Maryland becomes the first State to mandate over-the-counter contraceptive coverage; Missouri plans to increase Medicaid asset limitations by 500% by 2021; and HHS' final rule extends protections against sex discrimination to the healthcare setting.

FEDERAL AND STATE HEALTH REFORM NEWS:

HHS Finalizes Rule on Discrimination in Healthcare

The Department of Health and Human Services (HHS) released a final rule on discrimination in healthcare on the basis of race, color, national origin, age, disability, sex, pregnancy, gender identity and sex stereotyping, under section 1557 of the Affordable Care Act. The final rule does not resolve whether discrimination on the basis of an individual's sexual orientation is a form of sex discrimination, instead clarifying that HHS's Office for Civil Rights will evaluate sex discrimination complaints on an individual basis to determine if they can be addressed by the provisions in this final rule. The final rule also requires healthcare entities to enhance language assistance for consumers with limited English proficiency and make information and facilities more accessible to individuals with disabilities. In addition to these procedural safeguards, the main substantive change under section 1557 is the extension of protections against sex discrimination to the healthcare setting. Existing laws already protected against discrimination based on race, age, or disability in most healthcare settings.

Supreme Court Declines to Rule on Contraceptive Mandate

The Supreme Court opted not to decide the merits in Zubik v. Burwell, in which religious organizations that were entitled to an accommodation from the Affordable Care Act's contraceptive coverage mandate argued that the accommodation itself imposed a burden on their exercise of religion. Instead, the Supreme Court vacated the lower court decisions and asked each of the appeals courts that have ruled on the issue to reconsider their decisions in light of information the plaintiffs and the government provided to the Supreme Court. In supplemental briefings submitted at the Court's request, both the government and the religious organizations said they would be satisfied with a solution that allowed the employees of religious employers to receive coverage for contraceptives without the employer needing to pay for the contraceptives and without the employer being required to notify their insurers or the government of their religious objections. Eight of the nine federal appeals courts that had previously ruled on this issue had concluded that the existing accommodation did not infringe on the plaintiffs' free exercise of religion.

Maryland: Governor Signs Expansive Contraceptive Bill Into Law

Governor Larry Hogan (R) signed into law the Contraceptive Equity Act, which eliminates co-payments and prior authorization for most contraceptive methods, including emergency contraception (the "morning-after pill") and vasectomies, for Medicaid beneficiaries and individuals enrolled in State-regulated insurance plans. The bill, which passed with bipartisan support, also requires carriers to cover a single dispensation of a six-month supply of prescription contraceptives. The bill was supported by insurers, who cited an anticipated decrease in unintended pregnancies. Maryland will become the first state to require insurers to pay for over-the-counter contraceptives when the law takes effect in 2018.

New York: Governor Creates Task Force to Combat Opiate Crisis

Governor Andrew Cuomo (D) announced a new multi-disciplinary Heroin Task Force charged with developing an action plan to combat the State's opiate addiction crisis. Lieutenant Governor Kathy Hochul (D) will lead "healthcare providers, policy advocates, educators, parents and New Yorkers in recovery" in increasing awareness of addiction, expanding statewide prevention and treatment programming, and improving recovery support services. The task force's work will build on Governor Cuomo's recent efforts to stem heroin and opioid addiction that include expanding opiate treatment services, launching a public awareness and prevention campaign, and implementing electronic prescription drug monitoring systems.

Oklahoma: Governor Authorizes State to Seek 1332 Waiver

The Governor signed SB 1386 authorizing the State to pursue a 1332 State Innovation Waiver to create "Oklahoma health insurance products" that improve healthcare quality while controlling costs. The legislation permits the State to submit multiple waivers, including an 1115 waiver to participate in a Delivery System Reform Incentive Payment Program or an uncompensated care pool. While the legislation does not dictate details of the waivers, it requires them to be consistent with the State's Health Improvement Plan, a healthcare transformation and public health improvement initiative being rolled out under a State Innovation Model grant. The legislation further authorizes the Oklahoma Insurance Department to begin conducting individual and small group plan rate reviews upon implementation of a 1332 waiver (Oklahoma is one of only five states that does not currently do rate reviews). The authorization is effective November 1, 2016; a waiver application could be submitted to the federal government early next year.

FEDERAL & STATE MEDICAID REFORM UPDATES:

Missouri: CMS Approves Expansion of Adult Medicaid Coverage for Dental Services

CMS approved a State Plan Amendment to extend dental coverage beyond emergency services to approximately 282,000 adult Medicaid enrollees—nearly 80% of the non-elderly Medicaid population. Governor Jay Nixon (D) announced in January that the collection of $35 million in unpaid taxes would fund the expansion of benefits for FY 2016; funding for FY 2017 was provided in the most recent State budget. The coverage will be effective retroactive to January 1, 2016, prior to which coverage was limited to treating traumas of the mouth, jaw, or teeth.

