Manatt on Health Reform: Weekly Highlights - December 2016 #3

Manatt, Phelps & Phillips, LLP

Manatt, Phelps & Phillips, LLP

The National Association of Medicaid Directors offers policy considerations and recommendations to the incoming Administration; has its largest single day of enrollment ever; and new publications prepared by Manatt Health compare ACA replacement proposals and highlight the potential state impacts of Medicaid spending caps.

Manatt on Health Reform will be taking a break for the holidays and will be back on Tuesday, January 10.


ACA Repeal Would Cut Taxes for Top 1%, Raise Taxes for Low- and Middle-Income Households

ACA repeal would significantly cut taxes for those with incomes in the top 1% and would, on average, raise taxes for low- and middle-income households, according to the Urban-Brookings Tax Policy Center. Tax increases for low- and middle-income households would vary widely, with large tax increases for those currently receiving ACA tax subsidies ($3,900 for low-income households and $6,200 for middle-income households), and no change or very small tax cuts for most others. Nearly everyone in the highest 1% of income would see an average tax cut of $33,000 and those in the top 0.1% would see an average $197,000 tax cut. The detailed analysis includes tax implications of ACA repeal provision-by-provision.

New Tool Compares ACA Replacement Proposals

A new tool from Manatt Health compares key features of “repeal and replace” proposals, including: “A Better Way” from House Speaker Paul Ryan (R); H.R. 3762 (the 2016 reconciliation bill vetoed by President Obama); the “Empowering Patients First Act” from HHS Secretary Nominee Tom Price; the “Patient CARE Act” from Senators Orrin Hatch (R) and Richard Burr (R) and Representative Fred Upton (R); and a series of proposals from the Heritage Foundation. Most of the proposals would cap Medicaid spending, and all would revise and reduce premium tax credits and other federal funding for healthcare coverage, and repeal the individual and employer mandates.

Report Details State Impacts of Proposals to Cap Medicaid Funding

A new brief for the State Health Reform Assistance Network, prepared by Manatt Health, reviews the potential impact of federal Medicaid funding caps—such as block grants or per capita caps—on states. The brief notes caps would likely be set below current projections of states’ funding needs, reviews potential approaches for setting capped payments, and discusses how each approach might respond—or not respond—to cost increases driven by advances in medical care, an aging population, enrollment increases that result from economic downturns, or unanticipated healthcare costs such as the opioid crisis or natural disasters. While states would likely have greater flexibility in program design, the brief notes that new performance or outcome requirements may also be imposed.

National Association of Medicaid Directors Identifies Issues for the New Congress and Administration to Consider

The National Association of Medicaid Directors (NAMD) published four documents aimed at the incoming Trump Administration and Congress: (1) key considerations for ACA repeal and replace initiatives; (2) key considerations for possible changes to the structure and financing of Medicaid; (3) guidance and recommendations for the Trump Administration’s first 100 days; and (4) NAMD’s 2017 legislative priorities. NAMD did not take a position on “broad political questions” around ACA repeal, but did identify several ACA provisions it would like to see maintained, including the MAGI income eligibility standard, prescription drug rebates in managed care programs, and support for existing health home programs. NAMD also asks the incoming Trump Administration and Congress to convene a workgroup of Medicaid Directors to provide technical expertise on proposed Medicaid changes, highlighting the importance of not exposing states to “the greatest inter-governmental transfer of financial risk in the country’s history.”

California: Governor Warns of Consequences of ACA Repeal

Governor Jerry Brown (D) warned that repealing the ACA "would have a devastating impact on hospitals, the university hospital system, medical providers, all matter of people in business," reports KGTV San Diego. Governor Brown spoke to reporters while attending the Western Governors' Association Conference in San Diego.

Florida: Governor Meets With HHS Secretary Nominee, Continues to Support ACA Repeal

Governor Rick Scott (R) highlighted his continued support for an immediate and full repeal of the ACA during a meeting with HHS Secretary Nominee Tom Price on December 13, according to The Hill. The Governor, however, also noted that the ACA "has to be replaced if you want people to have access to good quality healthcare."

