Manatt on Health Reform: Weekly Highlights

Wrapping up the 2015 enrollment period, and State-based Marketplaces in seven states have announced special enrollment periods (SEPs) for people who were uninsured in 2014 and discover they owe a “shared responsibility payment” when they file their taxes. In the states, Medicaid makes news in governors’ budgets. Amidst a new round of Federal guidance, CMS announced dates for next year’s open enrollment period: November 1, 2015 - January 31, 2016.

FEDERAL GUIDANCE and Seven State-Based Marketplaces Establish Special Enrollment Periods for Tax Season and State-based Marketplaces in California, Connecticut, Kentucky, Minnesota, New York, Vermont, and Washington have announced special enrollment periods (SEPs) for individuals who owe a tax penalty, or “shared responsibility payment,” for being uninsured in 2014 when they file their 2014 taxes. While the SEPs do not impact individuals’ penalties this year, they will permit enrollment in 2015 coverage, thereby minimizing a tax penalty next year.

Tax Season Special Enrollment Periods*

Marketplace Special Enrollment Period March 15-April 30
California February 23-April 30
Connecticut TBD
Kentucky March 2 – April 30
Minnesota March 1- April 30
New York March 1- April 30
Vermont Within 60 days of discovering fee, but no later than May 31
Washington No later than April 17

* As of 2/24/15

Uninsurance Rate Lowest in Seven Years; Medicaid/CHIP Enrollment Continues to Grow

The percentage of Americans without health insurance has dropped to its lowest level in seven years, finds an extensive new Gallup survey that reports a drop of 3.5 percentage points in the share of Americans without health insurance from 2013 to 2014. Gallup says the trend could continue, since 55% of uninsured respondents plan to get coverage in 2015 rather than pay escalating health penalties. Additionally, total enrollment in Medicaid and CHIP has increased by more than 10.8 million since initial Marketplace open enrollment began in October 2013, including 547,000 people who signed up between November and December 2014, finds CMS' latest Medicaid/CHIP monthly enrollment report. Based on data as of December 2014, this reflects an 18.6% increase in average monthly enrollments compared to July – September 2013. States expanding their Medicaid programs saw a 27% enrollment increase, while those not expanding saw only a 7% increase.

Marketplace Enrollees Filing Taxes Owe an Average of $530 to Reconcile Tax Credits, Preliminary Analysis Indicates

Just over half of Federal and state Marketplace enrollees who have filed tax returns this year owe a portion of their advanced premium tax credits back, according to preliminary analysis from H&R Block. On average, filers owe $530, decreasing tax refunds by approximately 17%. Analysis indicates that many clients underestimated their household income when originally applying for the APTC, leading to the required payment during tax season. Additionally, data indicate that taxpayers who were uninsured for all or part of 2014 owe an average $172 penalty, and are more likely to claim an exemption on the tax return than file for an exemption with a Marketplace.

800,000 Marketplace Enrollees Receive Incorrect Tax Forms

CMS announced that 800,000 enrollees covered through the Federally-facilitated Marketplace have received 1095-A tax forms with incorrect information, representing 20% of all form recipients to date. The administration is urging this population to refrain from filing taxes until they obtain a corrected form, which can be expected in early March. The Treasury Department is currently considering an approach to assist the 5% of those who have already used inaccurate forms to file their taxes.

King v. Burwell: States Consider Options, Plaintiff Submits Final Brief

Republican Governors in Louisiana, Mississippi, Nebraska, South Carolina and Wisconsin announced they will not create State-based Marketplaces (SBMs) to maintain healthcare subsidies for their constituents if the Supreme Court strikes down their legality on the Federal Marketplace in the upcoming King v. Burwell case, according to a Reuters survey. Furthermore, officials in Georgia, Missouri, Montana and Tennessee noted that their Republican-dominated Legislatures could make establishing a SBM near impossible. Meanwhile, the plaintiffs have submitted their final brief, arguing that HHS intentionally differentiated between state and Federal Marketplaces when deciding which entity could legally offer subsidies. The Supreme Court will begin hearing opening arguments for the case on March 4th.


Final 2016 Benefit and Payment Parameters Released, Open Enrollment Announced

CMS released its final payment parameters and provisions for health insurance Exchanges for the 2016 plan year and with it announced the 2016 open enrollment period dates: November 1, 2015 - January 31, 2016. HHS did not, as was proposed in the draft payment notice, establish an optional re-enrollment process in which Federally-facilitated Marketplace (FFM) enrollees could choose to be moved to the lowest cost plan by default each year, regardless of insurance carrier. Beginning with the 2017 plan year, issuers will need to have their drug formularies approved by committees of clinicians that will consider treatment guidelines, scientific evidence, and cost.

