HHS Releases Medicaid Managed Care Rule, Eliminating “Excessive Mandates”; Democrats Say Rule Lets Plans “Out of Providing Needed Care”

As expected, HHS on the morning of Aug. 16 released proposed Medicaid managed care regulations, according to an HHS release. The proposed rule, which replaces a rule released by the Clinton administration in January, gives states "significantly more flexibility to decide how best to provide patient protections and use managed care in their Medicaid plans" (HHS release, 8/16). However, Democrats, who learned of the proposed rule earlier in the week, have already called the Bush administration's plan to "streamline" the regulations -- which would provide a host of patient protections for Medicaid beneficiaries enrolled in managed care plans -- "inconsistent" with the protections that the president "touted" for those with private health insurance in patients' rights legislation ( HR 2563) passed in the House earlier this month (Fulton, CongressDaily, 8/15).

The Administration's Position
In a written statement, HHS Secretary Tommy Thompson said, "Medicaid beneficiaries deserve the same rights and protections as all other Americans enrolled in managed care plans." He added that the proposed rule, which is to be followed by a final rule "early next year," will give "states flexibility" while providing "needed patient protections." In explaining the changes from the Clinton regulation, Thompson stated that "the previously issued rule went far beyond what Congress intended ... its excessive mandates actually threatened beneficiaries' access to care under Medicaid" (HHS release, 8/16). An HHS official stated that the administration hopes to "work in partnership" with states to "achieve workable protections," asking, "If states can't do it, what good are the protections?" (CongressDaily, 8/15). The rule will allow states in some cases "to keep in place important aspects of their existing programs." At the same time, states will be required "to submit to HHS clear plans" to measure the quality of care provided (HHS release, 8/16).

Democrats, Consumer Groups Speak Out
But a spokesperson for Rep. Sherrod Brown (D-Ohio) on Aug. 15 said, "These (Medicaid) regulations are reflective of the administration's failure to do anything in the best interest of the patients." Brown and other leading House Democrats sent a letter to Bush on Aug. 13 saying he had "retreat[ed] on patient protections for about 20 million of the poorest and neediest citizens," referring to those enrolled in Medicaid managed care plans. Despite administration assurance of support for Medicaid beneficiaries, Democrats "remain unconvinced," CongressDaily reports. According to the letter, "Not only are the provisions of HR 2563 similar to the Medicaid rules, the bill also, in section 301, explicitly expresses the 'sense of Congress' that the president should extend key patient rights to Medicaid beneficiaries." Democrats said that the move will allow states and managed care companies, which have "increasingly" enrolled Medicaid beneficiaries, to "get around providing needed care" (CongressDaily, 8/15). Brown said, "Even if the rules are still strong and pro-patient ... the best we are going to do is see them a year from now. There is no reason they have to do it this way" ("Morning Edition," NPR, 8/16). Earlier this week, the consumer group Families USA also spoke out against the rules. "The states have gotten their flexibility, but we're still waiting for the protections," said Joan Alker, the group's deputy director of government affairs (Kaiser Daily Health Policy Report, 8/15).

What the Rule Includes
According to HHS, the proposed rule, which will be open to comments for 60 days, "retains and expands upon all the protections already available to Medicaid beneficiaries" under the Balanced Budget Act of 1997. Beneficiaries will have the "rights" detailed below.

• Access to emergency room services: "Health plans must pay for a Medicaid beneficiary's emergency room care whenever and wherever the need arises."
• Ability to obtain a second opinion: "All beneficiaries will be allowed to get a second opinion from a qualified health professional."
• Access to women's health care: "Women will be allowed to directly access a woman's health specialist in the network for the care necessary to provide routine and preventive health care services as already available in Medicaid fee-for-service."

• Implement grievance systems that resolve complaints, "within state-established timeframes that may not be longer than 90 days and must be resolved by managed care organizations within 45 days." The rule will allow for "expedited timeframes" when "the life or health of the enrollee is in jeopardy."
• Not "Interfere with patient-provider communication."
• Ensure that there is capacity to serve the "expected enrollment in their service area."
• Submit marketing materials for approval to state regulators. In addition, Medicaid managed care plans must provide beneficiaries with "comprehensive, easy-to-understand information about [their] managed care plan."