Manatt on Health Reform: Weekly Highlights - November 2016 #4

Manatt, Phelps & Phillips, LLP

Manatt, Phelps & Phillips, LLP

CMS releases a wave of new regulations and guidance for Medicaid and CHIP; Michigan receives CMS approval for a lead abatement initiative; and Utah continues to push for its limited expansion of Medicaid coverage.


CMS Further Streamlines Eligibility and Enrollment Processes Across Medicaid, CHIP and HealthCare.Gov

CMS issued a final rule modifying eligibility provisions under Medicaid and CHIP in an effort to modernize and streamline eligibility and enrollment across Medicaid, CHIP and Marketplaces. The updates finalize selected provisions included in a January 2013 proposed rule. CMS codified those provisions deemed most needed to implement the ACA in a July 2013 final rule and the new final rule includes a “cats and dogs” set of provisions that addresses coordination of notices and appeals across health coverage programs, Medicaid for former foster care youth, coverage for newborns whose mothers were enrolled in Medicaid or CHIP at the time of their birth, presumptive Medicaid eligibility, verification of citizenship and immigration status and a number of other issues. At the same time, CMS issued a proposed rule that includes even more expansive detail on Medicaid and CHIP eligibility appeals that complements the final rule.

Proposed CMS Rule Would Prohibit New or Increased Medicaid Pass-Through Payments

CMS released a proposed rule consistent with recent guidance that would prevent states from adding new or increased “pass-through payments” into contracts with Medicaid managed care plans beyond those that were established as of July 5, 2016. Pass-through payments were addressed in the May 2016 final Medicaid managed care rule, which required these payments to be transitioned into payment arrangements based on service delivery, utilization and outcomes, but provided a 5-10 year transition period for certain provider types (hospitals, nursing facilities and physicians). CMS plans to leverage its contract and rate certification approval processes to ensure pass-through payments comply with regulations.

CMS Encourages States to Seek 1115 Waivers to Cover Former Foster Care Youth

CMS is providing new guidance and encouraging states to pursue a Medicaid 1115 demonstration waiver to provide Medicaid coverage to former foster care youth who aged out of foster care while living in a different state (the former foster care group is a mandatory eligibility group created under the ACA). CMS is also instructing fourteen states that currently use state plan authority to provide this coverage to convert to 1115 demonstration authority, as required under a new final rule published the same day as this guidance. These states must apply for a section 1115 demonstration by May 21, 2017 or risk losing their federal matching funds for this population. The bulletin also provides best practices for enrolling former foster care youth, including collaboration between child welfare and Medicaid leadership, coordinating data systems, training administrators and front-line staff, and educating youth about their coverage options.

CMS Memorializes Coordination of Benefits and Third Party Liability in New Handbook

States can now access a handbook that provides detailed guidance on the Coordination of Benefits and Third Party Liability (COB/TPL) under Medicaid state plans. Third parties (e.g., individuals, entities, insurers, or programs) pay for part of or all medical services provided under a state Medicaid plan. States must operate coordination of benefit programs to ensure that third parties pay their claims before the Medicaid program covers the remaining costs of care. The handbook covers a wide range of topics, including assignment of rights to third party payers, Medicaid state plan requirements, ways to identify third parties, claims payment methodologies, COB for Medicaid enrollees with Medicare coverage, COB and Medicaid managed care, and recovery from casualty/tort settlements and from the estates of deceased Medicaid enrollees.


Kansas: Hospital Association to Seek Medicaid Expansion Legislation With Newly-Composed Legislature

The Kansas Hospital Association (KHA) said it still intends to advance a Medicaid expansion bill with legislators during the 2017 legislative session in light of recent wins in the Legislature by pro-expansion Republicans and Democrats and despite the uncertainty that the Presidential election has brought to the healthcare landscape. Lieutenant Governor Jeff Colyer (R) indicated the Governor’s office would be willing to work with the Legislature "to create a Kansas solution that makes health care more affordable and available to Kansans." Governor Sam Brownback (R) has historically opposed expansion, though in February 2016 indicated a willingness to consider a Medicaid expansion program if it met certain requirements, such as budget neutrality. KHA crafted a Medicaid expansion plan in January 2016 modeled after Indiana's expansion program. Legislators introduced identical bills to implement the plan, known as "Bridge to a Healthy Kansas," neither of which were passed in last year’s legislative session.

Kansas: Provider-Commissioned Report Recommends Improved Efficiency for Medicaid Managed Care Organizations

A report prepared by Leavitt Partners for three Kansas provider-led organizations made a series of recommendations for improving the State’s Medicaid managed care program, known as KanCare, including simplifying and standardizing administrative functions, enhancing customer service to respond to enrollees’ needs, amending current managed care contracts to include a minimum medical loss ratio of 85%, and increasing transparency and oversight of managed care organizations. The report’s key findings include that KanCare has not measurably improved the quality of care for enrollees, and that the program’s projected costs are on track to hit approximately $3.5 billion in 2017, about $5 million below projected estimates.

