Generic Supporting Statement

Clearance for Medicaid and CHIP State Plan, Waiver, and Program Submissions

(CMS-10398, OMB 0938-1148)

Generic Information Collection #37 (Revision)

Managed Care Rate Setting Guidance

Center for Medicaid and CHIP Services (CMCS)

Centers for Medicare & Medicaid Services (CMS)

A. Background

The Centers for Medicare & Medicaid Services (CMS) work in partnership with States to implement Medicaid and the Children’s Health Insurance Program (CHIP). Together these programs provide health coverage to millions of Americans. Medicaid and CHIP are based in Federal statute, associated regulations and policy guidance, and the approved State plan documents that serve as a contract between CMS and States about how Medicaid and CHIP will be operated in that State. CMS works collaboratively with States in the ongoing management of programs and policies, and CMS continues to develop implementing guidance and templates to comply with new statutory provisions. CMS also continues to work with States through other methods to further the goals of Medicaid and CHIP, including program waivers and demonstrations, and other technical assistance initiatives.

The attached rate guide falls under the conditions discussed above as it outlines implementing guidance and template content for state submission of actuarial rate certifications for Medicaid managed care capitation rates per 42 CFR §§ 438.4 through 438.7. CMS has regularly published a Medicaid Managed Care Rate Development Guide. The 2020 Medicaid and CHIP Managed Care final rule¹ requires that CMS annually publish this guidance per § 438.7(e). CMS also published a 14-day Federal Register notice and posted the package for review as described below under section E (Timeline). These comments did not require revision of the rate guide and our responses are attached.

B. Description of Information Collection

States are required to submit rate certifications for all Medicaid managed care capitation rates per § 438.7. There are 46 Medicaid respondents consisting of 45 States, and DC that operate risk-based managed care programs. The Guide specifies our requirements for the rate certification and details what types of documentation we expect to be included. The elements include descriptions of data used, projected benefit and non-benefit costs, rate range development, risk and contract provisions, and other considerations in all rate setting packages. The Guide also details expectations for states when they submit rate certifications.

Section 1903(m) of the Social Security Act requires capitation rates paid to Medicaid managed care organizations (MCOs) to be actuarially sound. Regulations at § 438.4 specify that all capitation rates paid to an MCO, Prepaid Inpatient Health Plan (PIHP), or Prepaid Ambulatory Health Plans (PAHP) must be actuarially sound. Each state must submit all rate certifications to CMS for review and approval in accordance with regulations at § 438.7(a).

2020-2021 Rate Guide (Discontinued)

We collected this information from July 1, 2020 to June 30, 2021.

2021-2022 Rate Guide (Extension)

We are collecting this information from July 1, 2021 to June 30, 2022.

2022-2023 Rate Guide (New)

We will be collecting this information from July 1, 2022 to June 30, 2023.

C. Deviations from Generic Request

No deviations are requested.

D. Burden Hour Deduction

Wage Estimates

To derive average costs, we used data from the U.S. Bureau of Labor Statistics’ (BLS) May 2020 National Occupational Employment and Wage Estimates for all salary estimates (http://www.bls.gov/oes/current/oes_nat.htm). In this regard, the following table presents BLS’ mean hourly wage, our estimated cost of fringe benefits and overhead (calculated at 100 percent of salary), and our adjusted hourly wage.

Occupation Title	Occupation Code	Mean Hourly Wage ($/hr)	Fringe Benefits and Overhead ($/hr)	Adjusted Hourly Wage ($/hr)
Community and Social Service Occupations	21-0000	25.09	25.09	50.18

As indicated, we are adjusting our employee hourly wage estimates by a factor of 100 percent. This is necessarily a rough adjustment, both because fringe benefits and overhead costs vary significantly from employer to employer, and because methods of estimating these costs vary widely from study to study. Nonetheless, we believe that doubling the hourly wage to estimate total cost is a reasonably accurate estimation method.

Burden Estimates

There are 46 Medicaid respondents consisting of 45 States, and DC that operate risk-based managed care programs.

Currently Approved Burden (2020-2021 Rate Guide) (Discontinued)

We collected this information from July 1, 2020 to June 30, 2021. OMB approved 608 hours (135 rate certifications x 4.5 hours/response). We propose to discontinue this rate guide and burden since the rating period ended on June 30, 2021.

Currently Approved Burden (2021-2022 Rate Guide) (Extension)

Currently OMB has approved 608 hours (135 rate certifications x 4.5 hr/submission) at an updated cost of $30,509 (608 x $50.18/hr). Our cost estimate has been revised to account the most recent BLS wage data.

2022-2023 Rate Guide (New)

Based upon CMS’s experiences with rate setting, we estimate that on average it will take a state 4.5 hours per certification to organize and describe the data in a way that complies with the 2022-2023 guide. While 46 states have rates developed for an MCO, PIHP or PAHP, we estimate that an estimated total of 135 rate certifications will be submitted among those states. In aggregate we estimate a burden of 608 hours (135 rate certifications x 4.5 hr/submission) at a cost of $30,509 (608 x $50.18/hr).

Burden Summary

Guide	Respondents	Total Annual Responses	Burden per Response (hours)	Total Time (hours)	Labor Cost ($/hr)	Total Annual Cost ($)
2020-2021 Rate Guide (Discontinued)	46	-135	-4.5	-608	50.18 (updated)	-30,509
2021-2022 Rate Guide (Extension)	46	135	4.5	608	50.18	30,509
2022-2023 Rate Guide (New)	46	135	4.5	608	50.18	30,509
Total	46	135	4.5	608	50.18	30,509

Although this February 2022 iteration proposes to maintain the current number of annual respondents (46), responses (135), and total time estimate (608 hr), we have adjusted our cost estimate by $15,680 (from $201,544 to $217,224) to account for more up to date BLS wage figures.

Given that this collection of information request proposes no changes to our active total time estimate (2,800 hr) we are adding 5 hours of burden to account for the limitations of ROCIS which does not allow the submission of zero hours as would be indicative of no changes.

Information Collection Instruments and Instruction/Guidance Documents

The Rate Guide outlines implementing guidance and template content for state submission of rate certifications for Medicaid managed care capitation rates per §§ 438.4 through 438.7.

• 2021-2022 Managed Care Rate Guidance

We are not proposing any changes to the 2021-2022 Rate Guide.

• 2022-2023 Managed Care Rate Guidance (Revised)

See the attached Crosswalk for a comparison of the 2021-2022 Rate Guide to the 2022-2023 Rate Guide.

E. Timeline

Our 14-day notice published in the Federal Register on February 8, 2022 (87 FR 7177). The comment period closed on February 22, 2022. Comments were received; our response is attached. In sum, we did not make any changes to the Rate Guide nor to any of our burden estimates.

States are required to obtain prior approval of MCO contracts and rates per § 438.806 which means that the rates need to be approved by CMS before they claim the expenditures on the CMS-64 form (OMB 0938-1265). In order for CMS to have the ability to review and analyze the rate certification and allow sufficient time for questions and answers, states typically start submitting their certifications at least 60 days prior to the contract start date. With some contracts starting on July 1, 2022, CMS needs to allow states time to review this guidance and incorporate the elements into its rate certification prior to their submission. Therefore, we are requesting OMB approval by April 1, 2022 as the new guidance is effective on July 1, 2022.

1 The 2020 Medicaid and CHIP Managed Care final rule published in the Federal Register on November 13, 2020 (RIN 0938–AT40; CMS-2408-F) (85 FR 72754).