Whenever risk-based, capitated models are used, payment structures must encourage appropriate utilization of care and reward the provision of preventive care, intensive transition supports, and home- and community-based services. Rates should be adjusted for health status of the population using a variety of measures to facilitate this goal.  MCOs must ensure that the rates they pay network providers are high enough to create and maintain adequate and sustainable networks.

In addition, nothing in the rate structure should discourage the provision of home and community-based services. For example, entities should not receive a higher rate when enrollees have been admitted to nursing homes. There must be some risk for the integrated model associated with that admission. Finally, the rate structure should encourage participation of non-profit and safety net providers by offering access to capital necessary to begin offering LTSS as part of a MCO benefit package and by utilizing risk-sharing strategies that level the playing field between non-profit and larger, for-profit entities.

  • Financial incentives must focus largely on maintaining and fostering independence among people in community settings and moving people in institutional settings to the community to the extent possible and desired by the individual.  MCOs must be at equal risk for institutional and home and community-based placement of people with LTSS needs.
  • States must be required to ensure LTSS expenditures, as a percentage of total expenditures, remain at or above current percentages, and that community LTSS expenditures, as a percentage of total LTSS expenditures, remain at or above current percentages.
  • Rates paid to MCOs must be risk adjusted to account for the unique needs of MCO enrollees.  Rating categories should be based on the type and severity of diagnosis among enrollees. See this paper for more.
  • The rate setting process must include a method for predicting the long term services and supports needs of individuals that enroll in the MCO.  Data on functional impairments must be collected to support the development of this method.
  • MCOs must be at limited financial risk until CMS and the state are assured that the rate setting and risk adjustment processes are sound.  Risk corridors should be used to ensure that costs that are not predicted by the rate setting process are not ultimately born by individuals in the form of decreased access to providers and services.
  • CMS and states must develop opportunities for non-profit, community-based MCOs and LTSS providers to participate on equal footing with their larger, private, for profit counterparts.
  • Any quality incentive payments to providers or plans must be fully transparent and based on meeting or exceeding quality targets that include consumer-centric measures.
  • MCOs must not be incentivized to cut home and community-based provider rates as a means of achieving savings.  Requirements in contracts that set minimum rates will help prevent provider rates from dropping to levels that threaten access. Rate disputes between plans and providers must not impede access to needed services.
  • CMS and state must collect and make publicly available, data on rates paid to MCOs and rates MCOs pay to providers, including but not limited to LTSS providers.
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