Manatt on Health Reform: Weekly Highlights - March 2016

by Manatt, Phelps & Phillips, LLP
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HHS approves waiver extending Medicaid coverage to Flint residents impacted by the water crisis; SCOTUS rules that states cannot require self-insured health plans to provide claims data; and seven insurers sign on to Colorado's State Innovation Model initiative.

STATE MEDICAID EXPANSION & REFORM UPDATES:

Alaska: Judge Dismisses Medicaid Expansion Challenge

A Superior Court judge dismissed the Legislature's lawsuit against Governor Bill Walker's (I) Medicaid expansion, which was implemented via executive order last summer. The court found that the Governor was within his rights to expand Medicaid without the Legislature's support, citing the Governor's authority to accept federal funds unilaterally for mandatory Medicaid enrollment categories. Governor Walker praised the decision while State Representative John Coghill (R), who has played a leadership role in the lawsuit, said the Legislature would appeal the decision to Alaska's Supreme Court.

Colorado: Seven Insurers, Including Medicaid, Join State Innovation Model Initiative

Seven insurers have signed on to the $65 million State Innovation Model (SIM) initiative, agreeing to provide value-based payments, share necessary and reasonable data on total cost of care and utilization of services, and measure progress against agreed-upon milestones among their primary care networks. Participants in the initiative, which will operate from 2015 to 2019, include Anthem Blue Cross Blue Shield, Cigna, Colorado Choice Health Plans, Kaiser Permanente, Rocky Mountain Health Plans, UnitedHealthcare and Colorado's Medicaid program.

Kentucky: State Launches New Website for Medicaid and Public Assistance Programs

The Cabinet for Health and Family Services launched Benefind, a new web portal through which residents can enroll in Medicaid, Supplemental Nutrition Assistance Program and the State's cash assistance program. Program enrollees can also use Benefind to renew benefits, check benefit amounts, report changes, upload verification documents, check claim status, make claim payments and receive electronic notices. The rollout of Benefind comes shortly after Governor Matt Bevin (R) announced plans to dismantle kynect, Kentucky's State-based Marketplace, and transition to HealthCare.gov by the end of the year.

Michigan: HHS Approves Expanded Medicaid Coverage for Children and Pregnant Women in Flint

Approximately 15,000 children and pregnant women affected by the water crisis in Flint are newly eligible for Medicaid coverage, and 30,000 current Medicaid beneficiaries are now eligible for expanded services under a new five-year waiver agreement approved by the federal government. Children and pregnant women (and their newborn babies) with incomes up to 400% of FPL who have resided in Flint's water system service area between April 2014 and a future date when the water system is deemed safe (to be determined by Governor Rick Snyder (R)), are eligible for coverage under the waiver and exempt from cost sharing or premiums. Enrollees will have access to all Medicaid benefits plus Targeted Case Management services and evaluation of potential sources of lead exposure in the home. Children and newborns will remain eligible until they turn 21, and pregnant women will be eligible for the duration of their pregnancy and for two calendar months post-delivery. Individuals with incomes above 400% of FPL have the option to buy in to the program. CMS was unable to accommodate Michigan's request for lead abatement activities through the 1115 demonstration but noted that agency staff are working with the State to develop an alternative option under Title XXI.

North Carolina: DHHS Moves Forward With Medicaid Managed Care Redesign

The Department of Health and Human Services (DHHS) outlined its plans to transition Medicaid to a managed care system operated through three statewide managed care organizations and 12 regionally-contracted provider-led entities operating as "prepaid health plans" (PHPs) for the Joint Legislative Oversight Committee on Medicaid and NC Health Choice. DHHS released a draft 1115 waiver and progress report indicating its intent to build on the State's medical home model by requiring PHPs to contract with and be accountable for "person-centered health communities" (PCHCs). These PCHCs would be responsible for community-based comprehensive care management. The draft waiver also includes a request for Delivery System Reform Incentive Payment (DSRIP) funding. DHHS plans to submit the waiver on June 1, 2016 and estimates a July 2019 launch of Medicaid managed care through PHPs, to be selected through a procurement process in 2018.

South Dakota: State Health Officials Prepare Medicaid Expansion Plan for Governor's Review

State health officials will present Governor Dennis Daugaard (R) with a Medicaid expansion plan that includes financial estimates by "early summer," according to comments made to the media by the State's health secretary to Rachana Pradhan of POLITICO Pro. The Governor will then determine whether to move forward with expansion and whether to do so during a special session in 2016 or during the regular 2017 legislative session. The Governor announced last week that he would not pursue Medicaid expansion during the remainder of the current session, despite a sought-after CMS policy change that broadens the scope of services for which the federal government will fully cover the cost of care for Medicaid-eligible American Indians and Alaska Natives. State legislators expressed mixed reactions to these developments, with Republicans welcoming the Governor's delay and Democrats expressing disappointment, according to media reports. Relatedly, a Senate committee voted last Wednesday to reject a proposal passed by the House of Representatives that would have required the Governor to seek explicit legislative approval for Medicaid expansion.

