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

by Manatt, Phelps & Phillips, LLP
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House Republicans append a Manager's Amendment to the AHCA; HHS tells states they will have increased flexibility on Medicaid; and Florida previews its 1115 waiver amendment requests.

ACA REPEAL AND REPLACEMENT ACTIVITY:

Manager's Amendment Added to House Repeal Bill Before Rules Committee Meeting

House leadership introduced late on Monday Policy and Technical Manager's Amendments to the American Health Care Act (AHCA), after the bill cleared the House Budget Committee the previous week by a vote of 19 to 17. In addition to all Democrats, Republicans Mark Sanford (SC), Dave Brat (VA) and Gary Palmer (AK) voted against the bill in the Budget Committee. The amended bill now moves to the House Rules Committee for a Wednesday vote; a House floor vote is anticipated on Thursday.

AHCA Would Cut Medicaid Funding by $19 Billion, in Addition to the $880 Billion Identified by CBO

A new brief from the Center on Budget and Policy Priorities argues that several American Health Care Act (AHCA) provisions were not accounted for in the Congressional Budget Office's (CBO) scoring of the bill and that these provisions would lower Medicaid funding by $19 billion in addition to the $880 billion reduction identified by the CBO. These provisions include: rolling back Medicaid eligibility for children to pre-ACA levels; lowering the Medicaid home equity disregard for seniors and individuals with disabilities; eliminating retroactive eligibility; and requiring states to redetermine expansion beneficiaries every six months.

State Analyses Project Coverage and Funding Losses Under the AHCA

Analyses conducted in both Republican- and Democratic-led states conclude that the American Health Care Act (AHCA) would lead to increased State and consumer costs, increases to the number of uninsured, and downward pressure on state budgets.

  • California. A preliminary analysis by Covered California, the State-based Marketplace, finds that the AHCA would "dramatically increase" out-of-pocket costs for older individuals and disproportionately impact those living in higher-cost areas, possibly resulting in coverage becoming unaffordable.
  • Colorado. The AHCA would cut $340 million in federal funding to the State in 2020, when the bill's Medicaid reforms would take effect, according to a report from the Colorado Health Institute. By 2030, the State will have lost a cumulative $14 billion in funding and 600,000 fewer people would be enrolled in Medicaid, most of whom would likely become uninsured.
  • Connecticut. A State analysis projects that the AHCA would lead to disenrollment of 34,000 Marketplace enrollees, cost the State more than $1 billion annually beginning in 2020, and increase premiums in all markets by more than 40%. The average resident would receive $2,115 less in Marketplace subsidies, with those over 60 receiving $5,000 less.
  • Massachusetts. Governor Charles Baker (R) sent a letter to the State's congressional delegation noting that under the AHCA, the State would lose at least $1 billion in federal revenue beginning in 2020 and $1.5 billion in 2022, followed by greater loses in subsequent years. Separately, a chart pack produced for the Massachusetts Coalition for Coverage and Care by Manatt Health and funded by the Blue Cross Blue Shield of Massachusetts Foundation also found that the State could lose some or all of its $1.5 billion in federal funding for Medicaid expansion.
  • Nevada. Coverage for more than 300,000 Medicaid expansion enrollees would be at risk under the AHCA, and the State would lose $300 million each year in federal matching funds, according to preliminary estimates from State officials.
  • Ohio. The State estimates that 750,000 Ohioans could lose Medicaid coverage under the AHCA if expansion was phased out. If the State maintains Medicaid expansion without the enhanced federal funding, State spending would rise.
  • Oklahoma. An analysis prepared for Governor Mary Fallin (R) and obtained by the Associated Press noted that: the AHCA "creates a huge subsidy cliff between Medicaid and the individual market"; per capita allotments for Medicaid enrollees do not account for cost changes that are beyond the State's control; and the 30% premium penalty for lack of continuous coverage would keep young people out of the insurance market.
  • Oregon. According to an Oregon Health Authority report, the State's uninsurance rate would triple to 15% by 2023 under the AHCA. Up to 465,000 Oregonians could lose health insurance from 2018-2026, with the phase out of Medicaid expansion accounting for 375,000 of those losses.
  • Vermont. The AHCA could cost the State $200 million in federal funding beginning in late 2019, according to the Agency of Human Services, which could force the State to lower reimbursement rates, reduce benefits, and cut other health programs that receive Medicaid funding.
  • Virginia. An analysis prepared by the Department of Medical Services found that under the AHCA, per-enrollee Medicaid costs would exceed federal allocations, despite Virginia's already low per enrollee Medicaid spending. The analysis estimated that Virginia's Medicaid program would lose $1.8 billion between 2020 and 2026 as a result.
  • Washington. If the AHCA is passed, the uninsured rate would increase from 6% to 15%, 700,000 people would lose health coverage, and the State would need to replace $1.8 billion in lost federal funding between 2017 and 2028 in order to maintain its Medicaid expansion, according to data released by Governor Jay Inslee (D) and Insurance Commissioner Mike Kreidler.

