New York State is now considered the nation’s epicenter of the coronavirus outbreak, far surpassing all other states in confirmed COVID-19 cases.  Managed long-term care plans (“MLTCPs”) and other Medicaid managed care organizations (“MCOs”) are facing unprecedented financial and other challenges addressing the care needs of their members as COVID-19 continues to ravage more and more New Yorkers.  Earlier this week, the New York State Department of Health (“DOH”) acted to secure regulatory relief from the federal government for MLTCPs and MCOs as well as Programs of All-Inclusive Care to the Elderly (“PACE”) Organizations from the growing financial stress brought about by the coronavirus outbreak.

In recognition of the challenges faced by health care providers and payors alike, on March 13, 2020, the Secretary of Health and Human Services, invoking Section 1135 of the Social Security Act authorized the Centers for Medicare and Medicaid Services (“CMS”) to waive application of certain federal laws to ensure that sufficient health care items and services are available to meet the needs of Medicaid patients and plan members during the coronavirus public health emergency.  On March 23, 2020, DOH requested additional waivers from federal regulations under Section 1135 that impact among others, MCOs and MLTCPs, including:

  • Reconciliation of COVID-19-Related Expenses under Current Managed Care Contracts: In recognition of the added services required to be provided to members as a result of COVID-19, DOH is requesting that managed care contracts be revised to add a reconciliation to reimburse MCOs and MLTCPs for the added expenses that may arise.  This measure should allow plans to recover some or all of the additional associated COVID-19 related costs beyond their capitation payments.
  • Suspension of Actuarially Sound Requirements: Pursuant to 42 C.F.R. § 438.4, capitation payments to MCOs must be actuarially sound.  DOH has asked CMS to suspend the requirement for actuarially sound Medicaid managed care rates applicable to calendar years 2020 and 2021 so that New York State can work with the plans and their actuaries to best determine how COVID-19 and its associated requirements regarding cost-sharing, telehealth, and other requirements will impact plan financial performance.
  • Temporary Suspension of Biannual Onsite Plan Audits: Pursuant to 42 C.F.R. § 438.66, State Medicaid agencies must have a system for monitoring all Medicaid managed care programs.  DOH has requested the temporary suspension of full on-site biannual operational, targeted, focused surveys and readiness reviews of MCOs and to allow for the partial completion of essential survey and readiness activities remotely.
  • PACE Program Specific Relief: In addition to seeking waivers under Part 483 of C.F.R. applicable to MCOs and MLTCPs, DOH requested waivers to provide regulatory relief under 42 C.F.R. Part 460 specific to PACE.  These waivers include:  (i) allowing emergency care to be provided beyond the limitations of the contractual provisions; (ii) permitting programs to continue a member’s PACE enrollment in cases in which the member was required to move out of the service area; (iii) allowing services to be provided at a temporary alternative site, such as a family member’s home; (iv) extending the time periods for performing the initial assessments and reassessments, and allowing the assessments to be conducted via telephone or other telehealth modalities instead of in-person; and (v) relaxing the scope of disciplines required (physical therapy, occupational therapy, etc.) to participate in the interdisciplinary assessments and reassessments.

Already under financial stress due to the coronavirus pandemic, managed care plans stand to receive much needed regulatory relief if and when CMS approves DOH’s latest 1135 waiver request.  We expect that DOH will soon provide more guidance to plans about implementation of this waiver request following CMS’ action.

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Photo of Brian McGovern Brian McGovern

Brian McGovern is a partner at Crowell & Moring’s New York office.

Brian provides legal counsel and representation to health care and nonprofit clients. His experience spans the breadth of legal issues that confront the provider community, including counseling health care providers and…

Brian McGovern is a partner at Crowell & Moring’s New York office.

Brian provides legal counsel and representation to health care and nonprofit clients. His experience spans the breadth of legal issues that confront the provider community, including counseling health care providers and managed care plans on regulatory compliance; responding to government audits and investigations, including Medicare contractor audits and New York State Office of Medicaid Inspector General (OMIG) and Attorney General Medicaid Fraud Control Unit (MFCU) inquiries; overseeing or performing internal compliance investigations; advising on and negotiating managed care, vendor, and other contracts; providing counsel and advocacy on reimbursement issues; assisting providers on administrative applications and matters before regulatory agencies, including rate appeals, certificate of need applications, and property tax exemption applications and appeals; responding to patient-care survey deficiency citations; and representing providers in administrative proceedings and litigation in state and federal courts. The providers he has represented include nursing homes, home care agencies, hospices, hospitals, continuing care retirement communities, pediatric facilities, and managed care plans.

Photo of Jared Facher Jared Facher

Jared L. Facher is a senior counsel in the New York office of Crowell & Moring and is in the Health Care Group. Jared’s practice focuses on representing health care organizations, insurance companies, for-profit and tax-exempt entities in a wide array of litigation…

Jared L. Facher is a senior counsel in the New York office of Crowell & Moring and is in the Health Care Group. Jared’s practice focuses on representing health care organizations, insurance companies, for-profit and tax-exempt entities in a wide array of litigation, transactional and regulatory matters. His practice includes advising clients with respect to health care fraud and abuse issues and reimbursement matters, as well as representing providers in government audits and investigations. Prior to beginning his law career, Jared was a practicing physical therapist.