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How Medicaid's Final Rule Changes Affect Hospitals

By Thomas Gole, DO, FAAFP06 Jun 2016

medicaids-final-ruleThe Centers for Medicare and Medicaid Services (CMS) recently announced an update to Medicaid and the Children’s Health Insurance Program (CHIP). Medicaid's final rule is an attempt to modernize and strengthen the quality of care of its low-income healthcare program.

Thanks to the Affordable Care Act, Medicaid has seen substantial growth, and now 80 percent of enrollees are served through managed care delivery services.

How the Final Rule Works

The final rule is comprised of four parts, according to Vikki Wachino, director for the Center for Medicaid and CHIP Services at CMS. The rule will:

  • Enhance delivery system reform
  • Strengthen consumer protections and experience
  • Strengthen the integrity of the program
  • Align rules across the different insurance programs

As part of strengthening consumer experience and protections, the final rule will give consumers more information about plans through Medicare and CHIP’s first quality rating system. It will also attempt to improve the care coordination, enrollment and communication of state and managed care plans.

The quality rating system will allow states to pay Medicare reimbursements to facilities that meet quality benchmarks or participate in alternative payment methods.

How the Rule Can Affect Your Hospital

Currently, states can give “pass-through” payments to hospitals caring for Medicare patients. But the new rule will do away with these supplemental payments and instead reimburse facilities based on their quality and performance.

Even though the new guidelines have been announced, they won’t officially be in place until July 1, 2017. And, to make things easier for you, they’ll be implemented in phases.

“To support states’ efforts to advance delivery system reform and improve quality, the Final Rule requires states to establish a Medicaid quality rating system developed by CMS or adopt an alternative Medicaid managed care quality rating system that would be subject to CMS approval. Through a public notice and comment process, CMS will develop performance measures and a methodology for a Medicaid managed care quality rating system that aligns with the quality indicators for qualified health plans on the Exchanges. States will not be required to implement a quality rating system until three years after CMS issues guidance regarding the measures and methodologies for its rating system. Additionally, CMS chose not to finalize its proposal that would have given states the option to default to the Medicare Advantage Five-Star Rating system for plans serving only dual-eligible beneficiaries,” reports Lexology’s Hogan Lovells.

CMS wants to be an ally

Though the latest CMS changes may seem like a lot to digest, CMS Acting Administrator Andy Slavitt said the agency “wants to be seen as an ally that helps you thrive in the midst of all this change.”Become a Hospital Of Choice in 2018