Early Highlights of What the Final Managed Care Rule for Medicaid and CHIP Could Mean for Children with Chronic and Complex Health Care Needs

Last week the Centers for Medicare and Medicaid Services (CMS) released its long-awaited final rule outlining requirements for managed care organizations in Medicaid and Children’s Health Insurance Programs (CHIP). Preliminary NASHP analyses indicate that the final rule provides states with significant flexibility in making changes designed to modernize these federal programs as part of health care delivery reform, and to improve the quality of care and consumer satisfaction. While further in-depth analyses are needed to fully understand the new rule given its scope and length, this week NASHP highlights what it could mean for children with chronic and complex health needs.

First, it is important to understand this population of children and how states have historically structured Medicaid and CHIP programs to best meet their needs. Approximately 15 percent of all U.S. children, or more than 11 million, (age birth to 18 years) have a special health care need, ranging from chronic conditions such as asthma and diabetes, to more complex conditions such as spina bifida, cerebral palsy and congenital anomalies such as heart conditions. Children with complex health care needs comprise a small but growing number of U.S. children. It is estimated children with the highest levels of need make up from 0.4 – 0.7 percent, approximately 320,000 – 560,000 U.S. children. They typically rely on a myriad of health, education, social service and other supports for their health, and well-being. The first wave of Medicaid managed care in the 1990s saw many states carving out services for children and adults with special needs through fee-for-service arrangements. However, these trends have changed dramatically since that time. Recent CMS data and a 2010 Kaiser Family Foundation survey indicate that 32 states mandatorily enroll at least some children and youth with special health care needs (CYSHCN) in managed care, 20 states enroll CYSHCN in managed care on a voluntary basis, and about half of states mandate managed care for at least some children who receive Supplemental Security Income (SSI).

Below are some of the rule’s most significant changes and what they could mean for children with chronic and complex health care needs.

  • States retain the ability to determine which populations of children and adults to enroll in Medicaid managed care. This means that states can continue to mandatorily enroll some or all populations of CYSHCN into Medicaid managed care. In some cases, states have created separate managed care plans that exclusively serve all or some sub-populations of CYSHCN. The final rule preserves this state option.
  • States that mandatorily enroll CYSHCN into managed care will need to ensure families have an option to change their child’s health plan. States will not be required to establish a 14-day selection period (or any time period) and related fee-for-service system while enrollees choose a health plan – a provision that was under consideration by CMS in the draft rule. However, states will need to continue to ensure that enrollees, including CYSHCN, who have been automatically enrolled through a mandatory managed care program have the ability to change health plans for any reason within 90 days, every 12 months at reenrollment, or at any time for cause.
  • States are required to develop and implement network adequacy standards, including time and distance standards, for certain types of providers including pediatric, specialty and behavioral health providers, hospitals, and long-term services and supports. Inclusion of these provider types in network adequacy standards can help ensure access to pediatric and specialty services for children with chronic and complex health care needs. In requiring network adequacy standards, the rule recognizes that states differ in their geographic conditions and provider capacity and thereby, gives states flexibility in establishing these standards. States will want to consult resources like the National Standards for Systems of Care for Children and Youth with Special Health Care Needs for guidance and examples of best practice in this and other critical areas. The National Standards are a set of voluntary standards developed by a diverse group of federal, national and state stakeholders from Medicaid, public health, health plans, provider groups, families, and others to describe essential elements of service delivery systems for CYSHCN. Additionally, the National Committee for Quality Assurance (NCQA) has taken steps over the past several years to incorporate other measures of network adequacy into their health plan accreditation standards including patient experience, wait time for appointments, and availability of after-hours care.
  • Medicaid and CHIP managed care plans must meet state requirements and standards for care coordination established by the rule to deliver and coordinate care, and facilitate transition of services between settings of care. Additionally, plans will be required to make every effort to complete an initial health risk assessment within 90 days of enrollment of new beneficiaries, and ensure that enrollees with special health care needs receive an assessment and treatment plan that is regularly updated. These provisions are among several requirements for care coordination set forth by the final rule.
  • States will need to ensure that default (passive) enrollment processes – processes that auto-assign enrollees to a health plan – facilitate plan assignments that best meet the needs of all enrollees, including CYSHCN. States will need to seek to preserve existing provider-beneficiary relationships, particularly with providers that have served Medicaid enrollees. Additionally, states can establish additional criteria to include in passive enrollment processes including the preference of family members for a particular health plan or provider, previous plan assignments, and accessibility of the provider offices for children and adults with special needs.
  • CMS (or states as approved by CMS) will be establishing a new Medicaid and CHIP Quality Rating System (QRS) to promote quality of care and improved consumer engagement. According to the final rule, the QRS will provide performance information to consumers on all managed care plans in order to promote transparency, support states in contracting with health plans that offer higher-value care, and improve consumer and stakeholder engagement. The QRS provides CMS and states an important opportunity to ensure that the unique needs of children with chronic and complex health care needs are considered and that families of CYSCHN are involved in the development of the QRS rating system.

This long-awaited rule provides states with an important opportunity to continue to improve how service delivery systems under Medicaid and CHIP managed care are structured to best meet the unique needs of children with chronic and complex health care needs. NASHP will continue to analyze the final rule in further detail and its implications for states and special populations. As always, we encourage states to send us your questions, comments, and thoughts about the final rule.