Manatt on Health Reform: Weekly Highlights

Alabama receives federal approval for its Medicaid transformation waiver, while Michigan's Governor submits a Medicaid waiver on behalf of Flint residents; CMS announces $7.7 billion in reinsurance payments; and Vermont seeks to preserve its current SHOP system through a 1332 waiver.

STATE MEDICAID ACTIVITY:

Alabama: Medicaid Transformation Waiver Receives Federal Approval

CMS approved the State's 1115 waiver to transition its Medicaid program to managed care delivered through hospital- and provider-led entities called Regional Care Organizations (RCOs) across five regions. Under the new structure, Medicaid will contract directly with RCOs at an established cost for services delivered to Medicaid patients—including children, parents, pregnant women and aged, blind and disabled enrollees who are not receiving long term care services. According to the waiver, the State will receive $328 million over three years to fund the transition to the new RCO delivery system, including RCO start-up costs and provider payments. The Governor's press release indicates that the State may qualify for additional funding to supplement RCO payments. Among other conditions, the waiver requires the State to demonstrate that more pregnant women and children receive recommended checkups, and that fewer patients are admitted to hospitals. RCOs are expected to enroll more than 60% of the State's one million Medicaid recipients. The program will launch in October.

Michigan: Governor Requests Medicaid Coverage for 15,000 Children and Pregnant Women in Flint

Governor Rick Snyder (R) submitted an 1115 waiver to CMS following an announcement from the Obama administration that it plans to extend Medicaid coverage to pregnant women and children affected by the water crisis in Flint. The Governor is seeking Medicaid coverage for children up to age 21 as well as pregnant women and their newborn babies who have resided in Flint's water system service area between April 2014 and a yet-to-be-determined future date when the water system is deemed safe. Children and pregnant women with incomes up to 400% of the federal poverty level (FPL) would be eligible for coverage under the waiver, and individuals with income above 400% FPL would have the option to buy in to the program. Children and newborns would remain eligible until they turn 21; pregnant women would be eligible for the duration of their pregnancy and for two calendar months post-delivery. The waiver also seeks funding for targeted case management services and to enhance and expand current lead abatement programs. An estimated 15,000 additional Flint residents would receive Medicaid and CHIP services if the waiver is approved.

Nebraska: Medicaid Expansion Bill Remains Under Debate

State Medicaid Director Calder Lynch testified in opposition to Medicaid expansion bill LB 1032, citing a consultant report commissioned by the Department of Health and Human Services (DHHS) that estimates the bill's proposals would cost $1 billion over the next 10 years and could limit access to services, in particular for children and individuals with disabilities. The bill, which was introduced last month by a bipartisan group of lawmakers, would require DHHS to submit a waiver to expand Medicaid by purchasing qualified health plans (QHPs) on the Marketplace. Three previous Medicaid expansion proposals have failed in Nebraska.

FEDERAL AND STATE MARKETPLACE UPDATES:

CMS to Make $7.7 Billion in 2015 Reinsurance Payments

CMS announced that qualified health plan (QHP) issuers will receive $7.7 billion in reinsurance payments for the 2015 benefit year, as part of one of the three ACA programs (reinsurance, risk adjustments and risk corridors) intended to promote insurer competition and market stability. The reinsurance fund is predominantly funded by required contributions from all health insurers and some self-insured group health plans. Approximately $5.5 billion in contributions have been collected to date; $1 billion will be collected by November 2016; and approximately $1.7 billion was carried over from the 2014 benefit year. Reinsurance-eligible insurers will receive a quarter of the total amount owed to them in March 2016, while the final payments will be announced in June 2016. CMS announced last October that QHP issuers would receive $362 million of the requested $2.9 billion in risk corridors payments for 2014.

Vermont: State Releases Draft 1332 Waiver Seeking to Forego Online SHOP Infrastructure

Vermont posted a draft 1332 waiver seeking to forego the federally-required establishment of an online infrastructure for the State's Small Business Health Options Program (SHOP) Marketplace. The waiver proposes to maintain the State's current system, which allows employees direct enrollment through insurers instead of through the Vermont Health Connect (VHC) website. Employers would maintain the ability to offer their employees any qualified health plan (QHP) and insurers would continue to be responsible for all employer and employee notices, premium processing, and reporting enrollment data. VHC would continue to certify QHPs, determine eligibility for the small business tax credit, and operate an appeals process. Vermont is seeking public comment through March 11.

FEDERAL AND STATE HEALTH REFORM NEWS:

Most Highly Ranked Hospitals Are In-Network for at Least One Marketplace Plan, Robert Wood Johnson Report Finds

A review of highly ranked hospitals' participation in Marketplace plans found that more than 95% of those included on the U.S. News and World Reports "Best Regional Hospital" list were in-network for at least one Marketplace plan, according to the Robert Wood Johnson Foundation. However, between 2015 and 2016, the percentage of hospitals that were in-network for only one Marketplace plan increased from 7% to 20%, and nearly 6 in 10 hospitals reduced the number of plans for which they were in-network. According to the report, Hospitals in metropolitan areas (where the population is greater than 1 million) were more likely to reduce the number of Marketplace plans for which they were in-network.

1 Million Children Gain Coverage Between 2013 and 2014, According to SHADAC Report

Though adults were the primary target of the ACA's coverage expansions, the uninsurance rate for children under age 19 decreased from 7.5% in 2013 to 6.3% in 2014, driven by a general enhanced awareness of public coverage options and direct outreach to families eligible for Medicaid, CHIP or subsidies through Marketplaces, according to a new report by the University of Minnesota's State Health Access Data Assistance Center. Some of the largest coverage gains were made by groups of children that have historically had the highest rates of uninsurance: low-income, Hispanic, and non-white children. Twenty-three states saw a significant decrease in the number of uninsured children and no state saw a significant increase. Nevada experienced the highest percentage-point decline in its children's uninsured rate with a drop of 4.4 percentage points. California had the largest decline in the number of uninsured children (approximately 210,000). Nearly half of the remaining 5 million uninsured children reside in six states: Texas, California, Florida, Georgia, Arizona, and New York.

Kentucky: Former Governor Launches Campaign Against Current Governor's Healthcare Agenda

Former Governor Steve Beshear (D) announced the launch of his 501(c)(4) organization, Save Kentucky Healthcare, which will campaign to preserve Medicaid expansion and kynect, the State-based Marketplace, both implemented under his administration. Recent reports found these reforms to have had significant economic and health benefits to the State and that they are supported by the majority of Kentuckians. Governor Matt Bevin (R), who campaigned on dismantling these initiatives, has already begun the process of transitioning kynect to HealthCare.gov and has formed a committee to lead the redesign of the Medicaid program.

STATE STAFFING UPDATES:

Kentucky: Governor Names New Medicaid Commissioner

Stephen Miller has been named the State's Department of Medicaid Commissioner, filling the position previously held by Lisa Lee. Prior to this appointment, Miller served as the Vice President of Finance at the Kentucky Hospital Association for 24 years. The new commissioner will be an integral player in efforts to redesign Kentucky's Medicaid program and transition to an alternative Medicaid expansion model.

New Hampshire: Executive Council Appoints New DHHS Commissioner

Jeffrey Meyers, acting New Hampshire Department of Health and Human Services Commissioner, was confirmed by an executive council to permanently assume the commissioner position. Meyers was nominated for the position by Governor Maggie Hassan (D) at the end of last year, having previously served as the Department's Director of Intergovernmental Affairs. He succeeds Nicholas Toumpas, who has served as commissioner since 2008.