Frequently Asked Questions from States on
Advancing Care for Exceptional Kids Act of 2014 (ACE Kids Act)
October 24, 2014

Does the ACE Kids Act “nationalize” the Medicaid program for children with medical
complexity?
The legislation does not “nationalize” Medicaid for children with medical complexity. The
legislation includes an optional state plan amendment that would create an approach to the care
for children with medical complexity premised on collaboration between the states, CMS and
the networks designed to meet the needs of this high spend, high needs population. States
would have a significant level of flexibility in the general guidelines and framework of the
legislation. No state is required to adopt the proposed approach in the legislation and states
could simply not “opt in” and continue to provide care for children with medical complexity
enrolled in Medicaid as they do today.
If a state opts in, the following would apply:
o Payment: States would continue to set payment methodologies and rates within general
parameters set by the Secretary of the U.S. Department of Health and Human Services.
The legislative intent is to allow states to set their own risk based payment
methodologies and rates within the general guidelines outlined in the legislation.
o Enrollment/disenrollment of children in networks: The intent of the legislation is
to use the state’s processes for enrollment and disenrollment within the general
guidelines for initial assignment of the children into a network included in the legislation
(taking into account family choice, geographic proximity, and existing health care
providers). The legislation also allows an opt-out option for families and requires the
initial enrollment of all eligible children in the service area of the network.
o Benefits and eligibility: The legislation does not change current Medicaid policies on
benefits or eligibility for children.
o Claims data: We don’t expect the states’ role in data collection and reporting to change
under the legislation, except that there will be parameters for the data reporting to ensure
that data across states is consistent. This will enable comparisons and aggregation to
result in a national database on children with medical complexity. There is no intent to
impact state authority to keep the information in a manner that the state requires in its
role as party to the agreement between the state, federal government and network. One
of the goals of the legislation is to build a national database that then can be used by the
states, federal government and networks to drive quality improvement.
o Designation of the networks: The legislation does provide for a federal role in
designating networks but only if they meet the substantive requirements in the legislation
and participate in a three party (state-federal-network) agreement. The goal from the
children’s hospitals perspective is to begin to create nationally designated network
definitions in statute to best support the highest quality of care for children with medical
complexity across the country.
o Determination of network service areas: The service areas are designated via a three
party agreement (states, federal government and networks). A network serving medically
complex children requires a “critical mass” of providers --- specialists, primary care
providers, hospitals and other service providers tied together with a necessary
communications infrastructure. Networks will need a minimum number of patients in
order to be assembled and maintained. The bill is not attempting to create monopolies,
but rather to ensure that networks are sufficiently sized to deliver high quality, efficient
care. We expect in some areas there will be more than one network established.
Accordingly, the proposal attempts to strike a balance between providing quality and
specialized nationally designated network services to the critically ill pediatric Medicaid
population in the country, while assuring that there is the opportunity for competition to
provide services.
o Development of network adequacy, quality measures and other standards: Under
the legislation, the federal government working closely with the networks and states
would drive the development of standardized quality measures, care coordination
metrics and network adequacy standards. Due to the small number of children in this
category, it is necessary to look across states to best support quality improvements. This
does not mean states could not have a significant role in this process, just that the federal
government would lead this effort since they will have the aggregate data across states
and the national perspective, which is critical to improving care for this small population.

Could you explain how children are enrolled in the program and why they have to wait
90 days to opt out?
Children with medical complexity in areas where there are networks would be assigned to a
network by the state. In the first 90 days, the child and family would learn about the network,
the benefits of being part of the network and outline a care plan working with the care team.
The 90 days is necessary to allow the network and family time for this education, processing of
information and care plan development to take place. After the 90 days, the family could decide
that they want to return to the traditional Medicaid program or enroll in another network if one
is available.

Why are children required to travel 30 miles to their assigned medical home?
The language on the 30 miles in the legislation is designed to protect children and families from
being enrolled in networks that only have medical home capacity a far distance (ie., more than 30
miles) from the family’s home. For example, this would not be operationalized to require a child
in a dense urban area with ready access to a medical home to be assigned to a medical home 30
miles away. Since the state would be implementing the assignment, they would ensure the
proper implementation of this provision.

How would ACE Kids work in a state where children with medical complexity are
enrolled in Medicaid managed care?
The framework outlined in the bill could be operationalized in a state with FFS or Medicaid
managed care. In an opt in state where this group of children are already enrolled in Medicaid
managed care, the health plans would subcontract with the networks to provide all services for
children with medical complexity. The health plan and the network in collaboration with the
state would work out the financial arrangements and responsibilities for the administrative
aspects of this agreement. The network would be responsible for providing and coordinating
care for the children enrolled with medical complexity. Incorporating these networks into health
plan capacity would ensure that children with medical complexity have a nationally designated
network tailored to their unique health care and care coordination needs. The network would
also receive a risk based payment which would result in the alignment of payment with quality
outcomes and result in reduced costs under the program.