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Important Overhaul of Medicaid Managed Care Consumer Protections

July 8, 2016

Roughly 1 in 5 Pennsylvanians is currently enrolled in Medicaid. In March 2016, there were 2.7 million Pennsylvanians (including children) enrolled in Medicaid, 80 percent (2.2 million) received coverage through a Medicaid managed care organization (MCO). Managed care organizations are insurance companies who contract with the state to provide Medicaid benefits to eligible persons. On May 6, 2016, the Centers for Medicaid and Medicare Services (CMS) publish its final rule on Medicaid managed care, the first significant update since 2002. States will need to implement the provisions of this 1,425-page rule over the next three years with many provisions slated for July 1, 2017. The rule is designed to align Medicaid managed care and the Children’s Health Insurance Program (CHIP) with qualified health plans through the Health Insurance Marketplace ( and Medicare Advantage plans. The rule also expressly seeks to accomplish three other goals: advancing delivery system reform and improvements in quality of care; strengthening the consumer experience of care and key consumer projections; and improving accountability and transparency. 

There’s a lot of ground to cover in this rule, but it is important to highlight three key components that PHAN will work on in the coming months to enhance potential benefits for consumers. 

Network Adequacy:  Consumers are most concerned about the selection of doctors they have in the plan they choose. Plans are now required to ensure that they have an adequate network of doctors and other care providers (primary, specialty, behavioral health, hospital, pharmacy and dental). This is measured by establishing appropriate distance and travel time requirements that assess how far people must go to receive care. Pennsylvania currently has distance and travel time standards for primary and specialty care, but the final rule now requires states to have plans that must anticipate enrollment, needed services, and the characteristics of enrollees, along with the number and types of providers, the number of providers not accepting new patients, location, and available transportation. Plans must make public explanations of network adequacy and access. We are disappointed that the final rule did not adopt an initial proposal for provider-to-patient ratios. However, the new emphasis on network adequacy helps advocates work with the Commonwealth to potentially expand on its existing rules and consider other ways to ensure an adequate network, such as ratios or wait time limits for appointments.  

Quality Measurement and Improvement: Under the new rule, states will be required to develop a publically accessible rating system for managed care plans, similar to the star system for Medicare Advantage plans. This will go into effect three years from now. As Pennsylvania moves to develop its plan, we will push for a meaningful system that provides consumers with easy-to-understand data about plans and addresses the concerns of consumers and considers consumer-generated evaluations. We hope to find ways to insert the consumer input into this process. 

Plan Information and Enrollment Counseling: The new rule requires plans to provide information publically, such as a member handbook, provider directory, and drug formulary – similar to the Affordable Care Act requirements – in accessible formats in English and other languages prevalent in the state. The move here is to ensure that enrollees and prospective enrollees have what they need to make informed decisions in order to increase the number of active plan selections and changes made by enrollees (as opposed to passive enrollment). Additionally, choice counseling and counseling about managed care must be available to individuals in whatever format they need: in-person, online, or over the phone. While Pennsylvania already has worked hard to ensure these provisions are already in place, we hope the state will review its existing efforts and make additional enhancements to promote consumer access. We will keep updated on these discussions. 

There are other interesting features of the new rule, including the introduction of a medical loss ratio (the amount of money an MCO must spend on care rather than administrative and overhead costs unrelated to care) and an enhanced definition on medical necessity (the rule around what services must be covered). The rule also focuses heavily on rate development and setting, which we know is particularly important. We we have more time to digest these provisions, we will provide further updates. We know though that it is important to concentrate on the things that will most directly impact consumers and their interactions with the Medicaid managed care plans.