2107 Rayburn House Office Building 205 Cannon House Office Building Washington, DC Washington, DC 20515

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1 May 11, 2016 The Honorable Joe Barton The Honorable Kathy Castor U.S. House of Representatives U.S. House of Representatives 2107 Rayburn House Office Building 205 Cannon House Office Building Washington, DC Washington, DC Dear Congressman Barton and Congresswoman Castor: The National Association of Medicaid Directors (NAMD) writes to you regarding your jointly authored legislation, Advancing Care for Exceptional Kids Act of 2015 (ACE). We appreciate your leadership to ensure that Medicaid provides a high quality system of care for low-income, vulnerable children and their families. NAMD is a bi-partisan, non-profit association representing Medicaid Directors in all 50 states, the District of Columbia, and the territories. Our members drive major innovations in health care while overseeing Medicaid, one of the nation s most vital health care safety net programs, which covers more than 72 million Americans. State Medicaid programs, together with the Children s Health Insurance Program (CHIP), serve more than 1 in 3 children in the United States. Federal statute requires that states provide comprehensive services and furnish all Medicaid coverable, appropriate, and medically necessary services needed to correct and ameliorate health conditions, based on certain federal guidelines. NAMD members support the overarching intentions of the ACE Kids bill, which we believe to be aimed at improving the quality of care and care coordination for children with medically complex conditions. These children represent some of the most vulnerable Medicaid beneficiaries, and Medicaid programs across the country have been and continue to be developing programs and strategies to optimally address their needs. To the extent that those programs can be improved, NAMD members welcome further conversations with children s hospitals, pediatricians and specialty pediatric providers, and the children and their families that they serve. 444 North Capitol Street, Suite 524 Washington, DC Phone:

2 However, the construct for ACE Kids Act causes considerable concern for Medicaid Directors, which may severely limit the take-up of the proposed Medicaid/CHIP Care Coordination program option in Medicaid programs around the country. Here, we identify for you a few of NAMD s major policy and operational concerns with ACE. 1. The type of care coordination programs envisioned for the Medicaid/CHIP Care Coordination entities (MCCCs) can already be undertaken by states and Medicaid managed care organizations under existing Medicaid authorities, and in fact a number of states have such programs in existence today. Examples of existing delivery system models and authorities that are tailored to meet the medical, behavioral and support service needs of Medicaid enrollees with complex conditions include, in addition to Medicaid managed care programs, Medicaid Health Homes, Patient Centered Medical Homes, and Accountable Care Organizations. As a result, states are concerned the new model would create confusion, lead to duplication of effort, and drive fragmentation. Rather than develop a new provider- and population-based delivery system, NAMD supports an approach which would build on existing systems to achieve the care coordination and quality improvement goals we believe are intended by the ACE Kids Act. The majority of states are already engaged in developing programs of this nature, although fewer are focused on this population of children. These programs and authorities could be enhanced or supplemented to address the needs of children. NAMD would support exploring how existing Medicaid program authorities can and should be optimized to support the goals of the ACE Kids Act. 2. The newly proposed Medicaid Care Coordination entities would duplicate many of the same functions permissible under current authority, but would not be subject to the necessary regulations and oversight which already exist for other risk-bearing entities: Of primary concern is the creation in federal statute of a new type of Medicaid payment and delivery system (the MCCC) structured around a specific type of provider. This is not analogous to anything currently in existence in the Medicaid system. States currently may offer coverage to their pediatric populations in one of two ways. States may administer services through risk-based Medicaid Managed Care Organizations (MCOs), which are strictly defined, regulated and overseen with a complex set of financial, quality and network adequacy standards. Or, states may contract directly with providers for covered services with the state assuming Page 2 of 6

3 responsibility, with oversight from CMS, for ensuring the adequacy of the network and quality of care provided. States must comply with the statutory requirements of the Early and Periodic Screening, Diagnosis and Treatment (EPSDT) benefit; but both models provide considerable flexibility for states to tailor their approaches to reflect the needs of their Medicaid enrollees as well as state and local geographical, cultural and provider dynamics. The ACE Kids Act proposes a new model of care, which is a blend of these two, with an additional layer of federal oversight in designation of the Nationally Designated Children s Hospital Networks. The ACE model adds a layer of administrative complexity and burden at the state and federal level which is unnecessary, and likely disruptive to state Medicaid programs. NAMD finds that the MCCCs, as currently defined in the March 2016 revised version of ACE, would assume many of the risks and responsibilities of Medicaid MCOs, such as risk-based capitation, accepting prospective assignment of members, and network adequacy requirements, but seemingly with none of the necessary oversight and regulation to which Medicaid MCOs are subject. The state and federal standards for oversight of such an entity are unclear and would require considerable time and effort to develop. NAMD does not believe such an effort is prudent because a regulatory framework already exists for the preferred state-driven delivery models. 3. The ACE Kids Act envisions a three-way program agreement between the Secretary, the state Medicaid agency and the nationally designated children s hospital network. Again, this is a Federal-state-provider arrangement not currently in existence in Medicaid, and which NAMD finds to be unnecessarily complex and burdensome to achieve the intended outcomes. Under the current Medicaid program, states or Medicaid MCOs enter into provider agreements, with oversight from the Centers for Medicare and Medicaid Services, but the federal government is not a party to the agreement. The ACE Kids Act requires the Secretary to assume extensive new types of federal oversight activities of the MCCC program. For example, the Secretary and State shall ensure that such service area provides convenient access for eligible children to MCCC program services.the Secretary shall issue regulations establishing the circumstances under which a State agency may terminate a MCCC agreement..the Secretary shall establish a national set of quality assurance and improvement protocols to apply to MCCC programs. These and similar provisions remove the authority and obligation of developing and overseeing Page 3 of 6

