Government Programs & The Uninsured

Federal healthcare quality initiatives: recent developments reshaping the landscape

This week, our In Focus section considers the increasing emphasis on quality at all levels of our healthcare system, especially for work that affects federally funded health insurance programs.  

The Universal Foundation Measure Set  

The 2024 Centers for Medicare & Medicaid Services (CMS) Quality Conference, April 8−10, in Baltimore, MD, continued to highlight the harmonizing of quality measures across CMS programs and promotion of CMS’s universal foundation measures. These metrics capture quality across six domains for adults and four domains for children. By promoting and integrating these well-established measures across all CMS programs, end users can align priorities across programs and help to reduce burden on providers and health plans being assessed.   

Medicaid has long been a leader in incorporating the universal foundation measures, having used many of them in managed care contracts, health homes, and other arrangements that include a quality assessment component for the past 20 years. Earlier this year, many universal foundation measures, including those pertaining to behavioral health, became part of the mandatory core measure set that all states must report to CMS as required in the SUPPORT for Patients and Communities Act—comprehensive federal legislation that addresses the opioid epidemic. Mandatory reporting will allow Congress, the Medicaid and CHIP Payment and Access Commission (MACPAC), and other stakeholders to better understand the impact of federal investments on quality of care for Medicaid and CHIP enrollees. 

New Developments in Medicaid’s Approach to Quality  

Forward momentum is evident in other areas of healthcare quality as well. A significant federal milestone in quality of care was included in the Medicaid Managed Care Rule released in April 2024, which required states to design a quality rating system (QRS) and submit their methodology to CMS for approval. The QRS is intended to be user-friendly and help Medicaid members to pick a plan and monitor its quality performance. States will be able to use the QRS as a monitoring and oversight tool to compare plan performance. Not only will a QRS help improve Medicaid’s accountability to states, enrollees, and policymakers, but it also promotes transparency for all end users and the public. At present, Medicaid quality measures are reported by state rather than by plan. Plan performance in Medicaid is typically captured in a state’s external quality review organization (EQRO) annual report, which may impede the ability of most users to extract, compare, and digest information.   

Another federal initiative is the Medicaid Access Rule, also released in April 2024, to help state Medicaid programs move toward public reporting of quality and compliance measures in home and community-based services (HCBS). In 2022, CMS released more than 90 measures that could be used to assess quality of care in Medicaid HCBS waiver populations. Under the rule, CMS will identify a subset of HCBS quality measures in 2026 and the technical specifications for these measures will be made available publicly and updated as needed. Similar to the CMS Child and Adult Core Sets, states will have an opportunity to implement these measures and CMS can use those outcomes to create HCBS scorecards by state. 

Medicare Advantage Star Ratings Program 

Finally, CMS is incorporating the health equity index (HEI) into the Medicare Advantage Star Rating system. The HEI contributes to a plan’s potential bonus and helps level the playing field for plans that enroll and provide services to underrepresented or at-risk populations. The HEI will account for enrollees who are dually eligible for Medicare and Medicaid, individuals with disabilities, or members with a low-income subsidy (LIS). The HEI also assesses plan-level performance for these specialized populations. Allowing plans to earn a better bonus for delivering high-quality services to these populations helps to mitigate adverse selection and reward plans for care that may be resource intensive. 

What’s Next 

Accountability for quality is beginning to emerge in the form of value-based contracting, incentive payments, and other forms of reimbursement focused on reducing disparities and improving outcomes. Health plans, providers, state agencies, vendors and other interested stakeholders need to have a strategy for quality improvement that reflects evolving federal and state quality priorities, reporting systems, and improvement processes.  

HMA’s quality and accreditation team includes experts in the quality space from a variety of backgrounds, including National Committee for Quality Assurance (NCQA) surveyors, former HEDIS auditors, health plan and provider senior quality staff (vice presidents and chief quality officers), and former Medicare/Medicaid leaders. To learn more about implementing quality programs or to explore options for leveraging quality measures to maximize your organization’s value-based contracts, win requests for proposals, increase membership, and optimize member experience, contact Caprice Knapp, PhD, Managing Director, Quality Accreditation.  

The 2024 Presidential Election and its long-term impact on Medicaid

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’t hear much about it on the campaign trail (but our DC Direct subscribers get a steady stream of insight to stay on top of what’s coming next).

Medicaid’s political salience has been quiet but steadily increasing since 2010, with now 41 states (including DC) having expanded access, 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.  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 – whether at CMS, HHS, or in the White House – 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. Learn more about DC Direct and how this steady stream of insight can help inform your strategic decisions.

