Manatt on Health Reform: Weekly Highlights

South Dakota expects additional $18 million in Medicaid expansion savings due to CMS's revised IHS rules; Arizona uses procedural maneuvers to reinstate enrollment in CHIP; and comprehensive Medicaid managed care enrollment increased by 24% in 2014.

FEDERAL & STATE MEDICAID/CHIP HEALTH REFORM NEWS:

Enrollment in Comprehensive Medicaid Managed Care Increased 24% in 2014

Medicaid enrollment in comprehensive managed care rose from 35 million in 2013 to 43.3 million in 2014, according to national and state-specific data released by CMS. The increase is partly attributable to two new populations frequently being enrolled in managed care: Medicaid expansion adults (5 million total), and the aged, blind, and disabled, who have historically been carved out of managed care. In 18 states, more than three-quarters of Medicaid managed care enrollees were in comprehensive plans, up from 12 states in 2013, and enrollment in managed long-term services and supports (LTSS) grew by 175% nationwide. Comprehensive managed care provides a broad set of benefits, including acute, primary and specialty care, and in some states, behavioral health and LTSS.

Alabama: Transition to Managed Care Delayed, Medicaid Funding Shortfall Remains

Following approval by Alabama's House of Representatives, the Senate has voted to give the Medicaid agency the authority to delay the October 1 implementation of the State's Medicaid managed care program after it failed to approve using $70 million of BP oil spill settlement funds to close a portion of Medicaid's $85 million budget shortfall. The recently approved 1115 waiver that authorized the transition to managed care requires the State to ensure the availability of adequate resources for a successful transition, which the State has indicated it may not be able to ensure under the current budget. Commissioner Stephanie Azar said that Medicaid cuts were more likely after the BP bill's failure, though she did not offer further details. Governor Robert Bentley (R), who has not ruled out calling a special session to address Medicaid's funding shortfall, is expected to sign the bill delaying managed care implementation.

Arizona: State Lifts CHIP Enrollment Freeze

Governor Doug Ducey (R) signed a bill to restore enrollment in KidsCare, the State's Children's Health Insurance Program (CHIP), after a week of procedural maneuvering that led to passage of the bill in the Legislature, reports The Associated Press. Enrollment into KidsCare has been largely frozen since 2010.

Maryland: State Seeks Medicaid Presumptive Eligibility for Those Newly Released From Incarceration

Maryland is seeking federal approval to provide Medicaid presumptive eligibility (PE) to individuals newly released from incarceration, which would permit enrollment based on attestation of eligibility information to be followed by a full verification process. According to the State's waiver application, prison and jail staff would be trained and certified to assist incarcerated individuals with full and PE Medicaid applications. For those enrolled via PE, the State would subsequently address outstanding verifications in order to grant full Medicaid eligibility to those who qualify. The State's request is being made through an amendment to its managed care waiver renewal application, and aims to reduce recidivism and emergency care utilization by eliminating barriers to healthcare for ex-prisoners. The waiver renewal application is available for public comment through May 30, 2016 and will be submitted to CMS on July 1, 2016. If approved, the measure will become effective in 2017.

STATE MEDICAID EXPANSION ACTIVITY:

Alaska: House Brings Medicaid Expansion Lawsuit to State Supreme Court

The Alaska House of Representatives has filed an appeal in the State Supreme Court seeking reinstatement of its lawsuit against Governor Bill Walker's (I) executive order expanding Medicaid, according to the Alaska Daily News. Alaska's Independent Democratic Caucus has said the House, which did not formally vote on whether to pursue an appeal, could not legally appeal without a vote. A Superior Court judge dismissed the lawsuit in March, ruling that the Governor had the authority to expand Medicaid without the Legislature's support.

South Dakota: Estimated Medicaid Expansion Savings Up $18 Million After Changes in IHS Policy; Potential for Special Session Continues

The State has increased its projected cost savings from Medicaid expansion, from $67 million to $85 million, as a result of CMS's new policy that broadens the scope of services for which the federal government will fully reimburse for care of Medicaid-eligible American Indians (AI) and Alaska Natives (AN). State Health Secretary Kim Malsam-Rysdon noted that the Governor may call a special session to consider Medicaid expansion based on the increase in the projected savings.

FEDERAL AND STATE MARKETPLACE NEWS:

CMS Clarifies SEP and CO-OP Rules

CMS released an interim final rule amending the eligibility criteria for the "permanent move" special enrollment period (SEP), and providing more financing flexibility to Consumer Operated and Oriented Plans (CO-OPs) in an effort to stabilize Marketplaces and encourage continued carrier participation. CMS will now require individuals applying for the "permanent move" SEP to have minimum essential coverage for one or more days in the 60 days prior to their permanent move. Exceptions will be made for certain individuals, including those who were uninsured due to incarceration or those who were in the coverage gap in a state that has not expanded Medicaid. CMS also released separate materials clarifying the six circumstances under which SEPs are now available. CMS's interim final rule also changes the requirements for serving on a CO-OP board, which could allow CO-OPs to attract new sources of financing, and provides additional clarifications on loan repayments and the prohibition of CO-OPs to convert or sell to a for-profit or non-consumer operated entity.

CMS Clarifies Restriction on Marketplace Coverage for Incarcerated Individuals

CMS published an FAQ clarifying that its restriction on incarcerated individuals' enrollment in Marketplace coverage does not apply if an individual: (1) has not been convicted of a crime; (2) has been convicted but is not currently sentenced to confinement in an institution; or (3) has been convicted and is sentenced to a partial, limited or alternative form of confident in which no government entity is required to provide medical care. Marketplace enrollees who are formally sentenced to incarceration have 30 days to report their change in status to the Marketplace and terminate coverage. States that use the HealthCare.gov platform must adhere to the guidelines defined in the FAQ, while State-based Marketplaces have the option to adopt other "reasonable" policies.

Alaska: Moda Health Plan to Withdraw From Individual Market, Leaving One Insurer

Moda Health Plan (MHP) announced it will not sell policies on Alaska's individual market (on or off the Marketplace) for 2017, requiring 14,000 MHP enrollees—more than 60% of the individual market—to select a new insurer during 2017 open enrollment. Premera Blue Cross Blue Shield will be the only remaining insurer in the individual market, according to Alaska's Division of Insurance. MHP briefly withdrew from the individual markets in Alaska and Oregon earlier this year after regulators restricted some of its activities due to concern over the company's financial position. MHP resumed selling plans when those restrictions were liftedafter MHP developed a plan to stabilize its financial position.

Iowa: State Sues Federal Government Over CO-OP Collapse

Insurance Commissioner Nick Gerhart is suing the federal government over the liquidation of failed CoOpportunity Health, alleging that the federal government's attempt to recover funds from the CO-OP before other creditors violates federal and State law. The lawsuit also states that the federal government owes CoOpportunity funds from federal risk adjustment programs created under the ACA. CoOpportunity was liquidated in 2015 after mounting financial losses.