CMS sets parameters for optional Medicaid home health benefit for medically complex children | Manatt, Phelps & Phillips, LLP

On August 1, CMS released a letter from the State Medicaid Director (SMD) that lays out a new option for states to cover “health home” services for Medicaid-eligible children and youth with complex medical conditions. This benefit is established in section 1945A of the Social Security Act, as added in 2019 by the Medicaid Investment and Accountability Act (PL 116-16). States can adopt this optional Medicaid benefit beginning October 1, 2022, and will receive a 15 percentage point increase in their federal Medicaid matching rate (up to a maximum rate of 90%) for the first six months of the benefit. This SMD follows a January 2020 Request for Information (RFI) and an October 2021 Information Bulletin (CIB) that discussed interstate care coordination for children with complex medical conditions.

The SMD outlines federal requirements and areas of state flexibility for this new health care. Among other items, SMD discusses the following:

  • Eligibility. The health home benefit is available to eligible Medicaid “medically complex children,” referring to individuals under the age of 21 with one or more serious chronic conditions 1 and/or a “life-limiting disease or rare pediatric disease” as defined in SMD and section 1945A.
  • Health home services. CMS expects states to design the optional benefit in accordance with a “whole person” philosophy that “takes into account all the medical, behavioral, and social supports and services necessary” for a child with complex medical conditions. The benefit must cover the following services when offered by a qualified medical professional, institutional provider or health care team:
    • Comprehensive care management
    • Coordinate care, promote health, and provide access to the full range of pediatric specialty and subspecialty medical services, including services from out-of-state providers as medically necessary
    • Comprehensive transitional care, including appropriate follow-up, from inpatient to other settings
    • Support for patients and families (including authorized representatives)
    • Referral to community and social support services if appropriate
    • Using health information technology to connect services as far as possible and appropriate
  • Provider Standards and Payment Methodologies. The SMD identifies several requirements that providers must meet in order to offer health home services, in addition to identifying options for government payment methodologies such as capitation (ie, a flat “per member per month”) payment and/or tiered payments.
  • Beneficiary selection. Eligible beneficiaries must be given a choice whether to enroll in a health home. Those chosen to participate have a choice any kind willing and qualified home health care provider, even if enrolled with a managed care plan that operates with a limited network of providers.
  • Monitoring and reporting. Section 1945A requires both states and health home providers to collect and report certain data that will ultimately be included in required reports evaluating use of health home benefits, quality measures, and state implementation of best practices regarding coordination of care with out-of-state providers (per the October 2021 CMS Information Bulletin noted above).

To adopt the optional health home assistance, states will need to submit a State Plan Amendment (SPA) in accordance with the upcoming CMS guidance. CMS’ “Implementation Guidance” will include, among other things, definitions of federally required home health services and minimum standards for providers. States may be eligible for planning grants to support the development of SPAs for this new benefit.


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1 A person who qualifies on the basis of a chronic disease must have one or more “serious, long-term physical, mental, or developmental disabilities or illnesses” that “cumulatively affect three or more organ systems and seriously impair cognitive or physical functioning (such as the ability to eat, drink or breathe independently) and that also requires the use of drugs, durable medical equipment, therapy, surgery or other treatments. Section 1945A lists examples of potentially qualifying conditions, including cerebral palsy; cystic fibrosis; HIV/AIDS; blood disorders such as anemia or sickle cell disease; muscular dystrophy; spina bifida; epilepsy; severe autism spectrum disorder; and/or serious emotional disturbance or serious mental illness.

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