Print PDF


What Health Care Providers Need to Know Today About Newly-Proposed Medicaid Managed Care Regulation
June 5, 2015

Every health care provider that treats managed Medicaid patients would be impacted financially and operationally under sweeping changes to Medicaid managed care proposed by the Centers for Medicare & Medicaid Services (CMS) on May 26, 2015. This is the first major update to Medicaid managed care in 42 C.F.R. Part 438 in over a decade. The aims to align Medicaid managed care with Medicare Advantage and private market policies, bolster state delivery reforms, impose new quality ratings, set up best practices. The proposed rule directly impacts Managed Care Organizations (MCOs), Prepaid Inpatient Health Plans (PIHPs), Prepaid Ambulatory Health Plans (PAHPs), and Primary Care Case Managers (PCCMs). We have highlighted important issues in the proposed rules affecting healthcare providers here and posted a redline of the proposed changes to the current 42 C.F.R. Part 438 here.

Our impression of this proposed rule is that it fundamentally seeks to increase protections for managed Medicaid enrollees by ensuring greater access to care and directing higher levels of expenditures into such care. However, the proposed also seeks to provide greater protections for managed Medicaid plans by increasing transparency with regard to the establishment of actuarially sound rates determined by states. Beyond those broader principles, it proposes to expand the scope of monitoring by CMS of states, and by states of plans.  Plans would also be expected to incorporate numerous reforms related to program
integrity and quality, many of which would potentially flow down to providers. As a result, providers should be concerned that without more specific instructions to plans, some plans may use these proposed rules to justify imposing more burdensome obligations on providers, which will add to existing and increased state requirements on providers. Unfortunately, the proposed rule does not provide any meaningful assistance to providers in seeking to ensure more appropriate and timely payment from plans. Finally, the proposed rule seeks to adopt a slew of new provisions involving health plan payment and delivery of Long Term Supports and Services (LTSS) based on the increased prevalence of Medicaid managed care coverage of these services.

This alert addresses the following highlights:

  • The integration of managed long term supports and services;
  • The "sidestep" of the IMD exclusion;
  • Proposed network adequacy/accessibility standards;
  • Proposed state enrollment of all managed Medicaid providers;
  • Other proposed fraud and abuse provisions;
  • Proposed revisions to appeals and grievances processes; and
  • Propose changes to managed Medicaid coverage of outpatient drugs

For additional information, please contact Mark E. Reagan or Felicia Y Sze in San Francisco at (415) 875-8500; Hope R. Levy-Biehl, Nina Adatia Marsden or Yanyan Zhou in Los Angeles at (310) 551-8111; Joseph R. LaMagna in San Diego at (619) 744-7300 or Keith Fontenot in Washington, D.C. at (202) 580-7706.

For media assistance, please contact Maura Fisher at 202-580-7714.