Manatt on Health Reform: Weekly Highlights

CMS broadens federal match for Indian Health Services; South Dakota's Governor passes on Medicaid expansion for now nonetheless; Iowa receives an April 1 start date for Medicaid managed care; and HHS releases its final 2017 Marketplace rules.

Federal & State Medicaid Activity:

CMS Will Fully Fund Broader Set of Services for Medicaid-Eligible American Indians and Alaska Natives

CMS's new policy broadens the scope of services for which the federal government will fully cover the cost of care for Medicaid-eligible American Indians (AI) and Alaska Natives (AN), which may have significant implications in states with large AI/AN populations. Full federal funding was previously limited to services that IHS/Tribal facilities could provide directly, but CMS will now fully fund all services permitted under IHS rules that are also covered under a state's Medicaid plan, including transportation and long-term services and supports. Additionally, CMS will cover the cost of services provided by non-IHS/Tribal Medicaid providers who receive referrals from IHS/Tribal facilities pursuant to a written care coordination agreement, as long as the IHS/Tribal facility has a preexisting relationship with the patient and maintains responsibility for the patient's medical record and future care needs.

8.8 Million Uninsured Are Eligible for Medicaid or CHIP

More than a quarter of the nation's 32.3 million non-elderly uninsured individuals (8.8 million) are eligible for Medicaid or CHIP, and of the uninsured and eligible, 77% (6.8 million) live in states that have expanded or are moving forward with expanding Medicaid, according to the Kaiser Family Foundation. The percentage of uninsured individuals that are eligible for Medicaid is higher in expansion states (41%) versus non-expansion states (13%). Across all non-elderly uninsured and eligible individuals, half have incomes below poverty, just under 60% are people of color and three-quarters have part-time or full-time workers in the family.

Alabama: Medicaid Commissioner Says Senate Budget May Put 1115 Waiver Funding At Risk

State Medicaid Commissioner Stephanie Azar said that resources for implementing and monitoring Alabama's newly approved 1115 waiver could be at risk if the General Fund budget passed by the Senate last week, which includes no funding increases for Medicaid, is signed into law. The 1115 transformation waiver approved by CMS allows the State to transition its Medicaid program to managed care delivered through hospital- and provider-led entities called Regional Care Organizations but also requires the State to ensure the availability of adequate resources for outreach and enrollment, maintaining eligibility systems, compliance with cost sharing requirements, and financial reporting related to the waiver. The budget now goes to the House for consideration.

Iowa: Medicaid Managed Care Transition Approved for April 1

CMS approved Governor Terry Branstad's (R) plan to transition Iowa's Medicaid program to managed care but delayed implementation until April 1. This is the second delay of the Governor's plan, originally slated for January 1, due to concerns about the State's communication with beneficiaries and the provider networks of the managed care organizations (MCOs) hired to run the program. In a letter to Iowa's Medicaid director, CMS officials said the State and MCOs had taken significant steps to address both concerns. Governor Branstad praised CMS's decision, saying the program will increase access to care and lead to a more financially sustainable Medicaid program. The State will continue to administer the program until April and beneficiaries will have until the middle of June to switch MCOs for any reason.

South Dakota: Governor Pauses on Medicaid Expansion

Governor Dennis Daugaard (R) announced that he will not pursue Medicaid expansion during the remaining two weeks of the current legislative session, despite CMS's recently-released guidance that broadens the circumstances under which costs for care delivered to Medicaid-eligible Native Americans and Alaska Natives are eligible for 100% federal match. Governor Daugaard's administration had sought the policy change in order to free up State money to expand Medicaid to approximately 50,000 South Dakota residents. The Governor noted that he expects to take up expansion in the future, possibly through a special legislative session. The CMS announcement and the Governor's press conference follow passage of H.R. 1234 by the State's House of Representatives last week, which requires the Governor to seek explicit legislative approval for Medicaid expansion.

FEDERAL MARKETPLACE AND HEALTH REFORM NEWS:

HHS Releases Final Rule for Standard Plan Designs and Network Adequacy Requirements

The Department of Health and Human Services (HHS) finalized several benefit and payment regulatory changes for 2017, including: establishing voluntary standard cost sharing designs for bronze, silver, and gold plans; establishing a 1.5% fee in 2017—expected to increase to 3% over time—for states to lease HealthCare.gov eligibility and enrollment functionality; and allowing certain non-grandfathered insurance plans to remain non-compliant with ACA rules through the end of 2017. The final rule does not finalize a proposed federal default standard for time and distance network adequacy requirements. The rule also delays the requirement that insurers provide protections against excessive cost sharing for services rendered by out-of-network providers in in-network facilities until 2018. Finally, the open enrollment period for benefit years 2017 and 2018 has been finalized to run from November 1 to January 31, while for benefit years thereafter, open enrollment will run from November 1 to December 15.

