United States: Proposed Rule Creates Challenges For Managed Long-Term Services And Supports

On June 1, 2015, the US Centers for Medicare & Medicaid Services ("CMS") published its proposed rule on Medicaid managed care (CMS-2390-P).1 As noted in our three earlier advisories, which provided an overview of the proposed rule, discussed the expanded Federal role in rate setting, and explained how the proposed rule would expand program integrity obligations, the proposed rule represents the first update to the Medicaid managed care regulations since 2002. This fourth advisory examines the proposed rule's provisions related to Managed Long-Term Services and Supports ("MLTSS").

Long Term Services and Supports ("LTSS") are a key component of the Medicaid program for certain qualifying individuals. LTSS are defined in the proposed rule as "services and supports provided to beneficiaries of all ages who have functional limitations and/or chronic illnesses that have the primary purpose of supporting the ability to live or work in the setting of their choice, which may include the individual's home, a provider-owned or controlled residential setting, a nursing facility, or other institutional setting."2 MLTSS programs are Medicaid programs that use managed care to coordinate and manage LTSS.

Medicaid's unique role in LTSS

Medicaid is the largest single purchaser of LTSS in the United States, with cumulative spending of more than $130 billion annually on behalf of more than 4 million individuals. This surpasses both Medicare and commercial insurance spending. Federal law requires that State Medicaid programs provide nursing facility benefits and home health services, LTSS, which are available at each State's option through a state plan amendment, include services available at intermediate care facilities for individuals with intellectual and developmental disabilities ("ICF/IIDs") and mental health facilities for children and seniors, as well as personal care, speech, occupational, and physical therapies, and targeted case management. Many State Medicaid programs also offer home and community-based services ("HCBS"), in addition to certain nonmedical services, such as respite, home-delivered meals, transportation, adult day programs, and supported employment. These benefits vary widely among the States. Currently, there are over 300 HCBS waiver programs serving more than 1 million individuals. LTSS are expensive; while only 6 percent of Medicaid enrollees use LTSS, LTSS costs account for 45 percent of total Medicaid spending.

MLTSS models continue to develop and evolve. According to the Medicaid and CHIP Payment and Access Commission ("MACPAC"), the number of States offering MLTSS doubled from eight to sixteen between 2004 and 2012 and the number of people receiving MLTSS services has more than tripled from 105,000 to 389,000 individuals.

Individuals who rely upon Medicaid LTSS (including HCBS) have different needs than the general population or even the typical Medicare beneficiary. HCBS waivers cover individuals with developmental disabilities, physical disabilities and mental illness, as well as the elderly who often have multiple chronic health conditions. In order to fully understand the MLTSS provisions under the proposed rule, it is important to understand the current HCBS regulation and its origin, since the HCBS process is the primary pathway States use to make LTSS available.

The Omnibus Budget Reconciliation Act of 1981 ("OBRA") created authority under Section 1915(c) of the Social Security Act3 for States to offer HCBS programs under a three-year renewable waiver authority. The Deficit Reduction Act of 2005 ("DRA") added Section 1915(i), which allows States to offer HCBS as an optional program under State plan authority. The intention of 1915(i) was to give States the ability to offer LTSS without the need of a waiver.

The Affordable Care Act ("ACA") further amended Section 1915(i) and created the "Community First Choice State Plan Option" under new Section 1915(k). This provision offers States a temporary enhanced Federal match to encourage them to expand LTSS, but in exchange, it also requires all services to be offered statewide and does not allow waiting lists. Only four States have adopted this option as of May 2015.

In 2014, CMS published a comprehensive final rule that combined the various updates to the LTSS program.4 CMS continues to publish guidance for States on community integration for those in need of LTSS. On June 26, 2015, CMS issued an Informational Bulletin which provides an expansive list of reimbursable services and supports5 and a frequently asked questions document on HCBS.6

MLTSS would be impacted substantially by numerous new requirements in the proposed managed care rule, including requirements regarding actuarial soundness, rate development, medical loss ratio, appeals and grievances, network adequacy, performance measures, and provider screening and enrollment. This Advisory, however, highlights major provisions of the proposed rule specific to LTSS.

Ten elements of a strong MLTSS program

The proposed rule would codify ten key elements that CMS previously highlighted in 2013 guidance as indicators of a strong MLTSS program.7 The proposed rule converts the following key elements into requirements:

  1. adequate planning;
  2. stakeholder engagement;
  3. enhanced provision of home and community based services;
  4. alignment of payment structures and goals;
  5. support for beneficiaries;
  6. person-centered processes;
  7. comprehensive, integrated services package;
  8. qualified providers;
  9. participant protections; and
  10. quality.

