On August 1, 2022, CMS issued guidance on the implementation of Section 1945A of the Social Security Act (the Act), which gives states the option to cover health home services for Medicaid-eligible children under age 21 with medically complex conditions (the CMS Guidance). Beginning October 1, 2022, states can cover coordination of care for these children, including the full range of pediatric specialty and subspecialty medical services and coordination of care and services from out-of-state providers. The CMS Guidance outlines eligibility criteria, payment methodologies, provider standards, and reporting requirements for coverage of health home services. We briefly describe each of these below.

Eligibility Criteria

Section 1945A(i)(1) of the Act defines a “child with medically complex conditions” as a child with: 1) one or more chronic conditions related to three or more organ systems that impair cognitive or physical functioning and require treatments such as medication, therapy, use of durable medical equipment, or surgery; or 2) one life-limiting illness or rare pediatric disease. Section 1945(i)(2) provides examples of “chronic conditions,” including cerebral palsy, cystic fibrosis, and HIV/AIDS, among others.

CMS interprets Section 1945A(i)(1) as requiring states electing to cover health home services to cover services for children who meet the statutory definition of a “chronic condition” even if their condition is not listed in Section 1945A(i)(2). States must demonstrate, through their proposed Section 1945A state plan amendments (SPAs), that they will establish a process to identify chronic conditions that are not listed in 1945A(i)(2) but meet the statutory definition.

Section 1945A(i)(4) of the Act defines “health home services” as comprehensive and timely high-quality services provided by a designated provider, team of health care professionals operating with a designated provider, or health team. These services include, among other things, comprehensive care management, care coordination, transitional care, referrals, technology services.

Payment Methodologies

Section 1945A(c)(2)(A)(i) of the Act allows states flexibility in their payment methodologies for the health home services. For instance, states are permitted to create a tiered payment methodology that accounts for the severity or the number of a child’s chronic conditions or the provider’s specific capabilities. CMS encourages states to work with CMS to establish a capitated payment methodology or propose alternate models of payments.

Further, states with approved SPAs to cover the new health home benefit for children with medically complex conditions will receive a temporary 15 percentage point increase to their Federal Medical Assistance Percentage (FMAP) during the first two fiscal quarters after the states implement the benefit.

Provider Standards

Section 1945A of the Act provides three types of health home providers from which a child with medically complex conditions can receive health home services: 1) designated providers; 2) a team of healthcare professionals; and 3) a health team.

These providers must demonstrate that they have the ability to coordinate prompt care for children with medically complex conditions, develop an individualized comprehensive pediatric care plan, work in a culturally and linguistically appropriate manner with the pediatric patient’s family, coordinate access to subspecialized pediatric services, and coordinate care with out-of-state providers when medically necessary.

CMS encourages states to adopt a “whole-person” approach to promote continuous quality improvement. Additionally, states are required to ensure that providers are able to use a family-centered care planning approach that accommodates patient preferences.

CMS also notes that nothing in Section 1945A of the Act limits a child’s choice in selecting a provider, and therefore there cannot be a closed provider network through Medicaid managed care. CMS encourages states to review and update their Medicaid managed care contracts to reflect this requirement.

Reporting Requirements

Section 1945A(g)(1) of the Act requires health home services providers to report to the state certain information, such as their names, NPIs, addresses, and the specific services they provide to children with medically complex conditions. Section 1945A(f) also requires states to include in their Section 1945A health home SPAs a methodology for tracking certain data like the total cost of care resulting from improved care coordination under Section 1945A, a proposal for use of technology to improve service delivery and coordination, and a methodology for tracking access to medically necessary care from out-of-state providers.

Section 1945A(g)(2)(A) of the Act also requires states with approved SPAs to submit a comprehensive report to the Secretary. CMS expects to issue further guidance on this requirement at a later date.

Finally, CMS notes that under Section 1945A(c)(3) of the Act, beginning October 1, 2022, the Secretary may award grants to states for purposes of developing a Section 1945A SPA. The total amount of payments made to states shall not exceed $5 million.

The CMS Guidance is available here.