Missouri: Legislature Increases Asset Limits for Medicaid Enrollees

The Senate approved legislation to raise asset limits for Medicaid eligibility for seniors and people with disabilities, to $2,000 for individuals and $4,000 for families, by July 2017. The limit would then increase annually, to $5,000 for individuals and $10,000 for families by 2021. Missouri currently has the lowest asset limits in the nation—$1,000 for individuals and $2,000 for families—and is one of 10 states that has different eligibility criteria than the federal Social Security Income standard ($2,000 for individuals and $3,000 for families). The bill awaits Governor Jay Nixon's (D) approval, having been passed overwhelmingly by the House in late February.

Utah: Waiver Application for Limited Expansion Plan Defines Newly Eligible

The Department of Health (DoH) released a draft 1115 waiver application to expand Medicaid coverage to parents up to 55% of FPL and childless adults with no income who meet one of three eligibility criteria: (1) are chronically homeless; (2) are involved in the criminal justice system and in need of substance use or mental health treatment; or (3) are discharged from a state hospital or participate in Utah's General Assistance Program and need substance abuse/mental health treatment. The limited Medicaid expansion, approved by the Legislature in March, would enroll up to 16,000 low-income, uninsured Utahns beginning January 1, 2017 but would not be eligible for the enhanced federal match available for Medicaid expansion up to 138% of FPL. The DoH plans to submit the waiver for federal approval by July 1, and will host three public hearings and accept public comment through June 8.

FEDERAL AND STATE MARKETPLACE ACTIVITY:

Carrier Losses Not Expected to Impact Individual Market Viability, Report Finds

Despite losing $2.7 billion in 2014, the individual insurance market "will likely continue to be a large, viable" market due to mandated coverage and federal cost sharing and premium subsidies, according to a report from the McKinsey Center for U.S. Health System Reform. The report also found great variability in profitability across states and carriers. Nationally, financial performance varied widely: in six states, more than 75% of carriers were profitable; in California and Washington, 95% of carriers were profitable; however, in 18 states, fewer than 5% of carriers were profitable and six states had no profitable carriers. Additionally, authors found that the 30% of carriers that were profitable in 2014 covered 40% of the individual market. The report's authors conclude that such state-to-state variation suggests carrier-specific factors, such as network breadth and "managed plan design," likely influenced financial performance. This is supported by HMOs' lower losses compared to PPOs, and by HMOs' lower premium increases (half of PPOs' increases) in 2015 and 2016.

Humana Exiting Four Individual Markets

Humana announced its exit from individual markets in at least four states at the end of 2016: Alabama, Kansas, Virginia, and Wisconsin. The 25,500 people impacted by the change account for 3% of Humana's total individual market enrollment; 15,000 of those individuals are in Alabama, which is the only of the four states in which Humana offers Marketplace plans. Humana's exit from Alabama, along with UnitedHealthcare's recently announced exit, will leave the State with a single Marketplace carrier (Blue Cross Blue Shield of Alabama).

Some Marketplace Cost Sharing Rates Increased Moderately, Report Finds

Marketplace plans in 2016 saw moderate—though statistically significant—increases in out-of-pocket limits (7.1%), annual deductibles (10.3%), and copayments for non-preferred brand drugs (13.6%), according to a report from The Commonwealth Fund. Generic drug copayments were the only form of cost sharing that decreased (3.2%). The report attributes a portion of the overall increases in cost sharing to the greater number of bronze and silver plans offered, since they have less generous coverage. The report's authors also note that their figures may reflect aggregate changes, rather than year-to-year changes within a specific plan, and that the increases only apply to the 40% of Marketplace enrollees who do not receive cost sharing reductions. The authors conclude that future trends in cost sharing will be linked to trends in medical expenses, though future cost sharing increases in Marketplace plans are likely to be smaller than increases in employer-sponsored plans.

Report Examines Marketplace Tools to Support Consumer Decision-Making

Marketplace websites made significant strides during the third open enrollment period in providing consumers with decision support tools that allow them to select plans that align with their financial and medical needs, according to a report by the National Partnership for Women and Families. Manatt Health supported this study, an update from a 2015 analysis, by identifying new tools available on HealthCare.gov's window shopping feature and on State-based Marketplaces' websites, including customized cost estimators, integrated provider directories and prescription drug directories. The authors note that the tools represent a step forward for consumers but could still be strengthened. For example, future cost estimators could take into account specific medications or treatments and prescription drug directories could identify levels of cost sharing associated with specific medications.

California: Marketplace Premiums May Spike Next Year

Covered California's $308 million proposed FY 2016-2017 budget estimates that qualified health plan (QHP) premiums may increase an average of 8%—double the last two years' increases. The increase predominantly reflects the estimated impact of the 2017 expiration of the federal reinsurance and risk corridors programs, which were designed to financially buffer plans against high-risk enrollees. Final premium rates will be released in July after State officials conduct private negotiations with the State-based Marketplace's QHP issuers.