CMS Announces New Special Enrollment Period Confirmation Process

A new Special Enrollment Confirmation Process is being implemented in HealthCare.gov states for some consumers applying for coverage or changing their health plan outside of open enrollment period. The requirements apply to special enrollment periods (SEPs) due to: loss of minimum essential coverage; permanent move; birth; adoption; placement for adoption; placement for foster care or child support or other court order; or marriage. Documentation verification will be implemented over the next several months. In the meantime, SEP applicants will be required to acknowledge that verification documents will be requested of them at a later date. In addition, SEP application questions will also have further explanations regarding what qualifies as a loss of minimum essential coverage or a permanent move. CMS has requested comments from consumer advocates, insurance companies and other stakeholders on the new process, which will help inform implementation. CMS recently eliminated six SEPs in an effort to stabilize the insurance risk pool in response to insurers' concerns over the eligibility of and utilization by SEP enrollees.

GAO Finds HealthCare.gov Fraud Risk Inadequately Managed

A Government Accountability Office (GAO) report found that CMS did not appropriately analyze available HealthCare.gov data to identify fraud vulnerabilities during the first open enrollment period in 2013. GAO reviewed HealthCare.gov's processes for determining and validating eligibility for enrollment and income-based subsidies and found that CMS did not have an effective process for resolving inconsistencies for individual Marketplace applicants. The report makes eight recommendations, including that CMS should: consider analyzing verification system outcomes; take steps to resolve inconsistencies in applicant data; and conduct a risk assessment for potential fraud in Marketplace applications. The Department of Health and Human Services concurred with the report's recommendations and noted that some are already being implemented, such as daily updates to call center representatives about inconsistent documentation.

OIG Report Examines HealthCare.gov's Post-Launch Recovery

CMS and its contractors were quick to take corrective actions following the failed launch of HealthCare.gov by adopting a "badgeless" culture wherein CMS staff and contractors worked as a team regardless of job title or employer, and by "ruthlessly" prioritizing achievable goals over less essential ones, according to a new Office of Inspector General (OIG) case study. OIG reviewed HealthCare.gov implementation and execution from the ACA's passage in 2010 through the second open enrollment period and found that the federal Marketplace faced a high risk of failure due to technical complexity, a fixed deadline, and a high degree of uncertainty about mission, scope, and funding. Despite these risks, CMS was able to recover HealthCare.gov to accommodate a high volume of consumers within two months of the launch. CMS concurred with the OIG's call for "continued progress" in the following areas: leadership, alignment, culture, simplification, integration, communication, execution, oversight, planning and learning.

20 Million Fewer Are Uninsured Since ACA Implementation

The number of uninsured fell by 20 million since the ACA was passed in 2010, lowering the percentage of people without health coverage from a high of 16% in 2010 to 9.1% at the end of 2015, according to data released by the Centers for Disease Control and Prevention's National Center for Health Statistics (NCHS). Both public and private coverage rates increased and the percentage of people ages 18-65 with private health coverage reached the highest it has been since 2005 (70%). People are also less frequently foregoing needed medical care due to cost; 6.9% went without care in 2010 compared to 4.6% in 2015, which is the lowest rate since 2000. NCHS also found that the percentage of people with a usual place to go for care has risen steadily between 2010 and 2015, from 85.4% to 87.8%.

STATE MARKETPLACE ACTIVITY:

Arkansas: Governor Concludes Transition to State-Based Marketplace for Individuals Is Unnecessary

Arkansas should not develop a State-Based Marketplace (SBM) for the individual market, Governor Asa Hutchinson (R) said last week. Arkansas currently operates a Small Business Health Options Program (SHOP) and had planned to launch an SBM for the individual market beginning in January 2017. Governor Hutchinson, who put plans for the SBM on hold last fall, said the Federally-facilitated Marketplace was working well for individuals and that proposed changes to Arkansas's Medicaid expansion, known as "Arkansas Works," would not require an SBM.

District of Columbia: OIG Finds Varying Internal Effectiveness in Ensuring Compliant QHP Enrollment

An Office of Inspector General (OIG) audit of the District of Columbia's State-based Marketplace found that certain measures for ensuring accurate eligibility determinations were ineffective during the first open enrollment period in 2013, including: maintaining identity-proofing documentation, verifying annual household income, verifying eligibility for minimum essential coverage, and maintaining application and eligibility verification data. The report notes that the internal control to verify an applicant's citizenship was effective. The District's Marketplace concurred with OIG's findings and detailed steps taken both before and after the audit to confirm that applicants are properly enrolled and documented.

STATE STAFFING UPDATES:

Nevada: New Insurance Commissioner Appointed

The Director of Nevada's Department and Industry announced Barbara Richardson as the Commissioner of the Division of Insurance. Richardson previously served as the Director of Operations and Fraud for the New Hampshire Insurance Department and now replaces Scott Kipper, who resigned in July 2015. Amy Parks, who has functioned as acting commissioner since Kipper's resignation, will return to her former position as Chief Insurance Counsel of the Division.

Washington: Exchange Board Permanently Appoints CEO

The Washington Health Benefit Exchange board unanimously approved Pam MacEwan as Chief Executive Officer. MacEwan took over as interim CEO in August 2015 after Richard Onizuka, the Exchange's first CEO, stepped down. MacEwan has been with the Exchange since 2012 and previously served as the Chief of Staff. Prior to the Exchange, MacEwan work for Group Health Cooperative.

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