New Federal Rules Will Improve Medicaid, CHIP Access Across the Country

Enrollees in Medicaid and the Children’s Health Insurance Program (CHIP) will benefit from two rules finalized by the Centers for Medicare & Medicaid Services (CMS) yesterday. The rules — one focused on access to Medicaid fee-for-service care and home- and community-based services (HCBS), the other on Medicaid managed care plans — are complex, but they share a goal that’s easy to grasp: improving access to high-quality care for the 85 million people Medicaid covers.

CMS sets rules for states’ administration of Medicaid and oversees states’ adherence to those rules. The oversight role is particularly important given a 2015 Supreme Court ruling that providers and enrollees can’t take a state Medicaid program to court to enforce federal standards on payment rates for health care providers. (Under federal Medicaid law, payments must be sufficient to attract enough providers so that services are as available to Medicaid beneficiaries as they are to the general population in the area.)

Originally proposed in April 2023, the new rules will take effect on July 9, but states will have up to six years to come into compliance with some requirements; others are effective on July 9 and many are applicable between years two and four. Once the rules are implemented, they will give CMS necessary information to help ensure that Medicaid and CHIP enrollees can access services they are entitled to. The rules are also critical to advancing health equity, as many enrollees come from underserved communities where, due to racism and other forms of discrimination, access to the full range of health care services is often limited.

The rules will:

• Improve access by requiring transparency in setting payment rates. A set of provisions enhance transparency of provider payment rates, giving states, CMS, and stakeholders better information to ensure Medicaid rates meet federal standards for adequacy, as described above. The rules require states to publish and update fee-for-service rates (the payments they make directly to health care providers under Medicaid) and to compare fee-for-service rates for primary care, obstetrical and gynecological (ob/gyn) care, and outpatient mental health and substance use disorder (SUD) services to Medicare rates every two years. The rules also set standards requiring states to consider enrollees’ access to care before reducing or restructuring rates in their fee-for-service programs.

  Also, each year the managed care plans with which states contract to provide Medicaid and CHIP services will have to compare total spending on primary care, ob/gyn, and mental health and SUD services to what Medicare would have paid; states must submit an assurance to CMS that rates meet the state’s requirement for availability of services and post related reports on their public websites. A similar requirement applies to several HCBS services when they are delivered through managed care. If the state or CMS identifies a deficiency in any of these areas, states will be required to implement a remedy plan to improve access.

• Reduce appointment wait times. For managed care enrollees, the rules set maximum wait times of ten business days for mental health and SUD treatment (adult and pediatric) and 15 days for routine primary care (adult and pediatric) and ob/gyn services. They also require each state to set wait-time standards for at least one additional service of their choosing to help ensure network adequacy. The rules include new managed care “secret shopper” surveys to help gauge compliance with wait-time standards and the accuracy of provider directories, as well as annual enrollee satisfaction surveys to assess the impact of these and other requirements; results must be posted on state websites and reported to CMS.
• Enhance access to HCBS. The rules include new standards for states to improve person-centered planning, establish minimum performance standards and reporting requirements, and take other steps to improve HCBS access, beneficiary protections, and quality. The new standards are consistent with prior recommendations from consumer advocacy groups and state oversight entities, among others. The rules also set payment standards for direct care workers to ensure that a minimum of 80 percent of Medicaid payments for HBCS go to worker compensation. And they require states to create an interested parties group to help provide state agencies with feedback about the adequacy of HCBS payment rates.
• Give stakeholders and enrollees a greater voice in guiding Medicaid policy. Each state has long been required to have a “Medical Care Advisory Committee” for its Medicaid program, but these vary significantly in their makeup, impact, and involvement of people with lived experience with the Medicaid program. The rules rename these as “Medicaid Advisory Committees” (MACs) and establish new standards to enhance their impact. For example, at least 25 percent of the MAC must consist of representatives from newly required “Beneficiary Advisory Councils,” which each state must establish to ensure that Medicaid enrollees, their families, and caregivers have a direct opportunity to share their perspectives with the state.
• Increase transparency about managed care quality. The rules establish new website requirements for states to make managed care information more accessible to enrollees. They also establish a new Medicaid and CHIP Quality Rating System: managed care plans will be required to publish standardized information so that enrollees can more easily compare quality, access, and covered benefits when deciding where to get their care.

• Protect the integrity of Medicaid financing. The rules set new reporting requirements for, and limits on, state directed payments (SDPs), which states require managed care plans to make to certain providers regardless of the rates the plan might otherwise negotiate with the providers. SDPs play an important role in promoting health care access and quality by ensuring the stability of safety net providers and other key providers. However, the payments have grown exponentially in recent years and are increasingly financed by complex arrangements designed to secure increased federal Medicaid funding without assurances that the SDP benefits Medicaid enrollees.

  The new rules appropriately seek to maintain fiscal integrity by imposing guardrails to ensure that SDPs are not abused. But for states with existing SDPs or other payment arrangements funded by health care-related tax programs that are not consistent with CMS’s past practice and new rules, CMS will delay enforcement of the new rules to avoid disrupting those arrangements.

The rules also contain other notable provisions. For example, they update the medical loss ratio standards and reporting requirements for managed care plans, which concern the share of their premium revenue that the plans must spend on health care services rather than administrative costs and profits. And they finalize standards for states interested in using managed care “in lieu of services and settings” to address health-related social needs such as medically tailored meals and housing supports.

Once implemented, these rules will improve access to health care services that are supposed to be offered by Medicaid. Along with the recently finalized Medicaid and CHIP eligibility and enrollment rule, the rules are an important step to help eligible people get enrolled, stay enrolled, and access the quality health care services they need.