Proposed changes to 2016 Medicaid managed care rule The rule changes were proposed late 2018, but industry comments and analysis came in January. As expected, most of the substantive MCO responses were on rate-setting and actuarial soundness, with general relief over reverting to certifying rate cell ranges (instead of individual rates). Other highlights include: a request for longer transition time to implement pass-through payments changes, support for relaxed network adequacy standards and concerns over modifications to risk-sharing arrangements in MCO contracts post-execution.

Highlights of proposed changes

  • Rate setting – Reverts back to certified rate ranges.
  • Network adequacy- Lets states choose any quantitative standard (not universal time and distance).
  • Quality rating system- makes adoption of a new QRS by states required only “to the extent feasible.”
  • Appeals- Can provide as low as 90 days to members to request fair hearing. No requirements to provide written request of appeal after verbal request.

AHIP Comments

ACAP Comments


Asks for CMS to consider implementation timelines and related burden on plans / states

MHPA Comments

New safe harbor / Anti-Kickback Statute (AKS) regs (Jan 31)- CMS released a proposed rule that eliminates rebates from rx manufacturers to PBMS in both Part D and Medicaid health plans. Under the new rule there would be 2 narrower “safe harbors” meant to help plans with high out of pocket costs. Most analysts say this will be (if finalized) the most significant change to the drug pricing system so far. The goal of CMS is to change the current model which incentivizes manufactuers to set a high price on drugs. Those higher list prices are the starting point for rebate discussions. And the rebates (based on the higher prices) currently go back to the PBMS, which usually do not pass the savings back to the patient who received the drug. On the commercial side, the patient is hit twice – once by not sharing in the savings from the rebate, and again because their co-share costs are usually set based on the full list price (not the actual resulting price to the PBM after rebates). If all this seems too obvious a scheme to be allowed, its because there are currently “safe harbor” exceptions to laws meant to prevent such a scheme (the Anti-Kickback statute was passed in 1972; safe harbor exemptions were made under the Medicare/Medicaid Patient and Program Protection Act of 1987). The new reg takes aim at those exceptions and attempts to replace them with more targeted conditions designed to change PBM pricing strategies. This rule is part of an overall effort to increase rx pricing transparency (including a late 2018 rule that would require drug television commercials to show pricing information).

Further reading  

CMS now open to limited expansions- Although there is no new regulatory guidance here, multiple stories of a new willingness to consider expansion requests for new coverage at less-than-ACA (<133%FPL) levels came out in March.

Further reading

New efforts to prevent “silver loading” (Jan)- As part of its exchange benefit and payment guidance for the 2020 plan year, CMS requested comments on how to prevent silver loading. Silver loading is the practice of moving premium increases (especially the part driven by ending CSR payments) to the silver option in an exchange market, since the silver plans are used for setting federal subsidies. If the federal subsidies go up, then some of the impact of CSRs is mitigated. The CMS statement is open to an approach to end silver loading AND fund CRS payments.

Further reading

CMS proposed rules to increase patient access to their own health record data (Feb)- CMS put out new rules that require both providers and plans to make it easier for patients to get access to their own data. The rules require “new digital pathways” into EHRs and claims systems. The rules also limit the current holders of data from charging for access to the data. Much of the rule is designed to force interoperability (to the extent it is blocked by technology companies keeping silos in place to protect revenues or position). The proposed rules require software manufacturers to create tools that can “readily” export all of a patient’s medical files. It also seeks to make electronic event notification (admission, discharge and transfer- ADT) a condition of Medicare and Medicaid payments to hospitals. The proposed rules come amidst a stream of criticism from CMS over EHRs, including how they have added to physician burnout but not delivered on the promise of better care.

Further reading

Hospitals pricing transparency rule now in effect - The go live for the 2018 rule requiring hospitals to post pricing for all services was January. Hospital chargemasters nationwide are now on display for the public. Many markets already required this, but for hospital providers new to the requirement there has been some impact. Negotiated rates with payers are based on chargemaster fee schedules but remain hidden from patients at this time.

HCBS service setting criteria relaxed to allow more group homes- After an 18-month process of “listening sessions,” CMS issued new guidance on HCBS settings. New criteria allow states to cover HCBS in group homes (previously classified as institutional settings).