1. Medicaid - Supplemental Payments for Services Provided in Managed Care1

2. INTRODUCTION TO Medicaid managed care – THE 3 players FOR SUPPLEMENTAL PAYMENT PURPOSES
The State - enters into a contract with the managed care entity to arrange for the delivery of Medicaid managed care services
The managed care entity – also contracts with the FQHC to provide covered Medicaid services
The FQHC – provides the covered services pursuant to its contract with the managed care entity
This is just a who’s who – setting the stage.
We discuss the specifics of what a “managed care entity” is below but for now think of it as a MCO/HMO

3. MEDICAID MANAGED CARE – The 3 PLAYERS and their obligations
•A managed care entity must pay an FQHC at least what it would pay other providers for similar services. That amount typically does not equate to the Medicaid per visit rate an FQHC is entitled to receive under the Medicaid program.
•As a result, States must make up any difference between the per visit rate and what the FQHC received from the managed care entity. The State’s payment is known as a “supplemental” or “wraparound” payment.
In Medicaid managed care, as far as FQHC services and payment protections are concerned there are a couple of important ideas to keep in mind.
The State contracts with the managed care entity to arrange for the provision of covered Medicaid services. The managed care entity has as a matter of federal law to pay FQHCs at least what they would pay other providers for similar services. 42 U.S.C. § 1396b(m)(2)(A)(ix).
CMS has said (in its April 20, 1998 guidance) that the “intention of this provision is to ensure that managed care entities negotiate rates of payment with FQHCs. . . that are comparable to the rates paid to similar providers that do not have an FQHC designation” This ensures that contracting with FQHCs (which are typically paid their unique Medicaid per visit rates) is not viewed as onerous in the eyes of the managed care entity. States then have to make up the difference.
CMS has said that the purpose of the supplemental payment requirement is “to ensure that FQHCs . . .continue to receive their full PPS reimbursement rate regardless of the Medicaid delivery system, in light of the traditional flexibility for capitated managed care plans to set provider payment rates.” April 2016 CMS guidance.

4. Supplemental Payments (“Wraparound”)
In the case of services furnished by an FQHC
→pursuant to a contract
→with a Medicaid “managed care entity”
the State plan must provide for payment to the FQHC by the State of a supplemental payment “equal to the amount (if any) by which the amount determined under [the Medicaid per visit rate methodology] exceeds the amount of the payments provided under the contract”
Reference for this requirement is Social Security Act § 1902(bb)(5)(A) [42 USC 1396a(bb)(5)(A)] which is part of the Medicaid prospective payment system (PPS) statute/42 USC 1396a(bb) which contains the requirement that States pay FQHCs furnishing Medicaid services according to a cost-related prospective payment system (PPS) methodology or pursuant to an alternative payment methodology (APM). That Medicaid rate is referred to in these slides as the Medicaid per visit rate to be inclusive of either the PPS rate or an APM rate, as applicable.
Definition of “managed care entity” is discussed on the next slide!
“by the State” language indicates that the cost of the supplemental payment cannot be passed on to third parties such as the managed care entity (but further discussion of State delegation of wraparound responsibility is on slide 9 below).
There may be instances in which CMS may allow the responsibility of making the payment to be delegated by the State to the MCO, but the cost should be borne by the State. [recent CMS guidance – slide 9 below]

5. What is a medicaid manAged care entity?
A Medicaid “managed care entity” can be:
a Medicaid managed care organization (MCO) that meets federal requirements an providers for or arranges for services for enrollees under a contract or
A primary care case manager as defined in federal law
MCO definition is found in Social Security Act section 1903(m)(1)(A) [ 42 USC 1396b(l)(1)(A) and the requirements for the MCO contract are found at 1903m [42 USC 1396b(m)]
Primary care case manager is defined in section 1905(t)(2) [42 USC 1396d(t)(2)]:
1396d(t) defines “primary care case management services” as case-management related services (including locating, coordinating, and monitoring of health care services) provided by a primary care case manager under a primary care case management contract
t(2) – “primary care case manager” means any of the following that provides the above services under a contract: (A) a physician, physician group practice or an entity employing or having other arrangements with physicians and (B) at the State’s option a nurse practitioner, certified nurse midwife, physician assistant. [In Massachusetts, physicians, independent nurse practitioners and CHCs are eligible to serve as Primary Care Clinicians]
A primary care case management contract means a contract between a primary care case manager and a State under which the manager undertakes to locate, coordinate and monitor covered primary care (and such other covered services as may be specified under the contract) to all individuals enrolled with the manager and which (A) provides for reasonable/adequate hours of operation (B) restricts enrollment to individuals sufficiently near a service delivery site of the manager (C) provides for arrangements with, or referrals to, sufficient numbers of physicians and other appropriate health care professions; and (D) prohibits discrimination on the basis of health status (E) provides for right of enrollee to terminate enrollment with 1932(a)(4) and complies with other applicable provisions of 1932
Massachusetts's Primary Care Clinician Program appears to bear all the indicia of a primary care case management program (assuming there is a contract for such services) and therefore the PCC Program should meet the definition of a Managed Care Entity which would trigger the supplemental payment requirement

6. Supplemental payments - Timing
The payments must be made according to a payment schedule agreed to by the State and the FQHC, but “in no case less frequently than every 4 months”
- This language is found at Social Security Act § 1902(bb)(5)(B) [42 USC 1396a(bb)(5)(B)]
- While the statute does not explicitly say when the 4 month clock starts ticking, case law in the 4th Circuit Court of Appeals suggests that the 4 months starts to run from when the State receives the supplemental payment request (so not 4 months from the date of service).

