Manatt on Health Reform: Weekly Highlights

Montana receives approval to expand Medicaid beginning 2016; California’s $6.2 billion Medicaid waiver receives pre-approval; and HHS proposes broadening circumstances under which states receive enhanced federal matching funds for services furnished to American Indians and Alaska Natives.


Arkansas: Governor Reiterates Support for Medicaid Expansion, Withdraws Proposals to Limit Coverage

Governor Asa Hutchinson (R) submitted a letter to the Arkansas Health Reform Legislative Task Force agreeing with a consultant’s recommendations to discard two proposals he introduced in August as part of his initial Medicaid reform plan, which would have limited enrollment of the expansion population in the private insurance marketplace and eliminated coverage for non-emergency medical transportation. The Governor also noted that the report supported other principles of his Medicaid reform plan, including: promoting employer-sponsored insurance, enhancing cost sharing for certain beneficiaries, implementing a work referral program, and utilizing Medicaid managed care for “high cost populations.” The Governor urged the task force to continue studying other reforms that can be included in a new Medicaid expansion waiver application—which the Governor terms “Arkansas Works”—once the current waiver expires at the end of 2016.

Montana: Alternative Medicaid Expansion Waiver Approved by CMS

On Monday, Montana received approval from CMS for its alternative Medicaid expansion waiver, making them the thirtieth state in the nation, including D.C., to expand Medicaid. Under the approved waiver, Medicaid expansion enrollees with incomes above 50% of the federal poverty level (FPL) will use a provider network managed by a third party administrator and will be subject to a 2% of income premium, which will be credited towards co-payment obligations. Enrollees with incomes above 100% of the FPL may be disenrolled for failure to pay premiums after appropriate noticing and a 90-day grace period. Re-enrollment is permitted either upon payment of arrears or when the debt is assessed, which will occur at least quarterly. An additional 70,000 Montanans are expected to gain health care access to coverage through the expansion, which takes effect on January 1, 2016.


Arizona: Health Insurance Co-Op Removed From the Marketplace

The Department of Insurance announced that co-op Meritus has been placed into "supervision" and will not be allowed to issue new or renew existing policies for coverage year 2016. Approximately 59,000 Arizonans—28% of the State’s Marketplace—who are covered by Meritus products will be able to access their benefits through December 31, though they will be required to find new coverage for 2016. Meritus is one of 11 co-ops to announce its closure.

New York: Insurance Co-Op Accelerating Shutdown, Will Close November 30

The New York State Department of Financial Services (NYDFS) has ordered co-op Health Republic Insurance of New York (HRINY) to close all of its existing policies by November 30, a month earlier than originally instructed. Individuals with HRINY will be required to select a new plan by November 15 in order to maintain coverage for December 2015. In addition to the original requirement that HRINY end all individual plans, NYDFS has now directed HRINY to end all small group health plans as well. HRINY is one of 11 co-ops across the country that are closing or facing regulatory action due to fiscal issues.

Utah: Co-Op Withdraws From Marketplace, One Insurer Remains

The Department of Insurance announced that Arches Health Plan, the State's health co-op, will no longer offer coverage through Utah’s Federally-facilitated Marketplace for coverage year 2016 due to financial difficulties. Arches issued approximately 35% of the State’s total individual Marketplace policies in 2015, representing around 45,000 Utahns. These individuals will remain covered through December 31, but will need to select new coverage either off the Marketplace or from SelectHealth, the one remaining insurer offering Marketplace plans for 2016.

Washington: Moda Health to Exit Marketplace, Twelve Insurers Remain

The Washington Health Benefit Exchange announced that Moda Health will no longer offer health plans on the Exchange after 2015, leaving 47,000, or 29% of all Exchange enrollees, to seek new coverage for 2016. According to Moda Health, its decision results from the lower-than-expected risk corridors reimbursement from the federal government. Washington consumers will be able to choose from twelve remaining insurers selling 143 health plans on the Exchange.

More State Health Reform Updates:

California: $6.2 Billion Medicaid Waiver Receives Federal Pre-Approval

CMS officials “agreed in principle” to a five-year, $6.2 billion section 1115 Medicaid waiver, "Medi-Cal 2020", which will support a variety of delivery system and payment reform initiatives in Medi-Cal, California’s Medicaid program. The bulk of the funding would go toward a public hospital incentive program, though other initiatives include improving the State’s dental health programs and launching a whole-person care pilot program. Subject to CMS approval, the State may also be eligible to receive additional funding to support caring for its uninsured population after the demonstration's first year. The new demonstration will replace the State's previous waiver, the "Bridge to Reform," which was set to expire on October 31 but was extended until December 31 to allow for a smoother transition to Medi-Cal 2020.

