Manatt on Health Reform: Weekly Highlights

CMS targets short-term insurance plans in efforts to stabilize the individual market risk pool; Illinois mandates Medicaid coverage for opioid addiction treatment; and Michigan seeks to restructure State Medicaid financing.

FEDERAL MARKETPLACE NEWS:

CMS Taking Steps to Stabilize Individual Market Risk Pool

CMS announced several actions to stabilize the risk pool for individual health insurance coverage, including plans sold on HealthCare.gov, by enrolling more healthy people and discouraging potential gaming by enrollees and insurers. The actions include: limiting access to short-term limited duration plans, which are exempt from ACA reforms; improving the risk adjustment program to more accurately reflect enrollee costs; helping older consumers transition to Medicare; implementing a new confirmation process for special enrollment periods; and addressing data-matching issues. In conjunction with the announcement, the Departments of Labor, Treasury, and Health and Human Services jointly released a proposed rule that would implement some of these changes.

FEDERAL MEDICAID EXPANSION AND REFORM ACTIVITY:

CMS Reduces Federal Matching Rates for External Quality Review

CMS will reduce the federal matching rate for external quality review (EQR) activities from 75% to 50% for several plan types, according to CMS guidance. The EQR activities of prepaid inpatient health plans (PIHPs), prepaid ambulatory health plans (PAHPs), and certain primary care case management (PCCM) entities will receive the standard 50% administrative federal matching rate. Managed care organizations (MCOs) may still receive the enhanced matching rate if the EQR meets certain criteria and the State secures CMS approval of the EQR contract. A Medicaid and CHIP Managed Care final rule released in April extended annual EQR requirements to CHIP plans, PAHPs, and certain PCCM entities; MCOs and PIHPs were already subject to the requirements.

Medicaid Expansion Positively Impacts Safety Net Providers, Report Finds

States that expanded Medicaid report significant reductions in uncompensated care provided by safety net institutions, and budget savings for hospitals and community health clinics, according to a report by the Georgetown University Center for Children and Families. The report’s findings are based on telephone interviews with hospital systems and federally qualified health centers in three non-expansion states (Missouri, Tennessee, and Utah) and four expansion states (Arkansas, Colorado, Kentucky, and Nevada). While leadership in non-expansion states reported continued financial constraints, those in expansion states reported opening new clinics, buying equipment, hiring additional staff, and undertaking efforts to integrate and improve care delivery.

STATE MEDICAID EXPANSION AND REFORM NEWS:

Arkansas: DHS Director Pledges to Fix Medicaid Backlog

The Department of Human Services (DHS) will clear a backlog of more than 100,000 Medicaid cases—including outstanding eligibility determinations, renewals, and change of circumstance requests—by December 2016, according to DHS Director Cindy Gillespie. DHS will contract with outside firms to provide temporary caseworkers and reassign staff to focus on the most complex cases. The federal government will fund 75% of the effort, with the State responsible for the remaining $2.1 million in costs.

Michigan: Legislature Seeks to Restructure State Medicaid Financing

The Senate voted on a series of bills (S.B. 987-990) that would annul the Health Insurance Claims Assessment, or "HICA Tax," create a new version of the State’s Medicaid managed care Use Tax, and divert income tax revenue to support Medicaid managed care organizations (MCOs). The HICA Tax, a 0.75% tax on health insurance claims paid by individuals and businesses, currently helps finance the State’s share of Medicaid programs and supplements the existing Medicaid managed care Use Tax, which the federal government indicated will no longer be eligible for federal matching funds after December 31, 2016. The new bills would divert income tax revenue to the Medicaid Benefits Trust Fund to support Medicaid MCOs and establish a “Health Services Fund” supported by a new tax on MCOs for non-Medicaid health programs. The legislation has been referred to the House Committee on Insurance for review.

