Manatt on Health Reform: Weekly Highlights

Kentucky receives final approval from CMS to transition its Marketplace to the platform; Ohio puts a price ceiling on prescription drugs purchased by the State on its November 2017 ballot; and a new study links Medicaid expansion to lower risk scores for Marketplace enrollees.


CMS Provides Opt-Out Option to Marketplace Auto Re-Enrollment

CMS created a new feature on allowing consumers to opt out of the agency's new auto re-enrollment process whereby enrollees whose coverage ends due to an insurer’s exit from the Marketplace could be automatically assigned to a different issuer’s plan. Between November 1 and December 15 of this year, consumers can log in to their account, select their 2016 application and find opt-out instructions on the "My Coverage" page. Consumers who choose to opt out will not be automatically assigned to a new plan and will have until January 31, 2017 to select a 2017 plan on their own.

California: State Submits 1332 Waiver Request to Offer Unsubsidized Coverage to Undocumented Individuals

Covered California (the State-based Marketplace) submitted its draft Section 1332 waiver proposal to HHS, largely unchanged from the version released by the State for public comment in August. If approved, California would become the first state to allow undocumented residents to use their own funds to purchase coverage through an ACA Marketplace. Covered California estimates that 17,000 undocumented individuals would purchase coverage.

California: Marketplace Corrects Glitch That Erroneously Transferred Some Pregnant Marketplace Enrollees to Medicaid

Covered California (the State-based Marketplace) has corrected an IT glitch that was automatically transferring pregnant women with incomes between 138% and 213% of FPL from Marketplace coverage to Medi-Cal (Medicaid), reports California Healthline. Pregnant women in this income range who apply for coverage through Covered California are automatically enrolled in Medi-Cal, though women in this income range who are already enrolled in Marketplace coverage and report that they have become pregnant are supposed to be given a choice of whether to stay enrolled in Marketplace coverage (which often includes premiums and deductibles) or switch to Medi-Cal (which has little to no out-of-pocket expenses but may require a change in provider). The State’s system was not initially programmed to allow for this choice, causing 2,000 pregnant women to be transferred to Medi-Cal without their consent. These individuals have been offered the option to switch back to their Marketplace coverage and the system has been modified to automatically offer choice of coverage going forward.

Hawaii: State Approves an Average 30% Premium Rate Increase for the Individual Market

The Department of Commerce and Consumer Affairs approved average 2017 premium rate increases of 25.9% and 35% for the State's two individual market carriers. The rate changes will impact approximately 41,000 individuals in the State.

Kentucky: CMS Approves Request to Transition From State-Based Marketplace to

CMS has approved Governor Matt Bevin's (R) request to transition from a State-based Marketplace (SBM) to an SBM that uses the federal platform in time for the 2017 open enrollment period. In its letter to Governor Bevin, CMS stated that Kentucky took the necessary steps and fulfilled system functionality requirements to make this transition, though it continued to voice concerns about the potential disruption the transition may have on "seamless" system coverage and recommended that the State effectively communicate to consumers the appropriate information to enroll through the federal platform. CMS plans to closely monitor Kentucky's transition process, including modifications to enrollment and eligibility processes and call center workforce trainings. CMS will also monitor access performance indicators, such as timeliness of transaction processing and backlogs, to ensure an efficient transition with minimal disruption for consumers.

New York: Marketplace Carrier Participation Holds Steady

All but one insurance carrier that offered individual plans on NY State of Health (the State-based Marketplace) in 2016 will continue to offer plans in 2017. Wellcare’s departure from the Marketplace, a decision that will impact fewer than 1,000 consumers, leaves fourteen returning carriers on the individual Marketplace. The “Essential Plan,” New York's Basic Health Plan, will be available from 13 returning carriers and one new carrier.

Oklahoma: Individual Market’s Sole Carrier Requests Average 76% Premium Rate Increase for 2017

Blue Cross Blue Shield (BCBS) of Oklahoma—the only carrier offering individual Marketplace coverage for 2017—submitted requested premium rate increases to CMS ranging from 58% to 96%. The increases, which are pending CMS approval, would impact the approximately 130,200 people who access coverage through the Marketplace, 95% of whom were covered by BCBS of Oklahoma in 2016. According to the State, key drivers of the requested rate increases include lower than expected enrollment by the younger population, and new customers being "sicker" than expected. The Oklahoma Insurance Department does not have statutory authority to approve or deny premium changes for Marketplace plans. In news coverage of the proposed rate increase, HHS noted that headline rate changes do not reflect what consumers actually pay because tax credits reduce individuals' out-of-pocket costs below the “sticker price.”


Nebraska: CMS Approves Plan to Integrate Medicaid Managed Care Services

The federal government approved Nebraska’s 1915(b) waiver amendment to merge its physical health, behavioral health, and pharmacy services under Medicaid into a new integrated managed care initiative called Heritage Health. The State selected three managed care organizations to administer the program: United Healthcare Community Plan of Nebraska, Nebraska Total Care (Centene) and WellCare of Nebraska. The State has begun sending enrollment materials and Medicaid recipients will have until December 1, 2016 to select a plan or be auto-assigned to one. Coverage under Heritage Health will become effective January 1, 2017.

Tennessee: Value-Based Payment Reform Saves Medicaid $11 Million

A bundled-payment initiative saved the State's Medicaid program $11.1 million in 2013, the program's first year, according to Medicaid Director Wendy Long. The program, called Episodes of Care, incentivizes providers to deliver high-quality care at lower costs for specific clinical conditions. In the program's first year, providers reduced costs for perinatal care by 3.4%, asthma exacerbation by 8.8% and total joint replacement by 6.7%. The program, part of a State Innovation Model grant, added five new episodes in 2016 and will expand to 75 episodes by 2020.

