On October 18, 2018, the Office of Inspector General (OIG) issued a favorable advisory opinion to a Medicaid managed care organization (MCO) regarding its proposal to incentivize the MCO’s contracted providers to increase the amount of Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) services provided to Medicaid beneficiaries.
EPSDT is the child health component of Medicaid. Under EPSDT, Medicaid beneficiaries may receive a broad array of health services from birth to age 21. States are required to cover EPSDT services, even if the state’s Medicaid program does not cover the service in question under its fee-for-service program. In this case, the MCO had entered into a full-risk, capitated contract with a state’s Medicaid program. Under the proposed arrangement, the MCO would enter into contracts with providers. The contracts would require the MCO to pay the providers incentive payments for increasing the amount of EPSDT services provided to Medicaid beneficiaries enrolled in the MCO’s managed care plan. The additional cost of these incentive payments would not be passed on to the state or federal government.
OIG stated that the proposed arrangement fell within the safe harbor for eligible managed care organizations (EMCOs). This safe harbor excludes from the definition of remuneration any payments between EMCOs and first tier contractors, as long as they satisfy the requirements set forth in the safe harbor. Specifically, OIG stated that the proposed arrangement is permissible because:
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The arrangement would be effectuated through a written agreement signed by the parties, which specifies the items and services covered by the agreement, is for a period of at least one year; and specifies that the party providing the items or services cannot claim payment in any form from a federal health care program for items or services covered under the agreement;
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Incentive payments would be based solely on the provision of Medicaid services to existing enrollees; and
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The proposed arrangement would not inappropriately increase or shift costs to federal health care programs.
Overall, OIG noted that, although the program could lead to an increase in federal health care program costs through higher capitated payment rates and an overall increase to the state’s Medicaid managed care expenditures in future years, the arrangement would increase the likelihood that Medicaid enrollees requiring EPSDT services actually would receive the services, and that this increased utilization of EPSDT services is consistent with the state’s goal of assuring that children receive early detection and care.
