Manatt on Health Reform: Weekly Highlights

Funding for Arkansas' Medicaid expansion hangs in limbo; Tennessee's House Speaker appoints Medicaid reform task force in light of public groundswell; and CMS delays requirement for State-based SHOP online enrollment.

STATE MEDICAID EXPANSION AND REFORM ACTIVITY:

Arkansas: Medicaid Expansion Funding in Limbo

A political maneuver to secure funding for "Arkansas Works," Governor Asa Hutchinson's (R) plan to extend and reform the State's Medicaid expansion, is underway after the appropriation bill failed to receive the three-quarters majority vote required for passage. The Joint Budget Committee has approved an amendment that would technically end the program in December 2016; however, according to local media, the bill as amended is expected to pass the Senate and House, and then head to the Governor who has pledged to use a line-item veto to remove the provision, effectively preserving the program's funding. The Governor's veto can be upheld by a simple majority vote. Votes in the Senate and House are expected over the next two days.

Maine: State House and Senate Approve Medicaid Expansion for Sixth Time

Both houses of the State Legislature approved Medicaid expansion for the sixth time last week, but not by sufficient margins to overturn Governor Paul LePage's (R) anticipated veto. The bill requires a concurrence vote from the Senate before being sent to Governor LePage's desk. The current proposal would cover individuals up to 100% of FPL through regular MaineCare (Medicaid) and provide subsidies for individuals between 100% and 138% of FPL to purchase qualified health plans on the Marketplace. The non-partisan legislative fiscal office estimated that approximately 80,000 adults would become eligible for coverage. Maine previously covered some childless adults up to 100% of FPL, but dropped this coverage in 2014, the year of Governor LePage's most recent Medicaid expansion veto.

Ohio: Draft Medicaid Waiver Released Requiring Contributions to the "Buckeye Account"

The Ohio Department of Medicaid released a draft 1115 waiver application describing the "Healthy Ohio Program," under which all adult Medicaid beneficiaries eligible for Medicaid through the Ohio Covered Families and Children program (the State's pre-expansion population) or the Medicaid expansion would enroll in a high-deductible Medicaid managed care plan and receive a health savings-like account (the "Buckeye Account"), into which the State would deposit $1,000. Enrollees (with the exception of pregnant women) would also be required to contribute the lesser of 2% of their income or $8.25 each month into their Buckeye Account, and would be disenrolled if they failed to do so after a 60-day grace period. Account funds would be used to pay the plan's copayments and deductible, and could be supplemented with incentive payments for meeting preventive care goals. Enrollees would be subject to an annual and lifetime benefit spending cap, which, if exceeded, triggers a transition to traditional managed care or fee-for-service coverage. Enrollees who become ineligible for the program due to an increase in income could apply their account balance to premiums or cost sharing for Marketplace or employer sponsored coverage.

Rhode Island: 20,000 to Be Enrolled in State's First Medicaid Accountable Care Entity

Rhode Island is launching its first "accountable care entity" for Medicaid enrollees as part of Governor Gina Raimondo's (D) Reinventing Medicaid initiative. The entity is a partnership between UnitedHealthcare and the newly formed Integra Community Care Network and will provide care to 20,000 individuals currently enrolled in the State's UnitedHealthcare Medicaid plan. As part of the entity's efforts to improve health outcomes and reduce the overall cost of care, the network of providers, which includes the State's largest primary care group, will offer services during evenings, weekends, and holidays as a way to reduce emergency room visits. In addition, community-based health workers and care managers will help coordinate care, and data provided by United to patients' care teams will enable providers to identify high-risk patients and gaps in treatment.

Tennessee: New Committee to Propose Medicaid Reforms

House Speaker Beth Harwell (R) appointed a new legislative task force to consider reforms to the State's Medicaid program after supporters of Insure Tennessee, Governor Bill Haslam's (R) Medicaid expansion plan, launched a media campaign criticizing the Speaker for refusing to bring Medicaid expansion to a floor vote. Harwell said the four-person task force will develop pilot projects based on "conservative ideas," including potentially health savings accounts and support for enrollees transitioning into the workforce, acknowledging that some proposals may require federal approval. The pilots will be phased in and the task force will also identify cost targets for pilot programs that, if surpassed, would halt further implementation of the pilots. State Democrats criticized the announcement as an attempt to deflect attention away from Medicaid expansion. Insure Tennessee was defeated in committee last year. The task force intends to have a report ready in June for proposed meetings with CMS.

Texas: Interim 1115 Waiver Extension Requested Amid Renewal Negotiations

Texas requested a 15-month extension to its 1115 waiver to maintain current funding levels for the Uncompensated Care and Delivery System Reform Incentive Payment (DSRIP) programs and to continue operations under the statewide managed care delivery model. If granted, $3.1 billion would be allocated to the Uncompensated Care and DSRIP programs for twelve months beginning October 1, 2016, and a prorated amount would be allocated for the additional three months. Texas would continue discussions with CMS about the requirements for a five-year renewal during the 15-month extension. The waiver is currently set to expire September 2016.