Republican and Democratic Governors Oppose Republican Health Reform Bill

Four Republican governors have sent a letter to Senate Majority Leader Mitch McConnell (R-KY) and House Speaker Paul Ryan (R-WI) arguing that the American Health Care Act (AHCA) shifts significant costs onto states and fails to provide states with sufficient flexibility in their Medicaid programs. In their letter, Republican Governors John Kasich (OH), Rick Snyder (MI), Brian Sandoval (NV), and Asa Hutchinson (AR) encourage Congress to focus on stabilizing the individual market, but also express support for reforming Medicaid consistent with the principles agreed upon by Republican governors during a recent National Governors Association meeting. Other Democratic and Republican governors also expressed a range of concerns over the bill:

  • Georgia. Governor Nathan Deal (R) stated that health reform proposals should not "punish" states that did not expand Medicaid.
  • Louisiana. Governor John Bel Edwards (D) submitted a letter to Congressional leadership supporting Medicaid expansion, which has decreased the State's uninsured rate from 22% to 12.5% and saved Louisiana $200 million in its first year of expansion.
  • New Hampshire. Governor Chris Sununu (R) expressed concern over the AHCA, pointing to the role Medicaid expansion has played in providing drug treatment in the State. An estimated 6,000 Medicaid expansion recipients have accessed drug treatment in New Hampshire.
  • South Dakota. Governor Dennis Daugaard (R) expressed his concern that the AHCA would require the State to take on more risk under proposed Medicaid funding changes, though he also said it is important to address the federal deficit.

Report Details Potential Impacts of Repealing the ACA's Eligibility and Enrollment Modernizations

A new brief for the State Health Reform Assistance Network, prepared by Manatt Health, reviews the potential impact of repealing eligibility and enrollment modernizations enacted under the ACA, such as streamlined rules for counting income and enhanced matching funds for improving and maintaining eligibility and enrollment systems. According to the brief, repealing the streamlined income counting standards, known as modified adjusted gross income rules, would require substantial system redesigns for State-based Marketplaces and HealthCare.gov.

Kaiser Brief Summarizes 35 State Responses to Congress's Request for Input on New Healthcare Legislation

A new brief from the Kaiser Family Foundation catalogs and analyzes publicly available responses from governors and insurance commissioners in 34 states and the District of Columbia to a request from House Majority Leader Kevin McCarthy (R) and Republican committee chairs for state input on new healthcare legislation. The brief notes that Democratic and Republican responses were not fully aligned with federal Republican proposals.

OTHER FEDERAL AND STATE HEALTH REFORM NEWS:

President Trump's 2018 Budget "Blueprint" Cuts $15.1 Billion from HHS Budget

The Trump Administration is calling for a $15.1 billion budget cut to HHS in the President's 2018 budget "blueprint," an 18% decrease from 2017. The blueprint contains few details but calls for significant cuts to discretionary programs including $6 billion from the National Institutes of Health and $403 million from health professions and nursing training programs. The blueprint also calls for doubling FDA user fees, and increasing funding for opioid misuse prevention by $500 million and for the Healthcare Fraud and Abuse Control program by $70 million.

Hargan Nominated as Deputy Secretary of Health and Human Services

The Trump Administration has nominated Eric Hargan to be Deputy Secretary of Health and Human Services. Hargan previously served in the same role during the George W. Bush Administration and is currently a shareholder in the Health and FDA Business Practice for the law firm Greenberg Traurig, LLP.

California: Bill to Increase Prescription Drug Cost Transparency Introduced

State Senator Ed Hernandez (D) introduced SB 17, which would require drug makers to alert purchasers before raising prices, and require health plans to report the proportion of premiums spent on prescription drugs. The bill is similar to SB 1010 introduced by Senator Hernandez last year, which the Senator withdrew prior to a vote after changes were made by a State Assembly panel.