7. SUPPLEMENTAL PAYMENTS – TREATMENT OF FINANCIAL INCENTIVES
CMS has stated in guidance that financial incentives that FQHCs may receive from managed care entities should not be included in calculating supplemental payments.
→Doing so would negate the financial impact the incentive is designed to provide since the FQHC would get the same total amount of money regardless of whether it met the utilization or other goals set by the MCO.
Source: September 27, 2000 State Medicaid Director Letter.
The letter noted that MCOs frequently use their own funds to include financial incentives in their contracts with subcontracting providers. These incentives are typically to reduce unnecessary utilization or otherwise reduce patient costs. CMS viewed these incentive amounts as separate from the MCO’s payment for services provided under the contract and therefore should not be included in the State’s calculation of wrapround due to the FQHC.
Even though this guidance was issued in 2000 it was recently referred to in the April 2016 guidance and therefore still instructive/viewed by CMS as valid.

8. Supplemental payments – reconciliation
Per CMS guidance, states must conduct a “reconciliation” annually, or more frequently at State option, to ensure that MCO payments plus supplemental payments are equal to the per visit rate amount

9. SUPPLEMENTAL PAYMENT – POTENTIAL ISSUES/CHALLENGES
State uses a “paid claims” policy meaning that it only wraps visits for which the MCO pays. This could be a problem if MCOs typically fail to pay for all Medicaid-eligible visits
State not only delegates responsibility for making the wraparound payment to the MCO, but also the MCO is providing the source of funds
The paid claims policy has been litigated with success in New York and New Jersey. Paid claims policy can be problematic in a number of ways: (a) if an FQHC receives payment from an MCO on a capitated or bundled basis, the MCO typically pays only one time for a series of visits, typically at the end of the series. Centers challenging the policy have been able to show that they should be receiving wraparound for the intervening visits, not just the final visit. (b) Paid claims policy poses problems when an MCO is slow to credential a provider and therefore denies payment for visits that occur before the provider is credentialed. That visit (but for the lack of credentialing) would meet the definition of a Medicaid-eligible visit that should be paid and therefore wrapped.
With respect to delegation, please see the April 26, 2016 State Health Official Letter No at pp. 2-3 for a discussion of the option for States to “simplify supplemental payments to FQHCs” by having the managed care entities provide the supplemental payment. CMS advises that to accomplish this goal “a state could amend its state plan to implement an [alternative payment methodology], which is an optional alternative to the PPS requirements, including the supplemental payment requirements In order to use an APM to accomplish this goal, two conditions must be met: (1) the state and FQHC Agree to use the APM; and (2) the APM results in FQHCs receiving at least their full PPS reimbursement from the managed care organization. If a state chooses to implement the APM, the state would have to include in its managed care contracts a requirement that managed care plans pay contracted FQHCs at least the full PPS payment rate for covered services. In turn, the state would include the full PPS payment rate in calculating the actuarially sound rates paid to managed care plans.”
The April 2016 CMS guidance does stress that states “would remain responsible for ensuring that FQHCs and RHCs receive at least the full PPS reimbursement rate. States must continue their reconciliation and oversight processes to ensure that the managed care payments comply with the statutory requirements of the APM.”
This methodology must be described in the Medicaid state plan. States need to be able to demonstrate that each affected FQHC has agreed to the APM

10. Medicare - Supplemental Payments for Services Provided in Managed Care10

11. MEDICARE ADVANTAGE AND SUPPLEMENTAL PAYMENTS
Where an FQHC provides services under contract with a Medicare Advantage (MA) organization, it is eligible for supplemental payments, calculated on a per-visit basis.
The contract with the MA organization can be either direct or indirect. 42 C.F.R. §
While indirect is not defined in the regulation, presumably this refers to a subcontractual relationship.
The supplemental payment is required when a covered face-to-face encounter occurs between a MA enrollee and a covered practitioner. See 42 CFR for the visit definition (face to face encounter between an FQHC patient and a physician, PA, NP, CNM, visiting registered professional or licensed practical nurse, clinical psychologist, clinical social worker, qualified transitional care management service, med nutrition therapy, outpatient diabetes self-management training services)

12. MEDICARE ADVANTAGE – SUPPLEMENTAL PAYMENTS
Under Medicare PPS, Medicare’s supplemental payment equals the difference between:
→ the payments received from the MA plan as determined on a per visit basis and
→the FQHC’s PPS rate,
→less any cost sharing imposed by plan.
42 CFR (b)
Examples are provided in the Medicare Claims Processing Manual in case the CFOs would like to see how payments are calculated.

13. FINANCIAL INCENTIVES
As with Medicaid, any financial incentive provided to FQHCs under their MA contracts (such as risk pool payments, bonuses, or withholds) are prohibited from being included in the calculation of supplemental payments due to the FQHC.
Unlike Medicaid, the source is regulatory CFR as opposed to guidance.

14. Medicare advantage but no PLAN/FQHC Contract
Different rules apply to MA plan payment in non-contract setting (no supplemental payments, but plans must pay FQHCs in accordance with “original Medicare”)
the MA Plan must pay rates equal to what the provider would have received under original Medicare, except that like all MA plans, they are not required to “cost” settle with out of network providers. MA Plans pay 80% of the lesser of the all-inclusive rate or the national limit, plus 20% of the FQHC's actual charge, minus the Plan member's copay. There is no wrap-around payment due from CMS. Source: Medicare out of network guidance