Q & A: Managed Care Informing and Disclosure Requirements

Executive Summary

By 2010, about three quarters of Medicaid beneficiaries received services through some type of managed care arrangement. Subject to a few exceptions, States may require most Medicaid beneficiaries to enroll in managed care by amending their state Medicaid plans.æThis Q&A analyzes the responsibilities of states and managed care plans when they require persons with disabilities to enroll in managed care.

Q. My state?s Medicaid program will soon be requiring people with disabilities to enroll in managed care plans. What responsibility do state and managed care plans have to provide information about rights and services to new enrollees? Are there any cases addressing these requirements?
A. Federal law requires states and managed care plans to disclose information to enrollees and applicants. This includes services covered, enrollment and disenrollment rights, and notice and appeal rights. There are a few cases that address these requirements.
By 2010, about three quarters of Medicaid beneficiaries received services through some type of managed care arrangement.2 States may require most Medicaid beneficiaries to enroll in managed care by amending their state Medicaid plans.3 The exceptions are:  (1) individuals eligible for both Medicare and Medicaid (dually eligible individuals), (2) children under age 19 with special needs, and (3) most Native Americans.4 If a state wants to require these populations to enroll, they may apply for a waiver through 42 U.S.C. § 1396n(b), which allows them to waive some Medicaid requirements. They may also require mandate enrollment through 42 U.S.C. § 1315 (also known as section 1115) which allows demonstration, experimental, and pilot programs to test alternative service delivery methods.
There are three models of Medicaid managed care entities (MCEs):
  • Managed Care Organizations (MCOs): entities that provide a package of services in exchange for a payment for each enrollee, called a ?capitation payment.?  MCOs enter into ?comprehensive risk contracts,? through which they agree to provide certain services and incur a loss if the cost of providing services exceeds the capitated payment.   They are required to offer only a limited number and type of services, but may offer more.5
  • Prepaid Inpatient and Ambulatory Plans (PHPs): entities receiving capitated payments, but do not have comprehensive risk contracts. Unlike MCOs, they are required to offer a comprehensive package of services.6
  • Primary Care Case Managers (PCCMs): entities in which a primary care provider is paid a monthly per person fee to coordinate care for beneficiaries and receives fee-for-service reimbursement for services provided. 7
It is crucial that Medicaid applicants, enrollees, and other stakeholders have ready access to information about Medicaid managed care programs, including the services covered, the providers who participate in the plan, their rights to enroll and disenroll, to receive notices of adverse actions, to file grievances and to obtain an impartial hearing.  Fortunately, there are legal requirements designed to ensure that this information is actually available and understandable.8   Obtaining this information is particularly crucial for people with disabilities, who have greater need for more expensive or ongoing services. When this population is enrolled in capitated managed care, there is an incentive to deny or restrict access to services in order to save money.
States and managed care entities must provide all enrollment notices in a manner and form that can be easily understood by current and potential enrollees.9 Annually, and upon request, states must provide a list of available managed care entities along with a comparative, chart-like form that contains (for each MCE) information on benefits and cost sharing, service area, and available quality and performance indicators.10   Before an individual enrolls in an MCE, the state must inform the individual in writing of the any services that are not available through that entity and how they may obtain access elsewhere.11
Upon request, MCEs must make the following information available to both current and potential enrollees:
  • Identity, location, qualifications, and availability of participating providers;
  • Enrollee rights and responsibilities;
  • Grievance and appeal procedures; and
  • Covered items and services.12
States may require individuals to enroll in MCEs and may prohibit them from leaving the plan for a certain period of time. Even when states practicethis type of ?lock in,? enrollees must be allowed to disenroll from a managed care plan for cause at any time and during the 90 days following initial enrollment and at least once every 12 months thereafter.13  There is cause for disenrollment when (1) the enrollee moves out of the plan?s service area, (2) the plan does not cover a service the enrollee seeks due to religious or moral objections, (3) the enrollee needs related services that are not available in the plan?s network and her provider determines that receipt of the service separately would subject the enrollee to unnecessary risk, and (4) other reasons, including but not limited to poor quality of care or lack of access to covered services and experienced providers.14
MCEs are also subject to due process requirements.   Among other things, they must provide notice of actions to reduce, suspend, deny, or terminate services; failure to provide services in a timely manner; denial of payment of services; or, in rural areas, a request to obtain services outside the network.15
A number of courts have issued decisions dealing with Medicaid?s informational requirements.