Kentucky: Report Details Impact of ACA on Coverage and Access

The uninsured rate dropped from 13.6% in 2012 to 6.1% in 2015, the second-largest decline in the country behind West Virginia, according to a report published by the Foundation for a Healthy Kentucky. Both Medicaid/CHIP and individual market coverage increased significantly during that time and fewer Kentuckians cited delayed or skipped healthcare due to cost. The report also includes additional findings on access to care, cost, and quality by demographic categories, including race, ethnicity, age, and income.

FEDERAL AND STATE MEDICAID NEWS:

HHS Pledges to Allow States Additional Waiver Flexibility

HHS sent two letters to governors pledging to provide states with enhanced flexibility in their Medicaid programs. In a March 10 letter, Secretary Tom Price and CMS Administrator Seema Verma described a "new era" of state flexibility through a streamlined State Plan Amendment approval process; expanded "fast-track" waiver approvals; a review of managed care regulations; and a wider range of program options under 1115 waivers, including work requirements, cost-sharing, premiums, and health savings account-like features. In a separate March 13 letter, Secretary Price encouraged states to apply for 1332 waivers, particularly those seeking approval for high-risk pools or state-operated reinsurance programs.

Florida: Medicaid Agency Will Request Changes to Managed Care Waiver

The head of the State Medicaid agency sent a letter to HHS Secretary Tom Price outlining five changes the State will request to its 1115 managed care waiver: replace the State's various supplemental payment programs with a federal block grant; "modify retroactive eligibility"; discourage "uncoordinated and inappropriate ER visits" in order to "strengthen the relationship" between Medicaid enrollees and primary care providers; waive the rule requiring the State to submit its capitation rates to CMS for approval and allow the State to set its own network adequacy standards; and waive the "Access Rule," which requires states to assess how easy it is for fee-for-service Medicaid enrollees to access certain types of healthcare services.

Texas: Grant Intended to Replace Planned Parenthood Services Falters

An evangelical nonprofit that received a $1.6 million grant to increase patient rolls at women's health clinics that do not provide abortions has provided minimal outreach and failed to establish a helpline to help women access providers, according to an Associated Press review. The State acknowledged the problems and said it provided "quite a bit" of technical support including site visits to the grantee, which is best known for promoting alternatives to abortion, according to the Associated Press.

FEDERAL AND STATE MARKETPLACE UPDATES:

12.2 Million Enrolled in Marketplace Coverage During 2017 Open Enrollment

Approximately 12.2 million people selected or were automatically re-enrolled in Marketplace plans during the 2017 open enrollment period, down from 12.7 million in 2016. Average monthly premiums for the 83% of Marketplace enrollees that receive premium tax credits were $106 per month, the same as in 2016. Enrollees age 34 and under accounted for 36% of enrollments and those 35-54 accounted for 37% of enrollments, which is consistent with the 2016 age distribution.

Frequency of Television Advertisements Promoting Coverage Associated with Increased Enrollment

A new Health Affairs study finds that counties with higher frequencies of television advertisements promoting ACA coverage experienced higher rates of enrollment during the ACA's first open enrollment period, with government-sponsored advertisements for Medicaid having the strongest association with coverage gains. The study suggests that strategic investment in marketing and advertising during open enrollment could contribute to future coverage gains.

California: Open Enrollment Surpasses Projections

Covered California, the State-based Marketplace, announced 412,000 new consumers signed up for coverage and 1.3 million enrollees renewed coverage during the 2017 open enrollment period, outpacing initial enrollment projections. Speaking at the Covered California Board meeting, Peter Lee, the Marketplace's Executive Director, highlighted that strong participation from younger consumers has put the State on pace to have the best risk mix in the nation.

Minnesota: House, Senate Pass Bills Allocating Millions for State Reinsurance Pool

In an effort to stabilize the individual insurance market, the State Senate and House of Representatives passed similar bills that would provide between $600 million and $700 million in funding for a reinsurance pool to subsidize the cost of care for patients with high medical claims. The House and Senate will reconcile differences between the bills and merge them into a single proposal to be submitted to Governor Mark Dayton (D) for his signature. The House bill also directs the State to seek federal funding for the reinsurance pool by applying for a section 1332 waiver by July 2017. The bills were passed in response to 2017 premium rate increases for the individual market that ranged from 50% to 67%.

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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