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Frequently Asked Questions

Frequently Asked Questions are used to provide additional information and/or statutory guidance not found in State Medicaid Director Letters, State Health Official Letters, or CMCS Informational Bulletins. The different sets of FAQs as originally released can be accessed below.

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Are managed care plans permitted to maintain more than one level of appeal?

No. For the rating periods for contracts starting on or after July 1, 2017, managed care plans may not maintain more than one level of appeal. Section 438.402(b) requires that MCOs, PIHPs, and PAHPs ""may have only one level of appeal for enrollees."" Note that states may modify managed care contracts to require managed care plans to provide one level of internal appeal in advance of the rating period for contracts starting on or after July 1, 2017, as subpart F in the 2002 final rule permitted states flexibility as to the number of internal appeals. Please see page 27509 of the Final Rule for additional explanatory information.

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FAQ ID:93446

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Can states elect to permit enrollees to request a State fair hearing without first exhausting the managed care plan's appeal process?

No, not for the rating period for contracts starting on or after July 1, 2017. Section 438.402(c)(1)(i) requires that the enrollee exhaust the internal level of appeal before requesting a State fair hearing. Note that if the MCO, PIHP, or PAHP fails to adhere to the notice and timing requirements in section 438.408, section 438.402(c)(1)(i)(A) provides that the enrollee is deemed to have exhausted the internal level of appeal and may request a State fair hearing. States may modify managed care contracts to require exhaustion of the internal level of appeal in advance of the rating period for contracts starting on or after July 1, 2017, as subpart F in the 2002 final rule permitted states flexibility to determine whether exhaustion would be required. Please see page 27509 of the Final Rule for additional explanatory information.

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FAQ ID:93451

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The Final Rule at section 438.2 defines a rating period as the 12 month period for which actuarially sound capitation rates are set, but there may be legitimate reasons why a state may want to set capitation rates for a time period that is less than or greater than 12 months. Will states have any flexibility in this area?

Yes. CMS acknowledges that states may have legitimate reasons to set capitation rates for a time period that differs from 12 months and will take unusual circumstances into account when reviewing compliance with the rating period duration requirements. CMS will approve a rating period other than of 12 months when a state transitions the contract term and rating period from a calendar year to a state fiscal year basis and setting capitation rates for a 6 month or 18 month period would facilitate that transition. There may be other reasonable justifications for such variations in the rating period that CMS would be open to considering. The rationale for a rating period that differs from 12 months as defined in the regulation in section 438.2 should be specified in the rate certification required in section 438.7 for such consideration.

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FAQ ID:93456

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A rating period is defined in section 438.2 as the 12 month period for which actuarially sound capitation rates are set. The Final Rule ties implementation and compliance deadlines for some provisions to the rating period for contracts starting on or after a specific date. Non-risk prepaid inpatient health plans (PIHPs) and non-risk prepaid ambulatory health plans (PAHPs), PCCMs, and PCCM entities do not have a rating period as defined in section 438.2 because such arrangements are not subject to actuarial

The implementation date for non-risk PIHPs and PAHPs, PCCMs, and PCCM entities for provisions tied to a rating period is the earliest date that a risk-based MCO, PIHP, or PAHP would need to comply. For example, the provisions in subpart F relating to appeals and grievances have an implementation date for risk-based contracts of the rating period for contracts starting on or after July 1, 2017. Non-risk PIHPs and PAHPs would need to implement those provisions by July 1, 2017.

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FAQ ID:93461

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Can CMS please clarify if only audited financial statements that are done on a formal Generally Accepted Accounting Principles (GAAP) basis can be used to meet the requirements in section 438.3(m)? Audits can also be done following statutory accounting principles or government auditing standards and it is not clear if states and managed care plans have flexibility in which standard to apply.

The regulation at section 438.3(m) has a general reference to "generally accepted accounting principles" and "generally accepted auditing principles." This means that states have the flexibility to specify the applicable generally accepted accounting and auditing principles for the audited financial reports in the managed care plan contracts. The federal regulation does not endorse a particular standard.

