Manatt on Health Reform: Weekly Highlights

Vermont moves closer to launching the country’s first all-payer ACO; CMS approves Arizona’s 1115 waiver extension but rejects the State’s proposed work requirement and premiums for those earning below the FPL; and CMS issues a final rule prohibiting “hospital dumping” and forced arbitration by long-term care facilities.


CMS Suggests New Strategies for States to Enhance Enrollment Into Marketplace Coverage

CMS outlined outreach and data collection enhancements that states that rely on can adopt to promote a seamless transition of individuals who have lost or were determined ineligible for Medicaid or CHIP into Marketplace coverage. CMS recommends that states provide people found ineligible for Medicaid with a clearer roadmap of how they can secure Marketplace coverage. Specifically, in the notices that they send to these individuals informing them they are not eligible for Medicaid, states should advise them that they will be hearing from the Marketplace, but that they also have the option of not waiting and, instead, simply submitting a new application for coverage via CMS also advises states to revise application forms and procedures to promote the collection of email addresses to facilitate more effective outreach. Although aimed primarily at states that use, the informational bulletin also notes that similar strategies could increase enrollment in state-based Marketplace states.

HHS “Strongly Disagrees” With GAO Opinion on Use of Reinsurance Funds

A Government Accountability Office (GAO) opinion stated that HHS violated the ACA by not depositing funds collected under its transitional reinsurance program in the U.S. Treasury when 2014 collections fell short of projections. Republican lawmakers requested an opinion from GAO after HHS prioritized reinsurance payments to insurers over payments to the Treasury. Under the reinsurance program—which expires after the 2016 coverage year—HHS collects contributions from commercial insurers and group health plans and uses those collections to make payments to individual market health insurers to help stabilize premiums. The ACA instructs HHS to use a portion of these collections to make payments to the Treasury each year, though HHS did not deposit any amounts into the Treasury for 2014, instead directing all collections to insurers. HHS released a statement saying that it “strongly disagrees” with GAO’s opinion, noting that statute does not prescribe how contributions are to be allocated if total collections are insufficient to meet the statutory targets.

2.5 Million Purchasing Off-Marketplace Individual Coverage Could Qualify for Marketplace Subsidies

More than one-third of the 6.9 million people who currently purchase off-Marketplace individual insurance coverage have incomes that could qualify them for premium subsidies on the Marketplace, including 1.1 million who may also qualify for cost-sharing reductions, according to an analysis by HHS’s Assistant Secretary for Planning and Evaluation (ASPE). This means that approximately 70% of the individual market—including those on and off the Marketplace—are potentially eligible for premium subsidies; that percentage rises to 78% if uninsured individuals who could enroll in a Marketplace plan are included. ASPE attributes the high number of off-Marketplace subsidy-eligible individuals to consumers being unaware that financial assistance may be available to them through the Marketplace. It also notes that some consumers who did not qualify for subsidies in previous years may qualify now because premiums have increased, causing more people to meet eligibility standards.

CMS Reduces Number of States Included in Quality Rating System and Network Breadth Information Pilots

CMS will implement a Quality Rating System pilot in Virginia and Wisconsin during the 2017 plan year, three states fewer than originally planned. CMS also further reduced the number of states participating in the Network Breadth Information pilot, which was originally intended for all states, from six to four states: Maine, Ohio, Tennessee, and Texas. The quality rating system pilot will allow for an additional year of consumer testing of a five-star scale measuring a plan's quality of healthcare services and enrollee satisfaction before all FFM states must display this information in the 2018 plan year. States with State-based Marketplaces may choose to display quality rating information in the 2017 plan year or defer until the 2018 plan year. The network breadth pilot will also allow for consumer testing of information to compare provider networks across Marketplace plans for adult primary care providers, pediatricians, and hospitals. CMS will rely on findings from the network breadth pilot as it considers expanding the pilot to additional states and/or provider types in future years.


District of Columbia: 2017 Rates Will Increase 7% on Average

The Department of Insurance, Securities and Banking has approved rate increases for the individual market ranging from 1.8% to 22.8% and small group rate changes ranging from a 2.2% decrease to a 9.1% increase. All four carriers that offered Marketplace plans in 2016—Aetna, CareFirst Blue Cross Blue Shield, Kaiser Permanente and United Healthcare—are continuing to offer plans in 2017.

Maryland: CO-OP Acquired, Will Convert to For-Profit Insurer

Evergreen Health, one of six remaining CO-OPs established under the ACA, is being acquired by a group of private investors and will convert into a for-profit insurance company, according to media reports. The deal was approved by the CO-OP’s governing board but remains subject to both State and federal approval. Evergreen CEO Peter Beilenson cited the CO-OP’s $23 million risk adjustment payment for 2015 as a contributing factor in the decision. The CO-OP has agreed to repay an unspecified portion of its $65 million startup loan from the federal government. Ongoing operations will be financed by a temporary loan until the acquisition is complete, and coverage disruptions for members are not expected.

