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This week鈥檚 second In Focus section delves into the  final rule. The Centers for Medicare & Medicaid Services (CMS) published the access rule May 10, 2024, alongside the similarly significant . The two rules include new flexibilities and requirements aimed at enhancing accountability for improving access and quality in Medicaid and the Children鈥檚 Health Insurance Program (CHIP) across the fee-for-service (FFS) and managed care delivery systems and provide targeted regulatory flexibility in support of this goal.   

Five Takeaways from the CMS Medicaid Managed Care Final Rule, which 黑料不打烊, Inc. (黑料不打烊), published April 24, 2024, outlined key issues and implications that CMS advanced in the Medicaid managed care program. The Ensuring Access to Medicaid Services final rule, meanwhile, focuses on the following:   

• Payment adequacy for direct care workers (80/20 rule) 
• The role of self-direction and the 80/20 rule 
• Establishment of a pathway to national benchmarking of Medicaid rates   
• Potential impacts of the rule on programs that serve individuals with dual eligibility 

Overview  

The Ensuring Access to Medicaid Services finalized policies are designed to create an updated federal framework for Medicaid鈥檚 home and community-based services (HCBS) programs. These changes come at a pivotal time, as states are facing workforce shortages, particularly among HCBS direct care workers (DCWs). Table 1 provides an overview of several significant final policies. 

Table 1. Ensuring Access to Medicaid Services: Overview of Final Rule Policies 

Below 黑料不打烊 reviews several key questions we are fielding regarding the impact of the rule.  

Ensuring Payment Adequacy: How will states demonstrate that 80 percent of Medicaid payments go to direct care workers?  

The final rule requires at least 80 percent of Medicaid payments be spent on compensation for DCWs workers, including homemaker, home health aide, and personal care services. In response to public comment, CMS adjusted the final rule to include some employer costs in the 80 percent calculation.  

Recognizing it will take substantial time for providers to establish the necessary systems, data collection tools, and processes to collect the required information to report to states, CMS is providing states six years to implement the HCBS Payment Adequacy policy, and four years for reporting requirements. States and providers must ensure that that they are prepared to meet the payment adequacy requirements in the final rule. Being successful will require collaboration between states and providers, investments in systems, and analysis of 鈥� and potentially changes to 鈥� reimbursement levels.  

How does the 80/20 rule apply to self-directed care?  

CMS finalized its proposal to require that at least 80 percent of all payments for homemaker, home health aide, and personal care services in HCBS programs, including managed care programs, be spent on compensation for DCWs. In a change from its proposed policy, CMS limits the 80/20 compensation mandate to certain types of self-directed models. Specifically, the 80/20 rule will apply to models in which the beneficiary directing services does not set the payment rate for the worker, such as Agency with Choice and other self-directed models that use a fiscal intermediary or fiscal employer agent, in both managed care and FFS delivery systems. The compensation rule does not apply to self-directed models in which the beneficiary sets the rates paid to workers.  

CMS will hold states accountable for compliance with the 80/20 rule, regardless of whether their HCBS are delivered through an FFS delivery system, managed care delivery system, or both. States will need to determine an approach to track compliance with the minimum performance requirement at the provider level, not the managed care plan level. States and managed care plans should collaborate to determine their respective roles in activities such as the data collection and mandatory reporting, and they should continue to seek and monitor clarifying guidance from CMS. 

How will the Ensuring Access final rule affect national benchmarks in Medicaid rates? State Medicaid programs have many nuances that make it difficult to obtain applicable comparison data and best practices. Beginning July 1, 2026, the final rule requires that states publish their payment rates, specifically the average hourly Medicaid FFS fee schedule payment rates, separately identified for payments made to individual providers and provider agencies, if the rates vary. States also must conduct a comparative analysis of their base Medicaid FFS fee schedule payment rates with the Medicare non-facility payment rate. CMS does not, however, require that states change their payment rates based on the comparative analysis.  

Payment rate transparency publications, comparative payment rate analyses, and payment rate disclosures present opportunities for states, MCOs, and providers to assess the adequacy of payment rates and their impact on access to services. The forthcoming data also will help federal and state level policymakers in their efforts to improve quality, access, and affordability. States will need to do baseline assessments comparing Medicaid and Medicare rates. States, managed care plans, and providers should monitor for CMS sub-regulatory guidance, including hypothetical examples of the service codes that would be subject to the comparative payment rate analysis.  

Does the final rule affect integrated models of care for people who are dually eligible for Medicaid and Medicare? CMS finalizes policies that will have a variable impact on states and individuals dually eligible for Medicare and Medicaid because of differences in state approaches to integrated care for this population. For example, the new grievance system policies apply differently depending on the level of integration the state requires of Medicare Advantage (MA) dual-eligible special needs plans (D-SNPs) programs. Like grievance systems, states, providers, and MCOs should monitor how states address the final rules for critical incidents for individuals with dual eligibility when a Medicaid managed care plan is unable to access Medicare data.  

