Q & A: Assuring Accountability and Stewardship in Medicaid Managed Care: Public

Executive Summary

Q&A discussing public reporting requirements for states and MCOs.

Assuring Accountability and Stewardship in Medicaid Managed Care: 
Public Reporting Requirements for States and MCOs
Question: My clients are enrolled in managed care organizations (MCOs). They are Medicaid beneficiaries. The state Medicaid agency pays the MCOs a pre-set amount of money each month to provide certain services to them. Although the MCOs have 
been paid ahead of time to provide the services, some of our clients do not understand how to use their MCO and some are experiencing delays in getting needed care. According to the information our clients have received, they must obtain all but emergency care through their MCO or Medicaid will not cover the cost of the care. What can be done to monitor and improve the accountability of Medicaid managed care in our state? What can be done to ensure stewardship of public funds so that the government will get top value for our taxpayer dollars? 
Answer: The federal Medicaid laws include a number of consumer protections designed to assure that MCOs serve the individuals who are enrolled and are accountable to the taxpayers for the public funds they receive. Depending on the problems your clients are having, you can use these laws to enhance understanding of how managed care is meeting the needs of covered populations and to improve the operation of managed care for them. It is important for advocates to familiarize themselves with the applicable laws and to engage in ongoing monitoring on behalf of enrolled patients. 
Discussion: This Q&A focuses on states? use of prepaid managed care systems to provide services to Medicaid beneficiaries. After providing a brief overview on Medicaid?s use of prepaid managed care, the Q&A will explore some of the federal laws that states and MCOs are supposed to comply with and that you and your clients can use to ensure accountability and stewardship. 
Background on Medicaid managed care
Under traditional Medicaid rules, beneficiaries have the freedom to obtain services from any qualified, Medicaid-participating provider. See 42 U.S.C. § 1396a(a)(23) (the ?freedom of choice? rule). Medicaid beneficiaries have long been allowed to voluntarily enroll in qualified managed care plans since the early days of the program and, thus, opt to surrender their freedom of choice. 
In response to Medicaid managed care scandals in California, and Illinois,2 the Medicaid Act was amended in 1976 to establish standards for managed care organizations and other prepaid entities wishing to participate in Medicaid. The legislation prohibits federal funding to states unless MCOs and MCO contracting adheres to minimum accountability and stewardship protections. See 42 U.S.C. §1396b(m). Among other things, the contracts between the state and each MCO must assure that the MCO does not discriminate on the basis of health status or need, that beneficiaries have rights to disenroll, that the state can audit and inspect the MCO?s books and records, and that the MCO will maintain adequate patient encounter data to identify the providers who deliver the services to patients. Id. 
In the early 1980s, Congress and the Administration enacted legislation to encourage increased enrollment in Medicaid managed care plans. The Omnibus Budget Reconciliation Act of 1981 (OBRA-81) added section 1915(b) to the Social Security Act (42 U.S.C. § 1396n(b)). Section 1915(b) allows states to obtain permission from the US Department of Health and Human Services (DHHS) to waive otherwise mandatory Medicaid provisions so that beneficiaries can be required to enroll in MCOs. Under the law, DHHS must find the proposed program to be cost effective, efficient, and not inconsistent with the purposes of the Medicaid program. Systems that restrict freedom of choice cannot apply to emergencies or family planning services and cannot ?substantially impair access to services of adequate quality where medically necessary.? 42 U.S.C. § 1396n(b)(2). Moreover, restrictions cannot ?discriminate among classes of providers on grounds unrelated to their demonstrated effectiveness and efficiency in providing services.? Id. at § 1396n(b)(4).3
Significant changes were also introduced by the Balanced Budget Act of 1997 (BBA-97). The BBA-97 provisions authorize states to implement mandatory managed care for most Medicaid populations through a simple state plan amendment. See 42 U.S.C. § 1396u-2. A waiver is not required. Some populations are excluded from the state plan option, however. States must still obtain waivers to require the following populations to enroll in Medicaid managed care: 
  • Children under age 19 with special needs if they are eligible for Supplemental Security Income; described in community-based care programs under title V; eligible through the ?Katie Beckett? option; or in foster care, adoption assistance or out-of-home placement; 
  • Qualified Medicare Beneficiaries or persons dually eligible for Medicare and Medicaid; or
  • Native Americans (unless the managed care entity is operating as part of Indian Health Services). 
Id. at § 1396u-2(a)(2). 
Since the early 1980s, Medicaid managed care arrangements have grown significantly. In 1981, only 1.3 percent of the total Medicaid population was enrolled in some sort of managed care program. By 1997, this percentage swelled to approximately 48 percent of all beneficiaries and, by 2006, 65 percent of beneficiaries were enrolled in a managed care program. CMS, 2006 Medicaid Managed care Enrollment Report Summary Statistics as of June 30, 2006 at 1, available at http://www.cms.hhs.gov/.4 All states except Alaska and Wyoming enrolled at least some Medicaid beneficiaries in some sort of managed care program. Most beneficiaries are enrolled in prepaid plans?in a commercial MCO, a Medicaid-only MCO, and/or a prepaid inpatient health plan. Id. at 4-5. 
The National Health Law Program has monitored managed care at the state and local levels since the 1980s. Over that time, we have addressed problems with MCOs enrolling individuals improperly, marketing to people with disabilities and/or limited English for whom service delivery sites are not accessible, failing to provide services that individuals? treating doctors prescribe; offering inadequate provider networks to serve the enrolled population, and denying or terminating services without giving proper notice and the opportunity for the individual to challenge the denial. A few recent examples show the kinds of problems that can occur: 
  • The District of Columbia contracts with four MCOs to provide services, including Early and Periodic Screening, Diagnosis and Treatment for children under age 21. The CMSForm 416 shows states? annual EPSDT performance. According to the Form, dental services for children aged three years and older actually decreased between FY2005 and FY2006 in three of the four MCOs. Dental service levels were below 60 percent in all MCOs, with one MCO failing to provide any dental services to 65 percent of its enrolled children.5
  • In Miami-Dade County, a pilot project approved by CMS and initiated by then-Governor Bush enrolls Medicaid children in prepaid dental plans. A report from the State?s contractor found that the number of children who received dental care through the Medicaid program dropped 40 percent during the first year. Other reports showed a dental group, which was paid $4.25 a month for each of 790 children, provided services to only 45 children (5.7 percent) during the first six months of 2005. Thus, the group was paid $20,145 for treating 45 children.6 An analysis from the College of Dental Medicine at Columbia University found that the State of Florida lost value by paying the same amount for less care and less quality.7

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