Salazar v. D.C., 596 F. Supp. 2d 67 (D.D.C. 2009)
The plaintiff children in this case claimed that D.C. was violating Medicaid?s Early and Periodic Screening, Diagnostic and Treatment requirements governing Medicaid services for children. The parties entered into a consent decree in 1994 and court- supervised monitoring has been conducted since then.
In 2009, the court ordered the D.C. Medicaid agency and its contractors McKesson Health Solutions and an MCO to release the ?Interqual Clinical Support Criteria? used to evaluate requests for coverage of Medicaid services.  These criteria were developed and copyrighted by McKesson, which licenses them for use in D.C. and other Medicaid managed care systems around the country.  When services were denied based on these criteria, the children?s attorneys requested copies of the Interqual criteria. The Medicaid agency, McKesson, and the MCO refused to provide them, claiming the criteria were trade secrets. The court disagreed and ordered disclosure, holding that there was no support for the proposition ?that the federal copyright laws and local trade secret laws trump the federal Medicaid statute and regulations.?16   The court later amended the decision to issue a protective order preventing widespread publication of the criteria.17
Emily Q. v. Bonta, 208 F. Supp. 2d 1078 (C.D. Cal. 2001)
In another case filed on behalf of children, the federal district court ordered California state officials to take numerous steps to comply with EPSDT requirements to inform Medicaid enrollees about covered behavioral health services.  Evidence showed that many of the county-operated mental health managed care plans (MHPs) were not familiar with the full scope of mental health services available for children and youth. Accordingly, the court ordered the state agency to distribute lists of supplemental  mental health services to the MHPs. Supplemental mental health services is the phrase that California usese to indicate services that are not itemized in the state plan but covered for children and youth under age 21 pursuant to EPSDT?s requirements.
HealthNet of Conn. v. Freedom of Information Act Comm?n, No. CV064010428S, 2006 WL 3691796 (Conn. Super. Ct. Nov. 29, 2006) (available from NHeLP)
Three individuals requested information about Medicaid managed care plans through the state?s freedom of information act (FOIA) requiring disclosure of records by public agencies. They asked for information about reimbursement rates, fees, and preferred drug lists and formularies. Their requests were denied on the grounds that the MCOs were not performing a government function. The MCOs also claimed that the information sought included ?trade secrets? and forcing them to disclose the information would be an unconstitutional taking.
The Connecticut Superior Court held that the MCOs were public agencies under FOIA because conduct was regulated to a significant degree by a public agency (the Department of Social Services), they were operating part of a public program (Medicaid), and they were making significant governmental decisions (whether to cover a service, what rate to pay providers).  Accordingly, the court held that the information was subject to disclosure, but declined to decide the trade secret question, noting that another commission would consider the issue.  Advocates ultimately successfully advocated for the release of the records.18
Lukes v. Dep?t of Public Welf., 976 A.2d 609 (Pa. Cmwlth. 2009)
The petitioners in this case sought copies of contracts between a Medicaid managed care program and hospital providers under Pennsylvania?s Right-to-Know (RTK) law. An administrative law judge initially denied the petition, and the Pennsylvania Commonwealth Court reversed.
The court rejected the state agency and managed care plan?s argument that the contracts were not public because they were not in the agency?s possession, reasoning that the agency had the contractual right to obtain copies at any time. Moreover, the court held that the agreements were public because they were a product of the state agency?s relationship with the managed care plan. Because these contracts related to reimbursement of private providers with public Medicaid funds, the rationale for ordering disclosure was particularly compelling.
The court stated
[P]ublic entities that receive or control public funds have a duty to account for their handling of such funds. Disclosure . . . is the only way to ensure such accountability. To shield such documents from review would circumvent the public?s ability to determine how their tax dollars are being spent.19
Notably, Pennsylvania?s RTK law has been amended since the Lukes decision, so it is not certain that a court would reach the same result.20   But, the rationale of the decision appears to be consistent with the language of the revised statute and courts have treated the case as good law.21
Conclusion and Recommendations
Medicaid services are increasingly provided by managed care plans. As non- governmental entities, many of which are for-profit enterprises, these plans are often not used to operating in a transparent manner. It is crucial for advocates to push for the maximum access to information about the services and administration of these entities.
Advocates should:
  • Familiarize themselves with the information disclosure requirements that govern MCEs and state Medicaid agencies, including general public records laws
  • Request information from the MCEs and the state Medicaid agencies, particularly about available services and network providers
  • Make contacts with the media to publicize egregious instances of failure to provide information
  • Petition elected officials to bring pressure on MCEs to account for their actions.