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FAQ ID:93466

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Where can I find general information on the change in matching rates for External Quality Review (EQR)?

CMS released an Informational Bulletin (CIB) discussing the change in federal financial participation (FFP) for EQR that was effective May 6, 2016. The CIB includes revised claiming instructions for the CMS-64 and a sample form. It is available at Medicaid.gov on the EQR webpage, under Technical Assistance Documents, and available at https://www.medicaid.gov/federal-policy-guidance/downloads/cib061016.pdf (PDF, 279.08 KB).

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FAQ ID:93471

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Will states need to modify already approved contracts to add the final capitation rates to the contract to comply with section 438.3(c), which requires that the payment term be included in the contract?

Yes. We remind states that the requirement that the final capitation rate be specified in the contract is not a new requirement, see section 438.6(c)(2)(ii) of the 2002 final rule. The amount of payment for performance-in this context, the final capitation rate-is a primary component of any contract and must be included for purposes of verifying claims for Federal Financial Participation (FFP) on the CMS-64. In the Final Rule at page 27595, in the context of risk adjustment, CMS suggested that the payment terms under the contract could be identified in an appendix, or additional supporting documentation, to the contract for ease of updating the information when risk adjustment is applied. The state must submit a formal contract amendment when the final capitation rates differ from the payment terms in an approved contract.

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FAQ ID:93171

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Where can I find general information on the change in matching rates for External Quality Review (EQR)?

CMS released an Informational Bulletin (CIB) discussing the change in federal financial participation (FFP) for EQR that was effective May 6, 2016. The CIB includes revised claiming instructions for the CMS-64 and a sample form. It is available at Medicaid.gov on the EQR webpage, under Technical Assistance Documents, and available at https://www.medicaid.gov/federal-policy-guidance/downloads/cib061016.pdf (PDF, 279.08 KB).

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FAQ ID:94641

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Under what circumstances can states claim the enhanced 75 percent match for EQR activities?

Under section 438.370, the enhanced match of 75 percent is available for the EQR-related activities described in section 438.358 if all of the following conditions are met:

  • The EQR activity is performed on a managed care organization (MCO) by an entity meeting the requirements of a qualified EQRO in section 438.354 or its subcontractor;
  • The activity is performed pursuant to a contract approved by CMS; and
  • The activity is performed in accordance with a protocol issued by CMS.

FFP at the 50 percent matching rate is available for mandatory and optional EQR-related activities for PIHPs, PAHPs, and affected PCCM entities, regardless of whether the activities were conducted by an EQRO or another entity. FFP at the 50 percent matching rate is also available for EQR and related activities performed for MCOs that are conducted by an entity that is not a qualified EQRO. This is a change from previous regulations, under which the enhanced match was available for EQR of PIHPs to the same extent as MCOs. This provision took effect May 6, 2016.

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FAQ ID:94646

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Does the May 6, 2016 effective date for the change in FFP for EQR-related activities apply based on the date of approval of the EQRO contract, the date the activity was performed, or the date of expenditure for the EQR activity?

Regardless of whether an EQRO contract is approved before or after May 6, 2016, the change in FFP for EQR-related activities was effective May 6, 2016 for expenditures incurred by the state on or after May 6, 2016. Per general CMS-64 claiming principles, a state incurs an expenditure that may be claimed on the CMS-64 on the date the state pays the EQRO for the completed performance of the contracted EQR-associated activity.

The change to the FFP match rate for expenditure reporting takes effect in the middle of a quarter, which means that states must ensure that claims for expenditures for EQR activities affected by the change in FFP which were paid before May 6th and claims for expenditures which were paid on or after May 6th are reported separately. For only the quarter ending June 30, 2016, the CMS-64 EQRO Line 17 will allow states to report state expenditures associated with PIHP EQRO activities paid prior to May 6, 2016 and claim the enhanced 75 percent match. State expenditures associated with PIHP EQRO activities paid on or after May 6th must be claimed at the 50 percent matching rate.

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FAQ ID:94651

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