Medicaid Unwinding Check-in: Data Informed Observations to Guide Future Action

In this week’s In Focus section, HMA 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 “continuous eligibility” provision. States began to resume normal (pre-pandemic) redetermination activities in early 2023—a massive undertaking of attempting to reach and verify eligibility for the then 94 million Medicaid enrollees known as “unwinding.”  

More than 70 percent of the efforts that will precipitate the largest one-year drop in enrollments since the program’s inception in 1965 have been completed. The enrollment reductions to date have been virtually identical to HMA’s 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—down from the 94 million pre-unwinding enrollment peak and nearly 10 million greater than the 71 million pre-pandemic enrollment. 

Our team’s 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—including California, New York, and Texas—have 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 HMA 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—metrics that focused on some of the key challenges to a successful redetermination and timely access to care—received greater attention during the unwinding but were frequently overshadowed by other primary metrics like “disenrollments” and “procedural terminations.” 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.  

HMA’s 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 Medicaid unwinding developments, contact Matt Powers and Lora Saunders. 

Medicaid managed care final rule: what to watch for

Our second In Focus section provides a refresher on the Medicaid and Children’s Health Insurance Program managed care access, finance, and quality proposed rule that the Centers for Medicare & Medicaid Services (CMS) published in May 2023. As Health Management Associates, Inc. (HMA), has noted, the final rule is expected to be published later this month. If finalized as proposed, several provisions in the rule will signal the start of a new era of accountability and transparency for the Medicaid program. 

The policy changes are expected to fall into the following major categories: in lieu of services (ILOS), the Medicaid and CHIP Quality Rating System (MAC QRS), medical loss ratios (MLRs), network adequacy, and state directed payments (SDPs). These revised policies will affect Medicaid coverage and reimbursement for years to come. Following is a summary of the proposed policy changes to watch for in the final rule.  

ILOS 

CMS has proposed to expand upon and codify the sub-regulatory guidance around ILOS outlined in State Medicaid Director Letter #23-001. The letter advised state that they have the option to use the ILOS authority in Medicaid managed care programs to reduce health disparities and address unmet health-related social needs, such as housing instability and nutrition insecurity. The final rule would expand upon and codify that guidance. 

For example, although the ILOS proposal adds reporting requirements and guardrails to address fiscal accountability, the proposed rule also noted that the substitution of an ILOS for a state plan service or setting should be cost-effective but does not need to meet budget neutrality requirements. States are also permitted to specify that an ILOS can be an immediate or longer-term substitute for a state plan service or setting. 

MAC QRS 

CMS has proposed a MAC QRS framework that includes: (1) mandatory quality measures, (2) a quality rating methodology, and (3) a mandatory website display format. State Medicaid agencies and managed care organizations (MCOs) will be required to adopt and implement the MAC QRS framework that CMS develops or adopt and implement an alternative but equivalent managed care quality rating system. CMS will update the mandatory measure set at least every two years. Any planned modifications to measures will be announced publicly through a call letter or similar guidance, with measures based on: (1) value in choosing an MCO; (2) alignment with other CMS programs; (3) the relationship to enrollee experience, access, health outcomes, quality of care, MCO administration, or health equity; (4) MCO performance; (5) data availability; and (6) scientific acceptability. 

State Medicaid agencies will be required to collect from MCOs the data necessary to calculate ratings for each measure and ensure that all data collected are validated. In addition, state Medicaid agencies will be expected to calculate and issue ratings to each MCO for each measure. 

Lastly, state websites will be required to contain the following elements: (1) clear information that is understandable and usable for navigating the website itself; (2) interactive features that allow users to tailor specific information, such as formulary, provider directory, and ratings based on their entered data; (3) standardized information so that users can compare MCOs; (4) information that promotes beneficiary understanding of and trust in the displayed ratings, such as data collection timeframes and validation confirmation; and (5) access to Medicaid and CHIP enrollment and eligibility information, either directly on the website or through external resources. 

MLRs 

CMS has proposed three areas for revision to its existing MLR standards, which require MCOs to submit annual MLR reports to states, which, in turn, must provide CMS with an annual summary of those reports. Areas for revision include: (1) requirements for clinical or quality improvement standards for provider incentive arrangements, (2) prohibited administrative costs in quality improvement activity (QIA) reporting, and (3) additional requirements for expense allocation methodology reporting. 

With regard to provider incentive arrangements, CMS proposes to require that contracts between MCOs and providers: (1) have a defined performance period that can be tied to the applicable MLR reporting period(s), (2) include well-defined quality improvement or performance metrics that the provider must meet to receive the incentive payment, and (3) specify a dollar amount that can be clearly linked to successful completion of these metrics as well as a date of payment. MCOs would be required to maintain documentation that supports these arrangements beyond attestations. 

