State plans must consider impact of provider rates on beneficiary access

US Supreme Court says providers cannot challenge Medicaid payment rates in a court of law

Physicians under Iowa’s Medicaid program consistently provide quality medical care to our State’s 560,000 Medicaid beneficiaries despite payment rates that, according to the Iowa Medical Society, are nearly the same as rates paid to physicians in 2000. IA Health Link requires Medicaid’s four contracted managed care organizations (MCOs) to pay physicians no less than the Medicaid fee-for-service rates in effect on July 1, 2015; Medicaid-enrolled providers who do not sign with an MCO suffer a 10% out-of-network reduction in payment rates. In 2016, physicians again will petition the Iowa General Assembly for a Medicaid rate increase, an ask that may be at odds with the substantial cost-savings goal of IA Health Link.

Exasperation with sluggish state and federal responses to Medicaid payment inadequacy has led to provider lawsuits over the years. Provider claims focus on that section of federal Medicaid law referred to by regulators as the “access requirement.” Each state’s Medicaid program, as part of its state plan, must “assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” 42 USC 1396a(a)(30)(A) [Emphasis added].

In March of this year, the U.S. Supreme Court dealt a harsh blow to provider lawsuits, ruling in a close 5-4 decision that providers cannot seek remedy through the courts against a state Medicaid program for inadequate payment rates. In Armstrong v. Exceptional Child Center, et. al., 575 US ___ (No. 14-15, decided March 31, 2015), habilitation service providers alleged that Idaho’s Medicaid payment rates violated Medicaid’s “access requirement” law. Lower federal courts ruled in favor of the providers. The Supreme Court, however, held that no private right of action existed to support Medicaid payment rate challenges by providers through the courts. Instead, the majority argued, the only avenue of redress Congress gave to providers was through the secretary of Health and Human Services (HHS) who must assure that each state Medicaid plan satisfies federal requirements. The “sheer complexity” of this “judgment-laden” statutory payment requirement, the Court said, speaks volumes in favor of exclusive enforcement through federal regulators best suited to manage it in a consistent manner. The dissenting justices disagreed, arguing that if Congress had intended to deny providers access to the courts, Congress would have said so in the Medicaid law.

In a final rule published in the November 2, 2015 Federal Register, the Centers for Medicare & Medicaid Services (CMS) requires each state Medicaid program, as part of its state plan, to develop an access monitoring review plan no later than July 1, 2016, to assure compliance with the statutory access requirement. The rule, CMS says, sets forth a framework “to make better informed, data-driven decisions” on, among other things, service rate structures and provider payment methodologies impacting beneficiary access. Because the Armstrong decision places enforcement accountability with HHS for state plan compliance with Medicaid’s access requirement, CMS says it must be more transparent in exercising data-driven judgment calls on payment adequacy affecting beneficiary access.

The final rule, 42 CFR 447.203(b), requires access monitoring review plans to include an analysis specifying data sources, methodologies, baselines, assumptions, trends and factors, and thresholds regarding sufficient access, each of which may vary by geographic location within a state. Further, the plan must consider, among other things, the availability of care through enrolled providers to Medicaid beneficiaries in each geographic area by provider type and site of service as well as actual or estimated levels of provider payment available from other payers, public and private, by provider type and site of service. The review plan and analysis must specify measures used by the state to analyze beneficiary access, such as time and distance standards; providers participating in Medicaid; providers accepting new Medicaid beneficiaries; service utilization patterns; and telehealth availability.

States are required to submit an access monitoring review analysis to CMS with any state plan amendment reducing provider payment rates or restructuring provider payment methodologies that could result in diminished access. In the event of no state plan payment rate amendment but, rather, stagnant rates over the course of many years, state Medicaid programs, nonetheless, are required to complete access analyses at least once every 3 years for, among other things, primary care services and physician specialist services.  CMS calls for additional comments and information to improve upon data and metrics identified in this final rule.

Most Iowa physicians are touched by Medicaid. In many Iowa communities, Medicaid patients are a significant percentage of the physician’s practice base. Adequate Medicaid payment rates fairly reflecting physician costs are important in assuring physician participation in Medicaid and in avoiding tough restrictions on the number of Medicaid patients they see. CMS’ new rule evidences greater regulatory focus on adequate Medicaid payment rates based on uniform, objective, data-driven criteria, bearing in mind, however, that payment rates are important only as they affect beneficiary access. While instinct influenced by a long history of inaction may make physicians justifiably suspicious about the ultimate value of this new rule, CMS has set in motion an avenue of oversight and remedy that physicians and other Medicaid providers should not ignore.