Q & A: Medicaid Managed Care and Disability Protections

Executive Summary

In 2010, more than 70% of Medicaid beneficiaries received services through some type of managed care arrangement. Increasing numbers of people with disabilities, including those eligible for both Medicare and Medicaid (dual eligibles) are being required to enroll in mandatory managed care. Thus, advocates and policy makers are concerned about whether these populations will have access to the services and providers that they need. This Q&A analyzes whether Medicaid managed care programs must comply with Title II and III of the Americans with Disabilities Act and Section 504 of the Rehabilitation Act.

Q. Are managed care plans that participate in the Medicaid program required to comply with Title II & III of the Americans with Disabilities Act and Section 504 of the Rehabilitation Act?
 
A. Yes.  Because they receive federal funds in the form of Medicaid payments, these managed care plans must comply with Section 504. Managed care plans are not public entities and are therefore not directly bound by Title II of the ADA.  But, states are required to ensure that all public services comply with the ADA and Section 504, even if they are provided by private contractors. To this end, most managed care contracts require plans to comply with the ADA and other civil rights laws. Title III governs public accommodations, which include most managed care plans.
 
Discussion
 
Medicaid Managed Care
 
In 2010, more than 70% of Medicaid beneficiaries received services through some type of managed care arrangement.2   Increasing numbers of people with disabilities, including those eligible for both Medicare and Medicaid (dual eligibles) are being required to enroll in mandatory managed care. Thus, advocates and policy makers are concerned about whether these populations will have access to the services and providers that they need.
 
States may require most Medicaid beneficiaries to enroll in managed care through by amending their state Medicaid plans.3 The exceptions are:  (1) individuals eligible for both Medicare and Medicaid (dual eligible), (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 allow them to waive many Medicaid requirements. They may also require them to enroll through 42 U.S.C. § 1315 (also known as section 1115) by proposing demonstration programs to test alternative service delivery methods.
 
There are three models of Medicaid managed care.  First, Managed Care Organizations (MCOs) provide a package of services in exchange for a capitated payment for each enrollee.  Managed care plans may 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 must offer at least three of the following services:  outpatient, Federally Qualified Health Center (FQHC), nursing facility, Early and Periodic Screening, Diagnostic, and Treatment (ESPDT), family planning, home health, lab and x-ray, and physician services.5   Prepaid Inpatient and Ambulatory Plans (PHPs), like MCOs, receive capitated payments, but offer a comprehensive package of services and do not have comprehensive risk contracts.6 Finally, Primary Care Case Managers (PCCMs) are entities in which a primary care provider is paid a nominal, monthly per person fee to coordinate care for beneficiaries and receives fee-for-service reimbursement for services provided. 7
 
Advocates and policymakers want to ensure that mandatory enrollment in managed care does not reduce Medicaid enrollees? access to covered services.  This is a particular concern when individuals with disabilities are required to enroll in MCOs, because of the MCO?s risk contrasts with state Medicaid agencies. It is costly to serve this population. In 2009, 43% of Medicaid expenditures were made for individuals under age 65 with disabilities, despite the fact that these enrollees comprise only 15% of the total Medicaid enrollment.8   Because MCO contracts require them to incur loss if they spend more on services than they receive through their contracts, there is a strong incentive to deny coverage of services to keep costs down.
 
There are a number of safeguards in the Medicaid Act and regulations intended to ensure that enrollees obtain necessary services and quality care.  For example, MCOs and PHPs must ensure that services are accessible to the same extent as to recipients not enrolled in the plan.9   Contracts must also prohibit discrimination on the basis of health status or requirements for health services in enrollment, disenrollment, and re-enrollment.10
 
States must also ensure that the capitated rates themselves are adequate to cover necessary services for individuals enrolled in the MCO.  States will not receive federal Medicaid matching funds for services provided by MCOs unless the services are provided pursuant to a contract under which payments are made on an actuarially sound basis. Actuarially sound rates, in general, are rates that are sufficient to ensure that all anticipated health care costs can be met.11   States must document the actuarial certification of the capitation rates.12 Notably, however, the U.S. Government Accountability Office has found that CMS has been inconsistent in reviewing states? rate setting practice for compliance with this requirement.13
 
Disability Discrimination Prohibitions
 
Despite these and other specific provisions intended to ensure access to necessary services, people with disabilities who are enrolled in managed care may also need the disability discrimination protections of Section 504 or the ADA.
 
Section 504 of the Rehabilitation Act prohibits ?any program or activity? receiving federal funding from engaging in discrimination against people with disabilities.14   This includes making reasonable accommodations so that  services are accessible to people with disabilities, ensuring that facilities are accessible to people with disabilities and that services are provided in the most integrated setting appropriate to a person?s needs.15 This includes state Medicaid programs, which receive federal funds directly, as well as their successors, assignees, or transferees.16   Specifically, health care providers that receive federal funding are bound by Section 504. This includes, for example, hospitals that receive Medicare and Medicaid payments, individual providers that are reimbursed by Medicaid, and HMOs that are paid with Medicaid or Medicare funds.17
 
Title II of the Americans with Disabilities Act prohibits disability discrimination by public entities and in public services and programs. Like Section 504, Title II requires that entities make reasonable accommodations to ensure that individuals with disabilities can participate in public services and programs. It also requires that services be provided in the most integrated setting appropriate to an individual?s needs. The U.S. Supreme Court has held, in Olmstead v. L.C., that unjustified institutionalization violates Title II.18
 
State Medicaid agencies are public entities for Title II purposes, but managed care plans are not.19  A public entity is defined as a State or local government; a department, agency, special purpose district, or other instrumentality of a State or States or local government. 20 Courts have held that ?instrumentalities? are governmental units or entities created by one, thus private companies that contract with states would not meet this definition.21 But, ?all governmental activities of public entities are covered, even if they are carried out by contractors.?22   In addition, many states? standard Medicaid contracts require compliance with federal civil rights laws, including the ADA.23
 
Entities that do not receive any federal funding are usually bound by Title III of the ADA, which prohibits public accommodations from discriminating on the basis of disability in ?the full and equal enjoyment? of their services and facilities.24   A private business qualifies as a public accommodation if its operations affect interstate commerce. The definition specifically includes insurance offices, hospitals, and professional offices of health care providers.25  Covered entities are prohibited from using eligibility criteria or methods of administration that screen out or exclude individuals because of their disability.  They must make reasonable accommodations to ensure that individuals with disabilities can access the services or facilities of the entity and ensure that services be provided in the most integrated setting appropriate 26   Title III?s physical accessibility requirements are more explicit than Title II, and require entities to remove architectural barriers that prevent access. The failure to take steps to ensure that no individual with a disability be excluded because of the lack of auxiliary aids and services, including qualified interpreters, also violated Title III.27

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