Manatt on Health Reform: Weekly Highlights

CMS encourages access to Medicaid for eligible inmates transitioning to their communities, while New York seeks to extend Medicaid coverage to eligible inmates in the days prior to release; Pennsylvania seeks to shift $6 billion towards value-based payments in new MCO contracts; and HealthCare.gov will begin assigning star ratings to plans.

FEDERAL & STATE MEDICAID REFORM NEWS:

CMS Clarifies Requirements for Managed Care Reimbursement to FQHCs and RHCs

CMS released guidance clarifying the requirements for states to implement alternative payment methodologies (APMs) under which Medicaid and CHIP managed care entities directly reimburse federally-qualified health centers (FQHCs) and rural health clinics (RHCs) the full amounts payable to them under the prospective payment system (PPS). As is the case for any APM, the APM can only be implemented with respect to an FQHC or RHC if the FQHC or RHC agrees, and if the payments that the FQHC or RHC receives are equal to the full PPS rate. CMS clarifies that any states that implement such arrangements must describe them in their State Plans, and is requiring states that have already implemented such arrangements without describing them to submit updated State Plan Amendments by July 1, 2017. Finally, CMS is requiring all managed care contracts starting on or after July 1, 2017 to include access to at least one FQHC, one RHC, and one freestanding birth center, when available.

CMS Guidance Encourages States to Facilitate Access to Medicaid for Justice-Involved Populations

CMS released guidance aimed at ensuring states facilitate Medicaid access for justice-involved populations prior to and after a stay in correctional institutions. For the purposes of claiming Federal Financial Participation (FFP), the guidance clarifies the regulatory definition of an "inmate of a public institution" as an individual who is in custody and held involuntarily in a public institution operated by law enforcement authorities. CMS further clarifies that the State may claim FFP for justice-involved populations: on parole or probation; residing in a halfway house, under certain conditions; or on home confinement. States may not receive FFP for individuals residing in Residential Reentry Centers or in facilities for treatment of mental health and substance abuse disorders furnished exclusively to inmates. Reinforcing long-standing CMS policy, the sub-regulatory guidance encourages states to suspend, rather than terminate, Medicaid enrollees entering incarceration to ensure better continuity of coverage upon release. Correctional institutions are encouraged to prepare inmates by assisting them in submitting an application for Medicaid prior to release.

New York: Governor Seeks Medicaid Coverage for Incarcerated Individuals Re-Entering the Community

Governor Andrew Cuomo (D) announced that New York State is seeking federal approval to use Medicaid funding to coordinate medical, pharmaceutical and home health services for "incarcerated individuals with serious behavioral and physical health conditions" in the 30 days prior to their release. If the waiver is approved, New York will be the first state to provide transitional health coverage as individuals re-enter society. The Governor noted that the State expects to see cost-savings in the future, as improved continuity of care will lead to reduced recidivism and fewer emergency admissions from relapses in chronic conditions. The proposal was included in the State's fiscal year 2016-2017 budget.

Oklahoma: Medicaid Board Cuts Mental Health Services and Provider Rates

The Oklahoma Health Care Authority (OHCA) board has cut reimbursement rates for behavioral health professionals as well as the amount of mental health therapy Medicaid enrollees can receive. Independent psychologist rates will be cut by 10%, residential psychiatric service rates by 15%, and private therapist rates by 30%, among other rate reductions. Medicaid behavioral health services are administered by the Oklahoma Department of Mental Health and Substance Abuse Services, which is separate from the OHCA, though the OHCA board votes on Medicaid-related cuts proposed by the mental health department. OHCA has separately proposed the "Medicaid Rebalancing Act of 2020" as an alternative to its proposal to cut other provider rates by 25% beginning June 1.

