Manatt on Health Reform: Weekly Highlights

HHS's position on cost-sharing reduction payments remains unclear as insurers seek certainty before Marketplace rate filing deadlines; states continue to finalize Medicaid budgets and seek waiver flexibility; and North Carolina Republicans introduce Medicaid expansion legislation.

FEDERAL AND STATE MARKETPLACE NEWS:

HHS Position on Continuing Cost-Sharing Reduction Payments Remains Unclear

Multiple news outlets reported that HHS will continue to make cost-sharing reduction payments to insurers until the House lawsuit on the matter is resolved, but HHS statements have sent mixed messages, with the most recent statement noting the Administration has not yet decided its position on continuing the payments. Meanwhile, America's Health Insurance Plans and the Alliance of Community Health Plans both emphasized that insurers will need certainty around the availability of 2018 payments prior to upcoming rate filing deadlines or will need to raise premiums.

Loss of Cost-Sharing Subsidies Could Increase Benchmark Marketplace Plan Premiums by 19%

Amidst speculation about the future of cost-sharing reductions, a new Kaiser Family Foundation analysis estimates that premiums for benchmark silver plans on HealthCare.gov would increase by an average of 19% if federal cost-sharing subsidies ceased. Estimated premium increases would range from 9% in North Dakota to 27% in Mississippi and would be higher in non-expansion states compared to expansion states (21% versus 15%), because a larger share of enrollees in non-expansion states receive cost-sharing subsidies.

House Committee Adds $15 Billion Reinsurance Program to AHCA

Negotiations continued on the AHCA ahead of the April recess but the legislation still has not advanced to a vote by the full House. Before recess, the House Rules Committee passed by a party line vote an amendment to the AHCA that would establish a $15 billion risk sharing program to provide funds to individual market insurers to offset the costs of individuals with high-cost health conditions. The program would run from 2018 through 2026 and would supplement the AHCA's proposed $115 billion Patient and State Stability Fund, which would provide funding to states to support their individual and small group markets.

Iowa: Aetna Will Withdraw From the Marketplace in 2018

Aetna announced that it will stop selling individual policies in 2018, including those sold on the State's Marketplace. Aetna cited uncertainty and financial risk as reasons for its departure. Aetna's departure, along with Wellmark's departure (announced April 3) means most counties in the State's Marketplace will have only one insurer for 2018.

FEDERAL AND STATE MEDICAID REFORM ACTIVITY:

Majority of Governor's Budgets Propose Medicaid Enhancements

A Kaiser Family Foundation analysis of 48 budgets proposed by governors for fiscal year 2018 finds that more governors proposed expanding Medicaid benefits or increasing provider rates than proposed instituting cuts, despite state budget challenges. The brief also notes that 23 governors proposed funding initiatives to combat the opioid epidemic, 28 governors proposed enhanced funding for behavioral health services, and seven governors proposed funding health-related criminal justice initiatives. Some governors, however, proposed cost-saving measures, with 16 endorsing provider rate cuts, four proposing benefit reductions, and four supporting new cost-sharing requirements.

Cuts to Medicaid Funding Would Disproportionately Impact Older Adults

Medicaid funding cuts, through capped funding or reductions in Medicaid expansion funding, would disproportionately impact adults age 50-64, given that Medicaid covers nearly 20% of all older adults and nearly 50% of older adults with multiple chronic conditions, behavioral health problems, or physical disabilities, according to a Commonwealth Fund analysis of their Survey of High Need Patients. Older adults with multiple chronic conditions, functional limitations, or disabilities who receive Medicaid report lower rates of skipping medication or medical care due to cost, compared to non-Medicaid enrollees with similar health needs, implying that loss of Medicaid coverage would reduce access to care for this high-needs group.

Shifting Children's Coverage From CHIP to Marketplace Plans Would Increase Families' Out-of-Pocket Costs

Annual out-of-pocket costs for families with children who have chronic conditions could increase by $233 to $2,472 if children's coverage shifts to Marketplace plans as a result of Congress not extending funding for the Children's Health Insurance Program (CHIP) beyond FY 2017, according to a report published in Health Affairs. Four states—Arizona, California, Minnesota, and North Carolina—plus the District of Columbia are projected to exhaust their federal CHIP funding in the first quarter of FY 2018 if CHIP is not reauthorized by the end of FY 2017, meaning these states may need to increase state spending on the program or reduce eligibility, benefits or access to CHIP services, according to a Medicaid and CHIP Payment and Access Commission (MACPAC) report. MACPAC projects that more than half of the states will exhaust their federal CHIP funding by March 2018.