Washington: CMS Gives Preliminary Approval of 1115 Waiver for Medicaid Transformation

CMS has preliminarily authorized up to $2.3 billion in funding for Medicaid transformation initiatives through a Section 1115 waiver; final approval of the waiver and related funding is pending the State's adoption of CMS's Special Terms and Conditions. As part of the transformation efforts, nine regional Accountable Communities of Health (ACHs) will be responsible for coordinating and implementing delivery system reform projects to advance health systems capacity building, care delivery redesign, and prevention and health promotion. ACHs and Medicaid managed care organizations, which will remain responsible for the provision of Medicaid State Plan benefits, will also partake in a five-year Delivery System Reform Incentive Payment (DSRIP) program. The State’s transformation initiatives will also include reforming the provision of long-term care services and supports and helping qualified Medicaid enrollees gain access to housing and employment.


Medicaid Non-Expansion and “Transitional” Health Plans Associated With Higher Risk Scores

The ACA’s risk adjustment program uses average enrollee risk scores to determine which health plans have healthier and lower cost enrollees, and therefore must make payments into the program to be paid out to plans with less healthy and more expensive enrollees—low risk scores indicate healthier enrollees and high risk scores indicate less healthy enrollees. A new Kaiser Family Foundation analysis of CMS risk adjustment data for the 2015 benefit year found that the average risk score across non-expansion states that allowed “transitional” health plans was 8% higher than in expansion states that did not allow transitional plans and 3% higher than in expansion states that allowed transitional plans. This suggests that, on average, non-expansion states had sicker risk pools than expansion states, and expansion states that allowed transitional plans had sicker risk pools than expansion states that did not allow transitional plans, though the report’s authors note that this relationship is not necessarily causal. Transitional plans are non-ACA compliant plans purchased after the ACA was enacted but before the first open enrollment period in 2013. Allowing transitional plans may temporarily keep healthier enrollees out of the ACA individual risk pool (insurers were willing to insure transitional plan enrollees prior to the ACA). Transitional plans are allowed to remain in effect through the end of 2017, and transitional policy holders are not considered a part of the ACA’s individual risk pool.

Churning Rates Did Not Increase Under the ACA as Anticipated, Report Finds

A new study published in Health Affairs found little evidence of increased churning—or the changing of insurance coverage—since the 2014 implementation of the ACA’s coverage expansions, despite expectations that churning rates would increase. The study compared churning rates in 2015 among low-income adults in Kentucky, which used a traditional Medicaid expansion; Arkansas, which expanded Medicaid through the “private option” (enrolling beneficiaries in private Marketplace plans); and Texas, which did not expand Medicaid. It also compared 2015 churn rates to those in 2013. Nearly 25% of survey respondents changed coverage during the previous twelve months, though there were no significantly different churning rates in the three states over time. Nearly 20% of those who churned did so because they gained insurance coverage, and Arkansas and Kentucky respondents gained coverage at nearly twice the rate as those in Texas. The most common reason for churn across the study states was a change in a job or job-related coverage (33.8%). Respondents in Texas were most likely to say that they had dropped coverage because they couldn’t afford it, while those in Arkansas were most likely to say that their plan was no longer available. Kentucky respondents were most likely to report trouble with the renewal process in Medicaid or Marketplace coverage as the main reason for churning. The authors note the survey respondents’ negative experiences due to churning, including having to change doctors or switch prescription medications, and conclude by offering states a series of policy approaches to limit churn, including creating a Basic Health Program.

ASPE Report Details Nearly 50 New Payment Models Across Payers

A report commissioned by HHS’s Office of the Assistant Secretary of Planning and Evaluation details 47 “physician-focused payment models” (PFPMs) currently in use or in development by state and federal governments and the private sector, including nine samples of public payment models, 36 samples of private payment models, and two international models (at least nine of the models impact Medicaid enrollees). Each model description includes the model’s goals; how payments are calculated; how incentives operate; services, patients, and providers involved; the role of performance measures in payment calculations; whether the model layers on top of fee-for-service (FFS) or is an alternative to FFS; and hyperlinks to evaluations where applicable. The report was commissioned as background information for ASPE and for the Physician-Focused Payment Model Technical Advisory Committee created by MACRA, though the report’s authors also intend the document to serve as a resource to individuals developing new PFPMs.

New Health Affairs Issue Reviews ACA’s Impact on Access, Coverage, and Affordability

The October 2016 issue of Health Affairs features several studies on how the ACA improved access to care and impacted healthcare affordability, and the characteristics of those who gained coverage through the Marketplace and Medicaid expansion. Among other findings, the studies report that people who gained coverage through Medicaid or the Marketplaces in 2014 were far more likely to obtain a usual source of care and receive preventive care services than those who remained uninsured in 2014. Additionally, fewer nonelderly adults in 2015 Marketplace coverage reported healthcare affordability problems compared to 2014, though more Marketplace enrollees in non-expansion states reported trouble paying medical bills compared to those in expansion states. One of the studies found that those who gained Marketplace or Medicaid coverage in 2014 were more likely to have at least one chronic condition and may have had a “predisposition” to using healthcare. This suggests that future enrollees from the remaining population of long-term uninsured people may have different characteristics than those who enrolled in 2014.

Ohio: Drug Price Relief Act Slated for 2017 Ballot

Ohio’s November 2017 ballot will ask individuals to vote on proposed legislation that would prohibit the State from purchasing the drug unless its cost "is the same or less than the lowest price paid for the same drug" by the United States Department of Veterans Affairs (the VA). Supporters say this could lower the price of drugs for the State by up to 40%.



pursuant to New York DR 2-101(f)

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