The Centers for Medicare & Medicaid Services (CMS) is proposing to exempt states with high rates of Medicaid managed care enrollment from current requirements to analyze and monitor access in fee-for-service (FFS) delivery systems. The proposed rule also would loosen current state access analysis requirements when states make what CMS contends are “nominal” reductions in Medicaid FFS payment rates.

By way of background, the Medicaid Act provides that state plans must “assure 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(a)(30)(A) (Section 30(A)). Under current regulations issued in November 2015, states must submit to CMS an access monitoring review plan (AMRP) for certain categories of Medicaid services provided through a FFS delivery system. States must update the AMRP at least every three years. If a state reduces rates for additional Medicaid services in a way that could result in diminished access, those services must be added to the AMRP and states must monitor the effects of the rate reductions for 3 years. Furthermore, states must provide a public process and submit specific information regarding access to care if they propose to reduce or restructure Medicaid provider payment rates.

In response to state complaints about the administrative burden associated with the AMRP regulations, CMS has proposed streamlining these requirements. First, the proposed rule would exempt from most AMRP requirements those states with overall Medicaid managed care enrollment rates of 85% or more of the total covered Medicaid population (currently 17 states). In addition, the proposed rule would exempt from access-analysis requirements any reductions to provider payments of less than 4% in overall service category spending during a state fiscal year (and 6% over two consecutive years). CMS also would allow states that reduce Medicaid payment rates to rely on baseline information regarding access under current rates, rather than be required to anticipate the effects of rate reductions on access to care. CMS will accept comments on the proposed rule until May 22, 2018.

The proposed rule comes at a time when CMS approvals of state plan amendments reducing FFS payments have been subjected to increasing judicial scrutiny under the Administrative Procedure Act (APA). See, e.g., Hoag Mem’l Hosp. Presbyterian v. Price, 866 F.3d 1072 (9th Cir. 2017) (finding CMS acted in an arbitrary and capricious manner in approving a state plan amendment reducing Medicaid payments for outpatient services). Such APA suits have become more common in the aftermath of the U.S. Supreme Court’s decision in Armstrong v. Exceptional Child Center, Inc., 135 S. Ct. 1378 (2015), which eliminated the ability of providers and suppliers to sue state officials for injunctive relief in federal court related to alleged violations of Section 30(A). It remains to be seen what, if any, impact the proposed rule changes may have on the ability of providers and suppliers to challenge FFS reductions under the APA.