Manatt on Health Reform: Weekly Highlights

This week, CMS proposes continued 90% funding for Medicaid eligibility and enrollment system development. Montana is on the verge of becoming the 29th state (plus D.C.) to expand Medicaid eligibility, and Florida Governor Rick Scott says he will sue the Obama Administration, escalating the ongoing negotiations over Low Income Pool funding and Medicaid expansion.

FEDERAL LEGISLATION & REGULATION:

CMS Proposes to Continue Medicaid Eligibility System Funding at 90% Match

CMS issued a proposed rule to allow Medicaid agencies to continue receiving an enhanced 90% federal match for the development of eligibility and enrollment systems and a 75% match for maintenance and operations. The enhanced match was previously set to expire on December 31, 2015. To receive the 90% match, states must conform to seven standards and conditions, which have been strengthened in the proposed rule, including a new standard on states to complete critical Modified Adjusted Gross Income (MAGI) based system functionality. The proposed rule allows for a 90% match for states implementing a Commercial Off the Shelf (COTS) system, an increase from the 75% match currently provided. Finally, the rule allows the Federal government to reduce funding to 50% immediately upon discovering a deficiency in the system, eliminating the current one-year waiting period.

President Obama Signs Medicare Access and CHIP Reauthorization Act into Law

The President signed the Medicare Access and CHIP Reauthorization Act (MACRA) into law on April 16, permanently repealing Medicare’s sustainable growth rate (SGR) formula and extending CHIP funding through 2017. MACRA replaces SGR with a five year period of stable annual updates of 0.5% to physician payments, at which point a new “Merit-Based Incentive Payment System” would go into effect. Upon signing, the President praised Congress’ bipartisanship and stated that he is proud to sign into law a bill which will protect coverage for millions of Americans. Read Manatt’s in-depth analysis of MACRA.

FEDERAL NEWS:

HHS Announces $67 Million in Grants for Navigators

HHS announced its 2015 funding opportunity to support Navigators in states with Federally-facilitated and State Partnership Marketplaces, expanding the project period from one to three years to create better stability and consistency for grantees. HHS is providing up to $67 million in the first year of the award. The opportunity is open to both existing HHS Navigator grant applicants and new individuals and entities. Applications are due by June 15, with grants slated for award on September 2.

Secretary Burwell Denies Request for Pregnancy Special Enrollment Period

In response to a letter sent by 36 Senators and the ranking member from the Senate Health, Education, Labor and Pensions Committee, Secretary Burwell stated that HHS will not provide a Special Enrollment Period (SEP) in the Federally-facilitated Marketplace to women who become pregnant. Currently, in Federal and State-Based Marketplaces, while the birth of a child provides mother and baby with a special enrollment period, a woman becoming pregnant does not. State-based Marketplaces have flexibility to define and establish SEPs, though none has done so for pregnancy to date. CMS declined to establish a pregnancy SEP in the Federally-facilitated Marketplace in regulations released on February 27, 2015, but reiterated the HHS Secretary’s flexibility to do so. The Secretary's letter, however, indicates that HHS does not have the legal authority to establish pregnancy as an exceptional circumstance SEP.

Vikki Wachino Named Top Medicaid Official at CMS

CMS announced Vikki Wachino as the new Director of CMS' Center for Medicaid and CHIP Services (CMCS), replacing Cindy Mann, who stepped down in January and has since joined Manatt. Wachino moves to the position from her role as the Acting Director. Previously, Wachino was the Director of the Children and Adult Health Programs Group, where she oversaw implementation of various Medicaid related Affordable Care Act provisions.

IRS Commissioner Says Agency Has No Contingency Plan for King v. Burwell

In one of many recent Congressional hearings in which members of Congress have pushed Obama administration leaders on contingency plans for King v. Burwell, IRS Commissioner John Koskinen testified before the Senate Homeland Security Committee that the IRS will respond to a Supreme Court decision in King v. Burwell only when it is rendered. Koskinen reiterated that the agency is not preparing for a decision it cannot predict and that the role of the IRS is to implement the policy developed by the Treasury Department, White House, Department of Health and Human Services, and Congress.