In terms of QIA reporting, CMS proposes to explicitly prohibit MCOs from including indirect or overhead expenses when reporting QIA costs in the MLR. CMS also intends to add requirements regarding how MCOs can allocate expenses for the purpose of calculating the MLR by requiring MCOs to offer a detailed description of their methodology. 

Network Adequacy 

CMS has proposed a range of new network adequacy requirements intended to improve timely access to care for managed care enrollees. Those related to appointment wait time standards and secret shopper surveys are among the most prominent. 

For appointment wait time standards, CMS proposes that state Medicaid agencies develop and enforce wait times associated with routine appointments for four types of services: (1) outpatient mental health and substance use disorder (SUD) for adults and children, (2) primary care for adults and children, (3) obstetrics and gynecology (OB/GYN), and (4) an additional service type determined by each state Medicaid agency using an evidence-based approach. The maximum wait times must be no longer than 10 business days for routine outpatient mental health and SUD appointments and no more than 15 business days for routine primary care and OB/GYN appointments. State Medicaid agencies could impose stricter wait time standards but not more lax ones. The wait time standard for the fourth service type will be determined at the state level. 

State Medicaid agencies also will be required to engage an independent entity to conduct annual secret shopper surveys to validate MCO compliance with appointment wait time standards and the accuracy of provider directories to identify errors, as well as providers that do not offer appointments. For an MCO to be compliant with the wait time standards, as assessed through the secret shopper surveys, it would need to demonstrate a rate of appointment availability that meets the wait time standards at least 90 percent of the time.  

SDPs 

CMS has proposed several important changes to the requirements governing the use of SDPs, strengthening both the accountability required of and flexibility afforded to states. For example, CMS proposes to require that provider payment levels for inpatient and outpatient hospital services, nursing facility services, and the professional services at an academic medical center not exceed the average commercial rate. Furthermore, states would be required to condition SDPs upon the delivery of services within a contract rating period and prohibited from using post-payment reconciliation processes. 

With regard to flexibility, CMS proposes to remove unnecessary regulatory barriers to support the use of SDPs by states to implement value-based payment arrangements and include non-network providers in SDPs. The proposal also permits states to implement, without prior approval, minimum fee schedules in Medicaid consistent with Medicare provider rates. 

What’s Next  

CMS is expected to publish the final rule in April. In addition, CMS plans to publish a separate final rule addressing new regulations pertaining to access to care, which will have equally significant impacts on states, MCOs, and providers. If you have questions about how HMA can support your efforts related to the managed care final rule’s implications and the context of other federal regulations for states, MCOs, or providers, contact Michael Engelhard, Managing Director, Regional Managed Care Organizations, and Andrea Maresca, Managing Director, Information Services.

CMS finalizes significant changes to Medicare Advantage and Medicare Part D programs for 2025

This week, our In Focus section reviews a wide-ranging and comprehensive final rule released April 4, 2024, by the Centers for Medicare & Medicaid Services (CMS). The regulation revises and updates policies that affect Medicare Advantage (MA) and Medicare Part D coverage beginning in the upcoming plan year. 

The policies adopted in the final rule aim to strengthen consumer protections and guardrails, promote fair competition, and ensure MA and Part D plans can best meet the healthcare needs of Medicare beneficiaries, including individuals dually eligible for Medicare and Medicaid. In addition, the final rule includes important new policies to expand access to behavioral health providers, promote equity in healthcare coverage, and improve access to and use of Medicare Advantage supplemental benefits. These policy changes complement payment policy changes that were recently finalized in the April 1, 2024, CMS CY 2025 Rate Announcement and will take effect June 3, 2024.  

Below HMA experts walk through the major policies CMS finalized. 

Expanding Access to Behavioral Health Providers 

CMS finalized several regulatory changes to improve Medicare beneficiaries’ access to behavioral health services through strengthened MA network adequacy standards. These changes include: 

  • Establishing network evaluation standards for a new facility-specialty provider category, called outpatient behavioral health. This category includes a range of behavioral health providers, including marriage and family therapists (MFTs), mental health counselors (MHCs), opioid treatment programs, community mental health centers, addiction medicine specialists and facilities. Outpatient behavioral health will be included in network adequacy evaluations. 
  • Permitting MFTs and MHCs to enroll and start billing Medicare—as a result of statutory changes established in the Consolidated Appropriations Act (CAA) of 2023—and establishing corresponding changes to network adequacy standards for MA plans. 
  • Requiring MA plans to independently verify that behavioral health providers added to their network furnish services to at least 20 patients within a 12-month period. 
  • Adding outpatient behavioral health facility-specialty to the list of the specialties that will receive a 10 percent credit toward meeting network adequacy time and distance standards. 