4 provider networks from state Medicaid agencies and would unnecessarily modify, and potentially undermine, the state s oversight responsibilities. NAMD does not believe this strategy is desirable or necessary. In fact, it is likely to adversely alter the fundamental relationship states currently have with Medicaid providers and MMCOs. 4. The ACE Kids Act envisions cross state provider arrangements, which may add further complexity to the program. State Medicaid programs have the authority to establish standards for access to care, provider requirements, care coordination and management models, reserve requirements and other provider and plan expectations. Additionally, in many states, certain types of Medicaid plan entities are subject to regulations established by a Department of Insurance. States believe ACE Kids adds additional confusion and complexity given the differences between state Medicaid programs and the broader insurance standards that exist. 5. The prospective assignment of children with complex needs to MCCCs could potentially cause hardships for families. NAMD is concerned that the creation of the MCCCs could create situations in some states where siblings and parents of children with complex needs will be enrolled in different provider/payer organizations than the medically complex child. The current delivery system is already complex and can impose burdens on families with limited access to transportation and other supports. If MCCCs were to become the only system through which the medically complex child could receive services, and it was not the choice of the other family members, families in some states may be forced to move all of their care to the MCCC network. NAMD supports an approach that maximizes the opportunity for families to receive care in the same delivery systems whenever possible. NAMD is committed to bringing Medicaid Directors together and continuing to engage with stakeholders to discuss federal policy opportunities to improve care coordination and to measure the quality of services delivered through the Medicaid program. As we work to formulate more concrete recommendations to improve access to high quality services for and the overall well-being of children with medical complexity, we anticipate productive discussions may focus on the following areas. Page 4 of 6

5 1. Utilizing existing mechanisms to refine pediatric measures to focus on children with complex medical needs. In her most recent report, HHS Secretary Burwell notes that 41 states are already reporting at least 11 of the 22 Medicaid Child Core Set measures to CMS for federal fiscal year States and MCOs have invested in systems and programs to collect and report these measures. NAMD believes federal policymakers should examine options which leverage this existing process to enhance state reporting of process and outcomes measures for these children, Further, the measure development process already in place through the Measure Application Partnership could be used to enhance the measure sets. 2. Supporting the transition away from strictly fee-for-service reimbursement to payment focused on providing access to high quality services. Medicaid Directors are working towards the goals articulated by HHS to substantially transition provider payments away from volume-based and towards value-based payments that support appropriate care management and coordination services. However, states should be allowed to design and implement these value-based payment systems in a way that aligns with their states markets and the programs already in place in their state. Congress and other federal policymakers should continue to support state Medicaid agencies in adopting and enhancing state-designed value-based purchasing strategies as they are doing with the State Innovation Model grants and Delivery System Reform Incentive Program Section 1115 waivers. 3. Examining opportunities to streamline provider enrollment across state lines. Medicaid Directors believe there is value in examining the administrative processes around provider enrollment when a specialty provider organization in one state delivers services to a Medicaid enrollee residing in a different state. While bordering states often have agreements in place to facilitate access to commonly used providers, there may be opportunities to address the administrative complexities for multi-state specialty providers. In particular, federal and state policymakers and stakeholders would benefit from better understanding the existing federal and state requirements, including in the recently finalized managed care regulation, and ways to streamline these to support the delivery of appropriate interstate care in a timely manner that also protects program integrity. We share your goals to ensure timely access to medically necessary services for children with medical complexity and to minimize the burden around care coordination for their families. Page 5 of 6

6 We wish to continue to help inform your work and related federal policy efforts to ensure the proposals achieve these goals while also remaining feasible for state Medicaid programs. Sincerely, Thomas J. Betlach Arizona Health Care Cost Containment System Director President, NAMD Matthew Salo Executive Director, NAMD Cc: The Honorable Fred Upton, Chairman, House Committee on Energy and Commerce The Honorable Frank Pallone, Ranking Member, House Committee on Energy and Commerce Page 6 of 6