The Centers for Medicare and Medicaid Services (CMS) recently released its proposed Medicaid and CHIP Managed Care Proposed Rule—the first major update to regulations in more than a decade—with public comments due on July 27, 2015. As the former Director of the California Department of Managed Health Care (DMHC) with oversight of the state’s health insurance regulatory and policy operation, I wanted to share five key factors that CMS should consider before agreeing to a final proposal.

1. Align federal and state standards to be as consistent as possible.

States are likely to urge CMS to reduce federal requirements that add to the state’s program costs, and health plan and provider compliance headaches. One overarching concern for health plans, providers, regulators and examiners is conflicting federal and state laws, regulations, contractual provisions and enforcement activities. Those charged with enabling affordable health care chafe at the dollars and manpower crazy-making dueling regulators impose directly and indirectly. Ultimately, none of those conflicting compliance directives, dollars and staff time add value to patient care. Rather, they lead to confusion and place stress on our vital care providers.

To CMS’ credit, the proposed rules increase or clarify state oversight responsibilities, which leaves program management and oversight discretion largely with states. However, CMS significantly increases federal requirements with regard to minimum program and rate-setting standards, and introduces new state obligations. Managed care states are likely to view these new requirements as excessively burdensome and costly. CMS should consider the new requirements’ impact to states specifically around operational readiness reviews and ongoing oversight of managed care plans.

2. CMS’ proposed rules should tread lightly on states with strong oversight and physician-led models of care.
   

In California, which traditionally has had the highest managed care enrollment in the country, there has been a dramatic move of Medi-Cal patients from fee-for-service into managed care models, with health plans delegating and capitating medical groups to arrange for and provide the actual care in the past five years. The delegated model—under which organized groups of physicians accept responsibility for managing the care of HMO enrollees—has arguably been California’s preferred system for delivering health care. Under a delegated, capitated model, a health plan or payer delegates its responsibility to provide delineated care management services in exchange for a fixed, advanced per member per month flat fee.

It is essential that the CMS actively consider how the proposed rules will impact delegated providers operationally and financially, in order to preserve these positive provider relationships with traditionally underserved and diverse enrollees with its modifications to existing rules.

3. Medical loss ratios standards are critical so that patients, not health plan executives and investors, benefit.

Health plan accountability for public-purposed dollars is critical and long overdue. When public funds are being used, it’s crucial that CMS dictate only a certain percentage of money be made available for health services, as opposed to administrative costs and profit.

While the Affordable Care Act requires all commercial health plans and insurers to comply with an 85 percent medical loss ratio (MLR), Medicaid managed care plans are not included in this requirement.

The California Department of Health Care Services (DHCS) imposes the 85 percent MLR rule to all of its plans. But the DMHC has lacked jurisdictional authority to enforce in this area; it can only refer comments to DHCS for follow-up. The reality is that laws not meaningfully enforced are meaningless. Insurance regulators must be given the authority to enforce the MLR standards.

Frankly, the real question should be, “Why do health plans need 15 cents of every health dollar for administrative costs?” Health care dollars, particularly scant Medicaid dollars, must flow adequately to the providers charged with healing the patients.

After regulating California’s physician-led delegated health system, I believe that provider-sponsored, team-based care is the most appropriate model for ensuring the quality and completeness of patient-centered care. For that reason, both the duties and the dollars should flow to the clinician closest to the patient.  Clinicians and providers must gain access to a substantial portion of the health plan dollar that enables the most direct provision of high-quality health care.

4. Access standards must be time-based, be consistent across product lines, be applied to providers and be enforced by state regulators.

States regulatory agencies, such as DMHC, that have robust managed care network standards going beyond traditional geographic standards should not lose their autonomy to enforce the heightened standards. However, in states lacking such stringent access standards, the proposed standards appropriately require states to establish network adequacy standards in Medicaid and CHIP managed care for key types of providers, while leaving states flexibility to set the actual standards. Under the proposed rule, states would need to (among other network certification and update requirements) develop and implement time standards for primary and specialty care providers, as well as network adequacy standards for managed long-term services.

Further, additional standards are needed that relate to a health plan and its provider’s obligation to provide telephone “triage” for patients calling into offices, seeking care. Health plans in California are required to provide or make available telephone triage or screening services 24 hours a day, seven days per week to determine the urgency of an enrollee’s condition. Triage must be performed by qualified health care professionals and, if needed, a call back must be made to an enrollee within 30 minutes. During normal business hours, the telephone wait time for an enrollee to speak with a knowledgeable and competent plan customer service representative must not exceed 10 minutes. Since state insurance regulators do not generally oversee providers, the duty would perhaps be best placed on health plans to conduct “secret shopper” monitoring activities, monitor complaints and correct identified deficiencies.  States should be required to implement some variation of this “triage” requirement to provide true consumer protection.

5. CMS’ proposal appropriately requires Medicaid and CHIP managed care plans to coordinate transition of services between settings of care.

The proposed CMS care coordination standards are accordingly aligned with current California DHCS regulations. California Medi-Cal plans are already required to complete initial Health Risk Assessments (HRAs) within 90 days of enrollment, facilitating transitions of care and providing basic care coordination services. Enrollees with special health care needs and/or using long-term services and supports must receive an assessment and treatment plan that is regularly updated.

However, the “devil is in the details”, since CMS will ultimately define the requirement to “facilitate transition of services between settings of care.” If defined narrowly with a health system, it may be an achievable and critical goal. However, the interfaces between health systems, clinicians and clinics to social supports and behavioral services outside of their health systems are at best ragged, and often completely lacking. To impose this extent of coordination of care out of the care system is laudable but operationally challenged and currently financially unsustainable.

Traditionally, health plans have held the dollars associated to these “warm touch” activities. However, they have been unsuccessful with engaging patients and providing case management/care coordination activities in a timely manner (providing such services to prevent hospitalization, rather than upon discharge). For example, completion rates for health plans’ efforts to complete HRA’s for the Medicaid population trend around 20% to 30%. Once again, it highlights the essential role of the primary care team for patient engagement, versus a health plan.

A recent article in the New York Times entitled, “The Tangle of Coordinated Care,” highlighted the problem of multiple case managers at the health plan, provider and member services level, all contacting a patient separately and sometimes issuing confusing or conflicting guidance. The author notes that there may be “too many cooks in the kitchen, [and] the cooks are not always communicating,” while suggesting that a “dominant care manager” should guide the team. Leading provider systems have always argued that such activities should be done closest to the patient in the provider’s office. In order for health systems to maximize the capitated dollar, they should operationally and financially support an infrastructure that provides for these services to be rendered in a primary care setting.

The proposed regulations, while not perfect, are important proposed protections for our more vulnerable managed care enrollees.

For more information, please contact info@copehealthsolutions.com.