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The new regulation fulfills a promise made by President Clinton to extend a Patients' Bill of Rights to all Americans enrolled in public health care programs. The rule implements provisions of the bipartisan Balanced Budget Act of 1997 (BBA).

The final regulation reflects the agency's response to the over 300 comments received after the proposed rule was published in September 1998. It includes strengthened beneficiary protections and some new provisions designed to protect the rights of otherwise vulnerable persons in the Medicaid program. The final rule takes effect 90 days after tomorrow's publication.

"Managed care provides the promise of better coordinated health care at a more reasonable cost," said HHS Secretary
Donna E. Shalala. "But all Americans -- whether they are in Medicare, Medicaid, or private health plans -- deserve the basic protections that a Patients' Bill of Rights provides."

Among the most important improvements in the final rule are increased protections for individuals with special health care needs. The Health Care Financing Administration (HCFA), the agency that oversees the Medicaid program, will now require states to assure continued access to care for beneficiaries with ongoing health care needs who transfer from fee-for-service to a managed care plan, from one health plan to another and from a health plan to fee-for-service. The new rule also requires states and plans to identify enrollees with special health care needs and to assess the quality and appropriateness of their care.

Under the final rule, managed care plans serving Medicaid beneficiaries must also provide consumers with comprehensive, easy-to-understand information about the operation of those plans, including the names of all participating providers and their phone numbers and locations. States that mandate managed care must also offer most beneficiaries a choice of at least two qualified health plans.

The final rule also requires managed care plans to cover the cost of emergency health care services wherever and whenever the need for such services arises. Plans are prohibited from requiring prior approval for such services or requiring that consumers go only to approved facilities. Emergency services are based on a "prudent layperson" standard that requires payment in situations where the beneficiary reasonably assumes that he or she is in an emergency situation.

The final rule also includes requirements for screening and assessing all enrollees of a health plan within a certain time-frame. For individuals at risk of having special health care needs or those already identified as having special health care needs, health plans must provide a health assessment within a shorter time-frame.

One major change from the proposed rule is the establishment of specific requirements for state rate-setting that will ensure that all managed care capitation rates are actuarially sound. It eliminates the generally outdated regulatory ceiling on what states may pay managed care plans, a particularly important provision as more state Medicaid programs include people with chronic illnesses and disabilities in managed care. While this change is based on public comments on the proposed rule, it involves a new approach to regulating capitation payments. Therefore, the rule allows a 60-day comment period on this provision only.

In addition to consumer protections, the final regulation implements other important changes to Medicaid, the federal-state health insurance program for certain low-income Americans, which were included in the BBA. The BBA expanded states' option to guarantee Medicaid eligibility to beneficiaries for up to six months. This will ensure continued enrollment to families who otherwise move in and out of eligibility due to work status or income changes.

Other patient protections included in the final regulation are:

Access to Services. Female enrollees are allowed direct access to a woman's health specialist within the network for covered care necessary to provide women's routine and preventive health care services. All beneficiaries are also allowed to obtain a second opinion from a qualified health professional.

Patient-Provider Communication. Managed care plans are prohibited from establishing restrictions, such as gag rules, that interfere with patient-provider communications.

Network Adequacy. Managed care plans are required to assure that they have the capacity to serve the expected enrollment in their service area.

Marketing Activities. States are required to approve marketing materials used by managed care plans to enroll and re-enroll Medicaid beneficiaries. Plans are also prohibited from using door-to-door, telephone, and other forms of "cold call" marketing.

Grievance Systems. All managed care plans must have a system in place to address grievances and appeals. Grievances must be resolved within state established time-frames that do not exceed 90 days and the resolution of appeals must be achieved in accordance with medical needs, but not later than 30 days. However, expedited time-frames of no more than 72 hours exist for certain grievances and appeals.

Finally, the regulation establishes new quality performance standards for states regarding health plans. These quality standards are consistent with quality improvement efforts in Medicare and private sector purchasers.

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