Here at the Medicaid and the Law Blog, we spent part of our holiday break reading through the most recent COVID-19 relief package that was finally signed into law by President Trump amid a not-insignificant amount of drama. It was quite an undertaking; the new law is over 5,000 double-spaced pages. While much of the legislation is related specifically or more generally to COVID-19 and economic recovery, there are a couple of provisions related to the Medicare program we believe merit mention. It today’s post, we highlight two of those provisions.
First, about a year and a half ago, we told you about the interesting history of Medicaid’s non-emergency medical transportation (NEMT) benefit. One of the things we thought was interesting about this benefit is that it isn’t mandated anywhere in the Medicaid law. Rather, CMS regulations have long interpreted the statute’s requirement that a state operate its Medicaid program in a “proper and efficient” manner as including a requirement that the state Medicaid plan “ensure necessary transportation to and from providers.” 42 C.F.R. § 431.53(a). But, as we also pointed out, states frequently request – and CMS has approved – waivers of this requirement.
The calculus will change now in light of the new COVID relief law. In particular, section 209 of Division CC of the new law now adds a specific requirement in the statute that makes clear that “proper and efficient operation” of a state’s Medicaid program includes a requirement that the state “ensure necessary transportation for beneficiaries under the State plan to and from providers.” The new requirement applies even in those states that have elected to run their benefits through benchmark or benchmark-equivalent coverage (i.e., a benefit design modeled on private health insurance plans).
The statute also directs a study on potential fraud and abuse issues that may arise in the operation of the NEMT benefit. In addition to the mandated study, the new law requires that states ensure that providers of NEMT services (and individual drivers) have not been excluded from participation from the Medicare or Medicaid programs; have a valid driver’s license; have processes in place to protect against violation of drug laws; and have a process to disclose the driving history of drivers employed by the provider.
These new requirements generally become effective one year after enactment so, in most states, by January 1, 2022. Notably, the statute does not prohibit waivers of the new NEMT requirements so, in theory, a state can still request a waiver of NEMT requirements. It remains to be seen whether states continue to request these waivers.
Also of interest to us is another topic we’ve written about, and that is the growth of “supplemental payments” to providers in state Medicaid programs. Last year, we told you about a groundbreaking report by the Senate Finance Committee on supplemental payments. The new COVID-19 law adds an important requirement that will add some additional transparency on these payments.
As we’ve explained in the past, supplemental payments are different than disproportionate share payments to hospitals and nursing facilities. My testimony last summer before the House Energy and Commerce Committee describes the convoluted history of DSH. Supplemental payments are something else; these are additional payments that states are allowed to make to providers (as long as total payments to providers don’t exceed the state’s upper payment limit). For example, the Obama Administration wanted to encourage states to adopt delivery system payment reform models, so allowed states to make “delivery system reform incentive payments” (or DSRIP) to providers. But unlike DSH payments, which must comply with strict statutory requirements and for which there is some degree of transparency, supplemental payments are far more opaque. That’s what led to the Finance Committee report last year and what led to the new language in the COVID law.
The statute imposes a series of reporting requirements on states. In particular, by October 1, 2021, CMS has to develop a template for states that make supplemental payments to use to report on those payments. States will have to report on the following:
- A description of how supplemental payments comply with Medicaid’s requirement that payments be “consistent with efficiency, economy, quality of care, and access.”
- The criteria used to determine which providers are eligible to receive supplemental payments.
- A description of the methodology used to calculate the supplemental payments, and the data that backs up that methodology.
- A demonstration that the supplemental payments won’t cause the state to violate the upper payment limit.
CMS will be required to put this data on its website so that it’s publicly available. MACPAC is also likely to use this data in its research and will likely include data in future editions of MACStats.
What, exactly, is a “supplemental payment,” anyway? The statute defines the term simply as “a payment to a provider that is in addition to any base payment” made to the provider for services to Medicaid patients, but doesn’t include DSH payments. Let’s say that the Lord Have Mercy Hospital treats a Medicaid patient, the state pays the hospital based on a DRG system, and the total payment for the patient’s care is $10,000. Because the hospital provides care to a statistically measurable and significant number of uninsured patients, it qualifies for an additional $1,000 DSH payment under the state’s Medicaid plan. But let’s say that CMS has approved a supplemental payment regime for hospitals in the state that treat a statistically significant percentage of adults with substance use disorder, and Lord Have Mercy Hospital meets the SUD criteria for payment of $500 per discharge. That $500 additional payment is a supplemental payment that would have to be disclosed under the provisions of the new statute. Congress was trying to achieve a greater level of transparency, and did so under the new law.
We’ll have much more to say in the coming weeks about the Medicaid provisions of the COVID law and some changes that may be made by the new Administration. In the meantime, we wish our readers a safe, happy, and healthy new year!