STATE MEDICAID ACTIVITY:

Arkansas: State Releases New Purchasing Standards for Private Option Plans

The Department of Human Services (DHS) released coverage year 2016 guidelines for purchasing qualified health plans (QHPs) used to cover enrollees in the State's Private Option Medicaid expansion program, intended to "ensure the continued cost-effectiveness of the program and competitiveness of the market." Prior to these guidelines, Private Option enrollees could select any silver-level QHP on the State's Marketplace that only offered Essential Health Benefits (EHB), regardless of the plan's premium cost. For upcoming coverage year 2016, the new purchasing standards will only allow Private Option members to enroll in EHB-only silver-level plans that are either the lowest cost, second lowest cost or within 10% of the second lowest cost plans in each service area. A DHS spokesman commented that State officials "wanted to first make sure there was enough competition in the market to support the system [and] once that was in place, price sensitivity became a broader part of our purchasing strategy."

Florida: Governor to Take Legal Action against CMS

Governor Rick Scott (R) announced his intent to sue the Obama administration after CMS state that it will take into account Florida’s Medicaid expansion status, along with adequate provider rates, in its decision whether to renew funding for the Low Income Pool (LIP) program. Governor Scott holds that CMS’ approach breaches the 2012 Supreme Court ruling that barred the federal government from mandating Medicaid expansion. This development intensifies the already contentious negotiations between Florida and CMS over the LIP funding, which reimburses hospitals that treat large numbers of poor and uninsured patients and is set to expire on June 30. Shortly after Governor Scott’s announcement, Florida’s Medicaid department filed an amendment request to extend LIP funding through June 2017. Republican leaders noted they believe it is unlikely that the State will approve a budget by the end of the legislative session due to the Medicaid expansion negotiations.

Montana: Medicaid Expansion Bill Primed to Become Law

Pending endorsement from Governor Steve Bullock (D), Montana is expected to become the 29th state to expand Medicaid eligibility, as the Senate passed the Medicaid expansion bill endorsed by the House over the weekend. The Governor is expected to sign the bill, which remains subject to federal approval due to certain program requirements, including monthly premiums of 2% of income for all enrollees and disenrollment of individuals with incomes above 100% of the federal poverty level who fail to pay premiums. The expansion is estimated to cover up to 45,000 Montanans.

New Jersey: Vendor to Process Remaining Medicaid Applications

The New Jersey Department of Human Services (DHS) has contracted with Xerox, its Medicaid health benefits coordinator, to address the final 9,000-12,000 unprocessed Medicaid applications remaining in the system, reports NJSpoptlight.com. The backlog, which grew to 55,000 applications in May 2014, has remained relatively steady in the last year, with counties reportedly overwhelmed by the volume of applications. DHS estimates Xerox could finish processing the backlog as early as the end of May.

OTHER STATE HEALTH REFORM UPDATES:

Arizona: Governor Signs Bill Prohibiting ACA Implementation

Less than one month after it passed the Arizona House of Representatives, Governor Doug Ducey (R) signed HR 2643 into law, barring the state from using any personnel or money to enforce, administer, or cooperate with the ACA. Because the new law specifically bans the state from funding or implementing a State-based Marketplace, there is concern that it limits Arizona's options should the Supreme Court find that subsidies cannot be made available to individuals in states using the Federally-facilitated Marketplace in King v. Burwell. Governor Ducey said the State will have a "plan of action" ready should the subsidies be struck down, reports the Arizona Republic.

Colorado: Marketplace Board Approves $5.1 Million to Fix Online Enrollment

Connect for Health Colorado’s Board unanimously approved up to $5.1 million in funding to fix technological issues that have hindered online enrollment, with an estimated future savings of $6 million within 15 months. Because issues related to online enrollment resulted in inflated spending on the marketplace's call center in 2015, the outlined technological improvements are expected to result in higher enrollment and lower call center costs. In addition, Connect for Health Colorado is reportedly considering raising the 1.4% plan fee to 3.5% in order to raise additional revenue, the same amount assessed in states participating in the Federally-facilitated Marketplace.

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