AIS Health: New Opioid Law Has Implications for MA, Medicaid Plans

New Opioid Law Has Implications for MA, Medicaid Plans

Reprinted with AIS Health's permission from the November 1, 2018, issue of Radar on Medicare Advantage

One year after the Trump administration declared the opioid crisis a public health emergency, the president on Oct. 24 signed The SUPPORT for Patients and Communities Act (H.R. 6), a bipartisan legislative package containing myriad provisions aimed at addressing the opioid epidemic. One of the main objectives of the law is to expand access to substance use disorder (SUD) treatment in Medicaid, most notably with a softening of the so-called IMD exclusion, but it also features numerous provisions that could impact both Medicare and Medicaid plans.

“I’d characterize it as sweeping because it touches so many areas from the FDA to Medicare to Medicaid and back, and yet I think a number of people think it should have gone further,” remarks Stephanie Kennan, a senior vice president at McGuireWoods Consulting in Washington, D.C. “So, while this is sweeping, we’re going to have to see what kind of impact it has once it is all implemented to see if they have to go back” and do more.

The new law contains certain flexibilities related to the IMD exclusion, which refers to a longstanding exception that prevented state Medicaid programs from using federal funds to cover care for patients in mental health and SUD residential treatment facilities with more than 16 beds (i.e., Institutions for Mental Diseases). This exclusion has long been viewed by beneficiary advocates as a major barrier to effective behavioral health care. The primary change is that Section 5052 amends federal Medicaid law by giving state programs the option to cover care in certain IMDs, which may be otherwise not reimbursable for federal funds, for Medicaid beneficiaries aged 21 to 64 with an SUD for fiscal years 2019 to 2023. Through a state plan amendment, states may receive federal reimbursement for up to 30 total days of care in an IMD during a 12-month period for eligible individuals.

As a condition of receiving federal payments, states will be subject to a “maintenance of effort” provision that essentially says they have to maintain the same levels of funding for “what they’ve been doing in other areas of care, so having IMDs doesn’t mean you can cut back on some of the home and community-based services that were going on for opioid treatment,” points out Kennan. “It’ll be expensive for the states, but it’s important for the continuum of care. The trade-off is that you’ll have patients hopefully who are getting the kind of care they need faster and won’t need other things on the other end. We’re going to have to see how it washes out; different states have different health systems.”

More Options Mean More Work for Plans

As states add IMDs to their programs, plans will have to figure out who will be eligible and how to manage the care, “because not everyone is going to need inpatient treatment and it is only for 30 days,” adds Kennan. “And I think in general whether it’s Medicare or Medicaid, the plans are going to have to do some identifying and managing of patients, but in a little more detail than they had to do it before.” For example, another section allows more providers to furnish medication-assisted treatment (MAT), which could impact both programs.

“When you have greater capacity, you want to make sure that the patients are getting the right kind of care at the right time. So now that there are more options for patients, the plans are going to have to figure out how to manage the patient both in the continuum of care and also get them where they need to be initially,” suggests Kennan.

In addition to multiple provisions expanding access to SUD treatment in Medicaid and tightening state monitoring efforts for safe prescribing, the new law contains various Medicare-related provisions, including:

  • A provision allowing plans to suspend payments to pharmacies pending investigations of credible allegations of fraud. Plans must report such suspensions to HHS.
  • A requirement that CMS identify beneficiaries enrolled in Part D with a history of opioid-related overdose and include them in the definition of those potentially at-risk for prescription drug abuse under the Part D Drug Management Program.
  • A requirement that all Medicare Part D plan sponsors implement a drug management program for at-risk beneficiaries by plan year 2022.
  • An obligation for the HHS secretary to establish a standard, secure electronic prior authorization system for covered Part D drugs no later than Jan. 1, 2021.
  • A provision requiring beneficiaries at risk for prescription drug abuse to be eligible for the Medication Therapy Management program beginning Jan. 1, 2021.
  • A requirement that no later than two years after the date of enactment, the secretary establish a secure web portal allowing for secure communication between HHS, Part D and MA plans, and the Medicare Drug Integrity Contractor regarding certain program integrity activities. Beginning on or after Jan. 1, 2021, plans are required to submit to HHS information on investigations or other actions taken by such plans related to providers who inappropriately prescribe opioids.
  • New requirements that, for plan year 2021 and beyond, MA and Part D plans provide beneficiaries with information on the risks associated with opioids and coverage of alternatives to treat pain, and perform in-home risk assessments to ensure that beneficiaries are aware of safe disposal tactics for prescription drugs that are controlled substances.

Medicaid Plans Wary of MLR Pay-For

Meanwhile, one “pay-for” that may tick off Medicaid MCOs is a provision incentivizing states to require remittances around the medical loss ratio (MLR). Medicaid Health Plans of America (MHPA) has long taken issue with standardizing MLRs, and an 85% minimum MLR for the purposes of rate setting was included in CMS’s 2016 Medicaid managed care final rule. But CMS — which is close to releasing a rewrite of the rule — at the time acknowledged that it lacks statutory authority to enforce the MLR standard through remittances and said it “encourages” states to impose remittance requirements on plans that fail to meet the state-established MLR and determine the methodology for doing so.

“Right now, states are not required to demand remittances for the plans if they don’t exceed the 85% MLR, and [the law] creates an incentive by giving some enhanced federal matching to states that do require remittances for the plans for any amount of money that exceeds the 85% MLR,” explains Francis Rienzo, vice president of advocacy and government relations and interim CEO of MHPA. The trade group argues that the “strict application of the MLR in Medicaid is counterproductive” because it will discourage plans from innovating to hold down medical costs, he tells AIS Health.

For example, if a plan provides smartphones to diabetic patients to document their nutrition habits for a care manager, a state may consider the smartphone to be an administrative expense and the care manager as a medical expense. “If you’ve got a plan that’s right on the line at the 85% and they want to invest some administrative expenses in driving down medical costs, that’s a huge deterrent to doing that,” suggests Rienzo.

View the text of the legislation at

Contact Kennan via Joshua Karlen at or Rienzo via Joe Reblando at

by Lauren Flynn Kelly

Article from AIS Health