1 Produced by the National Health Law Program with a grant from the Training Advocacy Support Center (TASC), which is sponsored by the Administration on Developmental Disabilities, the Center for Mental Health Services, the Rehabilitation Services Administration, the Social Security Administration, and the HealthResources Services Administration. TASC is a division of the National Disabilities Rights Network (NDRN).
2 CMS, Medicaid Managed Care Enrollment, July 1 2010, https://www.cms.gov/Research-Statistics-Data- and-Systems/Computer-Data-and-Systems/MedicaidDataSourcesGenInfo/Downloads/2010July1.pdf.
3  42 U.S.C. § 1396u-2.
4 42 U.S.C. § 1396u-2(a)(2)(C).
5 42 U.S.C. § 1396b(m)(1)(A), 42 C.F.R. § 483.2.
6  42 C.F.R. § 483.2.
7 Id.
8   For  further  information,  see  Jane  Perkins,  Assuring  Accountability  and  Stewardship  in  Medicaid Managed Care:  Public Reporting Requirements for States and MCOs (June 2007) (available from TASC or NHeLP).
9 42 U.S.C. § 1396u-2(a)(5)(A); 42 C.F.R. § 438.10(b) (c), and (d).
10 42 U.S.C. § 1396u-2(a)(5)(C); 42 C.F.R. § 438.10(i).
11 42 U.S.C. § 1396u-2(a)(5)(D); 42 C.F.R. §§ 438.10(e)(2)(i)(E), (f)(6)(xii).
12 42 U.S.C. § 1396u-2(a(5)(B); 42 C.F.R. 438.10(f).
13 42 C.F.R. § 438.56(c).
14 42 C.F.R. § 438.438.56(d).
15 42 C.F.R. § 438.404.
17 750 F. Supp. 2d 65 (D.D.C. 2010).
18  Notably, in 2005, the state Attorney General?s office had written to urge the state Medicaid director to release the information related to reimbursement rates. The attorney general wrote: ?The critical public interest in openness and transparency in state contracting– especially involving more than $600 million of state funds — compels the release of these documents . . .? Op. Conn. Att?y Gen. (Oct. 2005), available at http://www.ct.gov/ag/cwp/view.asp?A=1770&Q=305398. For information about the advocacy in this case, contact Sheldon Toubman at New Haven Legal Services in Connecticut.
19 976 A.2d at 626.
20 Compare 65 Pa. Stat. § 66.1-66.2 (repealed 2009) and 65 Pa. Stat. 67.101-67.3103 (2012).
21 See, e.g., Honaman v. Twp of Lower Merion, 13 A.2d 1014 (Pa. Cmwlth. 2011) (citing Lukes with approval while noting repeal of earlier version of RTK law).

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