CMS Finalizes Major Reforms to Medicaid, Part 1: Medicaid Access Reg - McDermott+Consulting

CMS Finalizes Major Reforms to Medicaid, Part 1: Medicaid Access Reg

CMS Finalizes Major Reforms to Medicaid, Part 1: Medicaid Access Reg

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April 25, 2024 – Earlier this week, the Centers for Medicare & Medicaid Services (CMS) released two final regulations that added new requirements for states when operating their Medicaid programs. Medicaid is currently the largest health insurer in the country, serving 85 million enrollees as of the end of 2023 (although KFF estimates that that enrollment is decreasing because of the Medicaid unwinding process, and that at least 20 million Medicaid enrollees have been disenrolled as of April 18, 2024, based on the most current data from all 50 states and the District of Columbia). Through these regs, CMS aims to make improvements to both Medicaid fee-for-service (FFS) and Medicaid managed care and improve access to care for Medicaid enrollees.

To help me describe the first of these regs, I’m bringing in my colleagues Katie Waldo and Kayla Holgash. We’ll do a deep dive into the other reg, Medicaid Program; Medicaid and Children’s Health Insurance Program (CHIP) Managed Care Access, Finance, and Quality, next week. In the meantime, check out CMS’s fact sheet and chart on effective dates.

The Ensuring Access to Medicaid Services final reg contains several policies focused on home- and community- based services (HCBS). A significant HCBS policy that received the most public comments is the new requirement that at least 80% of Medicaid FFS and managed care payments for homemaker, home health aide and personal care services be spent on compensation for direct care workers as opposed to administrative overhead.

We expected CMS to finalize this proposal, but CMS did make some changes – the most noteworthy of which is a delay of the effective date from four years to six years. CMS also modified and expanded the definition of direct care workers to include clinical supervisors, and updated the definition of compensation relating to benefits for these direct care workers. CMS created a new definition of “excluded costs,” which are costs not included in the state’s calculation of the percentage of Medicaid payment spent on compensation. Excluded costs are “training costs (such as costs for training materials or payment to qualified trainers); travel costs for direct care workers (such as mileage reimbursement or public transportation subsidies); and costs of personal protective equipment for direct care workers.”

The final reg allows states to exclude certain providers and provide some state flexibilities from the requirement. CMS will allow states to set a separate minimum performance level for small providers and create a hardship exemption. CMS also exempts Indian Health Service and Tribal health programs from the 80% pass-through requirement.

Although this provision will become effective six years after the final reg’s effective date, in three years states will be required to report on their readiness to collect data on the percentage of Medicaid payments for homemaker, home health aide, personal care and habilitation services spent on compensation to the direct care workers furnishing these services. Within four years, states must begin reporting to CMS annually on the percentage of total payments for these services (less excluded costs) that is spent on compensation for direct care workers.

Other noteworthy provisions include:

  • Requiring states to:
    • Establish a grievance process for FFS HCBS beneficiaries to submit complaints.
    • Ensure that the person-centered service plan is reviewed and revised at least every 12 months for at least 90% of individuals continuously enrolled in a state’s HCBS programs.
    • Report on waiting lists in “section 1915(c) waiver” programs (HCBS waivers) and on service delivery timeliness for personal care, homemaker, home health aide services and habilitation services.
    • Publish all FFS Medicaid fee schedule payment rates on a publicly available and accessible website. It also requires states to compare their FFS payment rates for primary care, obstetrical and gynecological care, and outpatient mental health and substance use disorder services to Medicare rates and publish the analysis every two years. The reg requires states to publish the average hourly rate paid for personal care, home health aide, homemaker and habilitation services, and publish the disclosure every two years.
  • Establishing a minimum definition of “critical incident” and minimum state performance and reporting requirements for investigation and action related to critical incidents. The reg also requires states to operate and maintain an electronic incident management system.
  • Establishing a Beneficiary Advisory Council that is comprised of individuals with lived experience with the Medicaid program and provides representation on the Medicaid Advisory Committee. Both groups serve as vehicles for bi-directional feedback with the state on matters related to administering the Medicaid program and policy development.

The Ensuring Access to Medicaid Services reg is effective 60 days after publication, but many provisions have effective dates that widely differ from the overarching effective date. CMS also clarifies in the reg that if any provision is held to be invalid or unenforceable by its terms, or stayed pending further state action, that provision is severable from the final reg and does not affect other provisions.

All in all, this is a major reg, and stakeholders should review it carefully to assess the changes and their implications for their business lines. Stay tuned for our analysis of the Medicaid managed care reg!

Until next week, this is Jeffrey (and Katie and Kayla) saying, enjoy reading regs with your eggs!

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