Montana: Governor Urges Congress to Present ACA Replacement Prior to Repeal

Governor Steve Bullock (D) sent a letter to Republican Congressional leaders stating that Congress “should not rip healthcare away from tens of thousands of Montanans and millions of Americans without first presenting a real and viable alternative” to the ACA. The letter is a response to Congressional Republicans’ requests for ideas and recommendations for new healthcare legislation. The letter from Governor Bullock also highlights Montana's success at passing bipartisan legislation to expand Medicaid.

Rhode Island: Governor Worried About Impacts of ACA Repeal

Governor Gina Raimondo (D) expressed concern that a “not-thoughtful, too-quick unwinding of the Affordable Care Act” could be “potentially devastating” in an interview with the Providence Journal. Repeal, she said, would prompt a need for a contingency plan to provide coverage for more than 70,000 Rhode Island residents.


HHS Issues Final Rule to Protect Abortion Providers From Losing Federal Funding

The Department of Health and Human Services issued a final rule that requires states to distribute federal funds for services related to contraception, sexually transmitted infections, fertility, pregnancy, and breast and cervical cancer screenings to qualified health providers, regardless of whether they perform abortions. The rule will take effect two days before the beginning of the Trump Administration, which may act quickly to repeal the rule.

MACPAC Recommends 5 Years of Additional Federal Funding for CHIP

The Medicaid and CHIP Payment and Access Commission (MACPAC) has recommended that Congress approve five years of additional federal funding for the Children’s Health Insurance Program (CHIP), which provides insurance coverage to more than 8 million low-to-moderate-income children. The program is currently funded through September 30, 2017. MACPAC also recommended extending the CHIP maintenance of effort provision through FY 2022 to “ensure a stable source of health care coverage” for children as lawmakers deliberate changes to the coverage environment.

CMS Announces New CPC+, Medicare-Medicaid ACO, and Next Generation ACO Opportunities, Terminates Prescription Drug Demonstration

CMS announced new opportunities for providers and payers to apply to participate in the Comprehensive Primary Care Plus (CPC+) model and the Next Generation ACO model for Medicare enrollees in 2018. CPC+ is a national advanced primary care medical home model. Participating providers will qualify for incentive payments starting in 2018 under the new Medicare Quality Payment Program, established by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). CMS also announced a new Medicare-Medicaid ACO model for individuals enrolled in both Medicare and Medicaid. Finally, CMS officials announced that it will not proceed with a proposed Medicare Part B prescription drug payment demonstration. The AMA and several specialty physician associations had opposed the demonstration.

FEDERAL AND STATE MARKETPLACE ACTIVITY: Has Largest Single Day of Enrollment Ever, Extends Enrollment Deadline

A record 670,000 people signed up for coverage on December 15, the initial deadline to enroll in coverage that begins on January 1, 2017. The enrollment deadline was extended to December 19 in response to the surge.

CMS Releases Final 2018 Marketplace Rules, Updates Risk Adjustment Model

CMS issued the final Notice of Benefit and Payment Parameters and the final Annual Letter to Marketplace Issuers for 2018. The notice updates the Marketplace’s risk adjustment model to better account for high-cost individuals and those enrolled for less than 12 months. The final rule follows an August proposed rule and also finalizes a May interim final rule on special enrollment periods and CO-OPs. CMS also published an FAQ on how the second lowest cost silver plan (the “benchmark plan”) is determined and an FAQ on broker compensation and discriminatory practices. The latter FAQ is in response to reports of issuers discouraging broker sales to higher risk individuals.

California: Marketplace Extends Enrollment Deadline Due to Enrollment Surge

Covered California, the State-based Marketplace, extended its enrollment deadline from December 15 to December 19 for coverage that begins on January 1, 2017, aligning with’s extension. More than 67,000 new consumers signed up for coverage between December 12 and December 16, a 5,000-person increase from the same time last year; more than 196,000 consumers have signed up so far this year.


