Medicaid has recently released a Final Rule (Federal Register, Vol. 81, No. 88) for Medicaid Managed Care.
By definition,
Managed Care is a health care delivery
system organized to manage cost, utilization, and quality. Medicaid Managed Care
provides for the delivery of Medicaid health benefits and additional services
through contracted arrangements between state Medicaid agencies and Managed Care
Organizations (MCOs) that accept a set per member per month (capitation)
payment for these services.
When States agree to accept funding for Medicaid from the
Federal Government, part of the agreement is to determine the type of delivery
system in which beneficiaries will receive care. Historically, this was
fee-for-service (FFS). However, FFS delivery systems encourage volume
billing – i.e. every service a physician performs when a client is in his
care is reimbursed at a 1-to-1 rate, thus financially encouraging behaviors
that lead to performing non-necessary services. This type of delivery model
places the burden of risk on the payer – in this case, you and I as taxpayers.
However, Managed Care models typically use a reimbursement
rate that shifts the risk from us to the physicians (or hospitals, networks,
etc.,). Capitation payments, typically function (there are caveats to
everything, bear with me) as a means to pay a provider a set amount per
patient, regardless of the number of services the physician performs. For
instance, a physician may receive $180 for every client in his care, every
month, regardless of services rendered to those clients. The idea is some
healthy patients may not utilize $180 worth of services whereas; some patients
may utilize more than $180 worth of services. There are a series of checks and
balances here that need constant monitoring to ensure patients are not
underserved and physicians are not underpaid.
In 2013, there were 45.9 million Medicaid beneficiaries (73.5%) receiving care through a Managed Care model. Additionally, (in 2015), some 2.7 million children (73%) also received services through Managed Care models. To provide some perspective, the U. S. population in 2015 was approximately 320 million, so roughly 15% of all U. S. residents were in a Medicaid Managed Care setting.
Medicaid’s Final Rule was written to:
- Reform the Managed Care Delivery Systems
- Improve Quality of Care
- Improve the Beneficiary Experience
- Increase Accountability and Transparency
- Reduce Fragmentation of Care
Key components that were addressed in the rule making were:
- Payments for IMDs
- Addressing In-lieu of Services
- Modernization of typically antiquated systems – Digital handbooks for clients, new rules on network adequacy management, etc.,
- Coordination between Long-Term Services and Supports with Primary Care
- Rules outlining clarity and transparency in rate setting
- Including providing data that contains better encounter data
- And the flexibility to minutely adjust rates without a new actuarial certification annually
- Provides new parameters for the CHIP program that were historically lacking. These parameters bring the CHIP program more in line with the provisions that administer traditional Medicaid MCOs.
This final rule is a great first step at clearing away the
fog that has existed for years surrounding Medicaid Federal Regulations. Items
like ‘in-lieu of services’ and ‘IMDs’ were traditionally reinforced through
flimsy policy papers, or State Medicaid Directors Letters, or even worse,
internal CMS emails from division heads. The rules seemed to be applied with
little or no consistency, and varied on a State-by-State basis. Now, some
topics that were a source of past administrative tension between Federal and
State agencies can be relieved with clearly defined guidance. States will
continue to try and shift away from FFS models into Managed Care (as they are
easier on the budget), and as more States expand their Medicaid programs, we
can expect to see more and more of the population placed into these delivery
systems.