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Proposed Medicaid Rules: Managed Care Network Adequacy

On May 3, 2023, the Centers for Medicare & Medicaid Services (“CMS”) published two proposed rules amending the regulations governing Medicaid managed care organizations at 42 C.F.R. Part 438. The proposed rules, Managed Care Access, Finance, and Quality, and Ensuring Access to Medicaid Services, aim to improve access to care and quality outcomes for managed care beneficiaries. This is the third of a series of blog posts outlining the proposals by CMS. Comments on the proposed rules are due by July 3, 2023.

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Photo by @jontyson on Unsplash


Most Medicaid managed care plans are paid per member per month, creating an incentive to spend as little as possible for services. Plans primarily seek to reduce costs through utilization management and reductions in or denials of payments to providers. One of the few tools that providers can use to counterbalance this strong economic pressure is network adequacy requirements imposed on plans.

In 2016, CMS moved to strengthen beneficiary access by adopting new time and distance standards for Medicaid managed care plans, as well as other network availability requirements. In 2020, CMS overhauled the determination of network adequacy by replacing the time and distance standard with the quantitative network adequacy standard, giving more flexibility to states to pick among a variety of quantitative network adequacy standards. One may note the impact of different executive leadership and philosophy on these different policies.

In the proposed rule released last week, CMS identified a need for increased oversight of network adequacy and proposed additional changes. CMS does not propose a return to time and distance standards, but does create new requirements for when states grant exceptions to quantitative network adequacy standards. CMS strengthens this requirement by proposing managed care plans submit rate analyses as described in Tuesday’s post. This post addresses CMS’s additional new proposals around appointment wait time standards and secret shopper surveys:

  • Appointment Wait Time Standards: CMS proposes in new 42 C.F.R. sections 438.68(e) and 438.206(c)(1)(i) that (1) states develop and enforce wait time standards for “routine” appointments and (2) appointment wait time standards must become a mandatory provision in Medicaid managed care plan contracts. This standard would initially apply to outpatient mental health and substance use disorder (SUD) - adult and pediatric, primary care - adult and pediatric, obstetrics and gynecology (OB/GYN), and additional type(s) of service determined by the state. Like other quantitative network adequacy standards, states may grant an exception to this standard, but among other factors, the state must consider the payment rates offered by the plan to that provider type when granting an exception.

CMS clarified that states could set additional appointment wait time standards for other types of services. In addition, CMS proposed giving itself the authority to select additional types of services in the future.

Maximum Wait Times: In alignment with the standards for Marketplace plans, CMS proposed that an appointment must be provided within:

  • 10 business days for routine outpatient mental health and substance use disorder appointments;

  • 15 business days for routine primary care appointments;

  • 15 business days for routine OB/GYN appointments;

As long as states follow the above, CMS explained that states may vary appointment wait time standards for the same provider type based on various factors like geography or service type.

CMS is not proposing a maximum appointment wait time standard for the state-selected provider type.

Consistent with the requirement for QHPs beginning in 2024, appointments offered via telehealth would only be counted if the provider also offers in-person appointments.

  • Secret Shopper Surveys – To further reinforce network adequacy, CMS proposed states and managed care plans use independent entities to conduct secret shopper surveys in newly proposed 42 C.F.R. section 438.68(f) to determine plan compliance with Appointment Wait Time Standards and the accuracy of provider directories. Secret shopper surveys involve a third party pretending to be an enrollee (or their representative) and trying to schedule an appointment. Similar surveys in the past have revealed significant weaknesses in Medicaid access, stemming from listed providers not seeing any Medicaid patients, limiting services to Medicaid patients, or not seeing new Medicaid patients due to financial constraints. Among other requirements, the secret shopper surveys must:

    • Be conducted by an entity independent of the state and managed care plans.

    • Utilize a random sample and include all geographic areas covered by the managed care plan’s contract. For surveys determining appointment wait times, the survey must be completed for a statistically valid sample of providers, which means that secret shopper surveys must be administered to the number of providers identified as statistically valid for each plan.

