Manatt on Health Reform: Weekly Highlights

CMS targets Medicaid managed care pass-through payments; California proposes “California Qualified Health Plans” for the undocumented; and a new study finds out-of-pocket costs were reduced by nearly a third for Medicaid expansion enrollees.


CMS Further Clarifies Policy on Medicaid Pass-Through Payments

In an effort to phase out Medicaid managed care “pass-through” payments, CMS is aiming to prohibit states from increasing existing or adding new pass-through payments into Medicaid managed care contracts, according to a CMCS Bulletin. This announcement comes in addition to the phase-out of current pass-through payments described in the recent final Medicaid managed care rules, which provided 5-10 years for all pass-through payments to be transitioned into arrangements based on the delivery of services, utilization, and outcomes. States will now be required to submit detailed descriptions of existing pass-through payments so CMS can closely monitor the arrangements and ensure that capitation rates are actuarially sound and consistent with regulations. CMS will review whether pass-through payments are reasonable, do not exceed the maximum amount allowed and that they are not conditioned on the provider entering into or adhering to intergovernmental transfer agreements.

Medicaid Expansion Enrollees Report Increased Access and Reduced Costs, Study Finds

Medicaid expansion is associated with significant increases in outpatient and primary care utilization, improved self-reported health, and reduced emergency department use, according to a new study published by JAMA Internal Medicine. The study evaluated expansion’s impact on low-income adults in Kentucky and Arkansas compared to their counterparts in Texas, which did not expand Medicaid. While Kentucky enrolled the expansion population in managed care plans and Arkansas used private Marketplace plans (the “private option”), both states experienced comparable healthcare improvements, though Kentucky had higher diabetic glucose testing rates. Both states’ expansions were associated with a nearly 30% reduction in out-of-pocket spending, a significant increase in screenings and treatments for chronic diseases, and significant improvements in quality of care ratings. The authors, who based their findings on statistical analysis of survey results from nearly 9,000 respondents, note that Kentucky’s and Arkansas’s coverage expansions took more than one year to mature, suggesting that early evaluations of expansion likely underestimate its long-term impacts.

Medicaid Agencies Will Cover Mosquito Repellent to Combat Zika Transmissions

State officials in Texas, Louisiana, and Delaware have approved Medicaid coverage of insect repellant in response to increasing concerns over the Zika virus. In Texas, women between ages 10 and 45 years or who are pregnant are eligible; Louisiana extended coverage to pregnant women as well as men and women between ages 14 and 44 who are trying to conceive; and Delaware will cover over-the-counter mosquito repellants for Medicaid enrollees. CMS authorized a federal match for EPA-registered repellants when prescribed by a healthcare provider, among other Zika-related services, on June 1.

Ohio: New Statewide Multi-Payer Primary Care Program Incentivizes Value Over Volume

Governor John Kasich (R) announced the Ohio Comprehensive Primary Care (CPC) Program, which will increase patient access to patient-centered medical homes (PCMHs) by rewarding physicians participating in Medicaid and commercial insurance for joining PCMHs and providing high-value and high-quality—rather than high-volume—care. The multi-payer program, which is part of Ohio’s State Innovation Model Test grant, is a collaboration between the Ohio Department of Medicaid, the Governor's Office of Health Transformation, Ohio's Medicaid managed care organizations, and commercial healthcare payers. CPC physicians will receive incentive payments averaging approximately $4 per patient per month beginning in January 2017. Ohio's new initiative is closely aligned by design with the CMS' Comprehensive Primary Care Plus (CPC+) initiative, which will provide increased Medicare payments to selected primary care practices beginning in 2018.


CMS Implements Measures to End Marketplace Financial Assistance for Consumers Dually-Enrolled in Medicaid/CHIP

CMS announced a new process by which it will end advance payments of premium tax credits (APTCs) and cost-sharing reductions (CSRs) when a consumer is found to be dually enrolled in Marketplace coverage with APTCs/CSRs and Medicaid or CHIP. Beginning August 2016, dually-enrolled consumers will receive an initial notice indicating they may no longer be eligible for APTCs/CSRs because they have other minimum essential coverage. Individuals will be instructed to either update their Marketplace application to reflect that they are not dually enrolled or end their Marketplace coverage with APTCs/CSRs. If the dually-enrolled consumer fails to take these steps, CMS will send a second and final notice at least 30 days after the initial notice to notify the enrollee that the Marketplace will terminate APTCs/CSRs.

Excluded Services in Marketplace Plans Disproportionately Impact Women, Report Finds

A new study from The Commonwealth Fund has found that insurers often exclude health services for conditions that disproportionately affect women, despite ACA regulations intended to eliminate gender-based discrimination in insurance markets. The authors examined qualified health plans from 109 insurers across 16 states and identified six types of frequently excluded services: treatment of conditions resulting from non-covered services; maintenance therapy; genetic testing; fetal reduction surgery; treatment of self-inflicted conditions; and preventive services not covered by law. These exclusions disproportionately impact women for several reasons, including: women are underrepresented in the medical research insurers use to make coverage determinations; women are more likely to have a chronic health condition; and women often rely on genetic testing as a screening tool. In response to their findings, the authors suggest regulators prohibit variations within essential health benefits benchmark plans and require transparency in plan documents so that women better understand their coverage.