Minnesota: Rates to Increase up to 67% as State Announces Enrollment Caps

The State Commerce Department announced 2017 premium rate increases for the individual market, ranging from 50% to 67%. The Department also announced rate changes in the small group market, ranging from a 1% decrease to an 18% increase. Insurers will also be allowed to cap new enrollments for 2017, though one insurer—Blue Plus HMO—will not implement a cap. The rate changes will impact approximately 500,000 State residents. The release of preliminary rate requests for individual market insurers had been delayed from August 1 to September 1 so that insurers could evaluate the impact of Blue Cross Blue Shield's exit from the individual market, which required 103,000 individuals—40% of the State’s individual market—to find new coverage for 2017. In the release of 2017 premium rates, Department of Commerce Commissioner Mike Rothman renewed a call for reforms to improve affordability and stabilize Minnesota’s individual market.


CMS Issues Final Rule to Improve Care for Residents of Long-Term Care Facilities

CMS issued a final rule with several policy changes aimed at improving care and safety for residents in long-term care facilities that participate in Medicaid and Medicare. Most notably, facilities are no longer allowed to require residents to agree to private arbitration to settle disputes upon admittance. Facilities are also prohibited from “hospital dumping,” the practice of discharging mostly low-income residents back to the hospital and then refusing to readmit them due to low reimbursement rates or lack of insurance. The rule also included changes aimed at promoting person-centered care. For example, facilities are instructed to account for the health of residents when making staffing decisions, and to ensure that staff are equipped to develop care plans for residents that are tailored to their specific care preferences and goals. This release marks CMS’s most comprehensive update of long-term care facility policies since 1991. The rule is estimated to impact approximately 1.5 million residents at more than 15,000 long-term care facilities across the United States.

Coverage Rates Improved Significantly for All Demographics, ASPE Report Finds

Demographic groups with the highest uninsurance rates in 2010 saw the largest drops in uninsurance as of the end of 2015, though coverage gains occurred across all income groups, racial and ethnic groups, ages, and geographies, according to HHS’s Office of the Assistant Secretary for Planning and Evaluation. Non-elderly adults earning below 250% of FPL experienced a 41% decrease in the uninsured rate, a larger decrease compared to higher income groups, and states that expanded Medicaid saw greater uninsurance reductions compared to non-expansion states (50% versus 32%). Among racial and ethnic groups, non-Hispanic Asians saw the largest decline (59%) followed by non-Hispanic Blacks (nearly 47%). The expansion of dependent coverage eligibility up to age 26 in 2010 contributed to a 52% increase in coverage rates among 18 to 25 year olds. The report notes that the uninsurance rate fell further in the first quarter of 2016, to a record low of 8.6%.

Vermont: State Receives Preliminary Federal Approval to Launch All-Payer ACO

Vermont received preliminary approval from the federal government to launch the country’s first all-payer accountable care organization (ACO) for provider and hospital services, following nearly two years of negotiations between the State and CMS. Under the all-payer ACO model, Medicaid, Medicare, and commercial insurers will pay into an ACO, which will then pay participating providers based on the quality of care delivered. The model includes a proposed 3.5% per capita spending growth cap, beginning in 2018, and relies on a $51 million total investment in Medicare from 2017 to 2022 including a one-time $9.5 million investment in 2017. Under the preliminary agreement, Medicare and Medicaid beneficiaries can keep their current benefits and providers, and doctors, hospitals, federally qualified health centers and community service organizations are given the option of participating in the ACO. State officials are taking public comments on the proposal through October 11, 2016. If finalized as proposed, the agreement would authorize the ACO for five years beginning on January 1, 2017.


Arizona: CMS Approves Five-Year Waiver Extension, Rejects Work Requirement and Coverage Time Limit

CMS approved the State’s 1115 waiver extension, which will establish a new AHCCCS (Medicaid) Choice Accountability Responsibility Engagement (CARE) program, under which the expansion population earning above 100% of FPL can be charged monthly premiums of up to 2% of household income and co-payments for certain services, the total of which may not exceed 5% of total household income. Failure to pay may result in disenrollment, but cannot result in a six-month lockout of coverage, as originally proposed. In addition, the new “Healthy Arizona” incentive program will seek to encourage healthy behaviors by eliminating monthly contributions for up to six months for those who meet targets and providing incentive payments to individuals in AHCCCS CARE. CMS rejected the State’s requests to limit Medicaid coverage to five years, and to include a work requirement as a condition of coverage, monthly premiums for those below 100% FPL, fees if beneficiaries missed appointments, and additional verification requirements. The new five-year waiver, originally submitted in October 2015, takes effect October 1, 2016.

Massachusetts: Procurement for MassHealth ACOs Underway

The State Medicaid agency released a Request for Responses (RFR) for its proposed accountable care organization (ACO) program, which is pending authorization as part of an 1115 waiver amendment and extension currently under review by CMS. The ACO program is a core feature of the State’s sweeping proposal to transition its largely fee-for-service Medicaid delivery and payment system to a system of provider-led ACOs operating in partnership with Medicaid managed care and community-based organizations. The State also released additional details in the RFR and accompanying material, including information on risk corridors for each of the three ACO models, evaluation criteria for ACO applicants, and the timeline for implementing the ACO program. The RFR also provided new information on quality measures and the methodology that will determine the level of funding ACOs receive from the Delivery System Reform Incentive Payments (DSRIP) program. RFR responses are due January 12, 2017, and the ACO program is expected to launch in December 2017.



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