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New Federal Rules Aimed at Improving Medicaid Take Effect

Erin Guay

The federal government recently issued two final rules aimed at improving Medicaid programs. The new rules are intended to improve access to and quality of care; strengthen standards for Medicaid managed care; improve transparency and accountability; and improve health outcomes for people on Medicaid.  

The two final rules are broad and contain many provisions and new requirements for state Medicaid programs.  Together, the rules address both Medicaid fee-for-service and managed care systems. Some of the requirements apply to Medicaid services offered through the state plan (i.e., part of the standard Medicaid benefit package). Others apply to Medicaid Home and Community Based Services (HCBS) Waiver services (for people who meet a certain level of care and who get support services tailored to their individual needs).  While the rules take effect July 9, 2024, many of the new requirements will take effect in future years.   

In Pennsylvania, more than ninety percent of people on Medicaid get their coverage through a managed plan - through either the HealthChoices or Community HealthChoices systems. The federal government helps fund state Medicaid programs and sets broad requirements that states must meet to get the funding. States have flexibility within these broad parameters to tailor programs to meet the needs of people living in that state.  

Below, we provide highlights of the two Medicaid final rules. We’ll keep readers updated as Pennsylvania works to implement these rules.  

 

Ensuring Access to Medicaid Services (“Access Rule”) 

This rule addresses documentation of access to care and payment rates, home and community-based services (HCBS) through Waiver programs, and advisory committees that provide input to state Medicaid programs. Here are highlights that are most relevant to participants: 

  • Requires states to update assessments and person-centered service plans for HCBS Waiver participants at least once per year;  

  • Improves state’s incident management systems, including reports of abuse, neglect, and financial exploitation, for people who get HCBS Waiver services and requires states to have a complaint process for all HCBS participants.  

  • In Pennsylvania, this would establish a complaint system for people in Waivers that are delivered in a fee-for-service system. This new requirement would apply to the OBRA Waiver, Adult Autism, Community Living, Consolidated, and Person/Family Directed Supports Waivers. People enrolled in these waivers can use the complaint system to express dissatisfaction or to lodge a complaint about the State’s or providers’ compliance with person-centered service plan requirements. HCBS Waiver participants in Community HealthChoices, a managed care system, already have a complaint process available.  

  • Requires states to report how they establish and maintain HCBS wait lists, assess wait times, and report on quality measures 

  • Requires at least 80 percent of Medicaid HCBS payments to go directly to Direct Care Workers (DCW) rather than administrative overhead – this is aimed at ensuring a sufficient direct care workforce. The provisions do allow for exceptions to account for small providers, providers in rural areas, etc.  

  • Changes the structure and expands the scope of the stakeholder advisory committee each state Medicaid agency is required to convene.  Pennsylvania’s advisory committee is currently called the Medical Assistance Advisory Committee (the MAAC). It also broadens the scope of the advisory committee’s purview to include topics such as quality of services, language access, health equity, disparities and biases in the Medicaid program and more. There are also provisions related to improving transparency of the recruitment and appointment process for the advisory committee as well as meetings themselves.  

  • The final rule also requires states to form a Beneficiary Advisory Council (BAC) made up of Medicaid beneficiaries or representatives such as family members or caregivers. Pennsylvania already has a robust advisory committee structure with the Consumer Subcommittee and other subcommittees of the Medical Assistance Advisory Committee.    

  • 25% of MAAC membership will need to be drawn from BAC members in the future.  


Here is a fact sheet with more information about the requirements contained in this final rule.  

Medicaid, CHIP Managed Care Access, Finance, and Quality (“Managed Care Rule”) 

This rule focuses on improving access to care for people who get Medicaid through the fee-for-service system (i.e., the “ACCESS card” in PA) or managed care delivery systems (HealthChoices and Community HealthChoices in PA). Here are highlights of this rule, focusing on provisions that are most relevant to participants:  

  • Requires states to establish and enforce appointment wait time standards for certain providers – 15 business days for routine visits to primary care providers and obstetrics and gynecological providers (OB/GYN) and 10 business days for outpatient mental health and substance use providers.  

  • Requires states to monitor compliance with the above standards through secret shopper surveys. Results of these surveys must be submitted to the federal government and posted on the state agency’s website.  

  • Requires states to conduct annual managed care enrollee surveys. 

  • Increases public engagement around states’ managed care quality strategies and requires more meaningful data and information to be included in the annual External Quality Review Reports. Pennsylvania’s 2023 report can be found here.  

  • Strengthens requirements for the information people get about Medicaid managed care plans by requiring a “one-stop-shop” website where people can get information about Medicaid and CHIP eligibility and compare managed care plans based on quality, provider network, drug formulary (list of covered drugs) to help people choose a plan that best meets their needs;  

  • Requirements to standardize and improve the use of “in lieu of services (ILOS)” to meet the needs of enrollees. ILOS are services or settings that a managed care plan can substitute for services or settings that are already covered by Medicaid.  The rule establishing a new and broader definition of ILOS that may lead to ILOS being used to cover a broader range of health interventions that improve prevention or address health-related social needs. The rule also includes provisions to improve oversight and accountability of ILOS and codifies a number of enrollee protections including appeal rights and protections to prevent plans from using ILOS to discourage access to and use of other Medicaid services.  

  • One example of how ILOS is being used right now in Pennsylvania is UPMC CHC Plan covering services in an assisted living residence in lieu of nursing facility care. This is very new; so far only one assisted living provider is in network with UPMC CHC Plan.  

  • The Pennsylvania Department of Human Services issued an Operations Memorandum in June about Pennsylvania’s ILOS initiative to provide long-term care in assisted living settings.  
     

Here is a fact sheet with more information about the requirements contained in this final rule.