Medicaid managed care quality assessment and performance improvement

Executive Summary

A review of the changes contained in the quality assessment and performance improvement provisions of the final with comment period regulations. This memo summarizes the proposed rules and notes the changes that have been made. 

Medicaid Managed Care Quality Assessment and Performance Improvement, Subpart D
 
Below is a review of the changes contained in the quality assessment and performance improvement provisions of the final with comment period regulations. This memo summarizes the proposed rules and notes the changes that have been made.  It does not present a full discussion of the statute and proposed regulations. For a more full explanation of the proposed rules and NHeLP=s suggestions concerning each proposed rule, see Health Advocate (No. 194, Fall 1998) and NHeLP=s Analysis of HCFA BBA Proposed Rules on Medicaid Managed Care (Nov. 9, 1998), https://healthlaw.org/pubs/BBAregs/BBAmmctoc.html. For a similar discussion of the statute, see Health Advocate No. 190 (Fall 1997).
 
In these final regulations, subpart D was changed significantly.  The specific changes are discussed below.  Overall, much more detail has been added to the final rules. Also, in the proposed rules, the designation for this subpart was ' 438.300 et seq. The designation under the final rules with comment is ' 438.200 et seq.
 
HCFA indicates that this subpart implements 42 U.S.C. ' 1396u-2(c)(1) of the Medicaid Act. This provision requires State Medicaid agencies to implement a quality assessment and improvement strategy which includes access standards that ensure continuity of care and adequate primary care and specialized services capacity; examination of other aspects of care and services related to quality improvement (such as grievance procedures, marketing and information standards); procedures to monitor the quality and appropriateness of care; and regular and periodic review of the strategy.
 
The statute mandates that the standards developed under this provision be consistent with standards established by the Secretary of HHS as of August 1, 1998. However, standards developed by the Secretary are not to preempt more stringent standards that States establish.  Guidelines applied to Medicaid managed care programs under 1915(b) waivers are to apply until the standards established by the Secretary become effective. Id. at ' 1396u-2(c)(1)(B).
 
The statute further requires the Secretary to monitor State development and implementation of quality assessment and improvement strategies and to consult with States in developing these standards.  In response to comments indicating the belief that the proposed rules were too prescriptive, HCFA noted in the preamble that they consulted with States and beneficiaries in finalizing the rules. HCFA concluded that these important protections reflect what the agency believes to be Congressional intent in enacting quality and beneficiary protections. HCFA also sought to include aspects of the Consumer Bill of Rights, where legal authority permitted inclusion.  As a result of this process, HCFA included many of the changes that were suggested by comments to the proposed rules and noted that the final standards are consistent with what is used throughout the health care industry. 66 Fed. Reg. at 6295. Moreover, HCFA makes the quality rules as consistent as appropriate to those applied to Medicare+Choice plans. 66 Fed. Reg. at 6297.
 
In the final rule, HCFA extends these standards to PHPs as well as MCOs, because the concerns that prompted Congress to impose quality requirements on MCOs equally apply to PHPs, namely financial risk. 66 Fed. Reg. at 6296.
 
Because of the delay by the Bush Administration of the effective date, individuals with special needs and pregnant women are particularly affected.  For example, these rules contain requirements that would ensure that these individuals are identified, screened, and assessed soon after enrollment and that a treatment plan be developed to meet individual=s needs. The rules also make clear the States= responsibility for drafting clear contracts delineating what services the MCOs and PHPs are to provide and over what services will the State retain responsibility. Currently, there is a lot of confusion in this area, leaving many beneficiaries who need services in limbo. Finally, the rules require that individuals who are denied services receive written notices of action.
 
 
 
42 C.F.R. ' 438.202BState Responsibilities
 
This provision sets forth the State=s responsibilities in implementing its quality strategy.  66 Fed. Reg. at 6298-99.  In the final rule, HCFA adds the requirement that State agencies must provide for input of beneficiaries and other stakeholders in the development of the State strategy, including by making the strategy available for public comment prior to its adoption, and must document the State strategy in writing.  ' 438.202(b), (c). HCFA considers State agencies such as State Mental Health and Substance Abuse agencies, Title V Maternal and Child Health agencies, and IDEA agencies as stakeholders who should have input into the development of the strategy. 66 Fed. Reg. at 6318.
 