Impact: Adding the outpatient behavioral health category is expected to enhance Medicare beneficiaries’ access to a broader scope of behavioral health specialists. As result of the new policy and network expectations, MA plans may need broaden their networks, and providers that contract with MA plans may need to strengthen their capacity to address Medicare billing and reporting requirements, including quality reporting initiatives.  

Require Mid-Year Enrollee Notification of Supplemental Benefits 

The number of MA plans that offer supplemental benefits to beneficiaries is increasing, with the most frequently offered supplemental benefits including coverage for vision, dental, and hearing services.  Moreover, many MA plans also are offering supplemental benefits to address unmet social determinants of health needs, including home meal delivery, transportation, and in-home services and supports. At the same time, use of these benefits is reportedly low, and there are gaps in research and data analysis about how these benefit offerings are affecting beneficiaries’ cost and health outcomes.   

As a result, CMS is finalizing policies that require MA plans to engage in outreach to beneficiaries. Specifically, the final rule requires MA plans to send enrollees a mid-year notification regarding their unused supplemental benefits. The notification must include information on the scope of the benefit, patient cost-sharing, and detailed instructions on how beneficiaries can access their unused benefits.  

Impact: This change is intended to improve beneficiary awareness of plans’ supplemental benefit offerings and encourage greater use of these benefits. As a result of the regulatory changes, MA plans may look to further refine and adjust their MA supplemental benefit offerings to further improve the healthcare experience for Medicare beneficiaries. 

New Standards for Supplemental Benefits under SSBCI 

MA plans also offer supplemental benefits to beneficiaries through the Special Supplemental Benefits for the Chronically Ill (SSBCI) program, whereby people with ongoing and complex chronic conditions can receive supplemental benefits that are tailored to their specific health and social needs. In the final rule, CMS establishes new requirements for MA plans to demonstrate the value of these services by submitting evidence that the item or service will improve or maintain the overall health of chronically ill beneficiaries.   

Impact: This new reporting requirement is intended to ensure that SSBCI items and services are evidence-based and meaningful. As these regulatory changes are implemented under tight timelines, plans will need to move quickly to compile clinical data and evidence on the effectiveness of these targeted benefits, while also considering changes in their benefit offerings to better meet the needs of beneficiaries with complex and chronic conditions. 

MA Star Rating Changes 

In the final rule, CMS describes its ongoing work to streamline quality measures, including the agency’s progress in moving toward the Universal Foundation of core quality measures that are aligned across CMS’s quality and value-based programs. CMS notes that MA plans are beginning to report additional measures that are part of the Universal Foundation. Under previous regulations, CMS proposed to make the following changes to specific measures in the Star Ratings system: 

  • Remove the standalone Part C medication reconciliation post-discharge measure
  • Add the updated Part C colorectal cancer screening measure with the NCQA (National Committee for Quality Assurance) specification change 
  • Add the updated Part C care for older adults−functional status measure with the NCQA specification change. 

Impact: These changes build on earlier CMS efforts to improve the Star Rating system, including adding a health equity index and reducing the weight of patient experience and access measures to better align with the CMS Quality Strategy. 

Ensure More Dual-Eligible Managed Care Beneficiaries Receive Medicare and Medicaid Services from the Same Organization 

CMS finalized several significant changes designed to improve access to integrated care for dually eligible beneficiaries, including the following:  

  • CMS is limiting enrollment in certain Dual Eligible Special Needs Plans (D-SNPs) to individuals who are also enrolled in an affiliated Medicaid managed care organization (MCO).  
  • CMS also limits the number of D-SNP benefit packages that an MA organization can offer in the same service area as an affiliated Medicaid MCO. If a state Medicaid agency requires it, MA plans may offer more than one D-SNP for full-benefit dually eligible individuals in the same service area as the MA organization’s affiliated Medicaid MCO.  
  • Dually eligible beneficiaries will have an opportunity to enroll in an integrated D-SNP monthly under a new integrated care special enrollment period (SEP). 
  • CMS is lowering the D-SNP look-alike threshold from 80 percent to 70 percent for plan year 2025 and to 60 percent for plan year 2026 and into the future.  

Impact: These are considerable changes that are designed to increase the percentage of dually eligible beneficiaries enrolled in MA plans that also are contracted to cover Medicaid benefits. In addition, these changes will expand access to integrated member materials, unified appeals processes across Medicare and Medicaid, and continued beneficiary access to Medicare services during an appeal.  

