Manatt on Health Reform: Weekly Highlights

Oregon’s hospitals see improved financial performance following the ACA; CMS denies Indiana’s request for an additional lockout period in the Medicaid expansion program; and a new Manatt Health report details Medicaid funding options for social services.

FEDERAL AND STATE MEDICAID REFORM ACTIVITY:

Brief Explores Medicaid Funding Options for Social Service Interventions

A new brief prepared for the Milbank Memorial Fund and the New York State Health Foundation by Manatt Health reviews how states can use Medicaid to facilitate access to social services including housing services, employment and job stability programs, and peer and community supports. The brief, which is based on regulatory review and interviews with state and federal experts, describes 1115 Medicaid waivers as “by far the most flexible vehicle” that states have to integrate social services into their Medicaid programs, though the authors caveat that securing an 1115 waiver can be a lengthy process. The brief also finds that states can include case management, preventive and rehabilitative services, habilitation services, and Health Home services in their benefit packages through State Plan Amendments, which “generally are the simplest and easiest way” to secure funding for a service. Home and community-based service waivers, managed care and alternative payment models are also identified as tools available to states.

Arizona: Lift of CHIP Enrollment Freeze Ends Status as Only State Without Active Program

CMS approved Arizona’s plan to begin accepting new applications for KidsCare, the State’s Children’s Health Insurance Program (CHIP), ending a six-year freeze on enrollment that the State enacted as a cost-saving measure during the recession. Arizona had been the only state without an active CHIP program. An estimated 30,000 to 40,000 children up to age 18 with incomes between 133% and 200% of FPL will become eligible for coverage effective in September.

Alabama: Governor Will Propose Lottery to Close Medicaid Funding Gap in Special Session

Governor Robert Bentley (R) has called an August 15 special session to introduce legislation to create a statewide lottery in response to the current fiscal challenges, including an $85 million shortfall in the most recent Medicaid budget. If the legislation passes, a measure will be placed on the November ballot for a constitutional amendment to establish a lottery. The Governor expects the lottery to generate $225 million annually for General Fund programs, including Medicaid. In his video announcing the special session, Governor Bentley reiterated his commitment to the State’s ongoing transition to Medicaid managed care delivered through regional care organizations, which the State has delayed due to the Medicaid shortfall.

California: Aetna and UnitedHealthcare Seek to Offer Medi-Cal Managed Care Plans

Aetna and UnitedHealthcare will begin offering Medi-Cal (Medicaid) managed care coverage in two counties—San Diego and Sacramento—beginning July 2017, pending State approval. California's Department of Health Care Services opened the program to new insurers because the existing managed care contracts in those counties “have been in place for an extended period of time.” Twenty-two insurers currently participate in Medi-Cal managed care, and the last new insurer to enter the market was Centene in 2013. This announcement comes as UnitedHealthcare prepares to exit most ACA Marketplaces for 2017, including Covered California, the State-based Marketplace.

Indiana: CMS Denies Requested Amendments to Medicaid Expansion, Including New Lockout Period

CMS denied the State's request to add a six-month lockout period for all Medicaid expansion enrollees who do not complete the annual renewal process, which would have barred nearly 19,000 people from coverage each year. In a letter to Governor Mike Pence (R), CMS noted that it has not approved a lockout period for enrollees below 100% of FPL in any state waiver. CMS also rejected the State's request to discontinue a “prior claims payment program,” which provides retroactive coverage of medical costs incurred by a parent in the year before their enrollment in Healthy Indiana Plan (HIP) 2.0 (the State’s Medicaid expansion program). Prior to receiving Indiana’s request, CMS had established that this program could only be discontinued if data indicated it was needed by 5% or less of parents enrolled in HIP for three consecutive months. Nearly 14% of eligible individuals are incurring costs that would have been reimbursed in the absence of the demonstration, according to the State’s latest data.

Massachusetts: Dual Eligible Demonstration Extended Through 2018

MassHealth (the State’s Medicaid program) and CMS have extended and amended the One Care dual eligible demonstration contract with managed care plans to include updated quality withhold amounts, savings percentages, and risk corridor terms. The new contract will apply to the final two years of the now five-year demonstration. MassHealth is accepting Letters of Intent through August 12, 2016 from health plans interested in participating in the demonstration beginning January 2018. There are currently two plans participating in the demonstration, which cover approximately 13,000 adults with disabilities ages 21-64 who are eligible for both MassHealth and Medicare.

New York: Medicaid DSRIP Provider Networks Earn Top Performance Payments

Efforts to reform New York's Medicaid system via the State's Delivery System Reform Incentive Payment (DSRIP) program are on track, according to new data released by the New York State Department of Health. DSRIP provider networks known as Performing Provider Systems (PPSs) achieved the majority of DSRIP Year 1 Statewide and PPS-specific reporting, process, and implementation milestones, and received 99.44% of available performance-based funding. The State also announced the results of a value-based payment baseline survey, which found that 25.5% of State Medicaid Managed Care Organization (MCO) payments to providers were value-based in 2014. The 2014 figure is a baseline measurement for Medicaid MCOs and providers, who are aiming to meet the New York DSRIP goal of making 80%-90% of MCO payments to providers value-based by 2020.