States also must now submit to HCFA a copy of the State=s initial strategy and of any revisions when significant changes are made.  ' 438.202(f)(1).  States also must provide regular reports to HCFA on the implementation and effectiveness of the quality assessment and performance improvement strategy at least every three years.  ' 438.202(f)(2).
 
In response to comments questioning the three-year period for State review of its strategy, HCFA clarified in the preamble that the review in this provision refers to the State=s quality strategy, not to the actual State monitoring and review of MCOs and PHPs which is addressed elsewhere in the rules. Thus, the language was amended to require the State to periodically (instead of regularly and periodically) review its strategy and to update the strategy as often as the State considers appropriate, but at least every three years. ' 438.202(e).
 
 
 
42 C.F.R. ' 438.204 B Elements of State Quality Strategies
 
This section sets forth the minimum elements of a State quality strategy, including contract provisions, for assessing the quality and appropriateness of care and services provided.  66 Fed. Reg. at 6299-6300.
 
A revised paragraph (b) requires that State procedures for assessing the quality and appropriateness of care and services furnished to MCO and PHP Medicaid enrollees include procedures that 1) identify enrollees with special needs; and 2) assess the quality and appropriateness of care furnished to these enrollees. ' 438.204(b)(i), (ii).  In addition, States must also have procedures to identify the race, ethnicity, and primary language of each Medicaid enrollee and provide this information to the MCOs and PHPs at the time of enrollment. ' 438.204(b)(iii).  HCFA added this latter provision because it believes that in order for MCOs and PHPs Ato effectively address cultural competency, they all must have basic information on the cultural characteristics of their Medicaid enrollees.@ 66 Fed. Reg. at 6300.
 
States also must include in their strategy any performance measures and levels prescribed by HCFA consistent with the BBA. ' 438.204(c).  HCFA adopted this provision in response to comments suggesting that specific performance measures be included in the rules.  HCFA declined this recommendation stating that performance measures and standards change over time and it is important that the most current and useful measures can be adopted quickly.  In ' 438.240(c)(2)(ii)(A), HCFA also imposes an obligation on States to require contracting MCOs and PHPs to meet these specific performance levels. 66 Fed. Reg. at 6297.
 
HCFA refused to adopt recommendations that it require Aannual@ audits of MCOs for compliance with quality standards; monitoring of grievances and logs of calls to beneficiary hotlines; and medical record reviews in certain circumstances.  HCFA explained that while States may choose to conduct annual audits,[1] such audits would not relieve States of their ongoing responsibility to Acontinuously monitor@ MCOs and PHPs to ensure compliance Aat all times.@ Further, States are in the best position to determine how they will do this. 66 Fed. Reg. at 6299-6300. With respect to the grievances, HCFA believes that the requirement in ' 438.416(d) requiring MCOs and PHPs to submit summaries of their handling of grievances to the States sufficiently addresses the concern. 66 Fed. Reg. at 6300. Since HCFA does not require States to have Ahotlines,@ it does not feel as if it can require monitoring of hotline logs. HCFA also does not believe that it should require States to review any specific medical records, but rather it prefers to leave this decision to the State in the context of a State=s overall quality strategy.  66 Fed. Reg. at 6300.
 
 
 
42 C.F.R. ' 438.206 B Availability of Services[2]
 
This provision corresponds with 42 U.S.C. ' 1396u-2(c)(1)(A)(i) which requires each State to develop and implement access to care standards as part of its quality improvement strategy. 66 Fed. Reg. at 6300-01.
 
Out-of-Nework Medicaid Services
 
With respect to services that are available under the State plan, but not included in the MCO or PHP contract, HCFA amended the language to clarify that the State does not have case management responsibilities (i.e. by Aarranging@) for services not available from the health plan, but that it must make the service available from other sources.  66 Fed. Reg. at 6301-02.  In the preamble, HCFA also emphasizes that its intent in promulgating this rule was to ensure that enrollees in managed care have access to covered services under the State plan, but not included in the plan contract, and that the primary duty to inform beneficiaries rests with the State; however, the State may delegate this responsibility to the MCO or PHP. 66 Fed. Reg. at 6301.
 
