Manatt on Health Reform: Weekly Highlights - May 2015 #2

by Manatt, Phelps & Phillips, LLP

Latest numbers show dramatic post-ACA coverage gains; in California, an increase in dental-related ER visits follows cuts to Medicaid dental benefits; and the Massachusetts governor requests to maintain its definition of “small group employer” until the State can apply for a 1332 waiver in 2017.


Dramatic Gains in Health Coverage Since Affordable Care Act

Three new reports out this week confirm substantial growth in health coverage since the ACA. A study by RAND in Health Affairs found that 16.9 million more people have health insurance coverage now than before the ACA was implemented. Since September 2013, 22.8 million people gained coverage, including 11.2 million consumers in Marketplace plans and 9.6 million newly enrolled in Medicaid, while 5.9 million people lost coverage—those who lost coverage either became uninsured or found different coverage. In related news, CMS reports that 70.5 million individuals were enrolled in Medicaid and CHIP through February 2015, up by more than 11.7 million post-ACA. Finally, the Kaiser Family Foundation found that the individual market, both inside and outside the ACA established Marketplaces, grew to 15.5 million people in 2014, an increase of 46% compared to 2013.

$101 Million to Establish New Community Health Centers

The Department of Health and Human Services announced that $101 million in funding provided by the Affordable Care Act has been granted to 164 new health center sites in 33 states and two U.S. Territories. The Department estimates that the new centers will increase access to services for 650,000 individuals and add to the current network of 1,300 health centers that provide care to nearly 22 million patients, an increase of more than 5 million patients since the beginning of 2009.


Florida: Negotiations on Uncompensated Care Funding and Medicaid Expansion Continue

After Governor Rick Scott’s (R) meeting with Health and Human Services (HHS) Secretary Sylvia Burwell regarding the renewal of Low-Income Pool (LIP) funding for Florida safety-net hospitals, HHS reiterated that Florida “falls short of the key principles HHS will use in considering proposals regarding uncompensated care pool programs,” and Governor Scott filed an injunction request with the U.S. District Court in Florida to order HHS to review LIP renewal separately from Medicaid expansion. Additionally, Governor Scott issued an executive order formalizing the Commission on Healthcare and Hospital Funding that will analyze the revenues of Florida hospitals, insurance and healthcare providers, while the House and Senate announced that their legislative special session will run from June 1 through June 20. Prior to the end of this year’s legislative session, the Senate passed a budget that included Medicaid expansion and LIP funding; the House passed an amended version that excludes both.

Montana: Federal Officials Express Concern with Medicaid Expansion Requirements

The Obama administration expressed concern with the cost-sharing requirements included in the Medicaid expansion recently signed by Governor Steve Bullock (R), but noted its willingness to work with the State to address any issues. In its current form, the law would impose copays and monthly premiums on enrollees with incomes between 50% and 138% of the federal poverty level (FPL), though federal law prohibits premiums for Medicaid enrollees with income less than 100% FPL absent a waiver. State Senator Ed Buttrey (R), who sponsored the bill, commented that he had been in communication with the Obama administration regarding the requirements and acknowledged that Montana would be requesting more flexibility than CMS has granted to-date. The State intends now to draft a waiver plan and release for public comment before submitting it to the federal government.


Connecticut: Marketplace Insurers File Proposed Rate Increases

Carriers selling insurance on and off of Connecticut's State-based Marketplace, Access Health CT, submitted rate increases to the Connecticut Insurance Department last week ranging from 2% to 14%. The lowest rate increase was submitted by ConnectiCare Benefits Inc., which has the highest number of Access Health CT enrollees and anticipates a slightly younger population of enrollees in 2016. The highest rate increase came from HealthyCT, which lowered its rates between 2014 and 2015. Generally, carriers’ rates suggest that they expect the needs of the newly insured for 2016 to stabilize now that the marketplace has been operational for a year despite anticipated cost increases, according to the Hartford Courant. The Insurance Department will now analyze the proposed rate increases and accept public comment on them before determining whether they will be approved for the 2016 plan year.

Massachusetts: Governor Requests Maintenance of Small Group Definitions and Rating Factors for SHOP

Governor Charlie Baker (R) requested from CMS an extension of the State’s current definition of a “small group employer” as a business with 50 or fewer employees until the State is authorized to apply for a 1332 waiver in 2017. According to the governor’s letter, Massachusetts will seek a Section 1332 waiver that defines the small group market as 1-50 employees. Additionally, the governor requested an indefinite extension to its current transition period to allow the continued use of the State’s small group rating factors to lend stability to the Marketplace premiums.


California: Study Highlights Increase in Emergency Room Visits after Adult Dental Medicaid Benefit Cuts

After California removed adult dental benefits from its Medicaid program in 2009, hospitals recorded an increase of 1,800 emergency room visits for dental-related issues, according to a new study in Health Affairs. In addition, the authors estimated that the cost of emergency room visits for dental issues increased by 68% after the policy change.

Kentucky: Hospital Association Releases Report on Financial Health of State Hospitals

The Kentucky Hospital Association released a report detailing the current financial stressors on the State’s hospitals. The analysis found that the benefits derived from increased coverage through the State-based marketplace and Medicaid expansion did not offset the cuts that the hospitals are facing due to factors such as low Medicare and Medicaid rates. The report noted significant workforce and access implications, particularly in rural communities.


Georgia: State Considering Options to Care for the Uninsured

Governor Nathan Deal (R) stated that Georgia stakeholders led by large public hospital Grady Memorial are “explor[ing] the possibilities of covering people who are now uninsured” through an 1115 waiver, which would allow the state “flexibility [to] provide greater coverage and more coverage.” Grady is working with other Georgia hospitals and healthcare facilities to develop a demonstration project that would provide funds to rural and safety-net hospitals for the delivery of intensive care management services to improve patient outcomes and decrease emergency department utilization. The governor and Legislature remain opposed to Medicaid expansion, but Governor Deal recently signed the State’s FY 2016 budget, which: authorizes the Department of Community Health to pursue an 1115 waiver; and, recommends that a task force of legislators, providers and State officials submit a plan to the General Assembly by August 1 outlining how to support safety-net hospitals’ provision of care to the uninsured in light of impending reductions in federal support for Medicaid Disproportionate Share payments.

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Manatt, Phelps & Phillips, LLP

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