CMS Finalizes Sweeping Regulations for Medicaid Access, Managed Care, and HCBS

CMS Finalizes Sweeping Regulations for Medicaid Access, Managed Care, and HCBS

The Centers for Medicare & Medicaid Services (CMS) has released two highly anticipated final rules. Together, these rules reshape the federal regulatory landscape for Medicaid and the Children’s Health Insurance Program (CHIP), particularly with respect to standards for ensuring access to care, transparency, and oversight of provider payment rates, creating opportunities for public input (especially for people enrolled in Medicaid), quality measurement, and program accountability. The final rules officially take effect on July 9, 2024, but for most provisions, CMS has defined implementation deadlines that vary from 60 days to six years following this effective date.

The first rule, which focuses on managed care delivery systems, is titled “Managed Care Access, Finance, and Quality” (or the “Managed Care Final Rule”). The second final rule, which focuses on fee-for-service (FFS) delivery systems and program improvements for home and community-based services (HCBS) across delivery systems, is titled “Ensuring Access to Medicaid Services” (or the “Access Final Rule”). Although the two rules largely focus on different delivery systems, they share common goals and themes, with some provisions in each applying across multiple delivery systems. Common themes include:

Increasing transparency for Medicaid and CHIP program data related to provider payments and access to care.
Demonstrating CMS’s continued emphasis on addressing health disparities and advancing health equity.
Aligning standards and approaches across federally regulated health care programs.
Imposing new requirements on states and managed care plans to phase in implementation and provide technical assistance to providers.
Defining new processes for enforcement and dispute resolution between states and CMS.

These final rules represent the most significant changes to federal Medicaid and CHIP regulations since CMS established the existing regulatory framework for managed care in 2016 and will impact more than 85 million people nationwide. Three out of four of these individuals receive covered benefits through managed care plans that contract with the state.

Key provisions in the Managed Care Final Rules include:

Strengthen access to care and access to monitoring requirements in managed care programs by establishing federal minimum standards for appointment wait times for certain services, enhancing state requirements for access monitoring, and requiring states to publish analyses of managed care plans’ aggregate provider payments for certain services. Recognizing the rise of telehealth, CMS also provides new clarity to states and managed care plans about how to account for telehealth when monitoring for timely access and network adequacy.
Codify and revise the federal regulations governing State Directed Payments (SDPs)—through which states can establish parameters for managed care plans’ provider payments—by creating new flexibilities for certain types of SDPs while codifying or strengthening the guardrails around others.
Codify and build on recent CMS policy changes regarding “in lieu of services” (ILOS), a mechanism through which managed care plans can provide alternatives to standard covered services when it is medically appropriate and cost-effective.
Modify Medical Loss Ratio (MLR) methodologies and processes to align more closely with comparable MLR requirements for the commercial health insurance market, increase accuracy of plan reporting for rate-setting purposes, and allow for more consistent comparisons across each plan’s different managed care business lines and from state to state.
Establish a national framework and enhance requirements for managed care quality rating systems (QRS) to increase accountability for plans, assist beneficiaries with plan selection, and make various other changes to the existing provisions governing states’ managed care quality strategies and quality monitoring.

Key provisions in the Access Final Rule include:

Create new transparency and consultation requirements for FFS provider payment rates, including a requirement for states to publish analyses comparing the Medicaid FFS rates for certain services against corresponding Medicare FFS rates, the establishment of an “interested parties’ advisory group” to advise and consult on payment rates for certain HCBS, and significant new procedural requirements for certain types of FFS rate changes.
Modify the procedures for requesting federal approval to reduce or restructure FFS rates, by requiring additional supporting analyses with respect to state plan amendments (SPAs) that, based on a preliminary review, present potential risks to beneficiaries’ access to services.
Strengthen program advisory groups. States must create and support a Medicaid Advisory Committee (MAC) comprising diverse stakeholders, and a Beneficiary Advisory Council (BAC) comprising solely of people with lived experience and reflecting the diverse population in the Medicaid program.
Update HCBS program standards and processes regarding care access, quality, and payment, including:
- A requirement that at least 80% of Medicaid payments for certain home-based services go to compensation for the individual direct care workers who provide these services.
- New standards and reporting requirements related to person-centered service plans, waiting lists, and other access measures.
- A requirement to establish an HCBS grievance system and incident management system in FFS - like what is already required for HCBS delivered through managed care.
- A new regulatory framework requires state reporting of performance measures from the HCBS Quality Measure Set (which has, to date, been voluntary).

Additional information and resources on the Managed Care Access, Finance, and Quality Final Rule are available on CMS’s website here, or you can email questions to [email protected]. Additional information and resources on the final Medicaid Access Final Rule are available on CMS’s website here, or you can email questions to [email protected].