Manatt on Health Reform: Weekly Highlights

HHS proposes significant new network adequacy standards and surprise billing protections for 2017 QHPs; Louisiana's Governor-elect reiterates his intent to expand Medicaid on "Day One"; and California considers pursuing a 1332 waiver.

FEDERAL REGULATORY ACTIVITY:

HHS Proposes Standard Cost Sharing Designs & "Leasing" Fees for the Federal Marketplace

The Department of Health and Human Services (HHS), in a draft Notice of Benefit and Payment Parameters, has proposed several significant regulatory changes for 2017, including: establishing voluntary standard cost sharing designs for bronze, silver, and gold plans; creating provider network adequacy standards based on time and distance; and creating protections against excessive cost sharing for services rendered by out-of-network providers in in-network facilities. Additionally, HHS proposed a mechanism for State-based Marketplaces that use the federal technology platform—HealthCare.gov—for eligibility and enrollment functions to make 3% user fee payments. The draft notice is an annual rulemaking in which HHS sets policies for the Affordable Care Act Marketplaces and qualified health plans sold on Marketplaces, as well as other federal policies and programs that apply to health insurance coverage, such as the risk adjustment program. Comments on the draft notice are due December 21 and the final notice will likely be released in February 2016.

HHS Announces Intent to Make Full Risk Corridors Payments to Issuers

The Department of Health and Human Services (HHS) released guidance reiterating the Secretary's requirement to make full 2014 risk corridors payments to issuers, after announcing in October that it would make payments totaling 12.6% of issuers' 2014 benefit year payment requests. Consistent with previous guidance, the remaining 2014 payments will be made from 2015 collections, and, if necessary, 2016 collections. In the event HHS does not have sufficient funds to make full risk corridors payments for the 2016 program year, it will explore alternate funding sources, including working with Congress.

FEDERAL & STATE MARKETPLACE NEWS:

New Reports on Health Care Affordability, Cost Sharing, and Plan Shopping Are Released

Reports released this week by the Commonwealth Fund and the Kaiser Family Foundation (KFF) show that cost sharing continues to be a challenge for some populations, while a second KFF report indicates shopping for Marketplace plans may help to alleviate these concerns. The Commonwealth Fund's Health Care Affordability Index found that 25% of privately insured people of working age (who are mainly covered by employer plans) have high healthcare cost burdens relative to their income, and that two in five adults whose healthcare deductibles are 5% or more of their income did not seek recommended care because of the deductible. A KFF brief explored the role of cost sharing, including deductibles, in 2016 HealthCare.gov plans. That study found that cost sharing varies "quite a bit" from plan to plan, and that the average combined deductible for 2016 silver plans increased 20% to $3,064 between 2015 and 2016, though the authors note that the increase is likely offset by a decrease in other forms of cost sharing. Additionally, a separate KFF study found that most HealthCare.gov consumers will pay 15% higher premiums on average (before tax credits) if they remain in their 2015 plan for 2016, and that in nearly three-quarters of the counties in HealthCare.gov states, the lowest-priced silver plan for 2016 is a different plan than the lowest-priced silver plan for 2015.

Study Finds Low Take-Up Rates during Special Enrollment Periods

Fewer than 15% of uninsured consumers eligible to enroll in Marketplace coverage during special enrollment periods (SEPs) do so, according to a new report by the Urban Institute and Robert Wood Johnson Foundation. The report estimates that 46.5 million Americans will be eligible for a SEP in 2016, including 33.5 million individuals who will need SEPs to prevent coverage gaps and losses. The authors estimate that 1.7 million individuals enrolled during a SEP in 2015, representing 5% of the total number of individuals who require a SEP to avoid a short- or longer-term coverage gap. The report recommends Marketplaces conduct specific outreach and enrollment strategies targeted to job-loss and Medicaid termination, the two most widely applicable SEPs.

