Manatt on Health Reform: Weekly Highlights

The Massachusetts Marketplace takes steps to ease consumer confusion by reducing choice among QHPs; North Carolina appears poised to pass Medicaid reform legislation; and bipartisan support is gaining for defining businesses with 51-100 employees as large employers unless states request otherwise.

MARKETPLACE NEWS:

Massachusetts: Marketplace Lowers Number of Health Plans Offered in Effort to Ease Consumer Confusion

During its September Board meeting, the Massachusetts Health Connector certified 84 qualified health plans (QHPs) and 25 qualified dental plans for coverage year 2016, reducing the number of QHPs by 34% from 2015 in an effort to simplify consumer choice and reduce consumer confusion. The number of qualified dental plans certified remained similar to previous years. Consumers with no subsidies or only with advanced premium tax credits are expected to incur a 2%-8% rate increase for QHPs, while consumers with qualified dental plans are expected to see an average premium decrease of close to 2%.

MEDICAID EXPANSION UPDATES:

Alaska: Legislature to Challenge Medicaid Expansion

The Alaska Legislature signed a $450,000 contract with a team of lawyers to challenge Governor Bill Walker's (I) Medicaid expansion plan, having failed in its earlier attempt to secure an injunction before enrollment began on September 1. The Republican-dominated Legislative Council voted 11-1 along party lines to advance the suit. The House Minority Leader, citing the high price tag and unlikelihood of a win, was joined by the Senate Democratic Caucus and the House’s Independent Democratic Caucus in voicing opposition to the lawsuit.

Wyoming: More Than Half of Hospital Reimbursement Fund Spent Since July

Since the Legislature opposed Governor Matt Mead’s (R) call for Medicaid expansion, Wyoming has paid out $1.3 million of a $2 million million hospital reimbursement fund for uncompensated care established in July as an alternative to expansion. Governor Mead allowed the bill to take effect without his signature. Wyoming hospitals may apply to the State’s Health Department for reimbursements from the fund through June 2016. State Senator Charles Scott (R), the Chair of the Senate Labor, Health, and Social Services Committee, said he does not expect the Legislature to continue the funding efforts or expand Medicaid. Wyoming hospitals provided $21 million in charity care in 2013.

MORE STATE MEDICAID ACTIVITY:

Alabama: Governor Signs 2016 Budget, Avoids Medicaid Cuts

Governor Robert Bentley (R) signed a $1.7 billion 2016 budget, six months and three legislative sessions after sending his first 2016 budget to the Legislature. The budget holds steady Medicaid’s funding level despite earlier proposals to cut funding by a total of $500 million including federal matching funds; however, it does not include an additional $34 million Governor Bentley had requested for the State’s Medicaid reform efforts, a portion of which was allocated to support the implementation of Regional Care Organizations. Governor Bentley is working to secure additional funding through Medicaid overages, State hospitals, and settlement money, though the Alabama Hospital Association said additional funds “would be difficult to find.”

North Carolina: Compromise Proposed on Medicaid Reform

The State Legislature is expected to vote today on a "compromise" Medicaid reform bill that has been advanced after years of disagreement between the House and Senate on how to reform the program. Under House Bill 372, three entities would manage care for Medicaid enrollees statewide, and both managed care organizations and provider-led entities (PLEs) would be permitted to bid for these contracts. Additionally, 10 PLEs would be selected to offer coverage in six or seven newly created care regions. Enrollees would be able to choose from any of the statewide options or local PLEs. Governor Pat McCrory (R) has voiced his support for the bill. Any changes passed by the State will ultimately require federal approval.

Pennsylvania: State Announces Medicaid Coordination Initiatives

The Pennsylvania Department of Human Services announced a Request for Proposals that aims to increase coordination of care in the State's Medicaid program. Pennsylvania is soliciting Medicaid managed care organization contracts with a new mandate that contract winners must increase the percentage of value- or outcome-based contracts with providers to 30%. Simultaneously, Pennsylvania announced a concept paper for Community HealthChoices, a new long-term services and support initiative in which private companies manage care for individuals dually eligible for Medicare and Medicaid, the disabled, and/or those in need of long-term care services. Both initiatives are expected to improve the integration of physical and behavioral health and increase bundled payments to hospitals and for community-based services.