    • Segregate by separately identifying telehealth visits.

Provider Directory Validation: The secret shopper surveys will be used to validate electronic provider directory data for each of the provider types that are subject to the appointment wait time standards to the extent any of these services are included in the managed care plan’s provider directories.

Secret shoppers must validate the following data elements:

  • The active network status with the managed care plan

  • The street address(es)

  • The telephone number(s); and

  • Whether the provider is accepting new enrollees

When a secret shopper identifies any errors, the state must receive this information no later than 3 business days from identification by the entity conducting the secret shopper survey. The state must then send that data to the applicable managed care plan within 3 business days of receipt. Alternatively, the state could delegate to the entity conducting the secret shopper survey to forward the information to the managed care plans. The managed care plan has no later than 30 calendar days to update its electronic provider directory.

Determination of Compliance: CMS proposes that Medicaid managed care plans are deemed in compliance when the proposed secret shopper surveys reflect a rate of appointment availability that meets state-established standards at least 90 percent of the time.

  • Other Proposals from CMS Related to Medicaid Managed Care Access:

Changes in Operation of Provider Directory: CMS proposes that managed care plan electronic provider directories must now be (1) searchable and (2) include information on whether the provider provides telehealth services.

Changes in Terminology for Behavioral Health: For purposes of network adequacy and provider directories, CMS will reclassify “behavioral health” providers as “mental health and substance use disorder” providers.

Assurance of Managed Care Plan Compliance with Network Adequacy Standards: As part of the state’s review prior to submitting its assurance of compliance with network adequacy standards, CMS proposed to require the states to review the secret shopper survey results and the managed care plan’s payment analysis.

  • As part of the state’s submission to CMS, CMS proposed that the state report using CMS’s Network Adequacy and Access Assurances Report template, which was first published back in July 2022. CMS expects to revise the template, so states can report the results of the secret shopper surveys of provider directory data validation and appointment wait time standards.

  • CMS also proposed that the state must submit the assurance of compliance (1) when it submits a completed readiness review, (2) annually within 180 calendar days after each rating period, or (3) when there is a significant change in the managed care plan’s operation. This report, which would include the results of the secret shopper surveys, must then be posted on the state’s webpage within 30 calendar days after it is submitted to CMS.

Remedy Plans When Managed Care Plans Cannot Meet Network Adequacy Standards: Should CMS, a state, or a managed care plan identify an issue with a managed care plan’s ability to meet network adequacy standards, including the appointment wait time standard, CMS proposed that the state must now submit a twelve-month remedy plan to CMS within 90 calendar days of the state being made aware of the issue.

  • This remedy plan must provide specific steps, timelines, measurable and sustainable improvements, and responsible parties, whether that be the managed care plan or the state. With respect to the state’s responsibility, CMS suggested a possible remedy plan would include steps such as changing scope of practice laws or increasing payment rates to providers.

  • If CMS does not believe the issue is resolved within the twelve months of the remedy plan, CMS could require the state to continue the remedy plan for another 12 months as well as revise its remedy plan.

This proposed rulemaking reflects CMS’ continued attempt to monitor access by Medicaid enrollees to services. However, instead of strengthening network adequacy requirements, CMS continues to focus on more granular aspects of network adequacy like appointment wait times, secret shopper surveys, and demonstration of payment amounts for a select group of providers. For most requirements, CMS still authorizes states to grant exceptions, which some states use regularly.

Throughout this proposed rule, there are numerous areas for which CMS explicitly requests additional input, including whether the wait time standards are appropriate and how states have implemented secret shopper surveys. Stakeholders in state Medicaid programs, including healthcare providers, would be well-advised to carefully review this proposed rulemaking for potential impacts. Comments will be accepted at until 5 p.m. on July 3, 2023.

For more information on the proposed Medicaid regulations or state directed payments, please contact Felicia Y Sze and Sammy Chang.

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