To address concerns raised about the inability to obtain appropriate care within the plan network, HCFA added the requirement that MCOs and PHPs must adequately and timely cover services out-of-network for as long as the plans are unable to provide necessary medical services covered under the contract. ' 438.206(d)(5); 66 Fed. Reg. at 6303. HCFA intends this provision to extend to the inability to provide covered medically necessary services that are related, such as Cesarean section and tubal ligation, when needed to be performed at the same time.  66 Fed. Reg. at 6303. Further, HCFA requires in the new rule that the out-of-plan access does not result in greater costs to the enrollee. ' 438.206(d)(8).
 
Provider Network Capacity
 
 
HCFA has added Apersons with special health-care needs@ to the list of anticipated Medicaid enrollees that MCOs and PHPs must pay particular attention to in establishing and maintaining its provider network. ' 438.206(d)(1)(i).   MCOs and PHPs also must now consider provider Atraining,@ Aexperience@ and Aspecialization@ in establishing networks and in expanding its services area.  ' 438.206(d)(1)(iii), (d)(4).  These changes were made in response to comments requesting that MCOs make available providers experienced in treating conditions, such as HIV/AIDS, as part of their networks or through other arrangements. 66 Fed. Reg. at 6302, 6303. However, HCFA declined to specify the types of specialists or specific types or numbers of providers that must be included in the plan network, the level of experience needed by providers to treat particular conditions, or particular standards that specify maximum enrollee-to-provider ratios.  Id. at 6302, 6304.
 
Second Opinions
 
In response to a recommendation that enrollees have access to a second opinion upon receiving an adverse decision, HCFA implemented new ' 438.206(d)(3).  This provision requires that enrollees be provided a second opinion at the enrollee=s request, not just in the case of an adverse action, and at no cost to the enrollee.  However, HCFA did not agree that an unbiased opinion could be obtained only from an out-of-network provider. Thus, MCOs and PHPs can provide the second opinion from an in-network provider.  66 Fed. Reg. at 6306.  Note, second opinions are also added in ' 438.100 which concerns enrollee rights.
 
Women's Health Specialists
 
Section 438.206(d)(2) mandates direct access to women=s health specialists for female enrollees for covered women=s routine and preventive care.   HCFA states that this provision was proposed consistent with 42 U.S.C. ' 1396u-2(c)(1)(A)(i), which requires States to develop standards for access to care Ain a manner that ensures continuity of care and adequate primary care and specialized service capacity,@ and with the Consumer Bill of Rights and Responsibilities (CBRR) issued by the President=s Advisory Commission on Consumer Protection and Quality in the Health Care Industry in November 1997. 66 Fed. Reg. at 6305, 6306.  HCFA amended the language to make clear that direct access to women=s health specialists cannot be fulfilled merely by providing the opportunity to select a women=s health specialist as a primary care provider.  This requirement is in addition to the designated source of primary care, if that source is not a women=s health specialist. ' 438.206(d)(2); 66 Fed. Reg. at 6306.   HCFA also notes that this provision means that women should have access to any women=s health specialist within the network, unless the network providers are not accepting new enrollees or there are other network restrictions based on the enrollees choice of primary care provider (i.e. primary care provider can refer only to specialists within his/her subnetwork).  66 Fed. Reg. at 6305. However, women must be informed of the consequences of choosing such a primary care provider at the time of enrollment. Id.
 
HCFA states clearly that it intends the women=s direct access provision to apply to minors as well as adults and that Aif there is a medical need to see a women=s health specialist, there should be no impediment based on age…@ 66 Fed. Reg. at 6305. HCFA also explains that Aroutine and preventive services@ includes Ainitial follow-up visits for services unique to women such as prenatal care, mammograms, pap smears, and for services to treat genito-urinary conditions such as vaginal and urinary track infections and sexually transmitted diseases.@ Notably, HCA specified Ainitial follow-up visits@ as opposed to ongoing care for these health needs, and did not include in the list labor and delivery as was requested by comments. 66 Fed. Reg. at 6305.
 
HCFA declined to define in the regulation the term Awomen=s health specialist,@ because different types of health professionals may be appropriately contracting with a health plan as women=s health specialists due to education or clinical experience.  However, HCFA does intend for this term to include licensed health professionals with specific clinical education and training in women=s health care, including obstetricians, gynecologists, nurse midwives, and nurse practitioners who meet State licensing requirements. 66 Fed. Reg. at 6305.
 