FEDERAL NEWS:

Small Group Market Change Gains Bipartisan Support

A bill to amend the definition of the small group market is gaining bipartisan support, according to the Commonwealth Fund. The bill, H.R. 1624, would define businesses with 51 to 100 full-time employees as large businesses, unless a state elects to treat that group as a small business. Members of the House Energy and Commerce Committee have expressed interest in the plan, and 40 of the bill’s 215 cosponsors are Democrats. The Congressional Budget Office estimates the bill would increase federal revenue by $400 million over the next decade.

Court Rules Religiously Affiliated Employers Burdened by Contraceptive Care Mandate

The U.S. Court of Appeals for the 8th Circuit broke from the holdings in all other appellate courts in its recent ruling that religiously affiliated employers are unjustly burdened when seeking accommodation from the Affordable Care Act’s requirement to cover contraceptive care. The accommodation process, developed by the Obama Administration after the Hobby Lobby Supreme Court case, requires health insurance issuers and third party administrators to provide contraceptive services to employers’ health plan enrollees without charging the employer or enrollee for the service. All other circuits of the U.S. Courts of Appeals have previously ruled that this accommodation strikes the appropriate balance between access to care and protecting religious beliefs. When U.S. Courts of Appeals are split on a matter, the Supreme Court often settles the issue.

Community Health Centers Receive $500 Million in ACA Funding

HHS awarded nearly $500 million in Affordable Care Act funding to community health centers throughout the country, $350 million of which was awarded to nearly 1,200 health centers to increase access to a range of services such as medical, oral, behavioral, pharmacy and vision care. The remaining $150 million was awarded to 160 health centers for facility renovation, expansion or construction. HHS estimates that the awards will help provide primary care access to an additional 1.4 million people. The funds may also be used by health centers for outreach and enrollment activities during the 2016 open enrollment period.

GAO Recommends CMS Increase Marketplace Oversight

In a review of states’ use of federal funds for information technology projects to establish and support Marketplaces, the Government Accountability Office (GAO) found a need for increased CMS oversight. Specifically, GAO recommended that CMS articulate to states the agency’s oversight roles and responsibilities, ensure CMS’s senior executives are involved in marketplace IT funding decisions, and ensure states complete system testing prior to putting a system into operation. HHS concurred with GAO's recommendations. States reported spending approximately $1.5 billion in federal Marketplace grants and a portion of the $2.8 billion combined state and federal funding for Medicaid eligibility and enrollment systems on IT projects that supported marketplace development.

OIG Finds CMS’s Management of Federal Marketplace Contracts Inadequate

In a review of 20 of the 62 contracts CMS awarded for the development, implementation, and operation of the Federally-facilitated Marketplace, HHS’s Office of Inspector General found that contracting officers and their representatives did not always manage and oversee contractor performance in accordance with federal requirements and contract terms. Due to lack of oversight, contractor delays and performance issues were not always identified, unauthorized costs were incurred, critical deliverables and management decisions were not always documented, and past-performance evaluations were not always made available when making subsequent contract awards. CMS agreed with OIG’s recommendations to address these issues and has taken, or plans to take, corrective actions.

Uninsured Rate Down to 10.4%, According to Census Bureau

A U.S. Census Bureau report found that the uninsured rate decreased from 13.3% in 2013 to 10.4% in 2014, the largest change in the coverage rate since 2008. Consumers enrolled in individual health plans had the largest increase in coverage rates, from 11.4% in 2013 to 14.6% in 2014. Individuals enrolled in Medicaid had the second largest increase, from 17.5% in 2013 to 19.5% in 2014. The report also found that there was no statistically significant change in the percentage of people covered by employer-sponsored insurance, which was the source of coverage in 2014 for 55.4% of the insured population.

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