United States: Medicaid Managed Care Update: A Middle Ground For Network Adequacy Standards

This article is part of a series that takes an in-depth look at several proposals that would affect managed care organizations, health care providers and other industry stakeholders participating in, and contracting with participants of, state Medicaid and CHIP managed care programs. This installment explores the details of the provider network adequacy proposals.  Click here to read the other articles in the series.

Key Takeaways

  • The CMS's proposed rule would require states to adopt time and distance accessibility standards for seven provider types, but CMS has refrained from mandating these standards.
  • When establishing network adequacy standards, states that have managed LTSS programs would have to account for the unique needs of Medicaid beneficiaries requiring long-term care.
  • When developing network adequacy standards, states would also need to consider additional factors, such as cultural competency.

The national debate regarding the adequacy of provider networks in the post-Affordable Care Act (ACA) period is occurring on a new front, thanks to the Centers for Medicare & Medicaid Services's (CMS's) proposed rule (Proposed Rule) to modernize regulations governing state Medicaid managed care programs and Children's Health Insurance Program (CHIP) managed care arrangements.

Prior to the Proposed Rule's release, patient groups and the Office of the Inspector General (OIG), among others, had grown increasingly concerned that states had taken insufficient steps to ensure that managed care organizations and entities sponsoring prepaid ambulatory health plans and prepaid inpatient health plans for Medicaid and CHIP (collectively, Sponsors) maintained adequate access to covered services. In December 2014, the OIG released a report finding many beneficiaries had encountered significant wait times for physician appointments.  Just last month, California's state auditor released a report criticizing state officials overseeing the state Medicaid managed care program after finding incorrect or missing data on provider networks, inaccurate and outdated information in provider directories and other similar problems.

The Proposed Rule would address some of these issues, in part through requirements that states adopt maximum time and distance standards for select provider types that are frequently used by Medicaid and CHIP enrollees. Also among the proposals is a new set of network adequacy standards for Sponsors participating in state Long-Term Services and Supports (LTSS) programs. Although the Proposed Rule's network adequacy standards are intended to be more rigorous than those in the current regulations applicable to Medicaid managed care and qualified health plans (QHPs) offered on health insurance exchanges, states nonetheless would retain the authority to adopt standards for their respective jurisdiction. This approach seems to reflect an effort by CMS to balance a variety of competing issues, including deference to state agencies to administer their programs, but industry stakeholders are not in agreement as to what the appropriate balance should be.

CMS seeks comment on a variety of the proposals regarding network adequacy, providing an opportunity for stakeholders to raise issues and alternatives for consideration. Comments on the Proposed Rule are due to CMS no later than 5 pm (EDT) on July 27, 2015.

Proposed Time and Distance Standards:  Balancing Federal Concerns over Access to Care with State Autonomy over Network Adequacy

States would need to develop standards allowing Medicaid and CHIP enrollees to have access to certain provider types within a defined distance and/or travel time based on language in the Proposed Rule. Currently, CMS only requires states to "ensure that all services covered under the State plan are available and accessible to enrollees of" Sponsors. (42 C.F.R. § 438.206(a).)

If finalized, the standards set out in the Proposed Rule would require states to ensure that Sponsors' provider networks offer sufficient access to seven provider types:

  • Primary care physicians
  • Obstetricians/gynecologists
  • Pediatric dental
  • Behavioral health providers
  • Hospitals
  • Pharmacies
  • Specialists

Children comprise a significant percentage of Medicaid (and all CHIP) enrollees, so the Proposed Rule expressly provides that pediatric primary care providers, specialists and dentists must be included in states' evaluations of network adequacy.  Although states would be permitted to apply for exceptions to these standards during the waiver process, a state nonetheless would be required to monitor and evaluate access to any provider type that is excepted from these access requirements.

CMS elected not to define the maximum travel time and distance for any provider type, instead preserving states' authority to develop their own standards. CMS explains that it did not adopt a provider-to-enrollee ratio or other standard that states must satisfy because "time and distance standards present a more accurate measure of [members] ability to have timely access to covered services" than provider-to-enrollee ratios. States must nevertheless report whether such exceptions are warranted, on an annual basis, suggesting that CMS may be increasingly reticent to grant exceptions unless justified.

In the preamble to the Proposed Rule, CMS requests comments on whether to permit states to select their own network adequacy criteria or, conversely, whether to adopt even more precise standards for states to follow.

Comparison to Network Adequacy Standards for QHPs and Medicare Advantage

The Proposed Rule represents a middle ground between the detailed Medicare Advantage (MA) network adequacy standards and the more flexible regulations for QHPs. MA Organizations, for example, must maintain maximum travel time and distance standards for each county in which an MA Plan operates. Such standards vary depending on complex formulas factoring in the county's population density and provider mix (e.g., CY2015 MA HSD Provider and Facility Specialties and Network Adequacy Criteria Guidance). QHPs, by contrast, need only ensure that enrollees have access to the "sufficient . . . number and types of providers . . . to assure that all [covered] services will be accessible without unreasonable delay." (45 C.F.R. § 156.230.)

