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THE STATE OF AMERICA'S CHILDREN YEARBOOK 199..8 ..1
The 1997 Balanced Budget Act made major
changes in these rules-the most significant
changes pertaining to managed care in Medicaid
history. Medicaid managed care will now operate
with much less oversight by HCFA and more state
autonomy, although it will be governed by far more
specific federal statutes. Whether children receive
good care depends, now more than ever, on state
officials and advocates.
Under the new law, states no longer need federal
waivers to force most Medicaid beneficiaries
to enroll in managed care, and the 75/25 rule is
repealed. Waivers are still required, however, for
children with disabilities, children in foster care or
other out-of-home placements, children receiving
adoption assistance under title IV-E of the Social
Security Act, people eligible for both Medicaid and
Medicare, and certain Native Americans.
Two types of managed care entities-managed
care organizations (MCOs) and primary care case
managers (PCCMs)-are permitted under the new
law. MCOs provide a range of services from a
closed network of providers in exchange for a set
fee per beneficiary (a capitated payment). PCCMs
locate, coordinate, and monitor an enrolled beneficiary's
receipt ofservices and function as gatekeepers.
A PCCM may be a physician, a physician
group practice, a physician assistant, or a nurse
practitioner. Both types of managed care entities
may be responsible for either all Medicaid-covered
services or only some, in which case beneficiaries
are free to choose providers for services not subject
to managed care.
In an effort to protect consumers, the new law
sets forth detailed rules for Medicaid managed care
programs. Features include:
• Choice of health plans. As a general rule, states
must give beneficiaries a choice of at least two
managed care entities, although options may
be more limited for some beneficiaries (those
in rural areas, for example). Beneficiaries may
change managed care entities at any time for
good cause, any time within the first 90 days
after initial enrollment, or annually thereafter.
Beneficiaries who fail to choose a managed
care entity are assigned one by the state, according
to established criteria that take into
account prior relationships with particular
providers.
• Adequate access to care. MCOs must demonstrate
the capacity to serve expected enrollment
by offering an appropriate range of services,
access to preventive and primary care,
and a sufficient number and mix of providers.
In situations considered medical emergencies
(in the judgment of an ordinary, prudent person,
not a health professional), diagnosis and
stabilizing treatment must be covered without
requiring prior approval or limiting beneficiaries
to a specified network of providers.
• Access to information. Providers are required
to give beneficiaries clear information on a
variety of topics, including their rights and responsibilities,
covered services, benefits available
outside the managed care entity, costs,
participating health care providers, service
area, quality and performance indicators, and
grievance and appeal procedures. In addition,
MCOs generally may not impose "gag rules"
that prevent network providers from discussing
medical options with enrollees.
• Regulation and oversight. By August 5, 1998,
HCFA must issue quality assessment and improvement
standards that states must follow.
States likewise must establish and periodically
review quality standards and monitoring procedures
for MCOs. States must ensure annual,
external, independent review of the care furnished
under each MCO contract and make
the results publicly available. Strict rules also
apply to the marketing of managed care entities.
For example, marketing materials must be
approved by the states and may not contain
false or misleading information.
Potential changes for private managed care. In
1997 state legislatures remained deeply involved in
managed care issues. More than 1,000 bills were
introduced, with more than 200 enacted. However,
federal law (ERISA) forbids states from regulating
managed care for employers who "self-insure"-that
32 CHILDREN'S DEFENSE FUND