Medicaid Managed Care Rates and In Lieu of Services in Coordinated Care Initiative Counties 

Mari Cantwell, Chief Deputy Director Health Care Programs

Department of Health Care Services

PO Box 997413

Sacramento, California 95899

Re: Medicaid Managed Care Rates and In Lieu of Services in Coordinated Care Initiative Counties

Dear Ms. Cantwell,

It is our understanding that the Department of Health Care Services (DHCS) is currently considering changes to the rate structure for Medi-Cal Long-Term Services and Supports (MLTSS) and Cal MediConnect plans in the Coordinated Care Initiative (CCI) counties to both address 1) the removal of In-Home Supportive Services (IHSS) as a managed care benefit; and 2) the extension of the duals demonstration from a three-year pilot to a five-year pilot. We write to encourage the Department to take this opportunity to implement a new rate structure that would further incentivize the provision of services in home and community based settings. 

First, we encourage the Department to restructure rates that would allow plans to transition beneficiaries from skilled nursing facilities to a lower level care setting or into the community. While Olmstead[1] requires that states ensure that beneficiaries receive services in the most integrated setting appropriate to their needs, many beneficiaries residing in a skilled nursing facilities who could transition to lower levels of care, like a residential care facility for the elderly, remain institutionalized because the current rate structure does not adequately fund lower level care settings.  We advocate for a policy and rate structure that allows managed care plans to pay for support services these beneficiaries need at lower levels of care. Beneficiaries would pay their own room and board; plans would provide funding for support services that maintain health and wellness. These support services should be considered In Lieu of Services (see below), as they are provided “in lieu of” care in a skilled nursing facility.

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Second, we encourage the Department to allow In Lieu of Services – currently described as Care Plan Options (CPO) services[2] under the CCI - to be included in the Rate Development Template (RDT). From the outset of the CCI, we advocated for the inclusion of additional home and community based services (HCBS) in the covered benefit package. A former health plan executive once noted that the difference between a covered and non-covered benefit in managed care is traditionally “a fairly bright line, and if it is not our service, if the service or product in question is not a benefit, then it is highly unlikely that managed care will provide it.”[3]  To a large extent this has been the experience thus far in the CCI.[4]

As currently structured, plans are actually disincentivized from offering CPO services because the RDT does not include the investment plans make in these services, causing the plans’ rates to be reduced over time while increasing their costs.[5] Ideally, ILOS/CPO services would be included in the covered benefit package. Short of that, the Department must include ILOS/CPO services in the plans’ RDT. Furthermore, the new Medicaid Managed Care rule specifically requires the inclusion of the utilization and actual costs of In Lieu of Services in setting the plans’ capitated rates.[6] The provision of and inclusion in the RDT must apply to both Cal MediConnect plans and MLTSS plans.

Additionally, to ensure ILOS/CPO services are being delivered fairly, plans must be directed to track the kinds of services that are requested, needed, and most utilized. Plans must also be required to provide ongoing and meaningful notice and education to beneficiaries and their families to ensure that beneficiaries are fully informed of their home and community-based options.

Provision of ILOS/CPO services are instrumental in ensuring “successful community living” pursuant to Olmstead[7] and avoiding hospitalization and institutionalization, and therefore, must be accordingly prioritized.

We strongly urge the Department to include these changes in the newly developed rate structure. Please feel free to reach out to us to discuss the recommendations in more detail.

Sincerely,

[1] Olmstead v. LC, 527 U.S. 581 (1999).

[2] “Coordinated Care Initiative (CCI) Cal MediConnect Policy for Care Plan Option services (CPO services),” June 2013, available at http://calduals.org/wp-content/uploads/2013/06/Demo-CPO-services-Paper-6.3.13.pdf

[3] Bruce Chernof, The SCAN Foundation, “TSF Webinar: Managed Care 101 – Presenting the Fundamentals of Integrating Long-Term Services and Supports into a Managed Care Model,” Dec. 14, 2012.

[4] See, University of California San Francisco and Berkeley, “Provision of Home and Community Based Services through Cal MediConnect Health Plans,” November 2017, available at http://www.thescanfoundation.org/sites/default/files/ucb_researchbrief_hcbs_final.pdf.

[5] See, University of California San Francisco and Berkeley, “Provision of Home and Community Based Services through Cal MediConnect Health Plans,” November 2017, available at http://www.thescanfoundation.org/sites/default/files/ucb_researchbrief_hcbs_final.pdf.

[6] 42 CFR § 438.3(e)(2)(iv).

[7] Olmstead at 28.