New Jersey: State Begins 1115 Waiver Renewal Process

The Division of Medical Assistance and Health Services (DMAHS) declared their intent to renew the Section 1115 Waiver under which the State administers its FamilyCare programs (Medicaid). Under the Waiver renewal, the State seeks to continue funding for its Delivery System Reform Incentive Payment (DSRIP) program, enhance value-based purchasing strategies, streamline eligibility and enrollment, increase care coordination for dual eligible individuals, and expand managed care to include long-term services and supports. The State will present the Waiver proposal during the Medical Assistance Advisory Council meeting on June 15 and at other stakeholder meetings during the month long public comment period. The current Waiver expires in June 2017; if approved, the new Waiver will be effective from July 2017 to June 2022.

Ohio: Home and Community-Based Services Transition Waiver Approved

Ohio received approval for its plan to provide people with disabilities more options for receiving home and community-based services (HCBS). CMS revised regulations around Medicaid HCBS State Plan benefits in 2014, requiring states to "maximize opportunities for individuals to have access to the benefits of community living and the opportunity to receive services in the most integrated setting." In accordance with CMS regulations, Ohio submitted a transition plan under which individuals receiving HCBS services will move from programs in institutional settings to day treatment, day care, and community-based jobs. Plan approval was a priority for Ohio, which stood to lose 60% of program funding if it failed to comply with CMS regulations by 2019.

FEDERAL AND STATE HEALTH REFORM UPDATES:

ACA Increased Coverage and Access to Care for Rural and Urban Populations Alike, Report Finds

Individuals living in rural areas experienced an 8 percentage point increase in coverage between 2012 and early 2015, similar to the coverage gains seen in urban and suburban areas, according to a new report from HHS's Office of the Assistant Secretary for Planning and Evaluation. However, the report notes that the overall coverage gain for rural individuals is “particularly striking” due to the disproportionate concentration of uninsured rural individuals living in states that have not expanded Medicaid: 65% of the rural nonelderly uninsured live in non-expansion states versus 51% of the nonelderly uninsured in urban areas. The report also found that the portion of rural individuals who reported being unable to afford medically necessary care decreased by 5.9 percentage points compared to 5.4 percentage points for urban individuals, though the latter saw greater gains in the report’s other access measures.

Illinois: Lawmakers Respond to Opioid Epidemic

The Legislature overrode Governor Bruce Rauner’s (R) partial veto to pass a bill requiring Medicaid to cover all Food and Drug Administration-approved, medication-assisted opioid and alcohol dependence treatments. The law, which is part of an effort to address the State’s opioid addiction crisis, also includes: a mandate that law enforcement agencies, fire departments and emergency medical service providers possess anti-overdose drugs; authorization for trained pharmacists to dispense the anti-overdose drug naloxone without a prescription; a directive aimed at requiring private insurance companies to cover anti-overdose medications; and the expansion of drug courts. The bill’s implementation is ongoing and impacts several State agencies.

New York: Legislation Mandates Coverage for Opioid Addiction Treatment

The Legislature introduced a package of bills that would mandate insurance coverage for overdose medication and eliminate pre-authorization requirements for opioid addiction treatment. The package, which is expected to pass the Legislature and be signed by Governor Andrew Cuomo (D), also increases emergency treatment options, requires hospitals to provide follow-up treatment upon discharge, and reduces prescription limits for addictive opioids from 30 to seven days. The legislation implements some of the recommendations issued by New York's Heroin and Opioid Task Force in its final report, which emphasized expanding access to treatment programs and prescriber education.

North Carolina: Antitrust Lawsuit Challenges State’s Largest Health System’s Commercial Contracting Practices

The U.S. Department of Justice and the North Carolina Attorney General filed a civil antitrust lawsuit against North Carolina's largest health system, Carolinas HealthCare System (CHS), challenging its use of "steering restrictions" in contracting with commercial insurers. The complaint focuses on CHS's use of its dominant market position (it has a 50% inpatient market share in the Charlotte region) to secure favorable provisions in insurer contracts that reduce competition, such as barring insurers from offering tiered networks with competing hospitals in top tiers. According to Modern Healthcare, some experts believe the lawsuit may signal the beginning of a wave of steering-related regulation.

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