Arkansas: Task Force Report Highlights Expected Cost Savings From Medicaid Expansion

The Arkansas Health Reform Legislative Task Force met for the last time to approve its final report, which includes findings and recommendations on health coverage in Arkansas, including the finding that continuing Medicaid expansion would save the State $637 million from 2017 to 2021. The report also estimates that changes already underway, including capping some mental health benefits and allowing managed care organizations to manage dental benefits, will yield an additional $963 million in savings over the next five years. The Task Force was created by Governor Asa Hutchinson (R) in January 2015 to study broader reforms to the State Medicaid program.

Georgia: House Democrats Continue to Push for Medicaid Expansion

House Minority Leader Stacey Abrams (D) said State House Democrats will continue to push the State to expand Medicaid when the Legislature returns in January. "I think the responsibilities of Democrats is to demand that if we are not going to take the obvious solution, then demand to Republicans what are you going to do about the healthcare crisis facing Georgia?" Abrams said.

Maine: Enough Signatures Collected to Place Medicaid Expansion on Ballot

More than 65,000 Maine voters signed a petition organized by Maine Equal Justice Partners, an Augusta-based advocacy group, to place Medicaid expansion on the ballot. The signatures must be filed before January 26, 2017 to allow Medicaid expansion to appear on the November 2017 ballot.

Michigan: State Recommends Retaining Separate Medicaid Behavioral Health Funding and Delivery Systems

The Department of Health and Human Services (DHHS) is recommending to the State Legislature that the State maintain separate Medicaid funding and delivery systems for physical and behavioral health, after stakeholders expressed concern about a proposal in the Governor's budget that would have allowed the State's managed care organizations to manage Medicaid behavioral health benefits. The 77-page interim report from DHHS makes 69 recommendations for improving coordination of behavioral and physical health services, including requiring providers to follow person-centered planning, universal screening for substance use disorders, and closing service and geographic gaps. The State will collect public comment until January 4, before submitting the interim report to the Legislature on January 15. An additional report on pilot recommendations for physical and behavioral health integration is due to the Legislature on March 15.

Tennessee: CMS Approves 5-Year TennCare Waiver Extension

CMS approved Tennessee's 1115 waiver extension to continue operating the State's Medicaid managed care delivery system—known as Tenncare—until June 30, 2021. The waiver extension continues federal uncompensated care payments at previously approved levels through June 30, 2017, allows the State to spend up to $708 million in uncompensated care funding during a “transition year” from July 2017 to July 2018, and sets a total limit on uncompensated care funding of $627 million beginning in July 2018. The waiver also requires Tennessee to develop a new uncompensated care distribution methodology by July 2018. Tennessee, which enrolls its entire Medicaid population in managed care, had negotiated multiple temporary waiver extensions after the waiver expired on June 30, 2016.


Alabama: Governor Creates Council on Opioid Misuse and Addiction

Governor Robert Bentley (R) signed an executive order creating the Alabama Council on Opioid Misuse and Addiction, which will be tasked with studying the State’s current opioid crisis and identifying strategies to reduce opioid-related deaths. The Council will hold their first meeting within the next six weeks.


Maryland: Department of Health and Mental Hygiene Secretary Stepping Down

Van Mitchell, who has served as secretary of the Maryland Department of Health and Mental Hygiene since January of 2015, is leaving the position to pursue opportunities in the private sector. Dennis Schrader, formerly the Secretary of Appointments and Deputy Secretary of Transportation under Governor Larry Hogan (R), will replace Mitchell.

Montana: DPHHS Director to Retire

Richard Opper will be stepping down after serving as the director of Montana’s Department of Public Health and Human Services since 2013. Opper led the agency during the implementation of the State’s Medicaid expansion program. Sheila Hogan, the director of the Department of Administration, will replace Opper.

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.

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