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

Manatt, Phelps & Phillips, LLP

Oklahoma seeks federal approval for premium assistance program targeted to American Indians/Alaska Natives; Louisiana estimates $100 million in net savings from Medicaid expansion; and Vermont becomes the first state to submit a 1332 waiver to CMS.


Louisiana: State Estimates Over $100 Million in Net Savings in First Year of Medicaid Expansion

Governor John Bel Edwards' (D) administration estimates $155.3 million in State savings from Medicaid expansion in the first year of implementation, more than offsetting the estimated $51 million in costs, according to details released to media. The estimated savings would accrue from reduced uncompensated care payments, enhanced federal match for supplemental payments to safety net hospitals, shifting current Medicaid beneficiaries to the expansion group (which has a higher federal matching rate) and replacing general funds with Medicaid funds (for example, hospital costs for incarcerated individuals). These factors were excluded from former Governor Bobby Jindal's (R) administration's estimates of Medicaid expansion savings and costs. Governor Edwards announced the estimate in his "State of the State" address, at which time he also indicated a willingness to consider "personal responsibility" measures, such as co-payments, work referrals and healthy behavior incentives.

Oklahoma: 1115 Waiver Amendment Could Make Uninsured American Indians Eligible for Premium Assistance

The Oklahoma Health Care Authority (OHCA) submitted an 1115 waiver amendment to CMS requesting approval to establish the "Insure Oklahoma Sponsor's Choice Option," which would permit uninsured American Indians/Alaskan Natives up to 200% of the FPL to enroll in coverage sponsored by Indian Health Service Facilities, Tribal or Urban Indian Organizations (I/T/U). Medicaid would reimburse for the individuals' premium costs. OHCA estimates that more than a quarter of the State's uninsured are American Indians (80,000 individuals), and that the amendment would allow for 50,000 "potentially eligible" uninsured American Indians to gain coverage. The amendment, if approved, would be implemented January 1, 2017.


Massachusetts: New Law Places Tighter Control on Opioids

Governor Charlie Baker (R) signed landmark legislation aimed at addressing the State's opioid epidemic, which claims four lives per day in Massachusetts, according to the Governor's press release. The law is the first in the nation to limit first-time adult opioid prescriptions and all opiate prescriptions for minors to a seven day supply, with some exceptions. The new law also requires schools to provide education and awareness on opioid abuse, requires physicians to cross reference a prescription database before writing certain opioid prescriptions, and provides for ongoing education for providers. The bill was passed unanimously in both legislative chambers.

New Hampshire: New Division to Unify Response to Mental Health and Substance Abuse Challenges

Governor Maggie Hassan (D) announced the new Division of Behavioral Health within the State's Department of Health and Human Services (DHHS), established to promote the integration of behavioral health and medical care and to provide a unified response to the mental health and substance abuse challenges facing the State. The new division complements the recently-approved Delivery System Reform Incentive Payment (DSRIP) waiver, which promotes integrated care addressing the full range of beneficiaries' needs. It also aligns with implementation of New Hampshire's mental health class action settlement agreement, which significantly expands and enhances mental health service capacity in integrated community settings. Katja Fox, who has been serving as the Director of Strategic Integration for Behavioral Health and Substance Use Services, now serves as the director of the new division.

Vermont: Green Mountain State Seeks 1332 Waiver to Forego Online SHOP Platform

Vermont filed the first 1332 Waiver for State Innovation with CMS, seeking to waive the ACA requirement to establish an online infrastructure for the State's SHOP. The State aims instead to preserve its current system, which allows small employers direct enrollment through qualified health plan (QHP) issuers and choice among any available QHP. If approved, the waiver would become effective January 1, 2017. There are currently over 4,000 employers, representing more than 44,000 covered lives, enrolled in Vermont's SHOP.

HHS Releases Three-Year Evaluation of Community First Choice

HHS released its final report to Congress on the ACA's Community First Choice (CFC) benefit, which allowed states to provide long-term services and supports (LTSS) to eligible Medicaid enrollees in their homes or communities through their State Plans. The CFC benefit increases states' federal matching rate by six percentage points for covered services. The report presents findings as of March 2015—three years after CMS's final rule—including key factors impacting states' decisions whether to pursue CFC, the demographics of the approximately 300,000 individuals served by the program, states' LTSS expenditures and variation across programs. The report highlights recommendations from implementing states, which noted the importance of developing robust inter-agency communications among the "patchwork" of programs that serve individuals with physical or development disabilities. States also highlighted that local, state and federal funding and collaboration is critical for providing effective and accessible home and community based services. Four states (California, Maryland, Montana and Oregon) have implemented CFC; three others (Connecticut, Texas and Washington) have received approval to do so and two (Minnesota and New York) remain under review.


Maine: CO-OP Subject of Regulatory Dispute Following 2015 Losses

Maine Community Health Options (CHO), the State's largest individual market insurer and the sole profitable CO-OP in the country in 2014, is the subject of a dispute between the Maine Bureau of Insurance and CMS over its solvency. As reported by Jennifer Haberkorn with POLITICO Pro, the Bureau's concerns date back to December 2015, when it froze CHO's enrollment in targeted individual plans. Since then, the Bureau of Insurance sought receivership of CHO with the intent to terminate a portion of its individual policies, citing the CO-OP's possibly insufficient capital. CMS has opposed these changes, noting the potential disruptions of coverage. The Superintendent of Maine's Bureau of Insurance notified CMS that the State does not have funds to cover additional losses and requested that CMS share in the financial responsibility should CHO become insolvent.

Oregon: State Considers Vendors to Develop New State-Based Marketplace

Oregon's Department of Consumer & Business Services is considering four IT vendors (hCentive, Vimo, Softheon, and New Fields Technologies) for the development of a second State-based Marketplace (SBM) platform. Oregon's first SBM, Cover Oregon, experienced technical challenges when launched in 2012, resulting in the oversight board abandoning the platform to utilize in March 2015. The State must now decide whether to continue using, where issuers will be charged a 1.5% user fee (which is expected to increase to 3% in the future) according to recently-finalized CMS guidance, or build an SBM. Should the Department of Consumer & Business Services award a contract, 2018 would be the earliest a new marketplace could be up and running.

GAO Reports on CO-OP Premiums, Enrollment and Oversight

A new report from the Government Accountability Office (GAO) reviews trends in CO-OPs' premiums and enrollment, as well as CMS oversight of CO-OP performance, and finds that between 2014 and 2015, premiums in CO-OPs tended to decrease while enrollment generally increased. In 2015, CO-OP enrollment more than doubled to 1 million people; however, more than half of those enrollees were in CO-OPs that have since ceased operations. The GAO also found that as CMS's oversight "evolved" to focus on performance and sustainability of CO-OPs, the agency developed an "escalation plan" framework to identify, assess and, if necessary, determine an enforcement action for financial or operational issue. As of November 2015, CMS used its escalation plan with 18 CO-OPs, nine of which have since ceased operations. CMS responded to the GAO, saying that the agency continues to monitor CO-OPs' enrollment and has increased data and financial reporting requirements. CMS also noted that its goal is to make it easier for CO-OPs to attract outside capital and enter into new business relationships and that the agency will work with states' insurance departments to monitor CO-OPs that have ceased operations in order to minimize the negative impact on members and possibly recover loans.


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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