A Year of Managed Care Care Rate Reductions

As the health care environment continues to evolve, we see one steady trend: Medicaid and Medicare enrollment are steadily increasing. However, new trends are also emerging as we analyze data and strategize for the future of the industry.

The Medicaid fee-for-service approach is nearly a thing of the past. There are more than 75 million Medicaid enrollees nationwide—72 percent of those are enrolled in a Medicaid managed care organization (MCO). MCOs use a specified network of doctors and hospitals to fulfill contracts with states, taking responsibility for overseeing each Medicaid patient’s care.

While managed care delivery systems can reduce Medicaid program costs and manage the utilization of health care services, they are reducing rates to reach advertised savings. As enrollment continues to rise, HME providers are experiencing greater rate reductions. Multiple payers base their rates on Medicare reimbursements, or they use Medicare rates to justify their rate reductions.

Currently, 43 states have some type of Medicaid MCO plan in place. New York tops the list with 23 contracted MCOs, and California comes up next with 22 contracts. Out of the seven states currently without MCO plans, North Carolina and Oklahoma are in the process of implementing them; North Carolina hopes to complete this process by 2019.

Most states average four MCOs that manage beneficiaries, with big players in the market including Amerigroup, individual Blue Cross Blue Shield Plans, Centene, United Healthcare and Molina Healthcare.

With rate reductions for HME services increasingly being sought by MCO networks, AAHomecare has developed a strategy built around relationships to combat these cuts, with the goal of helping providers retain sustainable reimbursement. Our work involves evaluating the requests for proposals (RFPs) for new MCO states and reviewing the existing contracts when they are up for renewal. This has given us a seat at the table when important negotiations are taking place.

Thanks to our strategy, some states have been open to discussion on submission of regulations for review by the states, to be entered into RFPs, including consistent medical necessity policy, consistent prior approval policy and a Medicaid rate floor. As we continue to educate states on Medicaid Cures, we will continue to also have an impact on MCOs, and we hope to make a positive bend in the trend of rate reductions for the HME community.

But how does Medicaid Cures coincide with MCOs? The Cures Act provision related to HME limits the federal contribution for DMEPOS to Medicare competitive bid rates effective January 1, 2018. As reported previously by AAHomecare, we have evaluated the language and sought a legal opinion to clarify the rights of the state Medicaid programs. We determined that states have the right to continue to reimburse above Medicare pricing, as the legislation only limits the federal match and does not mandate competitive bid rate-setting. CMS has also confirmed this in our meetings with them.

Our focus since December 2017, has been to educate Medicaid programs state by state, informing each state of issues associated with following Medicare pricing, the significant differences between the Medicare and Medicaid populations, and the rights of the state to continue to set rates that enable access to care. We have provided information to the state Medicaid program that was not published by CMS, including the Cures HCPCS list. CMS has confirmed that this legislation impacts 244 HCPCS codes that meet the definition of HME items covered under 1395x(n) statute covered by Medicare and Medicaid.

AAHomecare has sought and received clarification from CMS, evaluated the rate comparisons in the majority of the states, and provided an evaluation of the landscape for Medicaid MCO plans and fee schedules, to ensure the tide turns, and all contracts remain true to the intent of Medicaid Cures. We have received utilization data from many states and have run it through the CMS analysis tool. This allows us to look at those states whose aggregate is under, or slightly over, and ask the states to leave their fee schedules alone. If their utilization data is over the aggregate, I am working with the state leaders to create proposals to limit the number of HCPCS codes involved with data analysis. We continue significant engagement with legal counsel, and part of my role is to work directly with state associations to educate and influence Medicaid directors.

Our strategy for Medicaid Cures has seen success. I have participated in 23 state Medicaid meetings and completed 10 utilization analyses, as well as another seven alternate proposals, with two of those being accepted, and the others still pending. Thirteen states have been influenced to not make rate changes for 2018, and five states that chose to make rate changes were influenced to only make changes to the 244 Cures HCPCS codes.

Through our relationships with CMS, AAHomecare was able to influence guidance and obtain a preliminary HCPCS code list, as well as provide direct questions based on state analysis. We have also seen the reissuance of the State Medicaid Director Letter to eliminate the December 31, 2017, deadline for states; CMS reissued the state letter on January 3, 2018, dropping the December 31, deadline.

We also experienced a positive policy change in the IFR rural rates and how they will be used in the Medicaid Cures process. Two concerns rose to the top related to the usage of the higher rural rates published by CMS. In previous communications, CMS had indicated it would be utilizing the January 1, 2018, fee schedule for the reconciliation process, but following a meeting with the agency and Medicaid finance division to provide information on the IFR and new rates, we received confirmation that state processing claims based on area can now use the higher rates for dates of service between June 1, 2018, through December 31, 2018.

Currently Colorado is the only state processing by area, but others have discussed doing this as well. I also discussed with CMS our concern that states have indicated they cannot process claims based on area due to claims system limitations, stating it will take years of reprogramming and millions of dollars. I am currently working with states that cannot complete the processing of claims to report their utilization by time frame and area, and finalizing a tool to use to help with this.

AAHomecare will continue to take part in collaborative and proactive approaches to deal with these challenges, and we have established work groups to look at specific HME opportunities. As an organization, we are set to make great strides in the final months of 2018. The key to thriving in the current reimbursement environment is thinking outside the box from a payer relations perspective and differentiating your company from the competition.