Based on AHLA’s annual Health Law Connections article, this special series brings together thought leaders from across the health law field to discuss the top ten issues of 2024. In the eighth episode, Martie Ross, Consulting Principal, PYA, speaks with Caroline Brown, Partner, Brown & Peisch PLLC, about current proposals that are on the table for Medicaid that may come to fruition in 2024. They discuss how the regulatory process works between CMS and the states and the proposed rules related to quality rating systems, payment adequacy and access, medical loss ratio, network adequacy requirements, and prior authorization. Sponsored by PYA.
Watch the conversation here.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
Based on AHLA’s annual Health Law Connections article, this special series brings together thought leaders from across the health law field to discuss the top ten issues of 2024. In the eighth episode, Martie Ross, Consulting Principal, PYA, speaks with Caroline Brown, Partner, Brown & Peisch PLLC, about current proposals that are on the table for Medicaid that may come to fruition in 2024. They discuss how the regulatory process works between CMS and the states and the proposed rules related to quality rating systems, payment adequacy and access, medical loss ratio, network adequacy requirements, and prior authorization. Sponsored by PYA.
Watch the conversation here.
To learn more about AHLA and the educational resources available to the health law community, visit americanhealthlaw.org.
A HLA is pleased to present this special series highlighting the top 10 health law issues of 2024, where we bring together thought leaders from across the health law field to discuss the major trends and developments of the year. Support for A HLA in this series is provided by PYA, which helps clients find value in the complex challenges related to mergers and acquisitions, clinical integrations, regulatory compliance, business valuations , and fair market value assessments, and tax and assurance. For more information, visit PYA pc.com.
Speaker 2:Well , thanks for joining us for the eighth installment of the A HLA podcast series on top 10 issues for 2024. Um, we're going to discuss some proposed Medicaid regulations. Joining us today is the author of that section of the article, Caroline Brown. Caroline, thank you for being here. Can you introduce yourself, please to our audience?
Speaker 3:Uh, thanks for having me , Marty. Um, I am a partner at Brown and Pi , which is a small law firm in Washington, focused on federally funded , uh, programs that are administered by the states. So Medicaid is obviously the largest of those.
Speaker 2:Caroline, most healthcare attorneys, I think, are familiar with Medicare regulations and how that process works. But I think most of us would admit that Medicaid is more of a mystery, and part of that certainly is the fact that there's 56 Medicaid programs, all 50 states, the territories, district of Columbia. Um, so I wanna take this opportunity and your expertise. Can you just give us an introduction to how this regulatory process works between the Center for Medicaid and the state programs?
Speaker 3:That's a great question, Marty, and it's hard to emphasize how different Medicare and Medicaid are, at least in how they, how different they were at their inception. Um, because Medicaid ultimately is a state run program that the federal government has agreed to fund in part. And , um, and the conditions of that funding are that they adhere to certain , uh, rules and federal rules and regulation. Over time, those rules and regulations have gotten far more complex than they started out as. And so , um, and in many cases , um, there states are, the states are themselves being regulated by the federal government, and they are being asked to regulate providers or their contractors in certain ways. So it's a much more complex process where there's not direct regulation of , um, providers, but rather where the states are being instructed to do certain things in a certain way if they wanna qualify , um, for federal funding. And over time , uh, I think the Centers for Medicare and Medicaid Services has been frustrated by the fact that there are 56 different Medicaid programs and has been trying to , uh, not necessarily to make them more uniform, but to make them easier to compare , um, by having , uh, states do things in certain ways that allows for , um, uh, comparison across state lines.
Speaker 2:Well, o on the Medicare side of the show, we at least have some hope that CMS appreciates that it's in its administration of its regulations. There may be challenges, so that may be somewhat a , a temper on what they do. Is that true on the Medicaid side?
Speaker 3:Um, it's hard to tell, and I think that there is often a lot of frustration at the state level that some of the things that they're being asked to do are extraordinary complex from an operational standpoint. And , um, and there's not a single way to do it. There are many different ways to do it, and , uh, and , uh, uh, it's, it's often very hard to sort of achieve compliance with what the , um, federal government is asking , uh, the states to do and what the states in turn then try to push down to their providers.
