AMARILLO, TX – This article discusses the federal laws that address the steps a DME supplier can take when it concludes that a Medicaid Managed Care Plan (“MMCP”) is taking steps that violate the contract between the supplier and the MMCP, or steps that are otherwise unfair/detrimental to the DME supplier and/or its patients.

Summary
There are no federal laws that directly provide relief to a DME supplier when the DME supplier believes that the MMCP is violating its contract with the supplier. It appears that a contract dispute between a DME supplier and MMCP will not implicate federal Medicaid laws unless the contract violation pertains to a requirement that the state is required to meet as a part of offering a managed Medicaid program. There is not a set regulatory process for the DME supplier to pursue such claims.

Applicable Laws
States may implement managed Medicaid programs using managed care organizations under three federal statutes. Section 1932(a) of the Social Security Act, 42 U.S.C. § 1396u-2(a), provides:

(1) Use of Medicaid managed care organizations and primary care case managers.—

(A) In general.—Subject to the succeeding provisions of this section, and notwithstanding paragraph (1), (10)(B), or (23)(A) of section 1902(a), a State—
(i) may require an individual who is eligible for medical assistance under the State plan under this title to enroll with a managed care entity as a condition of receiving such assistance (and, with respect to assistance furnished by or under arrangements with such entity, to receive such assistance through the entity), if—

(I) the entity and the contract with the State meet the applicable requirements of this section and section 1903(m) or section 1905(t), and

(II) the requirements described in the succeeding paragraphs of this subsection are met; and
(ii) may restrict the number of provider agreements with managed care entities under the State plan if such restriction does not substantially impair access to services.[1]

An MMCP may not discriminate against an enrollee based on health status and must cover certain services that are “immediately required,” as Section 1903(m) provides in relevant part:

(v) such contract provides that in the entity’s enrollment, reenrollment, or disenrollment of individuals who are eligible for benefits under this title and eligible to enroll, reenroll, or disenroll with the entity pursuant to the contract, the entity will not discriminate among such individuals on the basis of their health status or requirements for health care services;

(vi) …

(vii) such contract provides that, in the case of medically necessary services which were provided (I) to an individual enrolled with the entity under the contract and entitled to benefits with respect to such services under the State’s plan and (II) other than through the organization because the services were immediately required due to an unforeseen illness, injury, or condition, either the entity or the State provides for reimbursement with respect to those services,

Section 1915 of the Social Security Act, 42 U.S.C. § 1396n allows a state to offer a managed Medicaid program under certain “waivers”:

(a) A State shall not be deemed to be out of compliance … solely by reason of the fact that the State (or any political subdivision thereof)—

(1) has entered into—

(A) a contract with an organization which has agreed to provide care and services in addition to those offered under the State plan to individuals eligible for medical assistance who reside in the geographic area served by such organization and who elect to obtain such care and services from such organization, or by reason of the fact that the plan provides for payment for rural health clinic services only if those services are provided by a rural health clinic; or

• arrangements through a competitive bidding process or otherwise for the purchase of laboratory services … or medical devices if the Secretary has found that—
• adequate services or devices will be available under such arrangements…

(b) The Secretary, to the extent he finds it to be cost-effective and efficient and not inconsistent with the purposes of this title, may waive such requirements of section 1902 (other than subsection (s)) (other than sections 1902(a)(15), 1902(bb), and 1902(a)(10)(A) insofar as it requires provision of the care and services described in section 1905(a)(2)(C)) as may be necessary for a State—

(1) to implement a primary care case-management system or a specialty physician services arrangement which restricts the provider from (or through) whom an individual (eligible for medical assistance under this title) can obtain medical care services (other than in emergency circumstances), if such restriction does not substantially impair access to such services of adequate quality where medically necessary….

(c)(1) The Secretary may by waiver provide that a State plan approved under this title may include as “medical assistance” under such plan payment for part or all of the cost of home or community-based services (other than room and board) approved by the Secretary which are provided pursuant to a written plan of care to individuals with respect to whom there has been a determination that but for the provision of such services the individuals would require the level of care provided in a hospital or a nursing facility or intermediate care facility for the mentally retarded the cost of which could be reimbursed under the State plan. For purposes of this subsection, the term “room and board” shall not include an amount established under a method determined by the State to reflect the portion of costs of rent and food attributable to an unrelated personal caregiver who is residing in the same household with an individual who, but for the assistance of such caregiver, would require admission to a hospital, nursing facility, or intermediate care facility for the mentally retarded.

Managed Medicaid Plans under section 1915(b) are sometimes referred to as “freedom-of-choice” waivers, and managed Medicaid plans under section 1915(c) are often referred to as “home and community-based care” waivers.

Managed Medicaid plans must conform with 42 C.F.R. § 438.50 unless the plan is (i) part of a demonstration project under section 1115(c) of the Social Security Act, or (ii) granted under a Section 1915(b) of the Social Security Act.[2] 42 C.F.R. § 438.50(c) requires that:

The plan must provide assurances that the State meets applicable requirements of the following statute and regulations:

(1) Section 1903(m) of the Act, for MCOs and MCO contracts.

(2) Section 1905(t) of the Act, for PCCMs and PCCM or PCCM entity contracts.

(3) Section 1932(a)(1)(A) of the Act, for the State’s option to limit freedom of choice by requiring beneficiaries to receive their benefits through managed care entities.

(4) This part, for MCOs, PCCMs, and PCCM entities.

(5) Part 434 of this chapter [containing requirements for contracts and subcontracts], for all contracts.