Colorado: Single Payer Option Likely to Be on November 2016 Ballot

State residents will have the option to vote on replacing their State-based Marketplace with a single payer health system next year, if the signatures collected to support this initiative are verified by the Secretary of State’s Office. Supporters of the single payer initiative, called ColoradoCare, submitted 156,107 signatures, far more than the 98,492 required to put the initiative on the November 2016 ballot. ColoradoCare would be administered by a nonprofit cooperative, run by a 21-member board, and would cost the State approximately $25 billion, paid for by a 10% increase in the payroll tax. Employers would be responsible for two-thirds of the tax increase, while employees would be responsible for the remaining one-third.


CMS May Expand the Circumstances Under Which It Fully Funds Services for Medicaid-Eligible American Indians and Alaska Natives

CMS requested comments on a proposed policy change related to federal funding for services furnished to Medicaid-eligible American Indians and Alaska Natives by Indian Health Service (IHS) or Tribal facilities. Federal law requires the federal government to assume 100% of the amounts paid for services “received through” these facilities. CMS has established four conditions under which services are assumed to be “received through” these facilities, but states and Tribes have expressed concern that these conditions are overly restrictive. CMS is proposing to liberalize three of these four conditions, thereby making it easier for IHS and Tribal facilities to obtain the 100% federal match. The agency's announcement comes as it negotiates with Alaska and South Dakota—both states with large Tribal populations—to determine how best to pay for Medicaid expansion. CMS is requesting written comments by November 17, 2015.

2016 Marketplace Open Enrollment Successfully Launches

The open enrollment period (OEP) for and State-based Marketplaces successfully launched on November 1, 2015 at 7:00 am EST. OEP appears to be off to a relatively quiet start, with few reports of technical glitches preventing enrollment, and approximately 250,000 applications submitted through during the first two days of OEP, according to Politico. December 15, 2015 is the last day for consumers to enroll in or change plans for coverage beginning January 1, 2016. OEP ends on January 31, 2016.

Nearly One-Quarter of Enrollees Switched Plans During 2015 Open Enrollment

A newly released HHS report found that 23% of all people with 2014 Marketplace plans switched to a new plan for 2015, a much higher rate than is traditionally seen in employer-sponsored insurance (2.8% in 2010), the Federal Employee Health Benefits Program (12% in 2001), and Medicare Drug Plans (13% across four enrollment periods). Enrollees were more likely to switch issuers than metal levels; those who elected to switch plans within the same metal level saved almost $400 annually relative to what they would have paid if they remained in the same 2014 plan. Not surprisingly, consumers were highly sensitive to costs. Of silver plan enrollees who re-enrolled through the Marketplace in 2015, the vast majority (91%) remained in a silver plan, the only metal tier through which individuals with incomes under 250% of the federal poverty level can receive cost-sharing reductions.

Access to Specialty Care Limited in 2015 Marketplace Plans

A review of qualified health plan physician networks available through for 2015 found that 14% of plans do not provide access to at least one common specialty, according to researchers at Harvard's T.H. Chan School of Public Health. The study searched for specialists in a 50 and 100 mile radius of the most populated city where each plan was offered. Using the broader search criteria, the percentage of specialist deficient plans only decreased to 13.3%. The most common specialties lacking in-network access include psychiatry, rheumatology, and endocrinology.

Children’s Uninsured Rate at Record Low Following ACA Implementation

The uninsured rate among children dropped from 7.1% in 2013 to 6.0% in 2014 following implementation of the Affordable Care Act, according to a report by the Georgetown University Health Policy Institute. Nationally, 25 states showed statistically significant decreases while no states showed statistically significant increases, and states that expanded Medicaid coverage for adults had a decline of uninsured children almost double that of non-expansion states. The authors credit the decrease in uninsured rates to the launch of the Marketplaces, which covered nearly 500,000 children in 2014, and the “welcome mat” effect for children who were already eligible for Medicaid and CHIP. Nevada had the largest decrease in the rate of uninsured children—5.3 percentage points between 2013 and 2014—while Colorado, West Virginia, Mississippi, and Rhode Island also saw large declines ranging from 2.1 to 2.6 percentage points. Half of the remaining 4.4 million uninsured children live in six states: Texas, California, Florida, Georgia, Arizona, and Pennsylvania.


Rhode Island: Former Marketplace Director to Lead Medicaid Agency

Anya Rader Wallack, the former Executive Director of HealthSource RI, has replaced Deidre Gifford as Rhode Island’s Medicaid Director, effective November 2. Wallack was appointed head of Rhode Island’s State-based Marketplace in December 2014. HealthSource RI’s current Chief of Staff Zach Sherman will serve as Acting Director until Wallack’s replacement is found.

Texas: New State Medicaid Director Named

Gary Jessee, Texas Medicaid/CHIP Chief Deputy Director for Program Operations, was named the new State Medicaid Director. Jessee replaces Kay Ghahremani, who is retiring after 20 years with the State and three years as Medicaid Director.



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