Require Health Equity Assessments of Utilization Management Practices and Procedures 

CMS finalized several regulatory changes to the composition and responsibilities of MA plans’ utilization management (UM) committees, including the following:  

  • At least one member of the UM committee must have expertise in heath equity. 
  • The UM committee must conduct an annual assessment of UM practices and procedures on health equity, with a particular focus on the impact on beneficiaries who are low-income, dually eligible for Medicare and Medicaid, or have a disability. 
  • MA plans must make the health equity analysis publicly available on the plan’s website. 

Impact: These policy changes are aimed at assessing the impact of utilization management through a health equity lens and ensuring that these policies and procedures do not have a disproportionate impact on access to medically necessary care for underserved populations.  

Other Provisions 

The final rule makes several other notable regulatory changes to MA and Part D, which include: 

  • Allowing Part D plans to substitute biosimilars for the reference biologic product during the plan year as part of formulary maintenance changes, which is expected to expand access to lower cost biosimilars for Medicare beneficiaries  
  • Limiting out-of-network cost sharing for D-SNP PPOs 
  • Standardizing the MA risk adjustment data validation appeals process 
  • Establishing new guardrails for plan compensation to agents and brokers to prevent anti-competitive steering of beneficiaries and new requirements to third-party marketing organizations   
  • Changes to Medicare Part D medication therapy management (MTM) eligibility criteria 

What’s Next  

CMS continues its work to incorporate requirements for consumer engagement and transparency of data to address health equity. This final rule is poised to have a significant impact on plan benefit design and the landscape of health insurance markets in states and regions of states. CMS has created additional opportunities for states to advance integrated care initiatives that align with Medicaid, which will have downstream implications for MA and Medicaid plans, providers, and partnering organizations.  

The Health Management Associates team will continue to analyze and assess these regulatory changes that CMS has finalized. We have the depth, experience, and expertise to assist in tailored analysis and model policy impacts of the recently finalized changes.  For more information or questions about the policies described, contact Amy Bassano, Julie Faulhaber, Andrea Maresca, or Greg Gierer.

CMS releases Medicare Advantage and Part D payment policies for CY 2025

This week, our In Focus section reviews the recently announced policy and payment updates from the Centers for Medicare & Medicaid Services (CMS) that will affect Medicare Advantage (MA) and Medicare Part D programs in calendar year (CY) 2025. We also take a look at the CY 2025 Part D Redesign Program Instructions

Both the rate announcement and program instructions include important technical updates and payment policy changes that will affect MA and Part D plans. CMS previously released a proposed rule in November 2023 that included proposed policy changes to MA and Part D. Health Management Associates, Inc., colleagues are closely monitoring how the final Rate Notice will shape the industry’s approach to the separately proposed policies for supplemental benefits, integrated dual eligible special needs plans (D-SNPs), and encounter data policies among others.  

The following are highlights from the CY 2025 Rate Announcement and significant changes CMS made from the Advance Notice released earlier this year. 

Payment Impact on MA 

CMS estimates that the final ate announcement will lead to a 3.70 percent increase in average payments to MA plans in CY 2025. This reflects the net payment impact of policy changes and updates to MA plan payments relative to 2024 and is the same amount as proposed in the CY 2025 Advance Notice released on January 31, 2024. As a result, MA plans will receive an estimated $16 billion increase in payments for CY 2025, and according to CMS, the federal government is expected to make $500−$600 billion in payments to MA plans in 2025. This reimbursement increase—which include all the various elements affecting MA plan payments, including the MA risk score trend—represents the average payment increase across all MA plans, although the actual impact on each plan will vary. 

Effective Growth Rate 

The effective growth rate finalized in the CY 2025 rate announcement is 2.33 percent, down slightly from 2.44 percent in the advance notice. The effective growth rate is driven largely by growth in Medicare fee-for-service expenditures, and the CY 2025 Rate Announcement was updated to include program payments during the fourth quarter of 2023. In addition, the technical medical education adjustment has declined from 67 percent in the Advance Notice to 52 percent in the Rate Announcement. 

Medicare Advantage Risk Adjustment and Coding 

The rate announcement continues to phase in the updated risk adjustment model by blending 67 percent of the risk score calculated using the updated 2024 MA risk adjustment model with 33 percent of the risk score calculated using the 2020 MA risk adjustment model.  These revisions to the MA risk adjustment model, which include important technical updates to improve the model’s predictive accuracy, were finalized last year under the CY 2024 Rate Announcement with a three-year phase-in. The Rate Announcement also finalizes that CMS will adopt a new methodology for normalizing risk scores to more accurately address the effects of the COVID-19 pandemic. 

Consistent with what the agency proposed in the Advance Notice, in CY 2025, CMS will apply the statutory minimum 5.90 percent MA coding pattern difference adjustment. 

