On January 25 and 26, 2024, the Medicaid and CHIP Payment and Access Commission (MACPAC) held a virtual public meeting, which included the following sessions:

• Denials and Appeals in Medicaid Managed Care;
• Policy Options for Improving the Transparency of Medicaid Financing;
• Findings from Expert Roundtable on Evaluating the Effects of Medicaid Payment Changes on Access to Physician Services;
• Medicaid Coverage of Physician-administered Drugs; and
• Highlights from Duals Data Book.

The full agenda for the meeting and the presentations for the sessions are available here.

COMMISSIONERS APPROVE 7 RECCOMENDATIONS AIMED AT IMPROVING MEDICAID MCO DENIAL AND APPEALS PROCESSES

Medicaid managed care organizations (MCOs) serve 72 percent of the nation’s Medicaid beneficiaries and are responsible for determining medical necessity for these beneficiaries. Despite the critical role played by MCOs, there is little federal or state oversight of these organizations, and researchers lack the data to properly evaluate the effectiveness of MCO denials and appeals processes. The little research that does exist, in addition to media reports, point towards flaws in these processes. For example, a Department of Health and Human Services Office of the Inspector General (OIG) report found that prior authorization denial rates were significantly higher at Medicaid MCOs than Medicare Advantage (MA) organizations, at 12.5 and 5.7 percent respectively. Accordingly, the commission voted on seven recommendations that would improve the MCO denials and appeals processes by adding transparency, making the processes more accessible to MCO members, collecting better data, and providing independent oversight of the MCOs. All seven recommendations were approved by the commission, with all but recommendation 2.1 being approved unanimously.

The recommendations are as follows:

Recommendation 2.1

To bring independence and improve trust in the appeals process, Congress should amend Section 1932(b) of the Social Security Act to require that states establish an independent, external medical review process that can be accessed at the beneficiary’s choice, with certain exceptions for automatic review at the state’s discretion. The external medical review should not delay a beneficiary’s access to a state fair hearing.

Recommendation 2.2

To improve the beneficiary experience with the appeals process, the Centers for Medicare & Medicaid Services should issue guidance to improve the clarity and content of denials notices and share information on approaches managed care organizations can leverage to fulfill their requirements to provide beneficiary assistance in filing appeals. Additionally, CMS should clarify how Medicaid funding may be used to support external entities, such as ombudsperson services. 

Recommendation 2.3

To ensure beneficiaries receive denial notices in a timely manner, the Center for Medicare & Medicaid Services should require managed care organizations to provide beneficiaries with the option of receiving an electronic denial notice, in addition to the mailed notice.

Recommendation 2.4

To improve beneficiary access to continuation of benefits, the Centers for Medicare & Medicaid Services (CMS) should extend the timeline for requesting continuation of benefits. Additionally, CMS should issue guidance offering tools, including model notice language, to improve beneficiary awareness of their rights to continue receiving services while an appeal is pending. Guidance should also clarify the federal limitations on managed care organizations seeking repayment for continued benefits after a denial is upheld and provide model notice language to explain to beneficiaries that repayment could be required if the state allows for recoupment under fee for service.

Recommendation 2.5

To improve monitoring and oversight of denials and appeals, the Centers for Medicare & Medicaid Services (CMS) should update regulations to require that states collect and report data on denials, beneficiary use of continuation of benefits, and appeals outcomes, using standardized definitions for reporting. The rules should require that states use the data to improve the performance of the managed care program. Additionally, CMS should update the Managed Care Program Annual Report template to require these data fields. CMS should also issue guidance to states regarding implementation of this data reporting requirement and incorporation of these data into monitoring and continuous improvement activities.

Recommendation 2.6

To improve oversight of denials, Congress should require that states conduct routine clinical appropriateness audits of managed care denials and use these findings to ensure access to medically necessary care. As part of rulemaking to implement this requirement. The Centers for Medicare & Medicaid Services (CMS) should allow states the flexibility to determine who conducts clinical audits and who should add clinical audits as an optional activity for external quality review. CMS should release guidance on the process, methodology, and criteria for assessing whether a denial is clinically appropriate. CMS should update the Managed Care Program Annual Report template to include the results of the audit.