Wyoming: Coverage Program for the Uninsured Ends in House Committee

A bill requiring the Legislature to design a program to "provide greater health status improvements" than those provided by Medicaid for individuals who cannot "afford adequate health care" will not progress further during this Legislative session. Senate File 86, which would have also blocked the State from implementing Medicaid expansion prior to the Legislature's review of the new coverage program, never received a hearing in the House Committee of the Whole after its passage in the Senate.

FEDERAL & STATE MARKETPLACE ACTIVITY:

HHS Details Payment Notice Policies in Letter to FFM Issuers

In its 2017 Letter to Issuers in the Federally-facilitated Marketplaces (FFM), HHS outlines how it intends to implement provisions on standardized plans, network adequacy, discriminatory benefit design, and formulary review. Notably, FFM issuers will be permitted to offer multiple standardized plans at a single metal level if the plans are considered meaningfully different according to criteria detailed in the letter. The letter also provides details on time and distance standards for network adequacy of certain services, and provides process information on qualified health plan certification and rate filing, including the requirement for issuers to submit applications by May 11, 2016 for the 2017 plan year.

Kentucky: State Marketplace Closure Will Cost $236,000, According to Governor

Dismantling kynect, Kentucky's State-based Marketplace, will cost an estimated $236,000 according to Governor Matt Bevin (R), a figure that is in stark contrast to former Governor Steve Beshear's (D) $23 million estimate. Governor Bevin said the new cost estimate validates his decision to cut ties with kynect, calling it unsustainable and an unnecessary drain on the State's finances. Kynect is financed through a 1% assessment on private health insurance plans (which existed prior to kynect), that Governor Bevin has said he will use to fund the dismantling of kynect, and which the Legislature will be able to reallocate after the State transitions to HealthCare.gov.

FEDERAL HEALTH REFORM NEWS:

Supreme Court Limits States' Ability to Collect Claims Data

The U.S. Supreme Court ruled 6-2 that efforts by Vermont and at least 17 other states to require that health insurers provide them with claims data conflict with self-insured health plans' reporting requirements in the Employee Retirement Income Security Act of 1974 (ERISA). Liberty Mutual Insurance Co., which operates a self-insured health plan for its employees, brought the suit against Vermont saying that the State's law requiring insurers, providers, medical facilities and government agencies to report cost, quality, and utilization data violates federal law. The majority opinion argued that a patchwork of different state regulations could impose significant burdens on healthcare providers that would open them to liability. The dissenting opinion said that ERISA is meant to ensure self-insured plans offer appropriate coverage, and that Vermont was gathering data to improve healthcare quality and reduce costs. States that are collecting claims data say their databases will be incomplete and much less useful without data from all payers, an argument that was supported by the American Hospital Association and the Association of American Medical Colleges in an amicus brief. Approximately 93 million people are covered under self-insured plans.

ACA Coverage Gains Shared Widely Across Racial and Ethnic Groups, 20 Million Fewer Uninsured

The uninsured rate for non-elderly adults dropped by 43% between the beginning of the first open enrollment period in October 2013 and early 2016, reducing the total number of uninsured by 20 million, according to a new HHS report. The uninsured rate declined by nearly 53% for non-elderly black non-Hispanic adults, by nearly 51% for white non-elderly non-Hispanic adults, and by 27% for Hispanics. The newly insured include 6.1 million young adults, including those who gained coverage through the ACA's provision to allow young adults to remain on their parents' coverage through age 26.

HHS Broadens Eligibility for Health Information Exchange Enhanced Funds

HHS announced an initiative that will allow states to request 90% enhanced matching funds to develop health information exchange connectivity among a broader set of providers than was previously eligible, including long-term care providers, behavioral health providers, substance abuse treatment centers, and other types of providers that have not yet adopted health information technology. HHS anticipates the additional funding will increase the sustainability of health information exchanges and enable seamless sharing of health information and coordination of care across clinicians.

STATE STAFFING UPDATE:

Rhode Island: New Marketplace Director Named

Zachary Sherman has been appointed the new director of HealthSource RI, the State-based Marketplace. Sherman has been serving as acting director since November 2015 when former director Anya Rader Wallack left the position to lead the State's Medicaid agency. Sherman was an original member of the team that developed and implemented the Marketplace and was previously the chief of staff.

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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