CMS intends to provide additional sub-regulatory guidance and technical assistance to support implementation of policies that affect dually eligible individuals. States should verify their access to and readiness to use Medicare data related to the new requirements, and seek technical assistance to maximize use of these data for individuals enrolled in non-integrated D-SNPs. Commentors have also asked how the changes to the HCBS quality measure set may work in programs for dually eligible members.  

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黑料不打烊 is ready to support your efforts to understand and take action to account for the Ensuring Access to Medicaid Services final rule鈥檚 effects on your state鈥檚 or organization鈥檚 strategy and operations. Our experts are developing policies and procedures at the intersection of the access and managed care final rules. Please contact our featured experts on this vital set of issues.

The prospect of new leadership due to a presidential election brings with it the potential for significant shifts in priorities, policies, and programs within federal agencies. Medicaid now provides healthcare coverage for more than 84 million Americans. Since 2010, Medicaid has been subject to significant federal policy changes, starting with expansion as part of the Affordable Care Act, pandemic-related continuous eligibility provisions, expanded coverage for postpartum women, and just recently updated rules for managed care plans. The 2024 election will have a significant impact on Medicaid in the coming years, although you won鈥檛 hear much about it on the campaign trail (but our subscribers get a steady stream of insight to stay on top of what鈥檚 coming next).

Medicaid鈥檚 political salience has been quiet but steadily increasing since 2010, with now , changing the political narrative about the program. Medicaid coverage churn due to the unwinding of the pandemic related continuing-coverage provisions has been politically fraught for governors and legislatures, even bringing some states like Mississippi to finally consider the expansion opportunity to improve stability of coverage.

States each have their own approach to designing Medicaid coverage, but federal rules set the parameters within which they choose how to maintain access and quality of healthcare for low-income individuals and families.聽New CMS rules are requiring require more from managed care plans who contract to administer Medicaid in many states, increasing network adequacy, quality measurement standards, consumer protections and tailored approaches for long-term services and supports. These changes will shape the future of procurements for managed care services.

The election is very likely to touch on broad issues of affordability and equity, which are relevant to all healthcare programs but especially to Medicaid. Current policy priorities that center on equity have resulted in program design features that can impact the social determinants of health, including initiatives to address housing insecurity, food access, and mental health services. Increasingly these concerns have been bipartisan, although the proposed approaches will differ based on who is in charge.

Changes in national leadership 鈥� whether at CMS, HHS, or in the White House 鈥� will inevitably result in changes to the Medicaid program that impacts states and the agencies that serve the millions of Americans who rely on the program for essential healthcare services. Our Leavitt Partners colleagues provide regular intelligence on all the federal activity in D.C. that impacts Medicaid and other state health programs. and how this steady stream of insight can help inform your strategic decisions.

In this week鈥檚 In Focus section, 黑料不打烊 Managing Director Matt Powers and Associate Principal Lora Saunders discuss observations and perspectives as we approach completion of the Medicaid unwinding.   

Overview  

In response to the COVID-19 pandemic, CMS offered states an enhanced federal match in exchange for states pausing Medicaid disenrollments. As a result, Medicaid enrollment increased from around 71 million at the start of the pandemic to more than 92 million in December 2022, when Congress passed a bill to end the 鈥渃ontinuous eligibility鈥� provision. States began to resume normal (pre-pandemic) redetermination activities in early 2023鈥攁 massive undertaking of attempting to reach and verify eligibility for the then 94 million Medicaid enrollees known as 鈥渦nwinding.鈥�  

More than 70 percent of the efforts that will precipitate the largest one-year drop in enrollments since the program鈥檚 inception in 1965 have been completed. The enrollment reductions to date have been virtually identical to 黑料不打烊鈥檚 aggregate projections, and overall enrollment remains well above pre-pandemic levels. Perhaps most importantly, the Medicaid unwinding has put policymakers in a position to better evaluate how to improve enrollment and redetermination processes going forward.   

Figure 1 summarizes pre-pandemic enrollments, unwinding enrollments, and the projected end of 2024 enrollment. If the current trend holds, national Medicaid enrollment will be approximately 80 million enrollees鈥攄own from the 94 million pre-unwinding enrollment peak and nearly 10 million greater than the 71 million pre-pandemic enrollment. 

Our team鈥檚 assessment of the status of and data related to the Medicaid unwinding has led us to the following observations: 

• Arkansas, Iowa, Nebraska, Utah, and West Virginia have completed the redetermination process. More than half of the states are within two months of finishing the process. 
• The states that saw Medicaid enrollment grow the most under the continuous coverage policy are generally the same ones that are experiencing the greatest enrollment declines during the Medicaid unwinding. 
• Some larger states鈥攊ncluding California, New York, and Texas鈥攈ave sizeable outstanding redeterminations.   
• Nationally, more than 70 percent of all Medicaid enrollees have completed the redetermination process.  Figure 2 points out how far along states are with the redetermination process as of late April 2024. 