Florida: House Committee Approves Medicaid Work Requirements Proposal

The House Health and Human Services Committee approved a proposal that would implement work requirements and $10-$15 monthly premiums for "able-bodied" Medicaid enrollees. Failure to meet these requirements within a 60-day grace period would lock enrollees out of coverage for one year, although the committee chair, who introduced the proposal, signaled a willingness to negotiate the duration of the lockout. If the proposal passes out of the House, it would also require Senate and federal approval to be enacted. The Trump Administration's March 14 letter to governors suggests that HHS might be open to such a proposal, although the parameters of the Administration's position have not yet been articulated.

Iowa: Governor Touts Medicaid Managed Care Successes, Hospital Association and Democratic Lawmakers Dispute Governor's Data

According to a press release issued by Governor Terry Branstad (R), the State's Medicaid managed care program has reduced hospital admissions by 54%, improved care coordination and case management for Medicaid enrollees with "extremely complex medical needs," and saved $110 million and $232 million in FY 2017 and FY 2018, respectively. The Iowa Hospital Association disputed the 54% reduction in hospitalizations, saying that the decline is closer to 4%. Democratic lawmakers also noted that the cost savings cited by the Governor do not include spending on risk corridor payments recently approved to help offset insurer losses.

New York: Budget Authorizes State to Cut Prescription Drug Costs

Provisions established in the State's FY 2017–2018 budget will cap Medicaid prescription drug spending growth and authorize the New York State Department of Health to seek supplemental rebates and take other actions to decrease drug costs. The enacted budget also allocates additional resources to the State's Medicaid program for essential health services.

Texas: House Passes Budget With Medicaid Cuts, Will Conference With Senate Version This Week

The House passed a $218 billion biennial budget for 2018-2019 that reduces total funding to the State's Medicaid program by $1.4 billion (a reduction of $300 million in State funds), bringing total State and federal Medicaid spending to $63.2 billion. The budget assumes the State will be able to save $1.1 billion in State funding through "cost containment and increased federal flexibility." The budget also partially restores therapy services for disabled children using $43 million from a fund offering incentives to businesses controlled by the Governor's office. Lawmakers will now reconcile the House and Senate budgets, the latter of which also includes cuts to Medicaid.

STATE MEDICAID EXPANSION UPDATES:

North Carolina: House Republicans Introduce Medicaid Expansion Legislation

Republican lawmakers filed legislation to expand Medicaid and primarily fund the expansion through an assessment on hospitals. The legislation includes annual premiums equal to 2% of household income, and work requirements. Governor Roy Cooper's (D) Medicaid expansion plan remains on hold following a federal lawsuit filed by Republican State lawmakers.

Virginia: Legislature Rejects Medicaid Expansion Proposal

Citing rising Medicaid costs, the House rejected Governor Terry McAuliffe's (D) budget amendment which would have restored his authority to implement Medicaid expansion. Governor McAuliffe said he was "disappointed" in the outcome but is committed to continuing efforts to expand Medicaid in the State.

Wisconsin: State Would Have Saved $1 Billion by 2019 Had State Expanded Medicaid

A new analysis from the Wisconsin Legislative Fiscal Bureau commissioned by State Representative Peter Barca (D) estimates that the State would have saved $1 billion in healthcare costs for non-pregnant and non-disabled individuals by FY 2019 if it had fully expanded Medicaid to 138% of FPL in 2014. Currently, adults with incomes up to 100% FPL are eligible for Medicaid in Wisconsin.

OTHER FEDERAL AND STATE HEALTH REFORM NEWS:

Cross-State Insurance Sales May Not Improve Plan Affordability or Consumer Choice

Permitting health insurers to sell insurance products across state lines may not lower premiums or increase consumer choice of plans, according to an analysis published by The Commonwealth Fund. New insurers have not entered the market in any of the six states (Georgia, Kentucky, Maine, Rhode Island, Washington, and Wyoming) that permit cross-state sales to date, likely due to challenges establishing competitive provider networks across states and developing multi-state regulatory frameworks.    

Massachusetts: State Task Force Makes Recommendations to Improve Care for Mothers and Babies Affected by Opioids

An interagency task force on newborns affected by opioid abuse issued its final plan that includes more than 60 recommendations for improving care for substance-exposed newborns. Recommendations include: incentivize providers to develop and test innovative prenatal substance abuse treatment services; require or encourage universal maternal screening for opioid abuse; and create a public awareness campaign. Areas for improvement in care coordination include access to effective treatment and services, education for patients and families, and practices for screening, assessing and reporting newborns affected by opioids. The task force, which includes the heads of several State healthcare agencies, was established and charged with developing the plan in Massachusetts's FY 2017 budget. A second interagency team will now receive funding from the federal Substance Abuse and Mental Health Service Administration to develop strategies to implement the recommendations.