Timely Access to Services
 
The proposed regulations at ' 438.306(d)(5) required States to ensure that MCOs and PHPs make services available 24 hours a day, 7 days a week. At a minimum, this requirement applied to emergency and post-stabilization services and to non-emergency services that are required immediately due to unforseen illness. Id. HCFA intended this provision to ensure that individuals needing home health care and other non-hospital based services receive care, when medically necessary, during non-business hours. To clarify this intent, HCFA amended the language to simply require MCOs and PHPs to ensure that services are available 24 hours a day, 7 days a week, when medically necessary.  ' 438.206(e)(1)(iii); 66 Fed. Reg. at 6307.
 
Proposed ' 438.306(d)(6) required MCOs and PHPs to ensure that its providers= hours of operation are Aconvenient@ to enrollees and do not discriminate against Medicaid enrollees.  HCFA amended this language by moving the Ahours of operation@ portion of the regulation to ' 438.206(e)(1)(ii) .  The new rule continues to require MCOs and PHPs to ensure that providers= hours of operation are convenient for enrollees; however, what is convenient is defined by State-established methodologies and must be at least as comparable to Medicaid fee-for-service. 66 Fed. Reg. at 6307, 6308.  HCFA kept the requirement that providers not discriminate against Medicaid enrollees in ' 438.206(d)(7).
 
Language Access
 
HCFA eliminated the reference to the language access requirements specified at ' 438.10 (informational requirements) in the rule requiring that MCOs and PHPs ensure that services are provided in a culturally competent manner to all enrollees.  Compare proposed ' 438.306(e)(4) with ' 438.206(e)(2).  In doing so, HCFA explained that it strengthened the cultural competence requirements by adding a separate provision at ' 438.204 that requires States, as en element of the State quality strategy, to identify and provide MCOs and PHPs with information on race, ethnicity, and primary language spoken by each Medicaid beneficiary at the time of enrollment.  In addition, ' 438.206(e)(2) was revised to ensure that services are provided in a culturally competent manner to all enrollees, including, HCFA says, to those with limited English proficiency and diverse cultural and ethnic backgrounds.  HCFA also requires in final ' 438.10(b) that States, MCOs, PHPs and PCCMs make interpreter services available to meet the needs of all enrollees. 66 Fed. Reg. at 6312.
 
While HCFA declined to provide a definition of Acultural competency@ in the text of the regulations, as many comments requested, it offered the following as guidance which States may use in developing their own definition:
 
Cultural competency in health care is a set of attitudes, skills, behaviors, and policies that enable organizations and individuals to work effectively in cross-cultural situations.  It reflects an understanding of the importance of acquiring and using knowledge of the unique health-related beliefs, attitudes, practices, and communication patterns of beneficiaries and their families to improve services, enhance beneficiary understanding of programs, increase community participation, and eliminate disparities in health status among diverse population groups.
 
66 Fed. Reg. at 6312.
 
Specific Access Standards
 
HCFA did not adopt suggestions to specify geographic access standards (66 Fed. Reg. at 6304) or timeliness standards (Id. at 6307-08). It also was not more specific with respect to physical accessibility of locations for enrollees with disabilities, stating that other provisions adequately address issues of physical access and composition of provider networks. 66 Fed. Reg. at 6304-05.
 
 
 
' 438.207 B Assurances of Adequate Capacity and Services
 
Proposed ' 438.110 was drafted under the authority of 42 U.S.C. '1396u-2(b)(5) to require MCOs to provide adequate assurances that the MCOs have the capacity to serve the expected enrollment in its service area. Specifically, Congress specifies that these assurances must demonstrate that each MCO has an appropriate range of services, and a sufficient number, mix and geographic distribution of providers.  66 Fed. Reg. at 6283-84.  HCFA interpreted Aassurances@ to require MCOs to submit to the State and to HCFA documentation, as determined by the State, that addressed the State=s standards for access to care outlined in proposed ' 438.306 (redesignated as ' 438.206).  In addition, MCO submission of documentation and State certification was to occur at least every two years and at the time the MCO enters into a new contract with the State or when there has been significant change in the MCO=s delivery network or enrollee population. 66 Fed. Reg. at 6283.
 