Recommendation 2.7

To improve transparency, the Centers for Medicare & Medicaid Services (CMS) should publicly post all state Managed Care Program Annual Reports to the CMS website in a standard format that enables analysis. Reports should be posted in a timely manner following states submission to CMS. Additionally, CMS should require that states include denials and appeals data on their quality rating system website to ensure beneficiaries can access this information when selecting a health plan.

The majority of the discussion was focused on recommendation 2.1, the only recommendation that was not unanimously approved. The three no votes were Mr. John McCarthy, Dr. Angelo Giardino, and Ms. Carolyn Ingram, with Dr. Adrianne McFadden abstaining.

Dr. Giardino was hesitant to vote for the recommendation due to its projected cost of up to $500 million over 10 years and the fact that states already have the option to create an external review board if they find it necessary. Fourteen states have such an external medical review, with appeals to these reviewers resulting in full or partial overturning of denials roughly 50 percent of the time. Dr. Giardino did say that recommendations 5, 6, and 7 would give the commission the data necessary to determine if recommendation 1 was necessary, and that he would be willing to vote for the recommendation if presented with compelling data. Ms. Ingram believed that the board would be adding cost to the medical system and complexity to the appeals process and wanted to modify the recommendation to make independent clinical review part of fair hearing processes. While Ms. Patti Killingsworth voted in favor of the recommendation, she did request that the recommendation be changed to make it clear that the external review would be available at the beneficiary’s request, as opposed to an automatic review. This change was reflected in the recommendation.

Commissioners in favor of the external review pointed out the importance of such a review to build trust with beneficiaries, the importance of giving Medicaid managed care members the same rights as Medicare Advantage members, and the fact that the $500 million was the upper limit of the projected cost.

Other issues that were raised were the importance of strong definitions when gathering data to allow for meaningful comparisons across states and the issue of artificial intelligence (AI) being used to deny care. Regarding recommendation 2.4, multiple commissioners were concerned that the “model notice language to explain to beneficiaries that repayment could be required if the state allows for recoupment under fee for service” would dissuade beneficiaries from filing appeals without some language explaining the likelihood of recoupment.

COMMISSIONERS FAVOR IMPROVING TRANSPARENCY OF MEDICAID FINANCING

MACPAC explored policy options to improve the transparency of Medicaid financing methods and amounts. States and the government jointly finance Medicaid, although states can use state general funds, healthcare-related taxes, intergovernmental transfers (IGT), and certified public expenditures (CPE) to raise the non-federal share of Medicaid expenditures. The Commission previously recommended increasing transparency around the provider contributions to the non-federal share to allow analyses of net payments made to hospitals and nursing facilities. In this report cycle, MACPAC is looking to expand the previous recommendation and provide more detail about implementation. MACPAC staff presented policy options based on feedback from interviews as well as their usefulness, comprehensiveness, and ability to minimize administrative burden.

MACPAC’s suggested policy options include:

• Option 1: Improve transparency of state financing methods.
  • Option 1A: Require CMS to make responses to existing standard funding questions publicly available.
  • Option 1B: Require states to submit a new comprehensive report describing all their Medicaid financing methods, which would be made publicly available.
• Option 2: Improve transparency of state financing amounts.
  • Option 2A: Expand Form CMS-64.11 to include IGT and CPE financing and additional quality controls to ensure the accuracy of these data.
  • Option 2B: Require states to specify sources of non-federal share for claims for specific expenditures on Form CMS-64.
• Option 3: Improve transparency of provider financing amounts.
  • Option 3A: require providers to report financing information on cost reports.
  • Option 3B: require states to include financing information on provider-level supplemental payment reports.
  • Option 3C: require states to report provider-level financing data on a new report.

Commissioners agreed that there needs to be more transparency regarding Medicaid financing amounts and methods. However, it is unclear if it should be done by improving state financing methods, state financing amounts, or provider financing amounts. Commissioners discussed the importance of collecting this data and determining the amount providers are actually being paid. Several commissioners requested more information so they could understand the policy options and revenue sources. This included a new stand-alone report on how this process works at the CMS level, ensuring that 1115 waiver data is captured, and information about how the state uses the funding. Another commissioner requested a graph with all the funding sources, such as CPE, IGT, Disproportionate Share Hospital payments, and directed payments. In discussing data availability, one commissioner cautioned that making information public is not necessarily transparent if the people who want this transparency cannot understand it.

