The 2023 Medicaid Access Rule: The Struggle for “Equal Access” in Medicaid
Today's Medicaid program is but a shadow of what was once a much grander vision for American health care. When the push for a national health insurance program in the 1960s ran into fierce political opposition, Congress settled instead for a patchwork of programs directed at specific populations. This included Medicare for older adults and Medicaid for low-income and other vulnerable populations. These two programs, despite the shared conditions of their birth, were destined to lead radically different lives. Governed by nationwide rules and financed wholly by the federal government, Medicare grew to be stable and politically popular. By contrast, Medicaid lets states control the scope of their own Medicaid programs and requires them to absorb a portion of their programs’ costs. These features seem to have doomed Medicaid to a history of relentless budget cuts and restrictions.
Aware that the fiscal pressures on states would make Medicaid an easy target for cuts, Congress tried to put guardrails around beneficiaries’ access to care. One of these protections is the Medicaid law’s “equal access” provision. To comply, state Medicaid programs have to set their fee-for-service payment rates at a level that attracts enough health care providers to participate to ensure beneficiaries have access to care. Unfortunately, debates over this provision’s meaning and changing views of what it requires have mired its full realization.
A new proposal from Medicaid’s federal administrators takes aim at this fraught issue. In this post, I attempt an explanation of the proposed changes and examine its rationale.
Medicaid’s “Equal Access” Provision and Its History
The history of Medicaid’s equal access provision is one of shifting and conflicting interpretations. In broad terms, it tells state Medicaid programs to calculate payments to participating health care providers in a way that “assures that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” 42 U.S.C § 1396a(30)(A). This language puts all kinds of questions into the reader’s mind: what counts as sufficient payment? How do we compare access within Medicaid versus the general population? What kind of data could be used to show compliance?
For decades, no definitive answers were forthcoming, so the equal access provision became something of a Rorschach test. Health care providers contended that it required states to boost their payments when existing rates didn’t cover their expenses. By contrast, states claimed that the law allowed them to decide their payment levels based on budgetary constraints and other factors. These conflicts turned into lawsuits, in which health care providers accused underpaying states of violating the equal access provision. But courts failed to reach a consensus on whether providers or states were right. Some held that rates must be based on cost-studies while others adopted a more laissez-faire attitude. This led to legal weirdness: the nature of a state’s responsibility under the law depended on which court’s judgments it was bound to follow.
The federal agency that oversees Medicaid, the Centers for Medicare & Medicaid Services (CMS), eventually caught on that something was amiss. CMS issued a rule in 2015 that set forth a new process intended to clarify the provision’s requirements for fee-for-service Medicaid programs. First, the rule tells state Medicaid programs to submit periodic reports, called access monitoring review plans (AMRPs), showing that access to certain services is sufficient. In these reports, states are free to analyze and submit any data that they think shows access is sufficient, as long as they address five factors bearing on access to care—enrollee needs, the availability of care and providers, utilization of services, characteristics of the beneficiary population, and a comparison of payment rates between Medicaid and other payers. Second, the rule added requirements for states proposing changes to payment rates or structures that could put access to services at risk. Each proposed rate change or restructuring, which is sent to CMS in the form of a state plan amendment (SPAs), must include an analysis of the above five factors showing that access to each affected service was sufficient over the previous year. Once the SPA is approved, states then have to monitor access to the affected service for three years.
The 2015 rule provided what was at best an incomplete answer to the questions raised by the law. Against the wishes of advocates and provider groups, the rule declined to adopt nationwide standards and uniform data requirements, citing concerns about feasibility “given local variations in service delivery, beneficiary needs, provider practice roles, and limitations on data.” Worries over the rule were compounded by the Supreme Court’s decision just months earlier that precluded providers and beneficiaries from suing states for violations of the equal access provision. On the other side, many states objected that the rule imposed costly new procedures on state Medicaid programs without clearing up the longstanding uncertainty about how to comply with the equal access provision’s terms. Overall dissatisfaction with the 2015 rule led to an unusual number of agency actions in the succeeding years aimed at clarifying or changing it, including proposed rules in 2018 and 2019 that were never finalized because they drew substantial criticism.
The 2023 Medicaid Access Proposed Rule
A new chapter in this lengthy saga comes in the form of a proposed rule issued by CMS on May 3, 2023, whose proposed changes to the current regulations implementing the equal access law are summarized in Table 1 below. (The proposal is part of a broader plan by CMS to address other issues in fee-for-service Medicaid and CHIP programs and in Medicaid managed care programs—we won’t discuss those other changes here.)
Though the proposal has many parts, if we take a step back, we sense two major departures from the 2015 rule. First, in the area of periodic reporting, the proposal would ditch the current five-factor AMRP in favor of a simpler and more prescriptive comparison of the state’s Medicaid fee-for-service rates against the Medicare rates for the same services. Second, instead of demanding an AMRP-like five-factor analysis whenever access to a service might be reduced by proposed cuts or restructuring, CMS would now presume that proposals comply with the equal access provision if states can show that three criteria are met: the new rate is at least 80 percent of what Medicare would pay, the change wouldn’t cause more than a 4 percent cut in spending on the benefit category in question, and any access concerns raised by interested parties about the change could easily be addressed. It is only when a proposal fails to meet these elements that a state would have to include more extensive data and analysis showing that the change wouldn’t cut beneficiary access to care.
