Medicaid Managed Care Rate Reviews November 5 2015.

Medicaid Managed Care Rate Reviews

November 5 2015

Disclaimer

Please note that the presenters are speaking in a personal capacity, and do not represent the Centers for Medicare and Medicaid Services (CMS). The information and opinions contained herein are those of the presenters, and do not represent those of CMS.

Overview

Introduction to Medicaid and Medicaid managed care

Medicaid managed care rate review process

Background, process, and findings of the 2014 rate reviews

Background, process, and findings of the 2015 rate reviews

Planning for the 2016 rate reviews

Medicaid

Healthcare program jointly funded by states and the Federal government

The states are allowed flexibility in the benefits and populations covered

Minimum required benefits and populations are stipulated by the federal government

ACA provided for a coverage expansion; in states that chose to expand, virtually everyone with income below 138 percent of the Federal Poverty Limit is eligible for coverage

Medicaid Managed Care

States use at risk contracts to capitate Managed Care Organizations (MCOs), or HMOs to provide a subset, or all of the covered benefits to enrollees

Use of managed care has increased rapidly now accounts for $147.1 billion or 34 percent of Medicaid benefit expenditures

Of the states that expanded in 2014, 23 chose to do so through managed care

Actuarial Soundness

Regulatory requirements found at 42 CFR 438.6.c

Stipulates that rates must be actuarially sound

Actuarially sound rates are defined as rates that:

A. Have been developed in accordance with generally accepted actuarial principles and practices;

B. Are appropriate for the populations to be covered, and the services to be furnished under the contract; and

C. Have been certified, as meeting the requirements of this paragraph (c), by actuaries who meet the qualification standards established by the American Academy of Actuaries and follow the practice standards established by the Actuarial Standards Board.

Medicaid Managed Care Rate Review Process

Parties Involved

State and their actuary – responsible for developing the capitation rates

CMS Regional Office (RO) – coordinates most of the direct contact with the state, and is responsible for approval of rates and contracts

CMS Center for Medicaid and CHIP Services (CMCS) – develops CMS policy related to Medicaid managed care

CMS Office of the Actuary (OACT) – provides actuarial services for CMS and has become involved in managed care rate reviews

Historical Capitation Rate Review Process

The rate and contract reviews were historically conducted by RO staff members

The RO staff members used a checklist to guide their reviews

Consult with CMCS

Focus on the actuarial certification submitted by the state

Issues

GAO study released August 2010

Findings:

Inconsistent reviews

Variation in RO practices

Recommendations:

Implement a mechanism to track state compliance

Clarify guidance to CMS officials conducting reviews

Lawsuits and allegations of fraud and misconduct

OACT Involvement

In 2012 CMCS began consulting with OACT on ad hoc issues in certain states’ rates

States involved in lawsuits, and whistle blower allegations

Complex policy and actuarial adjustments to the rates

In 2013 CMS began reviewing states’ proposed methodology to account for Section 1202 (Primary Care Physician Payment Increase) in managed care rates, and OACT was involved in several state reviews.

2014 Medicaid Managed Care Rate Reviews

Background

Process

Findings


Background

ACA provided for a coverage expansion; in states that chose to expand, virtually everyone with income below 138 percent of the Federal Poverty Limit is eligible for coverage

Under the ACA the Federal Government pays for 100 percent of the expansion for CY 2014 – 2016, gradually decreasing to 90 percent in CY 2020


Process

CMS issued the 2014 Medicaid Managed Care Rate Setting Consultation Guide in September 2013

http://www.medicaid.gov/medicaid-chip-program-information/by-topics/delivery-systems/managed-care/downloads/2014-managed-care-rate-setting-consultation-guide.pdf






Process (continued)


CMS developed 4 “critical elements” for states to include in their rate certifications for CMS review

Considerations of data, assumptions, and methodologies used to develop rates

Risk mitigation

Same assumptions to build non-benefit component for currently eligible and New Adult population

Pricing New Adult population benefits


Process (continued)

CMS had a conference call with each state and their actuaries to answer questions from the Consultation Guide