Star Ratings 

CMS continues work toward implementing the “Universal Foundation” of quality measures—a subset of metrics aligned across public programs. CMS invites stakeholder feedback as it continues to explore adding measures to the Star Ratings, which are components of the Universal Foundation. 

For the CY 2025 rate announcement, Star Ratings changes include the types disasters that are included in the adjustment, updates to the non-substantive measure specification, and the list of metrics for inclusion in the MA and Part D improvement measures and Categorical Adjustment Index for 2025 Star Ratings. 

Part D Design and Part D Risk Adjustment Changes 

The Rate Announcement details several important changes to the standard Part D drug benefit for CY 2025 as required by the Inflation Reduction Act (IRA). These adjustments include eliminating the coverage gap phase from a three-phase benefit (deductible, initial coverage, and catastrophic) and setting the annual cap on patient out-of-pocket prescription drug costs at $2,000. The changes in Part D coverage design will have a significant impact on liability for Medicare beneficiaries, Part D plans, drug manufacturers, and CMS.  

CMS also finalized updates to the Part D risk-adjustment model to reflect Part D design changes included in the IRA and to ensure Part D plan sponsors can develop accurate bids for CY 2025. These changes include calibrating the Part D risk model using more recent data years and updating the normalization factor to reflect differences between MA-PD plan and standalone Part D plan risk score trends. 

Key Considerations 

Overall the final rate notice maintains stability and the opportunity for beneficiary choices in the MA program even as it continues to implement noteworthy changes in risk adjustment. The payment policies finalized in the CY 2025 Rate Announcement will have varying effects across MA plans, with some experiencing larger or smaller impacts in CY 2025. Plans should assess these effects as they prepare their bid submissions for 2025. 

In the CY 2025 rate announcement, CMS indicates that the 3.70 percent increase will provide continued stability in beneficiary access, choice, and benefits while ensuring accurate, appropriate payments to Medicare Advantage organizations. 

Looking ahead, CMS also has proposed policy and technical changes to the MA and Part D programs, which are expected to be finalized in the coming days. HMA’s summary analysis homes in on key issues that likely will be included in the final rule. CMS continues to solicit feedback from stakeholders on ways to reinforce and improve transparency in the MA program through the CMS Request for Information on MA data collection. Comments are due May 29, 2024. 

The HMA team will continue to analyze the important payment and technical changes finalized in the CY 2025 rate announcement. We have the depth, experience, and subject matter expertise to assist with tailored analysis and the modeling capabilities to assess the policy impacts across the multiple rules and guidance. 

If you have questions about the comments of the CY 2025 Rate Announcement and payment policies that impact MA plans, providers, and beneficiaries, contact Julie Faulhaber ([email protected]), Amy Bassano ([email protected]), Andrea Maresca ([email protected]), or Greg Gierer ([email protected]). 

CMS Innovation Center announces ACO PC Flex model to improve access for Medicare beneficiaries

This week, our In Focus section looks at the voluntary Accountable Care Organization Primary Care Flex (ACO PC Flex) Model, which the Centers for Medicare & Medicaid Services (CMS) Innovation Center announced on March 19, 2024. This model is designed to increase the number of low revenue ACOs in the Medicare Shared Savings Program (MSSP). Model participants will receive a one-time advanced shared savings payment and monthly prospective population-based payments. The ACO PC Flex Model is intended aims to support care delivery transformation, innovation, and team-based approaches to improve quality and reduce costs of care.

The ACO PC Flex Model is structured to increase the number of low revenue ACOs (i.e., ACOs composed of physicians, a small hospital, and/or serve rural areas). CMS published results in August 2022 indicating  that low revenue ACOs generated $113 more per capita savings than their high revenue counterparts.  CMS wrote in July of 2023 that the agency was seeking new opportunities for ACOs to serve Medicare beneficiaries. With this model, the Innovation Center is providing flexible payment to support innovative, team-based, person-centered, and proactive approaches to care for a subset of ACOs that have historically generated savings.

ACO PC Flex Model payments are structured to provide advanced shared savings to support administrative activities necessary for the model and ongoing payments specifically for primary care. The payment approach includes:

  • A monthly prospective primary care payment consisting of 1) a county base rate determined by average primary care spending, and 2) payment enhancements to support increased access to primary care, provision of care, and care coordination, which are exempt from CMS recoupment
  • An advanced shared savings payment as a one-time advance the changes needed to support needed operations and administration

With the approach, the Innovation Center anticipates CMS will be able to improve access to primary care services, particularly for underserved communities, and empower providers through flexible, stable payments to innovate care delivery to better meet their patients’ needs.