Because proposed ' 438.110 was closely related to proposed ' 438.306 the two were redesignated as '' 438.207 and 438.206, respectively, so that they can be read and applied together.  Specifically, the assurances that must be provided under ' 438.207 must document how MCOs are addressing the access standards delineated in ' 438.206.  66 Fed. Reg. at 6283.  HCFA also clarified that while proposed ' 438.306 was meant to address the substantive requirements to ensure availability of services, proposed ' 438.110 was to address the procedural requirements for submitting assurances of adequate capacity. 66 Fed. Reg. at 6284. Thus, HCFA did not include suggestions to include standards addressing particular services or populations in final ' 438.207.  Instead, HCFA addressed concerns about pregnant women and persons with special needs in ' 438.206. However, HCFA did not include access standards to address issues such as lack of family planning services within an MCO and how those services should be made available without additional burden on the enrollee. HCFA said that States are free to address this and other issues that were raised.  66 Fed. Reg. at 6284.
 
Paragraph (a) of the proposed rule was revised to no longer require routine submission of documentation to HCFA, as well as to the States. Instead, MCOs are to submit the documentation  to the States who, in turn, are required only to certify to HCFA that MCOs have adequate capacity and services.  Compare proposed ' 438.110(a), (d) with ' 438.207(a), (d).  Even though the statute requires that MCOs provide adequate assurances to Athe State and the Secretary,@ HCFA amended the language to address concerns that the proposed rule would interfere with the State=s monitoring role and that submission of documentation to HCFA as well would constitute a significant administrative burden on MCOs. 66 Fed. Reg. at 6285.
 
Final ' 438.207(b) requires submission of documentation to the State in a format specified by the State and acceptable to HCFA. While HCFA is not specifying the type of format that must be used, it stated that it will provide more formal guidance on acceptable formats once HCFA gains more experience in implementing this provision. 66 Fed. Reg. at 6285.
 
In response to comments questioning HCFA=s authority to require sufficient capacity related to specialists services, HCFA responded that although 42 U.S.C. ' 1396u-2(b)(5) refers expressly only to preventive and primary care services, it also requires assurances of Acapacity to serve the expected enrollment.@ Presumably, HCFA says, this includes those enrollees who need specialty services. In addition, while this section specifies expressly that these assurances should Ainclud[e] assurances with respect to preventive and primary care, this does not mean that assurances about other services are not necessary.@ HCFA also points to the clause discussing preventive and primary care at ' 1396u-2(b)(5)(A) as referencing Aan appropriate range of services@ and to ' 1396u-2(b)(5)(B) which requires Aa sufficient … mix of providers of services.@
 
Under the interpretation of its authority of ' 1396u-2(b)(5), HCFA has required assurances of specialty services as well.  ' 438.207(b)(1); 66 Fed. Reg. at 6286.
 
One comment requested clarification of the term Amix@ in the requirement AMaintains a network of providers that is sufficient in number, mix, and geographic distribution to meet the needs of the anticipated number of enrollees in the area@ (proposed ' 428.110(b)(2)), HCFA responded that it interprets this term to refer to provider types, such as types of specialists. 66 Fed. Reg. at 6286.  This language was maintained in the final rule. ' 438.207(b)(2).  However, HCFA further explained that States will have to review documentation submitted by MCOs to ensure that each MCO also meets access provisions, including provision of services in a culturally competent manner.  ' 438.206(e)(2).
 
Proposed ' 438.110(c) provided timeframes for submission of required documentation: 1) at least every two years; 2) at the time an MCO enters into or renews a contract with the State; and 3) at any time the State determines there has been a significant change in the MCOs delivery network or enrollee population.  In response to concerns that the two-year time period is too long and may not sufficiently protect beneficiaries and in response to comments that some States may be reviewing capacity more frequently, HCFA revised the rule to require submission of documentation on an annual basis. ' 438.207(c).  HCFA maintains the requirement that documentation be submitted when health plans enter into contracts with States. ' 438.207(c)(1). However, instead of requiring documentation upon renewal, the new language requires documentation when there has been a Asignificant change (as defined by the State) in the MCO=s or PHP=s operations that would affect adequate capacity and services…@ ' 438.207(c)(2).  The changes triggering the requirement include: (1) significant changes in services or benefits; (2) an expansion or reduction of the geographic service area; (3) the enrollment of a new population; and (4) a significant change in MCO or PHP rates. Id; 66 Fed. Reg. at 6287.
 