Overall, commissioners supported increased transparency but were divided on which policy options to pursue. Several commissioners supported Option 2A to expand Form CMS-64.11, as it will gather all types of financing for Medicaid payments. Others, however, were cautious of expanding Form CMS-64.11 because the agency has not prioritized reporting for this and has limited enforcement mechanisms. In response, one commissioner recommended revisiting CMS’s enforcement authority. Commissioners’ concerns primarily centered around enforcement feasibility and administrative burden. MACPAC staffers will compile feedback into recommendations. The Commission will plan to vote on these recommendations at the April 2024 meeting and include a chapter on the topic in the June 2024 Report to Congress.

MACPAC REVIEWS FINDINGS FROM EXPERT ROUNDTABLE ON EVALUATING THE EFFECTS OF MEDICAID PAYMENT CHANGES ON ACCESS TO PHYSICIAN SERVICES

During the January 2024 meeting, MACPAC presented on the effects of Medicaid payment changes on access to physician services, building off MACPAC’s prior analysis of 2017 data which showed varied acceptance rates of Medicaid beneficiaries.  The data shows that, overall, physicians are less likely to provide for people with Medicaid than those with Medicare or private insurance, and that only a small number of providers serve a high percentage of Medicaid beneficiaries. Based on 2019 data, Medicaid FFS payment rates tend to be about 72 percent of the Medicare rate but through new rules provided by CMS since 2022, there are mandates for minimum payment requirements for both FFS and Medicaid managed care to increase. MAPAC attempted to identify the cause of low physician uptake of Medicaid beneficiaries, and through a literature review they found mixed results but determined it is most likely a mix of Medicaid payment, claims denials, provider enrollment, challenges serving the Medicaid population, and administrative burdens.

The themes and potential for future work are as followed:

1. Tension between expanding provider participation and improving access to safety-net providers:
   1. Potential work: Expand on MACPAC’s existing payment and access frameworks to include considerations for site of care.
2. Data challenges:
   1. Potential work: Continue to examine T-MSIS and monitor new access rules.
3. Variations by practice type:
   1. Potential work: Further explore federally qualified healthcare center (FQHC) payment policy.
4. Role of managed care:
   1. Potential work: Examine how managed care rates relate to FFS, administrative burden, and network adequacy requirements.
5. Refocusing on beneficiary needs:
   1. Potential work: Apply payment and access frameworks to a subpopulation with unique needs.

Commissioners first discussed how providers view Medicaid payments, especially the Affordable Care Act (ACA) fee bump. One commissioner stated that the ACA fee bump is not meaningful to provider participation since it is only effective for two years, with administrative burden preventing treatment for the first year. Additionally, commissioners addressed the desire for a physician to perform their services for a lower price, especially behavioral therapists.

In terms of more research the commissioners shared ideas to look at adult mental health across private insurers and Medicaid since there is not expected to be less mental health care across insurance types. The commissioners also brought up the importance of looking at how many providers per Medicaid-accepting clinic accept Medicaid and making that information clear to the public. The commissioners also ask for more information on the beneficiary experience including a potential survey that addresses how long wait times are to see a practitioner and highlights the importance of diversity of practitioners available.

On the topic of quality, commissioners raised concerns about access to quality care, continuity of care, and increased wait times for higher quality physicians. An especially pressing concern is that of cultural competency and specialty care access for people with disabilities (primarily developmental disabilities), low-income beneficiaries, and beneficiaries that are part of marginalized communities. Another concern of the commissioners is what type of provider is seeing the beneficiaries, for example are they only being seen by dental students, or the dentist?

The commission ended by agreeing that further research must be done on this topic since it is quite complex and the research should focus more on quality, addressing beneficiary needs, and payment adequacy overall.

COMMISSIONERS REVIEW MEDICAID COVERAGE OF PHYSICIAN-ADMINISTERED DRUGS IN PREPARATION FOR MARCH DISCUSSION

Many high-cost specialty drugs in the pipeline, such as cell and gene therapies, are physician-administered. These types of drugs are expected to be a key driver of future Medicaid drug spending. There is little information on how state Medicaid programs pay for and manage utilization of physician-administered drugs (PADs), as most existing research focuses on drugs obtained through a pharmacy. To gain insight into this area, MACPAC has contracted with Milliman to conduct a roundtable discussion on Medicaid coverage of physician-administered drugs. Findings from this roundtable discussion will be presented at the March MACPAC meeting. In preparation for this session, MACPAC staffers provided commissioners with an overview of Medicaid coverage of physician-administered drugs.

