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New Federal Medicaid Rules Present Opportunity to Advance Reforms in NJ

Regulation moves Medicaid closer to insurance coverage available through federal marketplace

Jeff Brown, chief of staff at the New Jersey Health Care Quality Institute.
Jeff Brown directs the New Jersey Health Care Quality Institute’s QI Collaborative, a group that focused on redesigning the healthcare delivery system.

Efforts by advocates to increase access to healthcare may have received a major boost from the federal government this week in the form of the largest overhaul of rules relating to insurers and Medicaid and the Children’s Health Insurance Program in 13 years.

The regulatory proposal could ease the transition as Medicaid recipients move to the federal individual health insurance marketplace; change Medicaid’s definition of care coordination to include social supports outside of healthcare; and encourage the expansion of healthcare-delivery models that have proven successful in other states, according to healthcare experts.

“There’s a recognition in there that there’s a role for care coordination that goes beyond the traditional health system,” said Jeff Brown, who directs the New Jersey Health Care Quality Institute’s QI Collaborative, a group that focused on redesigning the healthcare delivery system.

Centers for Medicare and Medicaid Services (CMS) officials said they were prompted to revise the regulations due to the large number of major laws affecting managed care since the last rewrite in 2002, including the implementation of the Affordable Care Act. The rules apply to managed care, in which state Medicaid programs pay insurers (known as “managed care organizations,” or MCOs) a set amount each month, and they in turn pay providers.

The proposed regulations are capturing the attention of organizations involved in improving the health of Medicaid recipients.

Mark Humowiecki, general counsel of the Camden Coalition of Healthcare Providers, said there could be benefits from the proposal’s emphasis on making Medicaid regulations more similar to those for federal marketplace plans, as well as for those in private Medicare advantage plans.

“It make some intuitive sense -- there’s certainly going to be the dynamic of some people moving in and out of Medicaid eligibility” as their income changes, Humowiecki said. He added that he hadn’t gotten a chance to review the 652 pages of regulations.

CMS officials gave this as part of the rationale for the proposal: “By aligning Medicaid managed care with other programs when possible, we believe enrollees will experience smoother transitions and have fewer disruptions to care when they transition among sources of health care coverage.”

One proposal that’s gained the attention of insurers nationally would allow states to require the MCOs to spend at least 85 percent of the Medicaid payments on patient’s health claims, which would limit all of their operating expenses -- as well as their profits -- to no more than 15 percent. While this brings Medicaid in line with ACA rules, insurers raised concerns about how this would affect their operations.

It’s not clear how this rule change will affect New Jersey MCOs, since the state already applies similar minimums spending amounts -- known as medical-loss ratios -- on managed care, with the percentages varying between 80 percent and 90 percent depending on the patients they serve.

Brown said he was most encouraged by the potential change in the regulatory definition of care coordination. For the first time, the Medicaid rules are considering adding social supports, including legal services for patients -- in the definition of care coordination, a term that traditionally referred to insurers and various healthcare providers working closely together, but is increasingly including housing and other types of services.

“A key part of care coordination (is) helping with the transition with care in the health system and social services outside the health system,” Brown said, noting that residents without stable housing are more frequent visitors to hospitals.

Brown also noted that the regulations could require MCOs to list their providers in “machine readable” lists. He said that’s significant because such lists can be used by nonprofits and others developing consumer tools to make it easier for patients to search for providers that will best meet their needs. Currently, some insurers limit searches to a specific geographic area or medical specialty, instead of allowing outside groups to access the entire list of providers.

“It will allow us to see some consumer-focused innovations,” Brown said.

Humowiecki also said that it’s important for Medicaid to consider more than just healthcare in defining care coordination.

“That’s the core of our coordination intervention -- if you stop at the medical intervention … you’re not going to get into” the social factors that determine residents’ health, he said.

Brown also said that he will keeping an eye on whether the regulations are used by the federal government to encourage the expansion of new state models for delivering Medicaid services. He noted that New York and Minnesota have made improvements that could benefit New Jersey and other states.

“If CMS can take some of the best practices that are really flourishing in places like that, it can benefit (patients) on a national basis,” Brown said. The program Brown leads is working with healthcare organizations on payment and delivery-system changes, with a goal of improving healthcare quality.

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