OACT reviewed the rate certifications

Questions and answers


Findings

CMS (OACT, CMCS, RO), States, and States’ actuaries work together to accomplish the shared goal of addressing items from the 2014 Medicaid Managed Care Rate Setting Consultation Guide

Considerations of data, assumptions, and methodologies used to develop rates

Risk mitigation

Same assumptions to build non-benefit component for currently eligible and New Adult population

Pricing New Adult population benefits


Findings

Risk mitigation

CMS and states discussed risk mitigation

States had different approaches to risk mitigation

Provider reimbursement rates

Varying levels of documentation in certifications

Looking Back on 2014

Common issues identified in reviews

Documentation

Varying quality of documentation

Development of assumptions specific to ACA expansion

Reviewed assumptions developed by state actuaries



Data

Reliance on financial data, lack of encounter, price data

Assumptions and methodology

Documentation on trend

Varying levels of detail on programmatic change adjustments

Documentation on development of rate ranges

Development of non-benefit component assumptions


Process

2014 rate certification review focused mainly on the differences between the New Adult population and currently eligible rate development

Timing of certifications submitted for review

Make states aware of CMS’ expectations


Background

Process

Findings


Background

OACT reviewed New Adult population rate certifications in 2014

OACT and CMS contractors reviews all Medicaid managed care rate certifications in 2015


Process


http://www.medicaid.gov/medicaid-chip-program-information/by-topics/delivery-systems/managed-care/downloads/2015-medicaid-manged-care-rate-guidance.pdf





Process (continued)


Differences between 2014 and 2015 Guide

2014 Guide specifically addressed New Adult population

2015 Guide addresses all populations

2014 Guide is 3 pages, 2015 Guide is 9 pages


Process (continued)

CMS held webinars to present 2015 Guide

OACT and contractors reviews the rate certifications

Questions and answers


Findings

OACT continues to review states’ Medicaid managed care actuarial rate certifications

CMS and states work together to share information on rate setting


Common issues identified in reviews Documentation

Greater detail in many certifications

Some certifications missing substantial amount of information

Following rate guide – use of index

Actuarial judgment

Many cases where actuarial judgment provided as answer instead of data, analysis, justification

Role of actuarial judgment

Data

Reliance on financial data, lack of encounter, price data

Rebasing, reliance on data from previous certifications

Adjustments

Trend

Documentation, level of detail (by service, by population)

Other information to show reasonableness – historical trends, sources, methodology



Managed care efficiency

Documenting assumptions

Current level of efficiency

Program changes

Information on program change

Description of impact of change, adjustment

Non-benefit costs

Documentation, level of detail (by type of cost)

Margin

Other information to show reasonableness – historical trends, sources, methodology

Rate ranges

Methods, assumptions used to develop rate range

Clarity in certification


Process

Refining scope and focus of reviews

Defining and explaining expectations

Improving efficiency of review overall, at all levels


Planning

CMS issued the 2016 Medicaid Managed Care Rate Development Guide in September 2015

Draft Guide published on CMS website June 2015

CMS (OACT and CMCS) held 3 webinars to review 2015 Medicaid manage care rate reviews, discuss 2016 Guide, and answer questions after final 2016 Guide was published


Planning


http://www.medicaid.gov/medicaid-chip-program-information/by-topics/delivery-systems/managed-care/downloads/2016-medicaid-rate-guide.pdf






Planning


Differences between 2015 and 2016 Guide

Clarity

Improved definitions, description of required information

Section on MLTSS

Specific issues related to MLTSS rate-setting

Additional detail on certain areas

Pass-through payments

In lieu of services


Additional consideration

ASOP 49 (Medicaid Managed Care Capitation Rate Development and Certification)

Standard became effective for actuarial communications issued on or after August 1 2015

Conclusion

OACT involvement helpful for federal and state government

Opportunity for actuarial involvement in rate setting

Medicaid Managed Care Rate Reviews November 5 2015.

Documents

Transcript of Medicaid Managed Care Rate Reviews November 5 2015.