Game Changer: Key Reforms Proposed in CMS Medicaid Rule

You’ve got your nose to the grind stone working to meet all the waves of operational changes and requirements related to Medicare, Medicaid, Obamacare, and Health Care Reform – you literally don’t even have time to glance upward to the skies. Understandable. But it can cost you.

July 27th is the CMS deadline for all to submit their comments about the recent Medicaid Rule, which according to Andy Slavitt, Acting Administrator of the Centers for Medicare & Medicaid Services (CMS) is intended to “…better align regulations and best practices to other health insurance programs, …to strengthen federal and state efforts at providing quality, coordinated care to millions of Americans with Medicaid or CHIP insurance coverage.” What does this have to do with me TODAY?

Now is the time to strategize, innovate and transform your plan and benefit design so that your operational platforms can grow as the rule will require you to. Here are two examples from Gorman Health Group’s (GHG’s) Medicaid webinar that took place on Wednesday, June 24, hosted by my colleague, Sunmi Janicek, Vice President of Medicaid and myself.

According to John Gorman’s blog, “You’re Doing it Wrong in Care Management” issued May 18, 2015, you are going to need to modernize your approach in care management into data-driven care coordination “pods” providing a holistic model of care focused on high utilizers and those about to become them. This means you need to recommit to data analytics identifying and directing the work of care managers toward those beneficiaries with long-term needs that can be impacted. Further, you need to place a greater emphasis on preventable episodes of care, and on end-of-life care preferences, advance directives and care plans. If you take the top 5% of the membership that is incurring the most cost and provide complex care management, including a higher level of home care, hospital diversion, medication therapy management, nutrition counseling, and wound care, plans and their provider organizations will see a reduction in avoidable medical expenses. Those reductions in avoidable medical expenses translate to better managed Medical Loss Ratios (MLRs), which directly impact your bottom line. How so?

The proposed implementation of the new rate setting will require managed care organizations to meet a MLR minimum of an 85% threshold. This is to ensure adequate funds are being spent on coverage for Medicaid members appropriately as states seek to move more and more Medicaid beneficiaries into managed care on a mandatory basis. CMS has charged states to develop new rates that will promote program goals that include benchmarks for quality of care, community integration of enrollees, and cost containment. Further, CMS wants to ensure enrollees are receiving quality of care and access in a timely manner, so they have asked the states to propose set standards for time/distance for specific provider types.

MLR thresholds are currently being used by the private health insurance plans, as well as, Medicare Advantage plans for projections of future medical costs and covered services. By including Medicaid in this imitative, it’s evident CMS is trying to find a way to align standards among the different offerings across the board, but how will it affect your MCO?

While Medicaid MCOs don’t have the high sales and marketing costs of individual commercial plans, since sales are handled by the states, compliance costs could be high, making the 85% figure a cause for concern. Medicaid MCOs will have to be diligent in identifying and documenting costs incurred to improve quality; essentially determining spend that could be considered medical versus administrative; to drive up their MLRs. Plans need to be able to fine-tune care coordination and quality, which are the hallmarks of managed care, and a federal MLR regulation could inhibit this. Do you have the right processes in place to ensure this happens?

With all these new changes, we can’t stress enough that there will be a huge impact on implementation initiatives and sustainability that affect not only the finance department, but all departments. Once sustainability is achieved, it needs to be maintained as it will be addressed in future compliance reviews.

We are currently working with organizations in your area to identify gaps in operations while improving the ways they respond to clients, and developing care management models for the Long-Term Services and Supports (LTSS) population that make sense and will impact MLR. We share the same goal as you: to implement high quality, accessible, and cost-effective health care to our nation’s most vulnerable population.

As soaring enrollment issues with varying populations of people persist, and new programs continue to be introduced, tough challenges are ahead. We can help make the transition smooth. Contact us today to get started >>



To download the recording of the June 24, 2015 webinar mentioned above, please click here >>

GHG understands the complexities of the Medicaid population, and the numerous shifting variables that affect plan financial performance, such as state specific requirements for risk adjustment. GHG can assist with identifying the current and future costs of doing business, while building in anticipated adjustments that make sense for each population served. Visit our website to learn more >>

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