M. Managed Care Implications

As discussed in section II.L. of this IFC, managed care plans can play an important role in helping States accurately implement and ensure compliance with the community engagement requirement. States may elect to utilize their managed care plans to provide or enhance certain activities that leverage their plans' relationship with their enrollees to maximize the effectiveness and timeliness of the activity. For example, States could use their managed care plans to conduct outreach and educate Medicaid managed care enrollees on the community engagement requirement or to share data they possess about enrollees with the State to inform States' determination of the applicability of the community engagement requirement to specific enrollees. We believe data sharing will be particularly critical for ensuring that States have the most current information on enrollees' circumstances such as medically frail status or drug addiction or alcoholic treatment and rehabilitation program participation.

States can also allow managed care plans to refer or provide Medicaid managed care enrollees with additional services and assistance, although many such services and assistance (including all the examples included in this paragraph) cannot be considered in the development of capitation rates. For example, managed care plans could refer managed care enrollees to work programs sponsored by States or Federal government agencies that are administered at American Job Centers. As discussed in section II.C.3. of this preamble, our regulation at § 435.552(b) defines a “work program” as one that meets the definition in section 6(o)(1) of the Food and Nutrition Act of 2008. Foror an employment and training program under subsection (d)(4) of the Food and Nutrition Act of 2008, supervised job search or job search training is permitted as a subsidiary activity, as long as the job search activity is less than half of the required hours. Generally, Medicaid-covered employment services are not work programs that meet this definition. We believe that some managed care plans may undertake a variety of enrollee outreach and education processes. For example, managed care plans could provide education on work program appointment preparation and document collection, establish feedback loops with work programs to enable managed care plans to follow up with enrollees. We encourage managed care plans to ensure that any activities or services provided align with the community engagement requirement and meaningfully help enrollees who are applicable individuals meet the community engagement requirement. While the costs for these types of activities cannot be included in the development of capitation rates nor counted as value-added services, if plans voluntarily elect to provide services that meet the definition of a value-added service under § 438.3(e)(1), the services could be included in the medical loss ratio (MLR) numerator as incurred claims. [ 116 ]

Many States may expand existing work programs or develop new ones that comply with our definition at § 435.552(b), which incorporates the definition in section 6(o)(1) of the Food and Nutrition Act of 2008, to help enrollees meet the community engagement requirement. Many States may also be working with institutions of higher education to develop new, high-quality, short-term training programs that may be eligible for Pell grants under the newly expanded program pursuant to title VIII, subtitle D of the WFTC legislation. We encourage managed care plans to collaborate with States to determine what role they could play to support States' efforts. At a minimum, managed care plans should ensure that any activities or services that they implement related to community engagement are consistent with and promote work programs that comply with our definition at § 435.552(b).

While partnering with managed care plans to enhance a State's ( printed page 33423) implementation of the community engagement requirement may be an effective mechanism, certain Federal requirements (including § 438.5(e)) limit what can be included in the non-benefit component of capitation rates. When costs for administrative activities are included within a capitation payment, expenditures are matched at the Federal Medical Assistance Percentage (FMAP), [ 117 ] which is typically higher than the Federal match rate for State administrative activities in support of the State plan. States cannot delegate activities to managed care plans that are unrelated to the provision of Medicaid-covered services, in accordance with the contract established between the State and managed care plan that is reviewed and approved by CMS under § 438.3(a), or other activities that would be unreasonable to include in capitation rates that are eligible for FMAP. For example, States cannot delegate activities to conduct tracking or information gathering that are not related to the provision of Medicaid-covered services, such as the collection of information on work, community service, or education activities. States would also not be able to use their managed care plans to issue formal notifications to Medicaid beneficiaries regarding noncompliance with the community engagement requirement. States and their actuaries must ensure that any costs associated with the non-benefit component of a capitation rate complies with all Federal requirements, including §§ 438.4 and 438.5.

Section 71119(c) of the WFTC legislation provides a conflict-of-interest safeguard that explicitly prohibits States from using certain entities, including Medicaid managed care entities, [ 118 ] to determine enrollee compliance with the community engagement requirement. To implement this prohibition, we are amending § 438.58. We redesignate the current text at § 438.58 as paragraph (a) and add a new paragraph (b). In new paragraph (b), we specify that a State may not use an MCO, PIHP, PAHP, or other contractor to determine beneficiary compliance with the community engagement requirement in part 435, subpart F of this title, unless the entity is not, and has no direct or indirect financial relationship with, an MCO, PIHP, or PAHP that is responsible for providing or arranging for covered services for individuals enrolled with it under its contract with the State. This provision is consistent with conflict-of-interest protections applied to enrollment brokers and their subcontractors as specified at § 438.810(b)(2)(i). We believe this prohibition is an important safeguard to prevent program integrity concerns in the implementation of the community engagement requirement. Additionally, we remind States that under sections 1902(a)(4) and (a)(5) of the Act and implementing regulations in § 431.10, determining Medicaid eligibility may be delegated only to governmental agencies that maintain personnel standards on a merit basis.