Manatt on Health Reform: Weekly Highlights

Arkansas’ Governor requests to transition to a “State-based Marketplace on the Federal Platform;” Louisiana launches Medicaid expansion with SNAP fast-track enrollment; and study shows 2016 premium increases are lower for on-Marketplace than off-Marketplace plans.

FEDERAL & STATE MARKETPLACE NEWS:

Marketplace Plans Have Lower Premium Increases and Administrative Costs, Report Finds

A new report from The Commonwealth Fund finds that average 2016 premiums for individual off-Marketplace plans increased more than premiums for on-Marketplace plans—$48 versus $40 per member per month. The report, which compares the individual coverage markets on and off of Marketplaces using insurers’ most recent projections for ACA-compliant policies, also found that this lower premium increase among Marketplace plans appears attributable to a shift of enrollment toward HMO and “exclusive provider organization” plans. Insurers selling exclusively off of the Marketplace also projected slightly higher proportions of administrative costs (14.2% versus 11.7%) and profit (2.8% versus 2.0%). The study refutes concerns that insurers would sell less expensive and less comprehensive plans (bronze-level plans) off the Marketplace, attracting healthy enrollees and leaving less healthy and more expensive enrollees on the Marketplace. According to the authors, bronze-level plans constitute a similar proportion of coverage both on and off of Marketplaces.

Arkansas: Governor Seeks Transition to State-Based Marketplace on the Federal Platform

Governor Asa Hutchinson (R) has requested federal permission to transition from a State-Partnership Marketplace (SPM) to a State-based Marketplace on the Federal Platform (SBM-FP) for the 2017 plan year, according to the Arkansas Democrat-Gazette. The Arkansas Health Insurance Marketplace currently regulates plans on the individual Marketplace and administers the State’s Small Business Health Options Program (SHOP); under an SBM-FP model, the State would begin certifying the individual Marketplace plans and assume plan management and consumer outreach functions for those policies. Arkansas would continue to rely on HealthCare.gov’s eligibility and enrollment system, including the call center. The Governor’s spokesman said transitioning to an SBM-FP would decrease fees on insurers and could moderate future premium increases.

Alaska: Legislature Approves Reinsurance Program

The Legislature approved a plan to stabilize insurance premiums in the State's individual market, weeks after Moda Health Plan's exit left Premera Blue Cross Blue Shield as the only insurer on the individual market. The bill will use an existing tax on all health insurers to fund a reinsurance program for high-cost enrollees on the individual market. State Insurance Division Director Lori Wing-Heier said the individual market was in danger of collapsing if the Legislature did not approve the bill, according to Alaska Public Media. The bill also gives the Department of Health and Social Services authority to request a 1332 waiver from the federal government.

California: Undocumented Residents Move One Step Closer to Marketplace Coverage

The California legislature passed SB10, authorizing the State to seek a 1332 waiver to allow undocumented residents to purchase non-subsidized health insurance through the State-based Marketplace, Covered California. If Governor Jerry Brown (D) signs the bill and the federal government ultimately approves the 1332 waiver application, California would become the first state to allow undocumented residents to purchase full-price coverage through the ACA’s Marketplaces as soon as next year.

STATE MEDICAID ACTIVITY:

Study Highlights Best Practices in Connecting Justice-Involved Populations to Medicaid

A new study released by the Kaiser Family Foundation documents the impacts of efforts in Arizona, Connecticut and Massachusetts to connect justice-involved populations to Medicaid. Authors find that two-thirds of the incarcerated population in Connecticut is enrolled in Medicaid upon release. Additionally, 84% of former prisoners in Massachusetts that had Medicaid coverage in the year after release access a healthcare service, nearly half of whom have a behavioral health visit. The study reviews policies in these states, such as suspending Medicaid eligibility for incarcerated individuals and automatically reactivating their coverage upon release, that help to ensure more smooth transitions in and out of incarceration. In addition, all three states enroll individuals in Medicaid if they require inpatient care while incarcerated. Massachusetts received more than $4.2 million in federal funds to offset the costs of inpatient care for incarcerated individuals provided at private hospitals. The study concludes that more research is needed to better assess the impact on criminal justice related outcomes, such as recidivism rates.

