Manatt on Health Reform: Weekly Highlights - April 2017 #3

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The focus is on the Marketplaces this week as CMS publishes a new Marketplace stabilization rule, even as President Trump threatens to withhold cost-sharing reduction payments to insurers. In the states, Florida announces that CMS has committed to a $1.5 billion uncompensated care fund and Wisconsin proposes adding premiums, drug screening, work requirements and time limits to its Medicaid program.

FEDERAL MARKETPLACE NEWS:

Final Market Stabilization Rule Largely Adopts Proposed Changes

On April 14, CMS released a final rule intended to stabilize the individual market. Consistent with the February 2017 proposed rule, it shortens the open enrollment period, scales back special enrollment periods (SEPs), institutes more stringent eligibility verification for those enrolling during an SEP, permits insurers to require payment of premiums past-due as a condition of enrollment, and relaxes actuarial value and network adequacy standards. State-based Marketplaces, however, are provided with the option to extend the open enrollment period as a transitional measure. CMS did not finalize proposals that would have penalized those who failed to maintain continuous coverage. Stakeholder reactions were mixed, with insurers generally pleased, but still deeply concerned about the future of cost-sharing reduction payments (not addressed in the rule), and consumer representatives arguing that the new rule could pose barriers to coverage.

BCBS Marketplace Plans Show Improved Financial Performance in 2016, Signaling a More Stable Marketplace

A Standard and Poor's analysis of 2016 Blue Cross Blue Shield (BCBS) Marketplace plans found that the average medical loss ratio for BCBS plans included in the study improved from 106% in 2015 (meaning claims costs outpaced premiums collected) to 92% in 2016. The report's authors expect Marketplace insurers to "get close" to break-even margins in 2017, though political uncertainty could impede future insurer participation and margins. BCBS insurers are the leading insurers in most state Marketplaces, according to the report, especially in state Marketplaces with fewer competing insurers.

Stakeholders Urge Action on Cost-Sharing Reduction Payments

With President Trump recently threatening to withhold cost-sharing reduction (CSR) payments in an interview with The Wall Street Journal, it remains unclear whether HHS will continue to make CSR payments to insurers. Meanwhile, several healthcare industry groups including America's Health Insurance Plans, the American Medical Association, and the American Hospital Association penned a letter to President Trump emphasizing that CSR payments are critical to stabilization of the individual market. The Bipartisan Policy Center also released a statement supporting temporary extension of CSR payments through 2018. Key insurance industry leaders are meeting with CMS Administrator Verma today to discuss the issue.

OTHER FEDERAL AND STATE HEALTH REFORM ACTIVITY:

HSAs More Likely to Benefit High Income Earners

Health Savings Accounts (HSAs), which would have been expanded under the AHCA and are traditionally favored by conservative lawmakers, provide more benefit to high income earners, according to a new analysis from The Commonwealth Fund. This is because high income earners are more likely to fully fund their HSAs and, due to the relatively high tax rates that they face, experience greater tax advantages from the accounts compared to middle and low income earners.

Heritage Foundation Report Suggests Modifications to AHCA

A Heritage Foundation report argues that Congress should amend the AHCA to implement Medicaid block grants for disabled and long-term care populations, establish a premium support model for non-disabled Medicaid-eligible adults to enroll in private health plans, and accelerate the proposed rollbacks of federal Medicaid expansion funding by limiting enhanced federal matching rates to expansion adults enrolled in Medicaid before July 1, 2017. The report also notes that the AHCA provision to allow states to condition Medicaid eligibility on work requirements is "likely to be unworkable or difficult to administer and enforce."

Colorado: Two New Reports Look at Marketplace and Medicaid Eligibility and Enrollment

Connect for Health Colorado, the State-based Marketplace, published its 2017 open enrollment report with county level enrollment, premium, and premium tax credit data. The average monthly tax credit per household for 2017 is $369, up from $294 last year, and 28% of Marketplace enrollees were new enrollees. Additionally, the number of individuals enrolled through their employers in the small business Marketplace increased 46%. A separate report from the Colorado Health Institute found that 9% of people eligible for Medicaid remained uninsured in 2015, down from 15% in 2014. The rate of uninsured Coloradans that are eligible for Marketplace tax credits fell to 59% in 2015 from 68% in 2014.

STATE MEDICAID REFORM AND EXPANSION UPDATES:

Florida: State Says CMS Will Sanction a $1.5 Billion Uncompensated Care Pool Fund

The State issued a press release announcing the federal government's "commitment" to increase funding for the State's Low Income Pool (LIP) under the State's 1115 waiver, from $600 million in 2016 to $1.5 billion annually. Under the Obama Administration, Florida was provided with a significantly smaller LIP pool, reflecting a policy not to allow federal Medicaid funds to be used for uncompensated care attributable to individuals who could be covered via an expansion of Medicaid. CMS, however, has not yet formally approved the $1.5 billion figure and, as of now, the Florida House is still seeking reassurance that the funds will be available before relying on them in the State's budget. In contrast, the Florida Senate already is preparing to include the funding in its budget, according to the Tampa Bay Times. Separately, the Florida legislature is looking to cut hospital funding by between $200 million and $600 million, potentially creating a situation in which the new LIP funds are used to some extent to mitigate the impact of the State cuts.

Louisiana: Majority Approve of Medicaid Expansion

The 2017 Louisiana Survey found that 72% of Louisianans surveyed now approve of Medicaid expansion in the State, though only 42% view the ACA favorably, compared to 31% in 2014. The annual survey, which is conducted by the Louisiana State University Reilly Center for Media and Public Affairs, queried Louisianans between February and March of 2017 to assess residents' opinions of State government services.

Maine: State Launches Opioid Health Home Model

The Department of Health and Human Services (DHHS) launched an Opioid Health Home program, which will provide treatment and expand primary care access for Medicaid beneficiaries and uninsured individuals struggling with opioid dependency. DHHS has appropriated $3 million from the State and an additional $1.8 million in federal Medicaid matching funds to support the program. The program is now accepting applications from providers for participation.

Wisconsin: New Medicaid Waiver Amendment Includes Premiums, Work Requirements, Drug Screening, and Time Limits For Eligibility

The State released a summary of its proposed 1115 waiver amendment for public comment, and intends to submit the amendment to CMS later this spring. The State plans to request authority to: impose monthly premiums of up $10 per household for individuals with incomes above 20% of FPL, add emergency room co-payments, add work requirements for some adults, limit eligibility to 48 months for certain enrollees after which they would be locked out of Medicaid for six months, and require drug screenings for enrollees (those that test positive would be referred to a treatment program).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

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