These ten key elements are woven into the proposed rule in several different locations. For example, the requirement to provide support for beneficiaries can be found in the context of enrollment and disenrollment, network adequacy, the requirement to continue services pending appeals, and identification of individuals who need LTSS.

Definitions (Proposed 42 C.F.R. § 438.2)

As noted above, CMS proposes to add a new definition of LTSS as "services and supports provided to beneficiaries of all ages who have functional limitations and/or chronic illnesses that have the primary purpose of supporting the ability to live or work in the setting of their choice, which may include the individual's home, a provider-owned or controlled residential setting, a nursing facility, or other institutional setting."

In the preamble, CMS explains that it intends "for community-based services within this scope to be largely non-medical in nature and focused on functionally supporting people in the community."8 By contrast, HCBS waivers are alternatives to institutional care. In order to qualify for HCBS waiver services, an individual "would, in the absence of these services, require the Medicaid covered level of care provided in ... A hospital...; A NF [nursing facility]...; or An ICF/IID...."9 Thus, the new LTSS definition is much broader than current HCBS waiver requirements and, therefore, LTSS could be offered to many more individuals if the proposed rule is adopted. CMS specifically invites comments on the new definition.

Standard contract requirements (Proposed 42 C.F.R. § 438.3(o))

Under the proposed rule, any managed care contract that includes LTSS as a covered benefit must require that any services covered under the contract that could be authorized by a HCBS waiver or State plan amendment be administered consistent with the person-centered and fully integrated requirements under 42 C.F.R. § 441.301(c)(4). These requirements are explicit, extensive, and obligate managed care entities to satisfy specific conditions with respect to home and community-based settings, including the following:

  1. The setting must be integrated in, and support full access of individuals receiving Medicaid HCBS into, the greater community, including opportunities to seek employment and work in competitive integrated settings, engage in community life, control personal resources, and receive services in the community, to the same degree of access as individuals not receiving Medicaid HCBS.
  2. The setting must be selected by the individual from among setting options, including non-disability specific settings and an option for a private unit in a residential setting. The setting options must be identified and documented in the person-centered service plan and must be based on the individual's needs, preferences, and for residential settings, resources for room and board. The setting must ensure an individual's rights of privacy, dignity and respect, and freedom from coercion and restraint.
  3. The setting must optimize, but not regiment, individual initiative, autonomy, and independence in making life choices, including but not limited to, daily activities, physical environment, and with whom to interact.
  4. The setting must facilitate individual choice regarding services and supports, and who provides them.

In a provider-owned or controlled residential setting, more than a dozen other requirements related to housing and the person-centered service plan would also apply.

Disenrollment requirements (Proposed 42 C.F.R. § 438.56(d)(2)(iv))

The proposed rule would specifically allow disenrollment if an enrollee using MLTSS is required to "change their residential, institutional, or employment supports provider based on the provider's change in status from an in-network to an out-of-network provider ...." Since residential and institutional services are typically the most expensive services for an individual in need of LTSS, this new condition may furnish providers with substantial negotiating leverage.

Network adequacy standards (Proposed 42 C.F.R. § 438.68)

CMS is proposing very broad language concerning network adequacy standards. In particular, States with contracts that cover LTSS must develop "(i) Time and distance standards for LTSS provider types in which an enrollee must travel to the provider to receive services; and (ii) Network adequacy standards other than time and distance standards for LTSS provider types that travel to the enrollee to deliver services."10 In developing such standards, States must also consider "strategies that would ensure the health and welfare of the enrollee and support community integration of the enrollee" and "other considerations that are in the best interest of the enrollees that need LTSS."11 These vague standards, which could subject the State to CMS scrutiny regarding the adequacy of the network(s), may disincentivize use of MLTSS.

Stakeholder engagement (Proposed 42 C.F.R. § 438.70)

Although States with MLTSS programs already provide for stakeholder engagement in a variety of ways, CMS has proposed that States "must ensure the views of beneficiaries, providers, and other stakeholders are solicited and addressed during the design, implementation, and oversight of a State's managed LTSS program. The composition of the stakeholder group and frequency of meetings must be sufficient to ensure meaningful stakeholder engagement." (emphasis added). States may be concerned that these requirements will result in potential interference from CMS or the courts on behalf of individuals or entities that may, for a variety of reasons, challenge the sufficiency of State efforts.

Under Proposed 42 C.F.R. § 438.110, a State also would be required to establish and maintain a member advisory committee that is a "reasonably representative sample of the LTSS populations."