CMS Releases Guidance for Federal Marketplace Insurers

In its final letter, CMS provided operational and technical guidance to insurers seeking to offer qualified health plans (QHPs) in 2016 and announced a May 15 deadline for submitting QHP certification applications and 2016 individual market rates. However, Federally-facilitated Marketplace (FFM) states that are performing plan management functions may set later dates for QHP certification applications. The letter also outlines HSS’ review process to ensure that QHPs do not discriminate against individuals with chronic conditions.

CMS Releases Basic Health Program 2016 Funding Methodology Final Notice

CMS outlined the methodology used to determine federal payments made in 2016 to states that establish a Basic Health Program (BHP) in a final rule issued last week. The BHP, implemented by Minnesota and New York to date, enables states to provide an alternative to Marketplace coverage for low-income consumers (generally between 133% and 200% FPL) who do not qualify for Medicaid, CHIP, or other minimum essential coverage. The 2016 methodology is based on that of 2015, though states now have the option to use 2015 or 2016 Marketplace premiums, or another proposed methodology, to calculate BHP payment rates. The regulations are effective on January 1, 2016.


Illinois: Governor Proposes $1.5 Billion in Cuts from Medicaid Agency

Newly-elected Governor Bruce Rauner (R) proposed nearly $1.5 billion in funding cuts for the State's Medicaid program in his budget for fiscal year 2016, including the reduction or elimination of non-mandatory Medicaid services for adults such as dental care and podiatry. As reported by The New York Times, the proposed budget is expected to face significant opposition from the Democratic-led legislature.

Massachusetts: Legislature Approves Budget-Balancing Bill, Denies Governor’s Request for Authority to Cut Medicaid Benefits

The State Legislature approved H.52, Governor Charlie Baker’s (R) plan to balance the $738 million budget gap his administration faces after taking office in January. The bill included $168 million in cuts to MassHealth targeted to spending not mandated under the ACA, administrative costs and unspecified changes to benefits, reports The Daily News of Newburyport. Governor Baker also sought broad authority to restructure MassHealth, including to permit cuts to state-funded Medicaid programs aimed at people with disabilities, a provision Legislators removed after advocate opposition.

Texas: Governor's 2016-2017 Budget Proposal Affirms Stance Against Medicaid Expansion

Following speculation in late 2014 that Governor Greg Abbott (R) was exploring a Texas-specific solution to Medicaid expansion, the Governor released his 2016-2017 budget proposal affirming his stance against Medicaid expansion, stating: "Medicaid is a broken, bankrupt system . . . states need greater flexibility in providing for the health care needs of their residents, not more federal mandates." The budget proposal includes an additional $50 million in funding for the State's women's health programs; $40 million to the Department of Family and Protective Services to increase access to prevention and community-based programs; and, $21 million to support service member and veterans' mental health needs.


Iowa: Governor Releases RFP for Medicaid Managed Care Contracts

The Iowa Department of Human Services (DHS) released a Request for Proposal (RFP) for two to four statewide managed care contracts as part of Governor Branstad’s (R) Medicaid Modernization initiative. According to the RFP, the new program will cover the majority of Iowa’s Medicaid and CHIP enrollees as well as the Department of Public Health’s substance abuse services program. Proposals are due May 8. DHS anticipates announcing awardees at the end of July and starting the program January 1, 2016.

Wyoming: Legislature Again Rejects Medicaid Expansion

An amendment to expand Medicaid in the State’s Appropriations Bill, proposed by Representative Dan Zwonitzer (R), failed in a 41 to 15 vote. This amendment was generally considered to be a final attempt to expand Medicaid in this legislative session. Previously, the Wyoming Senate voted to reject Medicaid expansion and the House sponsor of the same legislation withdrew the bill in the House.


Connecticut: Jim Wadleigh Named CEO of Marketplace

Jim Wadleigh was named CEO of Access Health CT after serving as the acting CEO since September, when the Marketplace's first CEO, Kevin Counihan, was selected to lead the Federal Marketplace at CMS’ Center for Consumer Information and Insurance Oversight. Wadleigh has been with Access Health CT since 2012, initially as the Chief Information Officer, and previously worked at CIGNA and Pratt & Whitney Aircraft.

Illinois: Marketplace Executive Director Resigns

Jennifer Koehler announced her resignation as Executive Director of Get Covered Illinois. Koehler joined the Marketplace in January 2013 and guided it through its first two open enrollment periods. Koehler will continue to provide assistance to the Marketplace through February 22; a successor has not yet been publicly announced.



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