QRS data to allow beneficiaries to compare plans and support their decision-making process. Many states already have a mechanism to allow beneficiaries to compare plans and access information about them transparently. We can see this in states like Michigan and Illinois. By standardizing the measures and methodology, much like Medicare, Medicaid beneficiaries across the country will be able to compare plans consistently from plan to plan and state to state.

The release date of the first complete technical resource manual is calendar year 2027. The implementation timeline is aggressive and will require MCOs to work closely with their state partners as these new QRS Core Sets are rolled out. MCOs will need time to implement programs that support these measures as well as establish oversight, monitoring, and reporting.

To sum it up…
Enhanced collaboration, the use of all available resources, and meticulous preparation will be key for MCOs to successfully navigate the final rule. By focusing on these areas, MCOs can ensure compliance while also working to improve healthcare access and quality for Medicaid beneficiaries. As the managed care landscape continues to evolve, collaborative and strategic approaches will be vital for achieving success.

Karen Branch is Managing Director for Sellers Dorsey, a healthcare consulting firm providing strategic advisory services to improve healthcare quality equity, and access for underserved populations.