Washington: State Must Notify Impacted Enrollees of Hepatitis C Drug Coverage

A judge ordered the State Health Care Authority (HCA) (Medicaid agency) to send a notice to the estimated 900 Medicaid enrollees previously denied access to Hepatitis C medication, informing them of their new eligibility for the drug. Prior to distribution, the court must approve the notice language, which will also be reviewed by the lawyers representing the class of affected patients. The judge also granted class certification to the lawsuit, which will add as clients an estimated 22,000 Medicaid enrollees who have the virus and may require treatment in the future. In May a federal judge ordered HCA to cover Hepatitis C medication regardless of the severity of an individual’s liver condition.

FEDERAL AND STATE HEALTH REFORM NEWS:

Large Employers Continue Offering Health Coverage; Small Employers’ Offerings on the Decline, Report Finds

The number of large employers sponsoring health plans for their employees has held steady since the 2014 enactment of the ACA, though the percentage of smaller employers sponsoring health plans has steadily declined since 2009, according to a report from the Employee Benefit Research Institute. More than 95% of companies with 100 or more employees offered health coverage prior to the ACA and continue to do so; the 2015 rates for smaller employers ranged from 23% for companies with fewer than 10 employees to 74% for companies with 25 to 99 employees. Companies with fewer than 10 employees saw the greatest percentage decline between 2008 and 2015 (a 36% decline). The report’s authors cite several reasons for small employers sponsoring coverage less frequently, including: rising healthcare costs (both actual and the fear of future rising costs), the availability of non-group Marketplace coverage, and the 2007-2009 recession and the weak recovery that followed. The authors also note that smaller firms may face higher and more volatile premium increases and that health insurance plays a smaller role in worker recruitment and retention at smaller firms.

Oregon: Study Finds Correlation Between ACA and Improved Financial Health of Hospitals

An Oregon Health Authority (OHA) study found a 38% increase in operating margins and a 40% decrease in uncompensated care across Oregon's 60 acute care hospitals between 2014 and 2015. The study, which also found a 38% reduction in bad debt, attributes this improved financial performance to a 9% drop in the uninsurance rate, spurred by the State's adoption of Medicaid expansion and its establishment of a State-based Marketplace. The study's authors analyzed annual financial reports that acute care hospitals are mandated to submit to OHA.

Texas: New “Healthy Texas Women” Combines Programs to Expand Coverage and Services

Health and Human Services Executive Commissioner Charles Smith announced the State’s new “Healthy Texas Women” program, which combines the “Texas Women’s Health Program” and “Expanded Primary Care for Women” program due to a 2014 recommendation by the Sunset Advisory Commission aimed at streamlining several State healthcare initiatives. The combined program is operated by the State Health and Human Services Commission, which also now operates the separate family planning program, previously administered by the Department of State Health Services. The streamlined Healthy Texas Women program offers expanded services, including those for chronic conditions such as hypertension, diabetes, and high cholesterol in addition to previously offered immunizations, family planning, cancer screenings, and contraceptive services. Women between the ages of 18 and 44 with income below 200% of FPL are eligible, and women as young as 15 are newly eligible with parental consent. Women previously enrolled in either program will be auto-enrolled into the newly combined program. The prior Texas Women’s Health Program was established in 2013 with State funds only, replacing the State and federally-funded Medicaid family planning waiver program. The Expanded Primary Care for Women program was introduced in 2015 and offered primary, preventive and screening services to women at or below 200% of FPL who were unable to access the same care through other programs.

STATE MARKETPLACE NEWS:

Enrollment Lags at State-Run SHOPs, Despite Insurer Options

A Commonwealth Fund review of the ACA’s Small Business Health Options Program (SHOP) found that 13 of the 17 states (plus the District of Columbia) that operate a state-run SHOP offer plans from three or more insurers, but despite strong insurer participation, enrollment has been lower than expected. New York and California have each enrolled over 3,600 groups (covering approximately 42,000 lives), but five state SHOPs enrolled fewer than 200 employer groups. The researchers also found that the average employer group size in state-run SHOPs is consistently below 10 employees. According to the authors, this indicates that SHOPs are primarily attracting the “micro-group” market, a market often underserved by brokers and least likely to offer employer-sponsored coverage prior to the ACA.

Minnesota: Rate Requests Delayed Due to Blue Cross Exit From the Individual Market

The State Commerce Department has delayed the release of preliminary rate requests from individual market insurers from August 1 to September 1 so that insurers may evaluate the impact of Blue Cross Blue Shield's (BCBS) market exit. BCBS announced in July it would stop selling policies on the State's individual market (both on and off the Marketplace), requiring 103,000 individuals to find new coverage for 2017.