Table 1: Comparison of Current and Proposed 42 C.F.R. § 447.203 by Topic
Analyzing the Proposed Rule’s Rationale
CMS’s stated goal is to reduce the administrative burdens borne by states under the current process while allowing the agency to ensure compliance with the law. For some time, states have complained about the level of effort needed to come up with analytical methodologies and data sources that target the five factors that apply to both periodic reporting and proposed reductions or restructuring. Other aspects of the 2015 rule that have drawn criticism from states include the requirement to perform a rate comparison with private payers despite their refusal to share payment data, the application of the full AMRP process to states that have only a small Medicaid fee-for-service population, and triggering the rules on proposed payment changes in cases that, according to states, do not put access at risk.
To reduce burdens on states, the proposed rule would use a comparison between Medicaid and Medicare rates as a proxy for determining whether Medicaid rates are sufficient to ensure access. As reviewed above, a comparison of Medicaid and Medicare rates would replace the AMRP as the main objective in states’ periodic reporting obligation. And when payment rate reductions or restructuring are proposed, as long as states can show that the new Medicaid rates are within 80% of Medicare rates and the other criteria outlined above are met, CMS would presume equal access is achieved. Because Medicare makes data about its payment rates available to the public, CMS says it would be relatively simple for states to perform these comparisons.
It’s worth asking whether Medicare rates are indeed the proper proxy. Some evidence supports this approach. Physicians are significantly less willing to accept new Medicaid patients as compared to Medicare and underpayment is a key reason for this disparity; Medicaid payments for physician services are about 30 percent lower than those of Medicare. When Congress temporarily raised Medicaid rates for primary care providers a decade ago, researchers found improvements in access to care. One study estimates that a boost in Medicaid rates by $45 would reduce disparities in Medicaid beneficiaries’ access to care by at least 70 percent when compared to the privately insured. On this evidence, asking whether Medicaid rates bear a reasonable relationship to Medicare rates seems like it could be useful in assessing access in Medicaid.
But there are also arguments that cut the other way. Commentators disagree in the first instance whether Medicare rates themselves, which are typically far lower than commercial rates, are sufficient to ensure access to care. And even if we assume that they are, it’s not clear that closing the gap between Medicaid and Medicare payment levels would satisfy the terms of Medicaid’s equal access provision. Several factors that contribute to access challenges for Medicaid beneficiaries are unrelated to rate-setting. For example, Medicaid patients are more likely to have complex needs and state Medicaid programs are prone to payment delays and high denial rates—all of which reduce the willingness of providers to accept new Medicaid patients.
Perhaps CMS intends to address these factors, which are unrelated to rate-setting, in its proposed process for SPAs that seek to reduce or restructure payment rates. That process includes a failsafe mechanism to catch access issues raised by interested parties that cannot be solved by keeping Medicaid’s rates within 80 percent of Medicare’s. Triggering this failsafe would compel CMS to look “under the hood” at the state’s rationale for the change, the concerns of interested parties, and state data on utilization patterns, beneficiary demographics, provider availability, and other payers’ rates. The reach of this mechanism is highly delimited, though. Problems that are unrelated to rate-setting would fly under the radar unless the state submits a SPA seeking a payment change and an interested party raises a concern about it.
Regardless of the merits of these proposed simplifications, the burden-reduction rationale underpinning them might lead us to expect a significant decrease in the burdens on states. But this is not clear either. The proposed rescissions of the AMRP and post-SPA monitoring requirements would save states an annual total of $295,003. (Keep in mind, this figure would be spread out across the entire group of states with active obligations under one or both of these requirements in any given year.) These already modest savings are further tempered by the costs of the proposed additions. Take, for example, the comparative rate analysis (annual total cost to states of $87,103), the initial requirements for SPA payment rate reductions or restructurings ($40,678), and the additional requirements triggered when SPA changes do not meet the initial requirements ($92,716). Compared to the total administrative expenses of individual state Medicaid programs, which are measured in the hundreds of millions per year, the new regime’s projected impact on state budgets does not seem significant.
Nonetheless, we might ask whether the proposed changes, even if they’re not significantly cost-saving, are justified because they provide more value for the dollar. If “value” here means better access to care for Medicaid enrollees—spurred on by higher payments for participating providers—this would be a fair point. But it is precisely this that CMS declines to assert. “Nothing in this proposed rulemaking,” says CMS, “would require States to directly adjust payment rates.” And the range of factors that influence payment and access “create substantial uncertainty about the specific impact of the proposed provisions . . . on provider payment rate-setting and beneficiary access.” So we are back to wondering what the proposed rule is meant to achieve.
I leave you with one final thought. If CMS’s reasoning seems to us muddled or unconvincing, we must consider the possibility that the agency is not telling us everything on its mind. CMS’s decision to cite burden-reduction as its principal rationale despite its weaknesses might, whether conscious or not, conceal other motives. For example, CMS might believe its proposal would indeed encourage or compel states to increase their payment rates, but is either unable to fully rationalize this claim with the analytical rigor required in the context of rulemaking or is simply trying to avoid pushback from states. No doubt some of these questions will be answered in the final rule’s colloquy with public commenters.
March 2024 Update: The final rule is currently forecasted for publication in April 2024.