In addition, HCFA clarified the relationship between this section and 1915(b) waiver applications.  HCFA states that if there has been a significant period of time between the State=s assessment of adequate capacity at the time of waiver renewal, HCFA may ask the State to update its analysis and may request documentation from MCOs at that time. 66 Fed. Reg. at 6287.
 
HCFA also outlined its enforcement mechanisms should MCOs fail to demonstrate that adequate capacity.  The monitoring mechanisms include reviewing State reports and MCO and PHP documentation; interviewing representatives of the State, MCO or PHP; interviewing enrollees; reviewing provider agreements and contracts; and surveying participating providers.  Enforcement mechanisms range from issuing letters and corrective action plans to imposing terms and conditions under waiver programs, to conducting regular on-site monitoring reviews, and to withholding FFP under final ' 438.802(c).  HCFA states that its goal is to work with States to resolve problems and take appropriate action. 66 Fed. Reg. at 6287.
 
HCFA received comments suggesting that an MCO should be granted Awaiver@ of the requirement to document adequate capacity under this section if the MCO has made a Agood faith effort@ to solicit providers to participate in the plan=s network.  HCFA responded that in setting access standards, States have the flexibility to take into account a lack of provider types in certain geographic areas; limitations on the number of certain providers nationally, and other factors that may make it difficult for MCOs to always be able to construct a provider network that will address the health care needs of its enrollees. 66 Fed. Reg. at 6288.  As a result of this concern, HCFA requires in new ' 438.207(b)(4) that MCOs have policies and practices to address unanticipated need for providers with particular types of experience; and the unanticipated limitation of the availability of such providers. 66 Fed. Reg. at 6288. HCFA also requires in ' 438.206(d)(5) MCOs to permit enrollees to access out-of-network providers if the MCO=s network is unable to meet an enrollee=s needs. 66 Fed. Reg. at 6288.
 
 
 
' 438.208 — Coordination and Continuity of Care
 
Proposed ' 438.308 set forth requirements to ensure that States require MCOs and PHPs to maintain continuity and coordination of care for its enrollees.  Significant changes were made in the content and organization, including the move of provisions in proposed ' 438.306(e)(2), (3) pertaining to initial health assessment, and pregnancy and complex and serious medical conditions to this section.
 
Screenings and  Assessments
 
The proposed regulations required States to ensure that MCOs provide initial assessments of each enrollee within 90 days of enrollment, and within shorter periods of time for pregnant women and enrollees with complex and serious medical conditions. Proposed ' 438.306(e)(2). These requirements are amended and re-designated in ' 438.208. These rules are applicable to PHPs to the extent that they are applicable to the services furnished by the PHP. However, States must ensure that all Medicaid managed care enrollees are screened. '' 438.8, 438.208(a)(2); 66 Fed. Reg. at 6310.
 
Identification: In the final rule, HCFA identifies a more extensive list of individuals which must be identified as Aat risk@ in order to receive initial screens, follow-up assessments and treatment.   These include persons with special health care needs, children under age 2, and other enrollees known by the State to be pregnant or to have special health care needs. Persons with special health care needs, in turn, include SSI beneficiaries; children in Title IV-E foster care; enrollees in relevant, State-established, risk adjusted, higher cost payment categories; and any other category of recipients identified by HCFA.[3] HCFA also places the burden on the States to identify these individuals to the health plans upon the individuals= enrollment. ' 438.208(b); 66 Fed. Reg. at 6308.
 
Screens v. Assessments: In the final rule, HCFA deletes the term Ainitial assessment@ as ambiguous and differentiates between the terms Aintial screening@ and Acomprehensive health assessment.@ An initial screen, according to HCFA, may take the form of a phone call, mailed questionnaire, home visit or physical examination.  The initial screen must be sufficient to identify individuals with special needs and to identify languages, TTY requirements, and needs for accessible medical facilities and/or transportation services. A comprehensive health assessment includes a physical examination by an MCO or PHP provider. 66 Fed. Reg. at 6309.
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