Manatt on Health Reform: Weekly Highlights

CMS proposes a new rule to modernize Medicaid and CHIP managed care; the Florida saga continues with CMS proposing to extend—and reduce—LIP funding; and California's Marketplace approves a co-pay cap on specialty drugs.

FEDERAL NEWS:

CMS Proposes New Rule for Medicaid and CHIP Managed Care Plans

CMS released the first major update to Medicaid and CHIP managed care rules in more than a decade this week. The proposed rule focuses on aligning Medicaid managed care and CHIP with other forms of insurance coverage, including private coverage and Medicare Advantage; allows states to require participation in information technology reform such as health information exchanges; establishes a quality ratings requirement; and emphasizes consumer protections including new network adequacy provisions. The rule also requires plans to spend at least 85% of their revenue on medical care beginning in 2017, a medical loss ratio similar to that required of Marketplace plans but with one key difference—Medicaid managed care plans are not required to rebate the difference to consumers. The deadline to submit comments is July 27, 2015.

Senate Republicans Offer King v. Burwell Contingency Bill

Thirty-one senators, including Majority Leader McConnell (R), have signed onto a King v. Burwell contingency bill that would extend subsidies through September 2017 for enrollees in the Federally-facilitated Marketplace in the event of a Supreme Court ruling for the plaintiffs, reports Politico. The bill also would repeal the ACA’s individual mandate, employer mandate, and insurance coverage requirements. Meanwhile, Republican members of the House are developing a plan independent of the Senate, which is likely not to offer an extension; and Congressional Democrats are expected to offer a one-page legislative solution that eliminates the four words at issue in the litigation (“established by the State”) and thereby restores subsidies to residents of all states.

High Plan Satisfaction Reported Among Marketplace Enrollees

Nearly three-quarters of Marketplace enrollees rate their coverage as excellent or good, according to a report by The Kaiser Family Foundation, and the majority of enrollees are "very" or "somewhat" satisfied with specific features of their plan, including: provider and hospital availability, out-of-pocket expenses for doctor visits, prescription drugs, annual deductible, and monthly premiums. Despite the high marks overall, the survey revealed some affordability concerns. While 57% of those in ACA-compliant plans feel financially protected by their insurance, nearly four in ten feel vulnerable to high medical bills. Almost half of those with both ACA-compliant and non-compliant plans say it is very or somewhat difficult for them to afford their monthly health insurance premium.

MEDICAID REFORM AND EXPANSION NEWS:

Alabama: Senate Passes Major Medicaid LTC Reforms Estimated To Save $1.5 Billion within 10 Years

The Alabama Senate and the House Health Committee have passed a bill aimed at reining in the rising cost of care for Medicaid beneficiaries in nursing homes and long-term care facilities. The bill proposes organizing nursing home and long-term care providers into managed care networks called Integrated Care Networks (ICNs), which will loosely resemble the framework of the State's Regional Care Organizations. Under the bill, nursing homes and long-term care facilities would provide care at a capitated rate and the proportion of long-term care provided through home-based care versus in nursing homes would increase from 25% to 50%. Supporters claim that the State will save $1.5 billion within ten years if the ICNs are established by October 1st, 2018. The bill must be passed by the full House to be sent to the governor.

New Hampshire: Hospitals See Reduced Uninsured Visits after Medicaid Expansion

Nine months after the launch of New Hampshire’s Medicaid expansion, emergency room visits from uninsured patients has declined by 22% (compared to a 17% decline the year before expansion) while uninsured hospital inpatient and outpatient admissions declined by 27% and 15% respectively, reports the New Hampshire Hospital Association. The Association credits the New Hampshire Health Protection Program (NHHPP) for the developments, stating, “These are positive trends, which show the NHHPP is working to bend the health care cost curve, reduce cost shifting to private health insurance and eliminate the so-called ‘hidden tax’ on health care.” Just over 39,000 individuals had enrolled in NHHPP through April.

MARKETPLACE UPDATES:

California: Marketplace Board Approves Co-Pay Cap on Specialty Drugs

The Covered California Board approved a co-pay cap for high-cost, specialty drugs that will limit out-of-pocket expenses after any deductible to $150-$250 per month, per prescription for silver, gold and platinum plans and to $500 per month, per prescription for bronze plans. Covered California is the first Marketplace to implement this type of policy, which will result in premium increases of less than 1% across all plans in the first year according to a Marketplace spokesman. Insurance Commissioner Dave Jones released a statement in support of the specialty drug cap; he noted, however, that he was disappointed that the Board did not cap the bronze plans at $300 as requested and cautioned that prescription drug coverage would be “unaffordable” for bronze plan holders.

Colorado: Marketplace Approves Fee Increases

Connect for Health Colorado’s Board unanimously approved an insurer assessment fee increase from 1.4% to 3.5% and a broad assessment fee increase on plans both on and off the Marketplace from $1.25 to $1.80 per member per month. With the fee increases, which are meant to cover operational, not capital costs, the Marketplace’s total revenue is projected to be approximately $40 million in fiscal year 2015-2016.

South Dakota: Insurers' Proposed Rate Increases for 2016 Vary Considerably

Insurers selling individual plans on and off South Dakota’s Federally-facilitated Marketplace (FFM) submitted proposed rates for 2016, with rate increases ranging from the low teens to 43%, as reported by The Associated Press. Two of the three carriers that offer plans on the FFM reported requested rate increases in the low teens. Wellmark Blue Cross Blue Shield, the State's largest private insurer that does not participate in the FFM, proposed a rate increase of 43% for its 14,000 members with individual ACA-compliant plans, attributing the increase to large medical claims, high prescription drug expenses and members cancelling their plans after costly medical procedures.

OTHER STATE HEALTH NEWS:

Florida: CMS Proposes Extended but Reduced LIP Funding

CMS announced a preliminary decision to support Florida’s Low-Income Pool through a “phased-in approach,” with federal, state and local program funds providing $1 billion for the upcoming fiscal year (half of what Florida received this past year) and $600 million for the next and possibly subsequent fiscal years. CMS explained in a letter to the State that the first phase reduces the pool to its pre-2014 level while the second phase is intended to pay for the uncompensated care costs of those who would not be covered by Medicaid expansion. This is a preliminary decision which will be finalized after reviewing the State’s LIP funding amendment request; CMS noted in the letter that the amendment posted for public comment falls short of the three principles CMS has said it will consider in its renewal decision. CMS released this preliminary funding determination to inform the State’s special session, during which the Legislature will seek to finalize a State budget.

North Carolina: Secretary Announces New State Medicaid Director

The Secretary of the North Carolina Department of Health and Human Services announced that Dave Richard, deputy secretary of Behavioral Health and Developmental Disabilities Services, will replace current Medicaid director, Robin Cummings, who is stepping down to become the chancellor of the University of North Carolina-Pembroke. Since joining DHHS in his current position, Richard has been directly involved in oversight of the Local Management Entities and Managed Care Organizations system, which handles the State’s managed care delivery system.

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