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Medicaid and CHIP Managed Care Final Rule Revises Access to Care and Network Adequacy Standards, Promotes Innovative Technology

The Centers for Medicare & Medicaid Services (CMS) recently issued the Final Rule regarding managed care in Medicaid and Children’s Health Insurance Programs (CHIP) that revises and expands the federal rules governing the operation, contracting, oversight and payment of Medicaid managed care plans. Among the many items addressed in the Final Rule, CMS included provisions with respect to network adequacy standards—both in terms of state responsibilities and Medicaid managed care plans—and advised states to contemplate telemedicine, e-visits, and other evolving and innovative technological solutions.

Access to Care and Network Adequacy Standards

The interrelated issues of access to health care services and provider network adequacy are at the forefront of the many US-wide health care issues that have arisen in the wake of health reform. Health plans participating on the exchanges, Medicare Advantage Plans, Medicaid managed care plans and commercial plans have increasingly utilized “narrow networks” as a means of controlling health care provider costs (for more information, click here). State legislatures and regulators have responded to enrollee complaints by issuing new standards governing the adequacy and accessibility of provider networks.

The Final Rule reflects this trend by imposing obligations on the states to ensure that (1) covered services are available to Medicaid managed care enrollees in a timely manner, and (2) Medicaid managed care plans contract with a network of appropriate providers sufficient to ensure timely access to covered services, including the provision of medically necessary services outside of the network if the network is unable to fulfill its network adequacy and accessibility obligations.

The Final Rule requires the states to develop and enforce time and distance network adequacy standards for primary care, OB/GYN, behavioral health, adult and pediatric specialists, pediatric dental providers, hospitals and pharmacies, as well as any additional categories of providers determined by CMS. Furthermore, the Final Rule includes standards that require states to ensure that (1) female Medicaid enrollees, including female minors, have direct access to women’s health specialists; (2) enrollees can get second opinions from an in-network provider or out-of-network provider, if necessary; (3) enrollees can go out of network to get medically necessary services; (4) out-of-network providers may coordinate with Medicaid managed care plans to ensure that enrollees do not have to pay more for out-of-network services; and (5) enrollees have timely access to family planning services.

In response to comments, CMS provided a list of factors that the states should consider to establish provider network adequacy standards, including the ability of providers to communicate with enrollees who have limited English proficiency, accommodation of disabilities and diverse cultural and ethnic backgrounds (regardless of gender, sexual orientation or gender identity), and the availability of triage lines or screening systems. States that create exceptions from network adequacy standards must monitor enrollee access on an ongoing basis.

Use of Innovative Technology Solutions

Notably, CMS also advises states to contemplate telemedicine, e-visits, and/or other evolving and innovative technological solutions. Although the Final Rule only lists telehealth as an option for states to consider utilizing to meet the new standards, CMS’s suggestion aligns with the separate CMS rule published on November 2, 2015, that establishes standards by which states are to measure access in the Medicaid program. There, CMS provided that a new delivery system model and reformed payment methodologies have the capacity to improve access to care by making available telemedicine, telehealth, health information technology and other methods for providing coordinated care, services and support in a setting and timeframe that meet enrollees’ needs.

The Final Rule’s provisions suggest that telehealth and health information technology should be incorporated to meet network adequacy standards in the context of Medicaid managed care. Notably, the National Association of Insurance Commissioners recently released proposed model legislation for states that also includes telehealth as a way to meet network adequacy standards. The trend towards streamlined efficiency that is reliant on technology remedies a common problem associated with narrow networks: namely, inadequate access to care. 

The network adequacy standards provided in the Final Rule apply for plan years beginning on or after July 1, 2018.

© 2019 McDermott Will & Emery


About this Author

J. Peter Rich, McDermott Will Emery Law Firm, Insurance Lawyer, Payer's Affinity Attorney Los Angeles

J. Peter Rich is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Los Angeles office.  He co-chairs the Firm’s Insurance / Payers Affinity Group.  For over 30 years, Peter has practiced almost exclusively in the health law field, and routinely advises hospitals, health plans, medical groups, health insurers, and PPOs and similar organizations, as well as other health industry clients, in negotiating and structuring managed care and other health industry transactions, including major Medicare Demonstration Projects. 

He has formed...

Lisa Schmitz Mazur, Health Law Attorney, McDermott Will Law Firm

Lisa Schmitz Mazur is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Chicago office.  Lisa maintains a general health industry practice, focusing on the representation of hospitals and health systems and other health industry providers.

Lisa’s representation of hospitals and health systems includes providing guidance on not-for-profit corporate governance matters, tax-exemption issues, conflict of interest compliance and overall corporate compliance effectiveness.  In addition, Lisa regularly assists hospital and health system clients to develop and negotiate physician compensation programs, and prepare agreements with physicians and helps to guide governing boards and committees in the review and approval of such arrangements. 

Digital Health

Lisa advises a variety of healthcare providers and technology companies involved in “digital health” – the intersection of health software applications, analytical tools, medical technology and electronic data assets enabled by the Internet and mobile devices – on the applicable legal and regulatory infrastructure, with a particular focus on telehealth, telemedicine, mobile health and consumer wellness programs. For example, Lisa has assisted numerous clients in developing and implementing telemedicine programs by advising on issues related to professional licensure, scope of practice, informed consent, prescribing and reimbursement. Lisa assists her clients to identify and understand the relevant legal issues and develop and implement practical, forward-thinking solutions and strategies that meet the complex and still-evolving digital health regulatory landscape.

In addition to writing extensively on matters related to her digital health practice, Lisa has spoken at numerous conferences on a variety of digital health topics. She is the co-editor of McDermott’s Of Digital Interest  blog, co-chairs the Interstate Collaboration in Healthcare Stakeholder Group and chairs the Illinois Telehealth Law Forum Program Planning Committee

Lisa also co-leads the Firm’s Digital Health affinity group, which brings together McDermott lawyers from within and outside the Health Industry Advisory Practice Group to develop thought leadership, share information and collaborate on best practices.


Marshall E. Jackson, Jr. is an associate in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Washington, D.C. office.  Marshall focuses his practice on transactional and corporate matters affecting health care organizations,  including business organization, corporate governance, mergers and acquisitions, strategic affiliations and joint ventures.  Marshall also provides advice and counsel on a full range of federal and state fraud and abuse laws to hospital systems, medical practice groups and pharmacies.

Prior to...