The demonstration will start January 1, 2025, and run for five years. The request for applicants (RFA) is expected in the second quarter of 2024, and ACOs must apply for participation in MSSP as a new or renewing organization to be eligible for ACO PC Flex. Applications for MSSP close June 17, 2024.

More details are expected to be included in the RFA. If you are interested learning more about the ACO PC Flex Model, please contact Amy Bassano and Melissa Mannon.

Federal policymakers consider current and future spending measures on simultaneous tracks

This week, our In Focus section covers Congress’s and the Administration’s parallel efforts to finalize fiscal year (FY) 2024 spending bills and begin the budget process for FY 2025.  

Congress approved a bipartisan package for some of the FY 2024 spending bills, and on March 9, 2024, President Biden signed the Consolidated Appropriations Act of 2024 into law (PL 118-42). Programs funded through this measure include the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and other federal nutrition supports, rental assistance for safe and affordable housing, and veterans medical care and benefits.  

Several mandatory funding extensions of public health programs and health-related policies also found their way into the 2024 consolidated appropriations package, including extending the Community Health Center Fund, delaying reductions in the disproportionate share hospital allotments, defining Certified Community Behavioral Health Centers (CCBHCs) as a Medicaid service, extending incentive payments for certain Medicare providers, and mitigating the impact of cuts to the Medicare physician fee schedule.  

These policies, however, addressed a narrower set of issues than the expansive and bipartisan legislation that has been moving through both chambers of Congress. For example, House and Senate members have worked on respective bipartisan policies affecting price transparency, pharmacy benefit managers, and Medicare site-neutral policies, among others.  

Meanwhile, President Biden released the FY 2025 Budget proposal March 11, 2024, kicking off the annual budget process. Like the administration’s FY 2024 budget proposal, the FY 2025 plan emphasizes deficit reduction and continues to make equity and Medicare solvency cornerstones of the budget. Health-related priorities include expanding access to affordable healthcare services, lowering drug costs, improving maternal health, addressing the mental health and substance use disorder crises, and enhancing biodefense and preparedness activities.  

Check out the FY 2025 budget analysis from Leavitt Partners, a Health Management Associates, Inc. (HMA), company, here, and a deeper dive into the Consolidated Appropriations Act of 2024 here

What We’re Watching 

Congress is continuing negotiations on the outstanding spending bills, including the one that funds the Departments of Health and Human Services, Labor, and Education through September 2024. Lawmakers are working to reach an agreement before the next funding deadline of March 22.  

The administration’s FY 2025 budget proposals are generally being characterized as a blueprint for President Biden’s re-election campaign and, if successful, a policy agenda for his second term. Though Congress has already begun holding hearings on the budget request, members on both sides of the aisle will likely focus on issues that resonate in an election year.  

Regardless of the outcome of the November elections, Congress has an opportunity to address unfinished business during the lame duck session later this year.  

HMA and Leavitt Partners collaborate to monitor legislative and regulatory developments in healthcare and adjacent spaces and to assess the impact of policy changes on the healthcare industry. 

November is National Adoption Month

When Love is Not Enough to Preserve a Forever Family for a Child

National Adoption Month image

Families formed by adoption face unique challenges in their lifelong journey as adoptees, parents, and siblings. Adoption-competent mental health is a necessary resource for adoptive families. This November, we are honoring adoption as a vital permanency strategy and the importance of forever families in the lives of children and youth who need this sense of permanency, security, and wellbeing.

The Children’s Bureau, part of the U.S. Department of Health and Human Services Office of the Administration for Children and Families (ACF) created National Adoption month to increase national awareness of adoption issues, encourage the development of permanent relationships, and bring attention to the need for adoptive families to provide placement for teens in the U.S. foster care system. The theme for 2023, “Empowering Youth: Finding Points of Connection,” focuses on ways to provide opportunities and services that connect youth to their identity—including culture, background, interests, and ambitions – to support meaningful permanent relationships with adults.

Adoption Statistics

The following are key data from the fiscal year 2021 report for the Adoption and Foster Care Analysis and Reporting System.

In the U.S., as of September 30, 2021, there were 114,000 children and youth waiting to be adopted who were at risk of aging out of foster care without permanent family connections.

  • More than one in five children waiting for adoption were 13–17 years old.  
  • The average age of all children waiting to be adopted was 7.5 years old.  
  • The average time in care for all children waiting to be adopted was 33.7 months.  
  • The average time in care for children waiting to be adopted after termination of parental rights was 19 months.  

The National Council for Adoption reports an 18 percent decrease in adoptions from FY19-FY21, with over 19,000 children who aged out of foster care without a permanent family. There has been a 24 percent decrease in domestic adoptions from 2019-2020 and 93 percent decline in intercountry adoptions since peaking in 2004.[1] .  These data points reflect the urgency of revitalizing adoption as an important tool for the wellbeing of children who need permanent loving families.