FEDERAL MEDICAID & HEALTH REFORM NEWS:

CMS Issues Guidance on Family Planning Coverage Under Medicaid

CMS sent a letter to all State Medicaid directors reiterating that providers may not be excluded from participating in Medicaid for reasons other than being unable to perform covered medical services or being unable to bill for those services. The letter further reminds States that any provider exclusion must be supported by evidence of the provider's failure to meet the State's "reasonable" standards. States also may not target providers for reasons unrelated to their ability to perform covered services or the adequacy of their billing practices. The letter notes that providing a full range of women's health services does not disqualify a provider from participating in Medicaid. Ten states have recently taken action or passed legislation to cut off Medicaid funding to Planned Parenthood. This is the first time CMS has issued a collective warning to all 50 State Medicaid agencies, according to the Washington Post.

Parties in ACA Contraceptive Case Propose Accommodations

The petitioners and government in Zubik v. Burwell submitted briefs describing how contraceptive coverage may be provided to employees without violating the employer's preference to exclude contraceptive coverage from their sponsored plans. The petitioners suggested a process whereby insurers would provide contraceptive coverage to individuals at no cost if the individual actively enrolled in a separate program, with different enrollment processes, insurance cards and contracts. The government argued that the existing accommodation process for employers already meets standards articulated by the Court.

Minorities and Low-Income Individuals See Sharpest Coverage Gains Under the ACA

Minorities accounted for two-thirds of the national increase in insured adults in 2014 and 70% of the increase in private insurance coverage, according to analysis of census data by the New York Times. Immigrants, including 1.2 million documented non-citizen residents, had the sharpest rise in coverage rates, and low-wage workers saw "historic increases." Native Americans and Hispanics, who had the lowest coverage rates in 2013, had the highest gains in 2014 among the racial groups: 6.1 and 7.2 percentage points, respectively. The analysis also found that people with high school degrees gained coverage at double the rate as college graduates and adults living in households headed by a sibling or a cousin—often a marker of economic distress—gained coverage at double the rate of those in "traditional" households. The analysis described coverage gains for low-income blacks as "muted," citing states' failure to expand Medicaid. The coverage rate increased three times as fast for low-income blacks in expansion states (by 6 percentage points) compared to those in non-expansion states (2 percentage points). The report's authors write that the coverage gains were enough to halt "the decades-long expansion of the gap between the haves and the have-nots in the American health insurance system." They also note that nearly 14% of those who gained coverage in 2014 are ineligible to vote because of their citizen status.

Uninsurance Rate Among Children Reduced by Two-Thirds, New Reports Find

The number of uninsured children (age 18 and under) declined by 66% between 1997 and 2015 (to 4.8%), and the number of "young children" (under age 5) declined by 75% (to 3.2%), according to two new reports from the Urban Institute. Those declines coincided with major eligibility expansions through CHIP, increased participation among children in Medicaid and CHIP, and the enactment of the ACA's coverage provisions. The reports also found that the uninsurance rate among children continued to fall during the Great Recession (December 2007 through June 2009), despite uninsurance rates for nonelderly adults increasing during that time. Medicaid and CHIP are cited in the report as offsetting the loss of private coverage for children as the economy worsened.

FEDERAL MARKETPLACE UPDATES:

CMS Extends SHOP Direct Enrollment Flexibility Until 2018

CMS is allowing State-based SHOPs that do not provide for enrollment through an online portal to continue using "direct enrollment" with insurers through 2018, provided the SHOP already utilizes such an approach. To continue using direct enrollment, a SHOP must submit a plan to CMS describing: how the employer will receive an eligibility determination from the SHOP; how eligible employees and dependents will enroll in a SHOP qualified health plan (QHP); and how the SHOP QHP issuer will conduct enrollment consistent with applicable rules and policies. For 2019 and beyond, State-based SHOPs should have online functionality in place, or they may elect to use the federal platform, utilize a shared or regional SHOP platform, or submit a 1332 waiver to waive online enrollment functionality requirements.

2016 Marketplace Premiums Lower Than Initial Issuer Filings Suggested

The average Marketplace premium increased 8% between 2015 and 2016 despite predictions of double-digit increases that were based on initial issuer rate filings, according to a new report from HHS's Office of the Assistant Secretary for Planning and Evaluation. The report and its accompanying blog post note that those predictions did not take into account public rate review, consumer shopping or premium tax credits, all of which sharply reduce premium costs. The 43% of enrollees who switched plans for 2016 saved an average of $42 per month, and the 85% of enrollees who received tax credits had an average net premium increase of $4 per month. The report comes as issuers begin submitting their initial 2017 qualified health plans rate filings. Some insurers may propose significant rate increases, according to Health Affairs, due to the 2016 expiration of the reinsurance program and insurers' claims that Marketplace enrollees are a higher-cost population than they had anticipated.

UnitedHealthcare to Offer 2017 Marketplace Coverage in "Handful" of States

UnitedHealthcare announced that it will exit all but a "handful" of ACA Marketplaces in 2017, citing high coverage costs and sicker-than-expected enrollees, according to comments made by CEO Stephen Hemsley on a quarterly earnings conference call. Hemsley said the company expects to lose $650 million from its Marketplace business in 2016. The national impact of United's exit on premiums is expected to be minimal, according to a report from the Kaiser Family Foundation released the day before the announcement; however, the report found it will have a significant impact on choice in some locations. According to the authors, United is one of only two insurers offering qualified health plans in 29% of the counties in which it operates.

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