Speaker 2:So in the Medicaid space , um, when we talk about the providers and then the payers, in the case of, of managed care entities, is it direct regulation from the centers from Medicaid, or is it the Centers for Medicaid requiring the states to do things and the states in turn require Yes . Their provider ? Oh my
Speaker 3:Goodness. Okay . So one of , so yeah. So one of the things that we see, a , in the, in the, one of the rules that's , um, pending and that I expect is gonna be finalized is a lot more requirements about what the states have to put in their contracts with managed care plans, and then what the states have to do , um, uh, what the states have to do with whatever that information is that they're collecting , um, from , uh, from managed care plans. So one example would be in the, in the new quality structure that CMS is proposing, the quality rating , um, uh, the CMS will be requiring the states to gather a lot of information from the plans on a whole variety of , uh, quality metrics. And that information will be provided to CMS, but hand in hand with that is a requirement that each state develop a website where all this information can be provided and easily accessible to the Medicaid population, and that it , that different data can be looked at according to , um, different demographics and , um, and different , uh, criteria. And so there's the requirement that the states have to push down to the managed care plans in terms of providing and collecting data, but there's also the separate requirement on states that says you're the one who's now responsible for , um, uh, for creating website, where people that people can use , uh, all that quality data to choose the plan , uh, or to, or to evaluate , uh, the plan that they're already in. So it's sort of, it's a , it's, it's kind of a double , uh, a , a double obligation , uh, uh, some on the states themselves and some that then get pushed through to the providers.
Speaker 2:So on this quality rating system , um, and you know, the , again, the familiar world of Medicare is the star rating system for the Medicare Advantage plans. I mean , is it fair to draw comparisons between those two programs and what the centers for Medicaid are now trying to do with the CEEs?
Speaker 3:So I think it's similar, but it's not gonna be the same. Um, it's a , they're , it's a different population. Um, so different , um, uh, metrics are gonna be , um, uh, collected, but also it's a, in many ways it's a more diverse population because Medicaid has , uh, uh, you know, the, the , um, children and families, which , uh, is not a Medicare population. It's the primary insurer for people with disabilities. It's the primary coverage for long-term care, in addition to being sort of a more general healthcare coverage program. And so I think part of the , um, intent with the quality system is to collect information that can be relevant to all of those different , um, populations , um, including those who are duly eligible for Medicare and Medicaid.
Speaker 2:And in that proposed rule , um, certainly I understand the intent is to furnish beneficiaries with information to select a plan, but are there requirements then, back on the states in terms of how they evaluate plan performance on those metrics as well?
Speaker 3:Um, I think they will be expected to use that information, but right now the primary focus is on collecting and sharing that, making it transparent.
Speaker 2:So not like the star rating systems that a adjust , that adjust payments that are made to the plans. This is gonna be more, it's focused on the transparency to the
Speaker 3:Division ? Yes , yes . Got it . Yes, because this, because there, there's no, it's, it's, there's no direct tie to payment rates. That's usually a state decision within the confines of, you know, what's actuarily , um, appropriate to be paying.
Speaker 2:I'm not trying to suggest anything if the center is for Medicaid are listening <laugh> .
Speaker 3:So , but ,
Speaker 2:Um, I was really intrigued by the, the , the description of this new payment adequacy and access provisions, the , the proposed rule around that , um, where it's, it's reporting, certain specified reporting against states have to collect certain data from the managed care entities. This in terms of how much they're spending on certain types of services, and then comparing rates to Medicare, what are the regulators trying to accomplish here?
Speaker 3:So I think this is really a first , um, in , uh, where the , uh, there's a, the general statutory rule in Medicaid is that Medicaid has to pay rules that are efficient and , and economic and sufficient to attract enough providers to serve , uh, the population , uh, uh, comparable to what is available to the population in that geographic area. So very high level sort of , um, uh, requirement for where , where states are supposed to , um, be comparing and comparing it to Medicare , um, is always sort of a , uh, a metric , a metric that's looked at, but it's not really one that evaluates the sufficiency of the rates. And , um, and so , uh, I think this reflects a belief by CMS that the Medicare rates are , um, more or less appropriate, and that they wanna know where state rates are in comparison , um, to those, to the Medicare rates. And it is , um, I think it could be difficult for states to collect and report that information in a way that , um, is consistent with the historic view that , um, states themselves. They can , um, uh, should not publicize what rates are being negotiated between managed care plans and their , um, and their providers. But for certain services, they're being asked to collect them and , uh, report in the aggregate how those rates compare to Medicare. And then for certain long-term services, the states are being asked to collect information and report how those rates compare to what Medicaid would pay on the fee for service side. Um, and , um, uh, I'm not sure whether that's because there's a belief that the managed care rates are lower than what would be paid Medicaid fee for service , or whether there's a belief that the managed care rates are higher than what Medicaid would pay , um, uh, fee for service . But , um, uh, but what was striking in the , um, in the preamble describing these proposals was CM S'S view that this would enable easier comparison across states. Um, which is , uh, uh, that's sort of, that's unusual because really each Medicaid program should stand on its own. Each Medicaid program has its own , um, uh, priorities and its own , uh, uh, population. And , uh, and the comparison across states , um, uh, in some ways could , uh, can be very problematic.