Louisiana: Medicaid Expansion Launched Including Through SNAP Fast-Track

Enrollment in Medicaid expansion launched as scheduled on June 1, for coverage starting July 1, including through a fast-track process to enroll SNAP (food stamp) recipients. CMS approved the State's request to enroll SNAP recipients through a streamlined process that does not require additional income verification, given that the income and verification requirements for Medicaid and SNAP are very similar. The State estimates that over 100,000 SNAP recipients will be enrolled through this streamlined process. Louisiana is the first State approved to use SNAP data for Medicaid enrollment through a Medicaid State Plan Amendment, while other states have received approval through time-limited Medicaid waivers. The SNAP income verification option will be available at initial enrollment and at renewal.

Washington: Medicaid Ordered to Provide Hepatitis C Drugs to All

A federal judge ordered the Washington Health Care Authority (HCA) to cover Hepatitis C medication regardless of the severity of an individual’s liver condition, concluding that limiting the drug violates federal law requiring enrollees have access to medically necessary treatment, reports The Puget Sound Journal. In February 2015, HCA began limiting coverage of the drug to those with severe conditions. Washington’s Medicaid director noted at the time that if the Health Care Authority were to pay for treatment for all Medicaid clients with Hepatitis C, the cost would be three times the program’s total pharmacy budget. The ruling comes in response to a class action lawsuit filed by Harvard Law School.

FEDERAL & STATE HEALTH REFORM UPDATES:

IRS Rules Against Tax Exemption for ACO Serving Commercial Enrollees

The Internal Revenue Service (IRS) has denied a request for tax exempt status from an undisclosed accountable care organization (ACO) that serves individuals enrolled in commercial plans. The IRS concluded that the organization “did not meet the test for tax-exempt status because it was not operated exclusively for charitable purposes and it provided benefits to some doctors in its network.” ACOs that participate in Medicare, however, can be tax-exempt because they advance the “charitable purpose of lessening the burdens of government.” Implications of the ruling for ACOs and for hospitals that participate in ACOs with tax-exempt status is unclear.

Massachusetts: New Law Strikes Compromise on Hospital Payment

Governor Charlie Baker (R) signed a bill creating a $45 million, five year fund to ensure that hospitals that charge lower prices to insurers receive more money, reports MassLive.com. The bill also creates the Special Commission to Review Variation in Prices among Providers, which will make longer-term policy recommendations by March 2017. 1199SEIU, a union representing health care workers in Massachusetts, had been pushing for a bill or a ballot measure that would have limited disparities in the amount commercial insurers can pay different hospitals for the same procedure. Union leaders have indicated they will withdraw the ballot measure.

Texas: Uninsured Rates Decrease Since ACA Implementation

The uninsured rate among Texans ages 18-64 has dropped by nearly 30% since the implementation of the Affordable Care Act, lowering the State’s uninsured rate below 1999 levels, according to a report by Rice University’s Baker Institute for Public Policy and the Episcopal Health Foundation. Each of the ten demographic sub-groups studied experienced substantial uninsurance rate decreases, ranging from 15% to 51%. Texans ages 50-64 and Texans with incomes between 139% and 399% of the FPL experienced the most significant drops in uninsured rates, 51% and 42% respectively. Additionally, the largest percentage point decreases were experienced by Hispanics (11.9 percentage points) and Texans ages 50-64 (10.8 percentage points). The authors note that the lowest income Texans, whose uninsurance rate remains high at 46%, would be covered through Medicaid expansion, but Texas has opted not to expand. The authors analyzed data from the Health Reform Monitoring Survey, a quarterly survey of adults ages 18-64 launched in 2013.