Utah: Negotiations Continue With CMS Over Limited Medicaid Expansion, Delayed Start Likely

Utah officials will continue to negotiate details of its limited expansion of Medicaid coverage with CMS, though CMS is expected to request changes to the program that would likely delay implementation past the original January 1, 2017 start date, according to the Salt Lake Tribune. Utah's expansion plan is a limited extension of Medicaid coverage to approximately 16,000 Utahns, predominantly those living in extreme poverty, including the chronically homeless and those involved in the criminal justice system.


CMS Adds Medicaid to Its Online Drug Spending Dashboard, Updates Medicare Dashboard Data

CMS updated its Drug Spending Dashboards to include 2015 information on select drugs purchased for Medicaid enrollees, including drugs with high spending on a per-user basis, high spending for the program overall, and those with high unit cost increases in recent years. The interactive tool tracks changes in prescription drug prices and provides information on the availability of Evidence-based Practice Center (EPC) reports, which include evidence reviews regarding the effectiveness and risks related to certain drugs. This year’s dashboard also updates the 2014 information for Medicare drugs with 2015 data.

Block Grants and Per Capita Limits Would Likely Reduce Medicaid Benefits and Enrollment

A new issue brief from The Commonwealth Fund reviews the potential impacts of block grants and per capita spending limits on Medicaid services and enrollment and was published in response to public statements made by the incoming Administration and Republican Congressional leaders in support of restructuring Medicaid. According to the report, current proposals would “dramatically” reduce federal Medicaid spending by adopting “fixed-funding formulas” that separate funding levels from actual cost of care, creating funding gaps that states would have to absorb or offset by limiting enrollment or benefits. Block grants would likely reduce the number of Americans eligible for Medicaid and narrow coverage for remaining enrollees. While per capita spending limits allow for increases in federal Medicaid funding along with enrollment growth, states may still have to lower program costs (for example, by decreasing provider reimbursement rates) to avoid “significant” budget deficits.

Michigan: CMS Approves Plan for Lead Abatement Services

CMS approved a State Plan Amendment that allows Michigan to use approximately $24 million per year for five years on a Health Services Initiative (HSI) under CHIP for lead abatement services in eligible homes throughout the State. Homes are eligible if there is a Medicaid- or CHIP-eligible child under the age of 19 or a pregnant woman currently residing or visiting regularly. Homes in Flint will receive priority status. In March 2016, CMS approved a section 1115 demonstration that extended Medicaid coverage to children and pregnant women (and their newborn babies) with incomes up to 400% of FPL who resided in Flint’s water system service area between April 2014 and a future date when the water system is deemed safe. Michigan first sought approval for lead abatement activities in their 1115 demonstration; while CMS was unable to accommodate the request through the waiver, the agency worked with the State to develop the alternative option under the CHIP statute.

Virginia: New Legislative Subcommittee Established to Monitor Health Policy Changes Under Trump Administration

A new joint subcommittee of Virginia's Senate Finance and House Appropriations Committees will monitor health policy changes proposed by President-elect Donald Trump's Administration, according to the Richmond Times-Dispatch. The eight-person panel, to be appointed by the chairmen of the Appropriations and Finance Committees, will inform the budget committees on any potential changes to the ACA or other federal laws to enable the State to respond more quickly.


Illinois: CO-OP’s $70 Million Risk Corridor Lawsuit Dismissed

A federal judge dismissed a $70 million lawsuit brought against the federal government by Land of Lincoln Health CO-OP for outstanding risk corridor payments, citing the Chevron rule (which calls for judicial deference to administrative regulations) and stating that the agreements between the CO-OP and HHS "do not establish any contractual commitment pertaining to the risk-corridors program.” Land of Lincoln is one of several insurers to bring a lawsuit against the federal government over the ACA’s risk corridor program. It closed down in July, leaving approximately 49,000 customers to find new healthcare coverage.

Washington: Marketplace Releases Analysis of 2016 Data, Including on Use of Special Enrollment Periods and Churn

Nearly 10,500 enrollees on Washington Healthplanfinder, the State-based Marketplace, gained coverage during a special enrollment period (SEP) in 2016, 82% of whom qualified for a SEP due to loss of other health coverage, according to new data released by the Marketplace. The report also found low rates of “churn” (or, switching) between Marketplace and Medicaid coverage. In 2016, only 1.1% of qualified health plan (QHP) enrollees switched to Medicaid, and only 0.1% of Medicaid enrollees switched to QHP coverage. Between October 1, 2015 and September 1, 2016, QHP enrollment increased by nearly 10% (more than 16,000 people), while enrollment in the State’s Medicaid and CHIP programs through the Marketplace increased by approximately 2% (nearly 27,000 people).


Vermont: Governor Appoints Director of Health Care Reform to Green Mountain Care Board

Governor Peter Shumlin (D) appointed Robin Lunge, the Director of Health Care Reform in the Agency of Administration, to serve on the Green Mountain Care Board (GMCB), which is charged with ensuring that changes to the State’s health system improve quality and control costs. Lunge will replace Allan Ramsay whose term expired in September.

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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