Medicaid Unwinding: The Road Ahead 

As the Medicaid unwinding process enters its final phase in most states, we are looking back at the experiences and lessons that can be applied to make impactful changes to Medicaid eligibility policies, systems, and procedures. 

Despite the challenges that the pandemic presented, the safety net was tested and responded well. In early 2020, the number of employed Americans decreased from 158 million to 133 million, and unemployment levels quickly reached 15 percent. Many new healthcare policies targeted direct access issues (e.g., financial supports to providers and telehealth regulatory relaxations), whereas the Medicaid continuous coverage requirement was intended to mitigate the effects of the abrupt spike in unemployment and potential effects on healthcare insurance. Table 1 shows how 黑料不打烊 projects national coverage patterns to change by type of coverage from before the pandemic through the end of the Medicaid unwinding. While the number of people with employer-sponsored insurance (ESI) or uninsured remains essentially flat, Medicaid enrollment grows significantly, and marketplace enrollment nearly doubles. Myriad federal and state policy changes contributed to a remarkably stable uninsurance rate during one of the most volatile economic periods in the past century. 

A next question for policymakers is whether, or to what extent, the rate of uninsured people can be sustained or reduced. The broad state adoption of policies to expand postpartum coverage to 12 months from two months and the nationwide January 2024 requirement for states to offer 12 months of continuous Medicaid coverage for children provide a coverage and continuity boost, especially given that nearly 40 million children will benefit from the new law. Other policy levers have the potential to be widely accepted and provide a further incentive to move people who are uninsured toward coverage, more stable insurance products, and more predictable outcomes and costs relative to the inefficiencies and ineffectiveness of non-coverage. 

Pivoting to best practices and making policy changes permanent. Just as the relaxation of relatively rigid telehealth policies has become more accepted, post-Medicaid unwinding will provide a natural opportunity to assess best practices and consider permanent policy changes.    

• Making Ex Parte Durable Policy.  Evidence suggests that ex parte policies effectively reduce churn. Further refinement of longstanding ex parte policies is within reach. Ensuring ex parte appropriately manages both the complexities of household versus individual eligibility issues and addresses the weaknesses of unreliable member contact information can improve the likelihood that ex parte can effectively serve as durable policy.  
• Pivoting from Paper to Electronic Communications.  The Medicaid unwinding has seen more partnerships and innovation with state and federal workers, providers, managed care organizations, and consumer advocates, and allowed the increased use of mobile devices for outreach and engagement. Making more deliberate strides to simplify eligibility and move the eligibility platform, patient engagement, and member outreach to more reliable communication methods (e.g., email, text, and member portals rather than paper communication) while adhering to privacy and security requirements is a logical next step.   
• Continuing to Measure Better. Call abandonment rates, call center wait times, and application processing times鈥攎etrics that focused on some of the key challenges to a successful redetermination and timely access to care鈥攔eceived greater attention during the unwinding but were frequently overshadowed by other primary metrics like 鈥渄isenrollments鈥� and 鈥減rocedural terminations.鈥� Though disenrollment data and procedural terminations could be used to identify potential areas of concern, their emergence as primary metrics often diverted energy from innovative engagement and redetermination efforts. A focus on contextualized metrics that provide actionable information will support effective oversight and monitoring.

Marketplace growth may be the real story. Throughout the pandemic, marketplace enrollment has steadily increased, jumping nearly 90 percent from 2020 to 2024 and 30 percent from 2023 to 2024, to reach more than 21 million enrollees. Driving the growth in marketplace enrollment are temporarily increased marketplace subsidies and Medicaid unwinding public awareness campaigns.  

• The marketplaces are proving to be a reliable source of coverage for consumers without health insurance access through ESI or other public programs, particularly in times of significant change such as the Medicaid unwind. With more marketplace enrollees and, therefore, broader risk pools, more health insurers are considering offering marketplace plans and are assessing competitive advantages like lower costs, broader provider networks, and more robust drug formularies. 
• Figure 3 shows that marketplace growth in non-expansion states is far outpacing marketplace growth in Medicaid expansion states, suggesting that the key elements of the Affordable Care Act have developed deep roots.  

黑料不打烊鈥檚 experts continue to monitor Medicaid unwinding developments. We are taking a comprehensive approach to assessing lessons learned and opportunities to improve Medicaid as state and stakeholder experiences and data continue to become available over the next two quarters. 

For more information or questions about聽Medicaid聽unwinding developments,聽contact our featured experts.