MEDICAID EXPANSION UPDATES:

Alabama: Task Force Recommends Expanding Medicaid Coverage

The Alabama Health Care Improvement Task Force, commissioned by Governor Robert Bentley (R) via Executive Order in April, has recommended expanding health care coverage to Alabamians who currently fall into the "coverage gap" because they do not qualify for Medicaid or subsidies in the Marketplace and are unable to purchase health insurance through their employer or on the individual market. The report describes the benefits of "Medicaid redesign," including expanding coverage to 185,000 working Alabamians, helping rural hospitals and private practices remain open, and increased tax revenues that could "offset most or all of the eventual state share." The Governor has not yet taken a position on the recommendations, according to a spokesperson.

Louisiana: Governor-Elect Lists Medicaid Expansion Among Highest Priorities

Receiving 56% of the vote in Saturday's gubernatorial runoff election, John Bel Edwards (D)—campaigning on a promise to expand Medicaid on "Day One"—became Louisiana's Governor-elect over David Vitter (R). Since his election, Governor-elect Edwards has noted that concerns raised by the Legislative Fiscal Office about the State's funding mechanism for the non-federal share of expansion costs will need to be addressed before implementation. The Republican-dominated legislature passed a Medicaid expansion funding bill last spring that included a hospital assessment and was supported by the Louisiana Hospital Association. Edwards's chief of staff, State Senator Ben Nevers (D) (who sponsored several Medicaid expansion bills in recent years) estimates that 242,000 individuals would gain coverage under Medicaid expansion.

STATE HEALTH REFORM NEWS:

California: Marketplace Proposes 1332 Waiver Exploration Process

Covered California Executive Director Peter Lee proposed to the Marketplace board a process for partnering with the Department of Health Care Services (DHCS), the State's Medicaid agency, to assess potential ideas for a 1332 waiver proposal. Lee did not describe a preliminary vision or possible components of a waiver, but rather indicated that Covered California and DHCS staff will work together from January through April 2016 to develop potential waiver elements that align with the needs and goals of the State's Marketplace and Medicaid programs. Lee indicated that "pursuing a 1332 waiver would require significant time and resources" and that proposals should be directly related to the current Marketplace mission, achieve savings or administrative simplification, and improve processes rather than completely redesign them. The board and DHCS leadership will assess proposed options in summer 2016 and identify next steps for pursing a waiver, if appropriate.

Rhode Island: Statewide Healthcare Survey Reveals Primary Care Access Gaps and Delayed Care

The Department of Health (DOH) released the results of a statewide healthcare access and utilization survey of facilities and community members, conducted as part of a State Innovation Model (SIM) initiative to reform Rhode Island's healthcare delivery and payment systems. The survey's key findings include: there are 40% fewer primary care physicians in the State than previously estimated and 10% less than the national standard for adequate care access; available data on race, ethnicity, and patients' language needs is insufficient; nearly a third of Rhode Islanders delayed care because of cost and nearly half of those people became sicker before receiving care; and, 51% of assisted living residences are not accepting new Medicaid patients. Rhode Island's Health and Human Services Secretary Elizabeth Roberts noted that "there are many promising initiatives in Rhode Island that will benefit from such a robust data source," the findings and recommendations from which the State intends to use to develop population and behavioral health plans as part of the State's SIM initiative.

STATE STAFFING UPDATES:

Minnesota: Marketplace Names Internal Candidate as New CEO

The Board of MNSure, Minnesota's State-based Marketplace, announced the selection of Allison O'Toole as their new chief executive officer. O'Toole has served as the interim CEO since last spring after the departure of previous chief executive Scott Leitz. The announcement comes two weeks after the board nominated Mark Nyquist as the sole finalist for the position. The board cited O'Toole's "unique perspective" and "institutional knowledge," and a desire to maintain continuity as the main reasons for selecting her for the position.

Utah: Governor Appoints New Inspector General of Medicaid Services

Governor Gary Herbert (R) appointed Gene Cottrell to serve as Inspector General of Medicaid Services, where he will be responsible for identifying fraud, waste and abuse, recovering inappropriately paid funds, and strategic planning. Cottrell was previously the interim manager and chief of staff for the Utah Office of Inspector General. Upon confirmation by the State Senate, Cottrell will become the State's second Medicaid Inspector General, replacing Lee Wycoff.