(6) Section 438.4, for payments under any risk contracts, and § 447.362 of this chapter for payments under any nonrisk contracts.

42 C.F.R. § 438.66 requires the State to monitor its managed care programs:

(a) General requirement. The State agency must have in effect a monitoring system for all managed care programs.

(b) The State’s system must address all aspects of the managed care program, including the performance of each MCO, PIHP, PAHP, and PCCM entity (if applicable) in at least the following areas:

(1) Administration and management.

(2) Appeal and grievance systems.

(3) Claims management.

(4) Enrollee materials and customer services, including the activities of the beneficiary support system.

(5) Finance, including medical loss ratio reporting.

(6) Information systems, including encounter data reporting.

(7) Marketing.

(8) Medical management, including utilization management and case management.

(9) Program integrity.

(10) Provider network management, including provider directory standards.

(11) Availability and accessibility of services, including network adequacy standards.

(12) Quality improvement.

(13) Areas related to the delivery of LTSS not otherwise included in paragraphs (b)(1) through (12) of this section as applicable to the managed care program.

(14) All other provisions of the contract, as appropriate.

In addition, the State must collect data from its monitoring activities to improve its managed care program, including “provider complaint and appeal logs.”[3] A DME supplier that believes an MMCP is not meeting certain standards (e.g., network adequacy standards, medical management) may need to complain through the state. 42 C.F.R. § 438.68(c) requires states to consider certain network adequacy standards for certain providers, including long-term services and supports (“LTSS”) provider types, that could include DME suppliers:

(1) States developing network adequacy standards consistent with paragraph (b)(1) [certain providers, such as certain physician specialists] of this section must consider, at a minimum, the following elements:

(i) The anticipated Medicaid enrollment.
(ii) The expected utilization of services.
(iii) The characteristics and health care needs of specific Medicaid populations covered in the MCO, PIHP, and PAHP contract.
(iv) The numbers and types (in terms of training, experience, and specialization) of network providers required to furnish the contracted Medicaid services.
(v) The numbers of network providers who are not accepting new Medicaid patients.
(vi) The geographic location of network providers and Medicaid enrollees, considering distance, travel time, the means of transportation ordinarily used by Medicaid enrollees.
(vii) The ability of network providers to communicate with limited English proficient enrollees in their preferred language.
(viii) The ability of network providers to ensure physical access, reasonable accommodations, culturally competent communications, and accessible equipment for Medicaid enrollees with physical or mental disabilities.
(ix) The availability of triage lines or screening systems, as well as the use of telemedicine, e-visits, and/or other evolving and innovative technological solutions.

(2) States developing standards consistent with paragraph (b)(2) [for LTSS providers] of this section must consider the following:

(i) All elements in paragraphs (c)(1)(i) through (ix) of this section.
(ii) Elements that would support an enrollee’s choice of provider.
(iii) Strategies that would ensure the health and welfare of the enrollee and support community integration of the enrollee.
(iv) Other considerations that are in the best interest of the enrollees that need LTSS.[4]

As the regulations require the state to develop a plan to address these elements, a DME supplier would need to look to the state to determine whether an MMCP is in violation of the state’s plan or causing the state to be in violation of its obligations under the regulations.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected].

Cara C. Bachenheimer, JD, is an attorney with the Health Care Group at Brown & Fortunato, a law firm with a national health care practice based in Texas, where she heads up the firm’s Government Affairs Practice. Bachenheimer’s practice focuses on federal lobbying activities with Congress, the Administration, and federal regulatory agencies, such as CMS, FDA, IRS, and FAA. She can be reached at (806) 345-6321 or [email protected].

[1] Section 1903(m) of the Social Security Act requires “Medicaid managed care organization” to (i) make services it provides to Medicaid enrollees accessible to the same extent as such services are made accessible to non-Medicaid enrollees, and (ii) to make adequate provision against the risk of insolvency. Section 1905(t) of the Social Security Act pertains to “primary care case managers.”

[2] 42 C.F.R. § 438.50(a).

[3] 42 C.F.R. § 438.66(c).

[4] 42 C.F.R. § 438.2 (defining “Long-term services and supports” as “LTSS”).

2022 Look Ahead for DME Suppliers

Presented by: Andrea Stark, MiraVista, LLC and Jeffrey S. Baird, Esq., Brown & Fortunato
Moderated by: Liz Beaulieu, HME News

Thursday, February 3, 2022
1:00 p.m. EST

12th Annual Look Ahead Webinar

Well … 2022 has started off as crazy as 2020 and 2021 started off. Hopefully (fingers crossed) the Omicron variant will be the last gasp of the pandemic and COVID will morph into an annual endemic (i.e., one that we can live with). What is obvious is that the DME industry has shown brightly throughout the pandemic. DME suppliers stepped up and did whatever was necessary to take care of their patients and keep them out of the hospitals. The demand for DME is only going to increase in 2022 and beyond. This is the 12th year that Andrea and Jeff have presented their “Look Ahead” webinar. This webinar will focus on the most important issues that DME suppliers will have to deal with over the next 12 months. The goal of this program will be to provide knowledge and helpful tools for suppliers to utilize as they face the upcoming challenges. The program will focus on the following “hot button” issues:

• Future expectations of the DMEPOS Competitive Bidding Program.
• A new era in oxygen billing (including updated coverage updates and CMN elimination).
• Anticipated audit developments.
• Obligations arising out of the COVID public health emergency.
• The DME supplier’s role in remote patient monitoring (“RPM”).
• The relaxed telehealth restrictions.

There will be a live Q & A session following Andrea’s and Jeff’s presentation.

Register for the event.