With the Proposed Rule, CMS appears to be moving away from more general network adequacy standards such as those for QHPs, but without going so far as to adopt the prescriptive MA network adequacy regulations that are applicable to Sponsors. Inherent in CMS's decision is the recognition of states' historical role in overseeing provider networks for their Medicaid and CHIP managed care programs, as well as for the commercial insurance.

Practical Considerations

  • Although standardized network access requirements would provide some consistency among states' respective Medicaid requirements, waivers and other modifications may undermine the value of national standards. Moreover, many Sponsors also offer QHPs on state or federal exchanges subject to states' network adequacy requirements. States' authority to adopt network adequacy standards for Sponsors and QHPs, however, may preserve continuity of care and consistency in operations, notwithstanding state-by-state variation.
  • The appropriateness of national network adequacy standards for specific provider types raises questions about the ability of Sponsors to satisfy these requirements in the absence of a state's waiver, particularly in rural areas and given the potential negotiating power of providers that meet one or more of these types of provider categories and that have a significant market share.
  • What is unclear is the extent to which perceived deficiencies in network adequacy may be the result of states' insufficient resources to verify Sponsor compliance with existing requirements, and thus, whether heightened requirements for provider networks would help to resolve current concerns.

Ensuring Access to Culturally Competent Care and Other Factors For Network Sufficiency

CMS, in the Proposed Rule, retains many of the current factors states must use to evaluate Sponsor plan networks. For example, when performing network adequacy assessments, states would still need to consider anticipated enrollment, utilization, provider mix, geographic location and providers' acceptance of new Medicaid members.

The Proposed Rule would require states to focus on culturally competent care by explicitly requiring them to consider each Sponsor's ability to serve limited English language-proficient enrollees and to provide care in a culturally competent manner.

Variation from Existing Regulations

Existing regulations already require states to monitor providers' cultural competency. Currently, states must ensure that "[e]ach [Sponsor] ... participates in the State's efforts to promote the delivery of services in a culturally competent manner to all enrollees, including those with limited English proficiency ..." (42 C.F.R. § 438.206(c)(2).) Additionally, any waiver application submitted by a state would need to address Sponsors' efforts to provide culturally competent services.

Practical Considerations

  • It is unclear whether states may factor in the particular cultural needs of their Medicaid and CHIP members when assessing network adequacy (although states may also consider "the anticipated Medicaid enrollment."). More explicit language permitting states to consider the extent to which beneficiaries require language assistance and other culturally competent services may be helpful to states and Sponsors with regard to states' evaluation of Sponsors' provider networks. Conversely, a national standard could provide less flexibility to states and Sponsors in evaluating the most appropriate way to proceed.

Further Input Requested for LTSS Network Adequacy Standards

For LTSS providers, CMS proposes time and distance standards that take into account the limited mobility of beneficiaries requiring long-term care services. Under the Proposed Rule, states would need to implement travel time and distance standards for any LTSS providers who travel to beneficiaries to provide services (e.g., home health), and separate standards for LTSS providers where the members travel to be treated by LTSS providers.

The proposed regulations applicable to LTSS network adequacy appear to offer states greater flexibility than the proposed time and distance standards for Sponsors generally.  For example, CMS does not propose to define the types of LTSS providers to which states must ensure access.  Because the federal government has not previously adopted network adequacy standards for LTSS, CMS appears to be providing states with the opportunity to tailor such standards in order to identify what approaches work best.

Encouraging Community Integration

States would need to develop LTSS network adequacy standards that encourage community integration under the Proposed Rule. States would be required to consider whether a Sponsor is preserving enrollee choice of provider as well as whether the Sponsor is "ensur[ing] the health and welfare of the enrollee and support[ing] community integration ..." Current Medicaid managed care regulations do not discuss community integration for enrollees requiring long-term care.  The Proposed Rule does not define what steps a Sponsor must take to promote community integration, and requests further comment on what factors should be considered, although CMS does identify the cost of outreach and coordination of care as potential salient factors.

Practical Considerations

  • When the Proposed Rule is finalized, Sponsors may need to develop, or at least re-evaluate, policies and procedures to ensure community integration. States and Sponsors may need to consider commenting on whether states should retain the authority to define and assess community integration efforts, as outreach will necessarily vary due do variations among states' Medicaid and CHIP populations and provider communities.

Considerations and Next Steps

CMS has emphasized throughout the Proposed Rule that CMS is open to changes that could increase or decrease states' authority to develop their own network adequacy requirements.  States and Sponsors may wish to consider submitting comments regarding whether states should retain greater control over network adequacy standards.

Medicaid Managed Care Update: A Middle Ground for Network Adequacy Standards

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