Beneficiary support system (Proposed 42 C.F.R. § 438.71)

CMS proposes to require that States develop and implement a beneficiary aid system to aid individuals both prior to and after enrollment in a managed care entity. This new support system must include choice counseling, training for network providers, assistance for enrollees, and, specifically, assistance for enrollees who use or express a desire to use LTSS. There are several specific requirements with respect to LTSS, including serving as an access point for complaints and concerns, conducting education on enrollees' grievance and appeal rights, providing assistance in navigating the grievance and appeal process, and engaging in review and oversight of LTSS program data to aid the State in identifying, remediating, and resolving systemic issues.

Coordination and continuity of care (Proposed 42 C.F.R. § 438.208)

Under this subsection, States would be required to implement mechanisms to identify persons who need LTSS. Each managed care entity would be required to comprehensively assess each enrollee identified by the State, including identification of "any ongoing special conditions of the enrollee that require a course of treatment or regular care monitoring." The proposed rule describes at length who would be permitted to do the assessment, how a treatment or service plan would need to be developed by a person trained in person centered planning, and when any treatment or service plan would need to be reviewed and revised (i.e., at least every 12 months).

Credentialing (Proposed 42 C.F.R. § 438.214)

Through its contracts with managed care entities, a State would be required to establish and implement uniform credentialing and re-credentialing of providers. LTSS providers are specifically included in the list of providers. Self-direction of LTSS is a popular option for a growing number of individuals with LTSS needs. Under self-direction, individuals can hire a family member or friend rather than choosing a professional agency to assist them with a variety of LTSS to meet their needs. Credentialing could be viewed as a burdensome or intimidating process for some, which could discourage non-professionals from participating and thereby undermine one of the major strengths of self-direction — choosing one's caregiver.

Quality assessment and performance improvement program (Proposed 42 C.F.R. § 438.330)

The proposed rule would require that States require each managed care entity to establish and implement an ongoing comprehensive quality assessment and performance improvement program for the services it provides, including LTSS. Standard measures would be required by the State, including those specified by CMS. Each managed care entity that provides LTSS would be required to include performance measures "that assess the quality of life of beneficiaries and the outcomes of [the managed care entity's] rebalancing and community integration activities for beneficiaries receiving LTSS" (emphasis added). Measuring quality assessment and performance improvement may be a particular challenge for LTSS since LTSS is largely non-medical in nature and nonclinical performance measures of "quality of life" are likely to be more subjective than clinical measures of medical care. Note that elsewhere in the proposed rule CMS proposes to require that States establish a quality rating system that will use the data and information collected under this requirement.12


MLTSS models are still very much in development, serving less than 10 percent of the Medicaid population that uses LTSS. If CMS moves too quickly from guidance and "best practices" to uniformity, standardization, and enforceability, it may discourage States and health plans from adapting managed care concepts into LTSS. Blending person-centered, non-medical services delivered in the most integrated community setting with actuarially sound capitated rates is easier said than done. Even States that have a decade or more of experience with MLTSS are still experimenting. If States perceive there is less risk involved in fee-for-service LTSS than under the proposed rules, these rules may effectively discourage the development of MLTSS.

States, health plans, providers, service providers and other interested parties will have the opportunity to comment on CMS' comprehensive proposal. Comments are due to CMS no later than 5 p.m. EST on July 27, 2015.


1. 80 Fed. Reg. 31098 (June 1, 2015).

2. Proposed 42 C.F.R. § 438.2.

3. 42 U.S.C. § 1396n(c).

4. 79 Fed. Reg. 2948 (Jan. 16, 2014).

5. http://www.medicaid.gov/federal-policy-guidance/downloads/cib-06-26-2015.pdf.

6. http://www.medicaid.gov/medicaid-chip-program-information/by-topics/long-term-services-and-supports/home-and-community-based-services/downloads/home-and-community-based-setting-requirements.pdf.

7. http://www.medicaid.gov/medicaid-chip-program-information/by-topics/delivery-systems/downloads/1115-and-1915b-mltss-guidance.pdf.

8. 80 Fed. Reg. at 31142.

9. 42 C.F.R. § 441.301(b)(1)(iii).

10. Proposed 42 C.F.R. § 438.68(b)(2).

11. Proposed 42 C.F.R. § 438.68(c)(2) (emphasis added).

12. Proposed 42 C.F.R. § 438.334.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
22 Jan 2019, Seminar, San Francisco, United States

Dentons is pleased to offer a full day of classes, just in time for the California MCLE compliance period deadline of January 31, 2019.*

23 Jan 2019, Seminar, Los Angeles, United States

Dentons is pleased to offer a full day of classes, just in time for the California MCLE compliance period deadline of January 31, 2019.*

24 Jan 2019, Other, New York, United States

Join Dentons’ Health Care Partner Lori Mihalich-Levin and White Collar & Government Investigations Counsel Christine Genaitis as they lead conference sessions at AHLA Academic Medical Centers and Teaching Hospitals Institute.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions