Medicaid Managed Care Reform: Data and Health IT Requirements

www.charmcityheadshots.com photos (c) dennis drenner 2015By Megan Renfrew, Director and Policy Expert, Cognosante Solutions Lab
Twitter: @CognosanteLLC

In early May, the Centers for Medicare and Medicaid Services (CMS) finalized a regulation ushering in sweeping reforms to managed care programs within Medicaid and the Children’s Health Insurance Program (CHIP). This regulation will require states and health plans alike to step up their game with respect to data collection, analysis, and reporting.

This rule reflects the agency’s interest in achieving a balance between state flexibility and CMS oversight at a time when Medicaid managed care programs are growing rapidly as states transfer more services (e.g. Long-Term Services and Support (LTSS) and inpatient), populations (e.g. elderly and disabled individuals), and geographic areas out of traditional fee-for-service Medicaid and into managed care. Approximately 72 percent of Medicaid enrollees in 39 states and the District of Columbia are already served through managed care plans, up 14 percent since 2013 and climbing steadily.

Data-Driven Quality, Transparency
Under the final rule, which will be phased in over several years, CMS will no longer pay for Medicaid managed care services without submission by the state of encounter data that meets its standards on accuracy, completeness, and format. Doing so will be a challenge for many states, which have struggled with collecting data from managed care plans and reporting it to CMS, due in part to the limited analytical and reporting capability of legacy state IT systems originally designed for fee-for-service claims.

As a result, some states will need to make significant improvements to data collection and management systems to comply with the new rule’s encounter data standards and other reporting requirements. States may also find it necessary to revise contracts with managed care plans to ensure that plan reporting responsibilities are clear.

The final rule also strengthens provider network adequacy requirements, mandating that states include time and distance standards in provider network adequacy policies for Medicaid managed care plans (31 states already have time and distance standards in place for primary care providers). The regulation also requires that states expand their network adequacy rules to cover more than seven provider types, including hospitals, primary care and specialty physicians, behavioral health, and pharmacy, to help ensure adequate access to care for plan enrollees. To develop updated state policies and monitor plan compliance, states need accurate and up-to-date beneficiary and provider data, and may benefit from using GIS-based tools that automate network adequacy analysis and allow for easy evaluation of policy options and plan performance as they prepare to implement these changes.

A number of the quality-related requirements under the final rule also depend on accurate and timely data. For example, states must develop managed care quality improvement plans, and engage consumers and stakeholders in plan development. On the plan side, managed care organizations will be subject to a new quality rating program that aligns with quality standards for Qualified Health Plans and Medicare Advantage plans to allow consumers to make more informed choices. Encounter and other data is crucial for properly monitoring and reporting quality performance.

Concern was expressed during rule-making about the feasibility of implementing IT systems capable of managing the robust data collection, analysis, exchange, and reporting compliance requires. However, CMS took steps to ease the financial burden in late 2015 when it made permanent the extension of 90 percent federal matching funds for Medicaid enterprise system development. That final rule also allows that funding to be used for commercial-off-the-shelf (CooS) and software-as-a-service (SaaS) solutions, allowing states to take advantage of previously developed and tested products in the marketplace.

Driving Health Innovation
The final rule represents the first significant overhaul of the Medicaid and CHIP managed care programs in more than a decade. It was long overdue, as Medicaid managed care consumes $150 billion in combined state and Federal spending.

By taking advantage of federal matching funds to implement state-of-the-art and modular CooS and SaaS solutions, and by deploying sophisticated GIS and other tools for data-driven insights and decision-making, states will shorten the path to compliance even as populations and services covered by Medicaid managed care evolve and expand. These actions, along with innovations in delivery systems and payment reform, have propelled Medicaid managed care into the 21st Century and help solidify Medicaid’s position as a key driver in health innovation.

Megan has spent more than five years drafting healthcare bills for the U.S. House of Representatives, she previously served as the technical director at CMS responsible for collecting and analyzing Medicaid and CHIP eligibility and enrollment data from states.