Final Medicaid Managed Care Rule, Transparency Requirements for Commercial Insurance Carriers and two Georgia Waiver Approvals Announced
Over the past few weeks, two anticipated final rules were released by the Department of Health and Human Services (HHS) and accompanying agencies. The first was the Medicaid and Children’s Health Insurance Program (CHIP) Managed Care final rule, and the second was the Transparency in Coverage rule applicable to commercial insurance carriers. Georgia also received an interesting combination of Section 1115 and 1332 State Relief and Empowerment waiver approvals from the Centers for Medicare and Medicaid Services (CMS) that reflect many of the administrative and benefit eligibility flexibilities afforded in recent guidance from the Trump Administration. Included below are a few highlights and notable changes from the final rules and waiver approval announcements that are most applicable to state policy makers and consumers.
Medicaid Managed Care Rule
On November 9, 2020, CMS released the Medicaid and CHIP Managed Care Final Rule. Compliance with the specific rule provisions begins December 14, 2020 and will be phased in until July 1, 2021. In conjunction with the rule, CMS released a fact sheet that breaks down the rule into the following topics, outlining the main changes for each topic:
- Setting Actuarially Sound Capitation Rates
- Pass-Through Payments
- State-Directed Payments
- Network Adequacy Standards
- Risk Sharing Mechanisms
- Quality Rating Systems
- Appeals and Grievances
- Requirements for Beneficiary Information
One large change from previously enacted managed care standards, applicable to both Medicaid and CHIP programs, is that the 2020 rule removes the requirement that states set time and distance standards for determining network adequacy. Per CMS, this change was contemplated because some states have found that these time and distance standards do not accurately reflect provider availability. For example, rural parts of a state may rely heavily on telehealth and for those areas, a provider-to-enrollee ratio is the more accurate adequacy standard. For reasons like this, CMS is allowing states to shift to a quantitative standard that could include a minimum provider-to-enrollee ratio; maximum travel time or distance to providers; a minimum percentage of contracted providers with open panels; maximum wait times and hours of operations; or any combination of the stated standards. (States are permitted to keep time and distance standards if they currently utilize that method.) This change will not only allow a review of what providers are available, but also reflect the actual availability of and true consumer access to providers, which is often not captured by pure drive time or distance standards. The update also reflects the more holistic approach states have adopted, as well as the standards outlined in the National Association of Insurance Commissioners Health Benefit Plan Network Access and Adequacy Model Act for commercial insurance carriers to ensure network adequacy.
Another policy shift included in the final rule changes the way pass-through payments are made for states transitioning Medicaid populations or services from fee-for service (FFS) to a managed care delivery model. This change will allow states to make pass-through payments for up to three years at an amount equal to or less than their current upper payment limit as they move from FFS to managed care. This will apply to rating periods beginning on or after July 1, 2021.
Transparency in Coverage Rule
On October 29, 2020, the final Transparency in Coverage rule was released by HHS in conjunction with Departments of Treasury and Labor and the Internal Revenue Service (the Departments). Although many of these changes were previewed in the draft rule, the final rule’s stated goals are to provide greater accessibility to healthcare price information and plan comparison tools. The rule applies to health issuers in the individual and group markets and requires disclosure of cost sharing information, including in-network provider rates, historical out-of-network allowed amounts vs. billed charges, and prescription drug (RX) negotiated rates.
Some key deadlines and reporting requirements include:
- By January 1, 2023: A list of 500 services (included in the final rule as Table 1) must be posted online via a self-service tool for plan years that begin on or after January 1, 2023.
- By January 1, 2024: The rest of the services as defined by the Departments must be loaded into the tool for plan years that begin on or after January 1, 2023.
- Three separate machine-readable files must be made available to the public, which include:
- Negotiated rates for all covered items and services between the plan/issuer and in-network providers
- Historical payments to and billed charges from out-of-network providers
- In-network negotiated rates and historical net prices for all covered RX drugs by plan or issuer at pharmacy location level.
In the final rule, it is noted that 90% of health plans already offer some sort of price comparison tool, but without a federal directive all consumers do not have access to similar levels of cost transparency.
Georgia Waiver Approvals
The state of Georgia was granted two waivers just before the election: a Section 1115 Medicaid Waiver and a Section 1332 State Relief and Empowerment Waiver (Section 1332 waiver). Both waivers include flexibility and eligibility standards afforded under the current administration that are likely not to align with the priorities of the incoming administration.
Section 1115 Waiver
Georgia’s Section 1115 Waiver includes a limited Medicaid expansion for just those individuals with incomes up to 100 percent of the Federal Poverty Level (FPL). To be eligible, the individuals must also meet work requirements (80 hours of qualifying activities unless they qualify for a reasonable accommodation). The waiver also includes authority to charge a premium to those between 50 percent and 95 percent FPL as a condition of eligibility. Additionally, the covered population will be charged copayments consistent with the state plan and federal rules. Lastly, this waiver granted the state approval to end hospital presumptive eligibility and retroactive eligibility for the waiver population. The waiver was approved on October 15, 2020 and will be implemented on July 1, 2021.
The state requested the enhanced federal match (FMAP) since the population of 100 percent FPL to 133 percent FPL would be able to seek coverage via the state’s Section 1332 Waiver (see below)[1], but that request was denied.
Section 1332 Waiver
Georgia also received approval of a Section 1332 Waiver on November 1, 2020—the sixteenth Section 1332 Waiver approved nationwide. The approval allows the state to establish a state-based reinsurance program and use pass-through funding to support the program. The program will go into effect in 2022, and, like most of the fifteen other reinsurance waivers that came before it, Georgia’s program is an attachment point model reinsurance program. Insurers will be reimbursed at an average of 27 percent of claims between $20,000 and $500,000. The coinsurance percentage will vary based on the relative health care costs in each area of the state.
Georgia’s waiver approval will also allow the state to move forward with a Phase Two, under which it will eliminate the Health Insurance Marketplace in the state and allow certain non-Qualified Health Plans (QHPs) to be sold side-by-side with QHPs and provide state-based subsidies replacing federal premium tax credits to be used for the non-QHPs. The approval for Phase Two, which will go into effect in 2023, makes the Georgia waiver the first comprehensive Affordable Care Act (ACA) waiver to be granted, and could catalyze other states to seek more comprehensive Section 1332 Waivers (as we noted in our fall white paper—though we now know that future submissions will be reviewed under the leadership of a new federal administration).
Furthermore, the future of Georgia’s Section 1332 Waiver remains uncertain; numerous commenters raised concerns that it will result in coverage losses, as well as less comprehensive and affordable coverage—and therefore, fails to meet the statutory Section 1332 Waiver guardrails. As a result, it could be subject to a legal challenge. Likely related to the significant concerns raised about the waiver by commenters, CMS included an unusually lengthy approval letter with the STCs, laying out its thinking and analysis in approving the waiver. Under the terms of the approval, Georgia will face heightened compliance, transparency, and reporting requirements and readiness reviews—relative to the transition away from the Marketplace, operational readiness and guardrail compliance—as compared to states with reinsurance-only waivers. This will include an independent evaluation of the waiver. As noted in our analysis of the 2020 election results’ impact on health policy, the Standard Terms and Conditions also make it harder for the next administration to amend or rescind the waiver.
Footnotes
[1] The enhanced FMAP for the Medicaid expansion under the ACA is only available for states that cover the full expansion population up to 133 percent FPL.
