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Medicaid final rule defines the future of LTSS

Arizona was the last state to enter into the Medicaid program, which it did in 1982. Shortly after, it became the first state to establish a mandatory, statewide Medicaid managed care program. Establishing the Arizona Long Term Care System (ALTCS) in 1989, Arizona moved all long-term services and supports (LTSS) under managed care. More recently, managed LTSS (MLTSS) in Arizona has grown from approximately 39,000 enrollees in 2004 to over 58,000 in 2016.

New Jersey, a state that launched MLTSS more recently in 2014, has already made significant progress in expanding the program’s reach. Specifically, New Jersey’s MLTSS program, part of its statewide managed care program NJ Family Care, started by integrating care for the state’s dually eligible Medicare and Medicaid population and has since expanded to include both nursing facility and home-and-community-based services (HCBS).

Iowa is an even more recent example of a state that made the switch to MLTSS. Effective in January 2016, Iowa moved from primarily Medicaid fee-for-service (FFS) management of LTSS, behavioral health, and complex populations to IA Health Link, a fully-integrated managed care program that integrates HCBS waiver, behavioral health, and acute/physical services for all populations. IA Health Link had 604,664 members enrolled as of May 2016.

Arizona, New Jersey, and Iowa are just three examples of the growth we’ve seen in MLTSS. Currently, 26 states are in various stages of implementing MLTSS programs, and MLTSS enrollment grew by 175 percent from 2013 to 2014. But, as interest in moving LTSS programs under managed care has grown, so has the federal government’s interest in ensuring these services are cost effective and high quality.

The growth in MLTSS programs prompted the Centers for Medicare and Medicaid Services (CMS) to issue consumer-centric, quality-focused guidance on the topic. The Medicaid managed care final rule issued in April 2016 is CMS’ first major update to this program in more than a decade (since 2002). It reflects program modernization based on years of policy development. For the first time, the rule includes guidance specific to MLTSS and discusses the expanding role for HCBS. The rule gives states more flexibility in program design and administration, emphasizes person-centered processes, and strengthens the need for health plans – or managed care organizations – and states to work together.

The issue of quality is front and center in the new regulations. The rule requires states to establish quality assessment and performance improvement programs, a state quality strategy, and a CMS-defined managed care quality rating system aligned with Qualified Health Plan (QHP) quality ratings. As a result, states will need to rank their managed care programs, including MLTSS plans, based on quality scores and publish these rankings on a regular basis. These new regulations impact states, health plans, and providers, and emphasize the need for these stakeholders to synergize how they achieve these evolving requirements.

The Medicaid population has complex needs and requires coordination between physical health, behavioral health, and long-term care providers. These groups may not have previously worked together within traditional models. Indeed, most long-term care providers, for example, mental health providers and providers that support persons with disabilities (both intellectual and physical), operate solely in Medicaid FFS so may not be as familiar with health plans. States are now tasked with monitoring quality and consumer choice in managed care in a way that is data driven, transparent, and cost and quality conscious. A lot of this work will be breaking new ground.

The final rule poses several challenges. Even today, many providers have limited and/or no electronic health records (EHRs), which limits clinical data collection, sharing, and care coordination capabilities. Many states have resource challenges, limited staff capacity and need training and targeted technical assistance.

But the paramount challenge is collecting data for quality measurement and reporting in an MLTSS/community setting. LTSS quality measures are generally not as well developed as those for acute care; no consistent, widely-accepted LTSS quality metrics exist yet. But, work is continuing in this area, and states, health plans, providers, members, and advocates can collaborate to measure outcomes better. These stakeholders should develop MLTSS quality measures that both capture care integration and align with measures and requirements in a state’s existing programs for external quality review, Medicaid waivers, CMS demonstration programs, and value-based care initiatives. Ideally, measures should be meaningful yet not be unduly burdensome for those who need to report the information.

States that are pursuing a full-risk approach to MLTSS will require a more complex, strategic plan to effectively coordinate integrated care models, data collection and sharing, plan oversight and measurement, and payment across long-term, physical and behavioral health benefits. These states, with guidance provided by the Medicaid managed care rule, may have an opportunity to leverage their broader Medicaid Managed Care Quality Strategy to increase quality and reduce growth in the cost of care. For example:

  • Providing incentives to health systems to reduce preventable readmissions
  • Encouraging health plans to invest in health information technology, including telehealth, to expand access
  • Aligning program quality measures with interventions that improve clinical outcomes, including improving individual’s ability to function, and that address social determinants of health

As MLTSS expands through full-risk or partial-risk capitated contracts, states and health plans are collaborating to develop models of care for the community setting that have enormous potential. Arizona, for example, is leveraging its relationships with the state’s health plans to use its Elderly and Physically Disabled program contracts to expand value-based purchasing (VBP) efforts – contracts that have had shared-savings requirements in place since 2012. This example of aligning an MLTSS program with broader VBP initiatives could produce quality improvement in service delivery while keeping both health plans and providers in mind.

States are at different stages of transformation. Care coordination within community settings is imperative for states, health plans, and MLTSS providers. While technology needs to catch up to help better manage this population, the building blocks are in place and states are motivated to get to the next level of LTSS delivery.

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Author bio

Mark, a vice chairman of Deloitte, leads our US Public Sector practice which provides consulting, advisory, audit, and tax services to government and higher education clients nationally. Mark has more than 25 years’ experience in the US, United Kingdom, Australia, and New Zealand across a range of complex and often high-profile strategy, business operations, digital transformation, and large-scale technology implementation projects.