Recognizing that adoption is just the beginning of the family’s journey and the fact that adoptive families need special attention, especially when the children who have been adopted have suffered the trauma of entering the child welfare system, mental health treatment and resources are critical to the wellbeing of these families and the children in them.

Importance of Identity

Research has shown that strong cultural identity can contribute to mental health resilience, higher levels of social well-being, and improved coping skills, greater self-esteem, higher education levels, better psychological adjustment, and improved coping abilities.[2]  But many youth in foster care often have lower cultural identity strength than those who did not experience foster care. This can lead to higher levels of loneliness and depression, lower self-esteem, and difficult psychological adjustments that in turn affect coping skills and learning.[3]

In her book You Should be Grateful, Angela Tucker offers many practical insights and tools aimed at nurturing identity and helping transracial families and adoptees to center around the cultural norms and experiences of the adoptees themselves.[4] 

A Changing Landscape

Many states now have safe-haven laws where parents can drop off their babies without penalty at hospitals, fire stations or police department if they are not able to care for them knowing their babies will be cared for and placed in families through the child welfare system. At the same time there are many children and youth who languish in foster care waiting for a ‘forever family’ to adopt them. Thousands of teens in foster care are looking for the love, support, and encouragement that families provide throughout their lives—not just until they turn 18. Youth who were adopted from the foster care system when they are 16 or older may be able to access Education and Training Vouchers (ETV) of up to $5,000 per year. Those who were adopted from foster care when they are 13 or older are more likely to qualify for federal financial student aid because they do not have to count family income when applying.[5]

When it comes to medical and mental health benefits, qualifying families may receive federally funded monthly maintenance payments, and other support, often until a child turns 18 or 21, depending on the state where they live, and medical assistance until age 26 if they were in foster care at a certain age depending on the state. Recognizing the need for adoption competent mental health, the Federal Administration for Children and Families has awarded the Center for Adoption Support and Education the grant to build a national Center to Support Mental Health Services in the Child Welfare System.[6]

The recent Biden-Harris regulations strengthen services and supports for children and families in the child welfare system. These regulations require additional support for kinship families, and protections for LGBTQI+ youth and expansion of access to legal services for children and families entering the child welfare system. Congress could use the momentum from these regulations to make the Adoption Tax Credit fully refundable and extend it to legal guardians to assist with the financial resources of raising children.

The recent Supreme Court Dobbs decision will likely impact adoption trends, but that trend is still evolving and will need to be monitored before conclusions can be drawn.

How HMA Can Help

HMA assists organizations working in child welfare and adoption, and grounds our work in human-centered design, lived expertise, and change management and leadership principles in state and county program development. We can help support organizations working with children and youth in foster care or with adoption agencies by:

  • Providing technical assistance to state and local government, and community-based organizations
  • Developing system redesign and strategic planning
  • Facilitating stakeholder engagement
  • Implementing workforce and leadership development strategies

Visit the ACF website to learn more about National Adoption Month and find tools and resources to educate yourself and your community about how we can achieve better outcomes for youth in foster care. 

If you have questions on how HMA can support your efforts in Child and Family Wellbeing, please contact:

Uma Ahluwalia, MSW, MHA, Managing Principal,
Jon Rubin, Principal, or
Caitlin Thomas-Henkel, Principal.


[1] Adoption by the Numbers – National Council for Adoption (adoptioncouncil.org)

[2] Anderson, M., & L.O. Linares. “The Role of Cultural Dissimilarity Factors on Child Adjustment Following Foster Placement.” Children and Youth Services Review 34(4), 2012, 597-601.

[3] Children on AdoptUSKids – AdoptUSKids

[4] “You Should Be Grateful” Stories of Race, Identity and Transracial Adoption — Angela Tucker

[5] Teens need families – AdoptUSKids

[6] Adoption Support Center & Services | C.A.S.E

Impact of a federal government shutdown on healthcare programs and services

HMA is releasing an agency-by-agency analysis of the impacts on several key healthcare programs and services in the event of the potential federal government shutdown in the coming days. As of September 27, 2023, the U.S. Congress has not approved any of the twelve appropriations bills for FY 2024 or a continuing resolution (CR) that would maintain federal funding at the FY 2023 level for a specified period of time into FY 2024 while Congress continues negotiating. If the shutdown is not averted before the deadline, look for a LinkedIn live at 10am Monday, October 2 to discuss the ramifications on the U.S. healthcare system. Go to the HMA LinkedIn page to watch.

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