Pennsylvania: New Managed Care Contracts Will Require Value-Based Contracting

The Department of Human Services (DHS) will negotiate three-year contracts with eight managed care organizations (MCOs) requiring gradual increases in their share of value-based or outcome-based provider contracts to 30% of the medical funds received from DHS. The new contracts, which the Department describes as the most significant change in the Medicaid program since its move to managed care 18 years ago, are expected to shift $6 billion from fee-for-service payments to accountable care organizations, bundled payments, patient-centered medical homes, and other performance-based arrangements. MCOs will still be required to develop integrated care plans with behavioral health MCOs, and medical and behavioral MCOs will share an opportunity to earn performance payment incentives for improving targeted beneficiary population health outcomes.

Texas: State Receives 1115 Waiver Extension Amid Ongoing Negotiations

CMS approved Texas's request for a 15-month extension of the State's 1115 waiver, maintaining current funding levels for the Uncompensated Care and Delivery System Reform Incentive Payment (DSRIP) programs through December 2017. While Texas continues to negotiate for a five-year renewal, the State will receive $3.1 billion for the Uncompensated Care and DSRIP programs for twelve months beginning October 1, 2016, and a prorated amount for the additional three months. If a waiver renewal agreement is not reached by the end of the extension, the uncompensated care pool will be reduced to cover the costs of uncompensated and charity care for low-income Texans "who are uninsured and cannot be covered through Medicaid or other insurance programs" while DSRIP funding will be phased down 25% each year beginning in 2018.

FEDERAL MARKETPLACE NEWS:

HealthCare.gov Will Display Standardized Plans and Quality Ratings

HealthCare.gov CEO Kevin Counihan announced two new plan selection tools for 2017 open enrollment: quality star ratings and display settings for new standardized plans—branded "Simple Choice" plans. According to the CMS blog post, the quality star rating initiative will pilot the use of a five-star scale to measure a plan's quality of healthcare services and enrollee satisfaction. Five states will feature these ratings for 2017 open enrollment: Michigan, Ohio, Pennsylvania, Virginia and Wisconsin. The blog also noted that "Simple Choice" plans will be prominently displayed for enrollees in all HealthCare.gov states with clear visual cues that allow consumers to compare plans with a uniform set of features, such as deductibles, out-of-pocket limits and co-payments. The Simple Choice feature is intended to work in conjunction with the star rating system and currently available features in "plan compare," including physician look-up and prescription drug search.

Marketplace and ESI Enrollees Report Equal Access and Affordability

Adult Marketplace enrollees with low and moderate incomes have equal measures of healthcare access and affordability compared to adults with employer-sponsored insurance (ESI) or off-Marketplace individual coverage, according to a report from the Urban Institute that compares Marketplace and Medicaid enrollees to each other, the uninsured, and those with other sources of coverage. For example, compared to ESI or other individual market enrollees, Marketplace enrollees reported no more difficulty securing an appointment or finding a new doctor and were no more likely to report problems paying medical bills or having high out-of-pocket costs. The report, which analyzed survey data from non-elderly adults with family incomes below 400% of FPL, also found that Marketplace enrollees are "generally as satisfied" with their plans as those with ESI and off-Marketplace individual coverage, though ESI enrollees reported the highest satisfaction among the three groups. For example, Marketplace enrollees are as satisfied with their premiums as those with ESI, though a higher rate of Marketplace enrollees reported being dissatisfied with their choice of providers (14% versus 6%). More Marketplace enrollees were also dissatisfied with their plans' protection against high medical bills (25%) compared to ESI enrollees (18%). The report also compared Marketplace and Medicaid enrollees and found that the former have a higher rate of unmet medical needs due to cost and greater difficulty paying medical bills, but are able to secure provider appointments more easily.

STATE STAFFING UPDATE:

New Mexico: Former Deputy Appointed Secretary for Department of Health

Governor Susana Martinez (R) appointed Lynn Gallagher as Secretary of the Department of Health last week, following the death of former Secretary Retta Ward in March. Gallagher served as the Deputy Secretary since 2013 and was previously the General Counsel for the Aging and Long-Term Services Department.

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