Speaker 2:Yeah . We've learned through hospital price transparency regulations that a rate is not always a rate. And I think that's especially
Speaker 3:True
Speaker 2:In Medicaid .
Speaker 3:Medicaid especially True in Medicaid. Yeah. Yeah.
Speaker 2:'cause you start talking about directed payments and supplemental payments and dish. Does the proposed rule accommodate that and , and provide direction to the states on how to calculate that?
Speaker 3:Um, uh, at a high level it does. Um, but I think that there's gonna be , uh, there's gonna have to be sub-regulatory, assuming that this is finalized more or less in the form that it is, there's gonna have to be sort of subregulatory guidance as to what counts and, and what doesn't for these , um, uh, uh, in, in , in these types of comparisons ,
Speaker 2:Uh , you mean the devil's in the details,
Speaker 3:The devil's in the details, <laugh>
Speaker 2:Being of details. Let's talk about the proposed rule on medical loss ratio. Now, my very basic understanding of NLR is, it's a comparison between how much a plan pays in providing services plus quality initiatives, how that is a percentage of the total amount they receive from the state , um, as payments. And that, that MLR has a target of whatever it is, 85%, 89%, and the like. And this proposed rule is talking about what goes into the calculation of the denominator , um, how much they
Speaker 3:Say numerator and denominator. Denominator , yeah. Yeah.
Speaker 2:What are they trying to do here? What , what's the end game <laugh> ?
Speaker 3:So again, I think this is, it's , uh, uh, uh, kind of a well in Medicaid, the MLR is not a , it's, it's not, states are not required to take a rebate. Um, if, if , um, uh, plans are be below the anticipated MLR, but they do use it, they do have to use it in setting their capitation rates. I think this is a tightening of the MLR , um, where in both the numerator and the denominator and the numerator , um, there's a , uh, in terms of what is paid out to providers , uh, managed care plans can only count incentive payments if they meet certain criteria that are decided upon in advance. And so if a plan finds itself with sort of below its MLR and with extra funds, it can't be distributing those to providers in a sort of non , um, uh, at , in a last minute way <laugh> , um, to bring its MLR up. Um, on the denominator side , um, it is , uh, requiring plans to include , uh, state directed payments and other types of payments that are being made by states to plans that , um, that , uh, may not be considered part of sort of the base capitation payment. And so , um, I, I think it, it , it's being , uh, it's a stricter definition of the MLR and , um, uh, uh, but it does continue to give states the flexibility of deciding whether or not to , uh, require a rebate and if they do require a rebate, where to set that percentage standard.
Speaker 2:Um, another proposed rule on network adequacy requirements for MSCs, I'm gonna grossly simplify this and say it's driven primarily by maximum wait times. So the MCE has to develop an adequate network so that beneficiary wait times for services are not delayed. And, you know, on the provider side of the world, we love network adequacy standards because that's what gives us negotiating authority against the plans , is you have to have us right you to meet the network <inaudible> requirements. You need us, and I'm gonna leverage that as best I can to get a higher rate or other favorable contract terms . But this always comes down to a question of enforcement , um, is what is the remedy if a plan fails to meet network adequacy requirements? And is that merely a matter of contract between the state and the plan? Or is there something built into this overall regulatory scheme that provides some protections to beneficiaries? And in doing so, right , to
Speaker 3:Providers , right ? So there's always been network adequacy requirements. So the state's always had to set net network adequacy requirements, and they can use various things to just to , uh, evaluate how adequate the network is. But the new proposal is, it says you have to have wait times. Um, uh, you can't use a , as, as one measure of network adequacy, and then it sets specific wait times , uh, 10 days for behavioral health providers and 15 days for primary care and , um, OB GYN providers for routine visits. Um, and then this , I I think it , the proposal is that a state has to choose a fourth category and set its own , um, wait times. And then it says, states have to have secrets shopper surveys where , um, uh, where states , uh, send out secret shoppers to see can they get appointments within those , um, wait times, and is the provider who's listed in the provider directory one who's available for , um, Medicaid patients and, and is all the other information in the directory , um, correct. And then if there, if there , um, uh, if there's a failure, there is a requirement, again, it's a requirement on the state , um, to , uh, uh, enter into some sort of corrective action plan with, its, with the managed care plan to try to , um, remedy that , um, uh, solution. And I think , uh, you know, those, those wait times are pretty aggressive there . Um, uh, they are, I think, more aggressive than the wait times in Medicare and , um, and more aggressive than what most people would have in their commercial plans. But you are dealing with a more, you are dealing with a more vulnerable population.