Payment for PADs is based on 1) the cost of the drug and 2) the cost of administration and professional services. The payment for the drug cost is not required to be on the basis of average acquisition cost, and payment for the drug cost often includes a mark-up. The methodology for drug cost varies by state, with 23 states using average sales price (ASP) plus 6 percent, 11 states using a cost between ASP and ASP plus 6 percent, 2 states using ASP and another percent, and 14 states using another benchmark.

For dually eligible beneficiaries, PADs are typically reimbursed by Medicare at the payment rate of ASP plus 6 percent for most Medicare Part B drugs. Medicaid then pays the beneficiary’s costs for Part A and Part B drugs, such as coinsurance. Medicaid does not pay for Part D drugs or associated cost sharing.

MAPAC staffers noted several challenges related to managing PAD use and spending: the payment amount is generally higher under the medical benefit, claims processing limitations reduce use of utilization management tools, cost and payment may vary by site of care, rebate collection may be challenging, and overlap between the medical benefit and pharmacy benefit.

Although there is limited publicly available information regarding Medicaid utilization of and spending for PADs, MACPAC assessed PAD utilization and spending using PAD lists from 5 states and based on Medicare Part B procedure counts. For Fiscal Year 2021, drug spending on PADs totaled $10.35 billion (gross before rebates), and spending on administration totaled $1.84 billion. These totals include spending on both full-benefit, non-dually eligible beneficiaries, and dually eligible beneficiaries. PAD spending was highest for disabled beneficiaries, and then for beneficiaries aged 65 or older. Oncology drugs are the vast majority of PADs. MACPAC’s analysis is limited in that it does not include drugs in a bundled payment, so the analysis likely undercounts PAD utilization and spending.

During discussion, one commissioner noted that this is an area where value-based care is needed, with payment tied to access, as he saw delays in care while beneficiaries waited for prior authorization. One commissioner asked if there was a shift in site of care during the pandemic. The March meeting may include information on these topics and will also include discussion of cell and gene therapy, including provider attitudes on billing at acquisition cost, and collecting outcomes data.

MACPAC STAFFERS HIGHLIGHT KEY STATISTICS ON DUALLY ELIGIBLE BENEFICIARIES, NOTING A SHIFT TOWARDS MANAGED CARE ENROLLMENT

MACPAC staffers reviewed highlights from MACPAC’s and the Medicare Payment Advisory Commission’s (MedPAC’s) Data Book: Beneficiaries Dually Eligible for Medicare and Medicaid, which was published in January 2024.The publication is available here[1]. The data book is a compilation of key statistics on individuals who were dually eligible for Medicare and Medicaid in 2021, and examines trends in population composition, spending, and service use between 2018 and 2021.

From 2018 to 2021, the dually eligible population grew by an average of 2 percent annually to include 12.8 million beneficiaries. Medicaid spending per beneficiary grew at a faster rate for non-dually eligible beneficiaries compared to dually eligible beneficiaries, at 3.9 percent and 8.5 percent on average per year, respectively. In terms of service utilization and spending in fee-for-service care, dually eligible beneficiaries were more likely to use institutional long-term services and supports (LTSS) compared to non-dual eligible individuals. An increasing amount of dually eligible beneficiaries used home- and community-based services (HBCS) through a waiver than a state plan. Per-user spending on Medicaid inpatient hospital services, institutional LTSS, and prescription drugs increased, even though the share of beneficiaries using these services decreased.

There is a growing shift towards managed care enrollment for dually eligible beneficiaries, with nearly a quarter of all dually eligible beneficiaries having at least one month of enrollment in both Medicare and Medicaid managed care in 2021. The share of beneficiaries with at least one month of comprehensive Medicaid managed care enrollment increased by 7.5 percent from 2018 to 2021.

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This Applied Policy® Summary was prepared by Emma Hammer with support from the Applied Policy team of health policy experts. If you have any questions or need more information, please contact her at ehammer@appliedpolicy.com or at 202-558-5272.

[1] https://www.macpac.gov/wp-content/uploads/2024/01/Jan24_MedPAC_MACPAC_DualsDataBook-508.pdf