Two More CO-OPs Sue Federal Government Over Risk Adjustment Program

Two of the remaining seven ACA CO-OPs, Minuteman Health, which offers plans in Massachusetts and New Hampshire, and New Mexico’s Health Connections filed suits in federal court challenging the formula used to determine payments made under the ACA’s risk adjustment program. The CO-OPs argue that the current program, which is intended to mitigate adverse selection and stabilize premiums, favors larger insurers and does not include relevant factors contributing to premium differentials. Under the program, Minuteman is required to pay $16.7 million and New Mexico Health Connections is required to pay $14.5 million. The suits join a similar one filed in June by Maryland's Evergreen Health CO-OP.

California: Undocumented Immigrants Would Be Eligible to Purchase “CQHPs” on Marketplace Under Proposed 1332 Waiver

Covered California’s (the State-based Marketplace) draft 1332 waiver proposal would allow undocumented immigrants to purchase non-subsidized health insurance through a new option on the Marketplace called California Qualified Health Plans (CQHPs). CQHPs would be identical to Covered California’s qualified health plans, and issuers would be required to offer both types. Covered California estimates that 17,000 undocumented immigrants—less than 1% of the State’s individual market—would take up coverage through the plans. If the waiver is approved, open enrollment for the CQHPs will begin in November 2018 for coverage beginning January 1, 2019, and California will become the first state to allow undocumented residents to purchase coverage through the ACA’s Marketplaces with their own funds.


Colorado: Single Geographic Rating Area Would Limit Health Plan Availability, Report Finds

Consolidating Colorado's nine geographic rating areas into a single region could lead carriers to offer narrow network plans, withdraw plan offerings in high-cost areas, or exit the market altogether, according to a consultant’s report commissioned by the State Legislature and released by the Division of Insurance. The report, which studied whether a single geographic rating area would reduce statewide premium price disparities, recommends introducing a rating band to limit premium variation between regions instead of a single geographic rating area. Officials are seeking options for limiting the 36% price differential in per member per year premiums that now occurs across geographic rating areas.

Colorado: Budget Deficit Projected for Single-Payer Initiative

A Colorado Health Institute report projects that ColoradoCare, the single-payer initiative on the November 2016 ballot, could face revenue shortfalls of $253 million in its first year and $7.8 billion over 10 years as healthcare costs outpace program revenue generated by a 10% payroll tax increase. The ballot will permit State residents to vote to replace Connect for Health Colorado, the State-based Marketplace, with ColoradoCare, a universal healthcare coverage initiative.

Connecticut: Marketplace and Medicaid Enroll 41% of Individuals Losing Medicaid Coverage

Access Health CT (the State-based Marketplace) and the Department of Social Services enrolled 41% of the approximately 13,800 individuals whose Medicaid coverage ended on July 31, 2016 after income eligibility requirements for Medicaid parents and relative caregivers were lowered. Roughly 2,100 of those individuals enrolled in a Markeptlace plan and nearly 3,500 were re-determined eligible for Medicaid. Last year, the State approved a two-year budget that reduced income eligibility requirements for Medicaid, from 201% of FPL to 155% of FPL.

Illinois: State Improves Birth Control Coverage

Governor Bruce Rauner (R) signed legislation (HB 5576) guaranteeing birth control coverage without cost-sharing for all FDA-approved contraceptive drugs, devices, and supplies for women in State-regulated individual and group health plans. While the law does not require all FDA-approved methods to be included on plans’ formularies, it does require coverage of FDA-approved non-formulary methods when prescribed by a provider based on medical necessity. The new law also permits women to obtain up to 12 months of contraception at one time and ensures coverage of patient education and counseling on contraception, contraceptive follow-up services and voluntary sterilization, all with no cost-sharing. The law is scheduled to take effect on January 1.

New York: Department of Financial Services Approves 2017 Rates

The Department of Financial Services (DFS) has approved rate increases for 2017 individual and small group plans ranging from 8.3% on average in the small group market to 16.6% on average in the individual market. According to DFS, rate increases were primarily driven by increasing medical and drug costs, as well as the end of the federal reinsurance program, which provided additional funding to insurers whose enrollees incurred high claims costs. DFS emphasized that more than half of NY State of Health (the State-based Marketplace) purchasers qualify for premium tax credits, offering some protection from the increased rates, and that the increases will not affect members enrolled in New York’s Basic Health Plan, which will continue to offer premiums of $20 or less for those who qualify.


New Hampshire: State Appoints Interim Director After Medicaid Director’s Departure

Katie Dunn, New Hampshire's Medicaid Director, is leaving the position to be a Senior Program Director at the National Academy for State Health Policy. Dunn's deputy, Deborah Fournier, will serve as Interim Director while the State decides on a permanent replacement. Dunn has held the position since 2008 and has overseen numerous initiatives including Medicaid expansion.



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