Speaker 2:Speaking of aggressive and less aggressive timelines, let's wrap up with a conversation about the what you, you , um, in the articles referred to as a proposed rule. You know, in fact, it was finalized by CMS about a couple of mid-January , um, which is the prior authorization rule , which, and check me on this, it applies to Medicaid, MCOs, as well as Medicare advantage plans and , um, exchange plans, right? So yes, that group, not commercial payers, darn it, but that group is subject to this rule. And sort of the big headline grabber when that was published was , um, the pri the time period by which a payer has to respond to a request 72 hours for an urgent , uh, request. And then seven business seven , excuse me, seven calendar days.
Speaker 3:Yeah , seven calendar days for the
Speaker 2:Other . Yeah . Yeah . And , and help me under , first of all, before we get to , I understand with emergency services, there are no PA requirements, but what , how do they define urgent in this role ? Or is it, I know,
Speaker 3:I don't think they defined urgent, but I haven't made my way through all 844 pages of the final rule , <laugh> .
Speaker 2:Okay . But I mean , it's ,
Speaker 3:So I was waiting, it , it's not yet in the federal register. It's only available in the large <laugh>,
Speaker 2:Big , big print in
Speaker 3:Very large document. Yes.
Speaker 2:<laugh> can't possibly print it because there's two rims of paper. Right, right. Um , but, but it , it is probably an emergent services. There shouldn't be a PA requirement. Correct. So this is somewhere
Speaker 3:Between , yeah , it's not for , I don't think, no, I don't think it's for emergency
Speaker 2:Services. That may be one of those ,
Speaker 3:Uh , yeah ,
Speaker 2:We know and we see it, right? Uh ,
Speaker 3:Yeah, I mean, I assume, I assume it's as , uh, in some way as determined by the physician who's , uh, or other provider who's seeking that authorization.
Speaker 2:Right. But so my question on these wait times is, for example, the American Medical Association has published , um, proposed model legislation for the states , um, on pa, which would impact commercial payers as well, but they have much, they are advocating for much more aggressive timelines in 72 hours and seven days. A as you understand it, would a state have the authority to, to impose a more stringent requirement?
Speaker 3:Oh, sure. This, this is a , yeah, this is a , this is a , a minimum standard. I think some states already do have more , um, um, stringent , uh, requirements. So this would be, this would be the minimum and it would be standardized across all different , um, types of , um, plans. And the, one of the , um, sort of corollary aspects of the rule and the , the one that didn't get all that headlines, but um, uh, is, is to make all that prior authorization process much more transparent about what is required in order to , um, be authorized and what may or may not be missing from the , uh, request. And , um, and what the decision was and why the decision was made that way. Um, and that's all information that , um, plans and , um, uh, uh, Medicaid fee , certain Medicaid agencies are gonna have to be , um, make available , um, both to providers and to beneficiaries.
Speaker 2:Well, all of this goes into effect by January 1st, 2026. So I know what we're gonna talk about next year, Caroline
Speaker 3:<laugh>.
Speaker 2:So I am enormously much more smart than I was before we started this conversation, so thank you for taking the time. I'm glad we have folks like you monitoring these developments and keeping us on the straight and narrow.
Speaker 3:Thanks so much, Marty. Pleasure to be here.
Speaker 1:Thank you for listening. If you enjoy this episode, be sure to subscribe to a HLA, speaking of health law, wherever you get your podcasts. To learn more about a HLA and the educational resources available to the health law community, visit American health law.org.