Manatt on Health Reform: Weekly Highlights - July 2016

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Massachusetts extends coverage of Hepatitis C treatments and New Hampshire extends substance use disorder coverage to more Medicaid enrollees; Alaska’s Medicaid expansion now moves ahead uncontested; and CMS reports HealthCare.gov’s latest enrollment numbers.

FEDERAL AND STATE MARKETPLACE ACTIVITY:

Marketplace Coverage of Substance Use Disorder Treatments Varies Considerably, Report Finds

The ACA’s inclusion of substance use treatment as an essential health benefit expanded its availability “considerably,” but an Urban Institute report finds that coverage and cost-sharing requirements vary significantly across plans. The report examined Marketplace coverage in six cites (Albuquerque, Chicago, Kansas City, Los Angeles, Manchester, and Memphis) and found that Marketplace plans generally have fewer coverage restrictions for medically assisted treatments (MATs) for alcohol dependency compared to MATs for opioid dependency: MATs for opioid dependency are more frequently excluded from coverage and MATs for alcohol dependency tend to be placed in lower cost-sharing tiers than their opioid treatment counterparts. However, the cost-sharing tier in which each drug is placed varies considerably and each tier’s cost-sharing requirements—which can be substantial—further vary significantly across cities and by plan within cities (except in Los Angeles, because California’s benefit design is standardized). MATs’ sometimes substantial cost-sharing requirements combined with other restrictions, such as preauthorization, can hinder access to treatment. The report also found that outpatient substance use treatments are less restricted than inpatient treatments, though “considerable variation” exists between and within the study cities.

11.1 Million Consumers Enrolled in Marketplace Coverage at End of March

Approximately 11.1 million consumers effectuated enrollment in coverage through HealthCare.gov and State-based Marketplaces as of March 31, 2016, representing almost 1 million more than at this time last year, which CMS says demonstrates the strength of Marketplaces over time. Eighty-five percent, or 9.4 million consumers, received advanced premium tax credits to reduce premiums, and 57%, or 6.4 million consumers, benefitted from reduced cost-sharing if enrolling in a silver plan. CMS noted it will report on effectuated enrollment in Marketplace coverage on a semi-annual basis.

Nearly 500 Insurers Will Receive $7.8 billion in Reinsurance Payments for 2015

CMS will issue $7.8 billion in reinsurance payments to 497 insurers for the 2015 benefit year as part of the risk adjustment program instituted under the ACA to mitigate adverse selection and stabilize premiums. CMS also reported a strong correlation between paid claims, risk adjustment, and reinsurance transfers, which CMS says is confirmation the risk adjustment program is working as intended. Issuers with high paid claims amounts were more likely to have high risk scores and receive risk adjustment payments. For example, in the individual market, issuers with the lowest claims costs were, on average, assessed a risk adjustment charge of approximately 12% of total collected premiums, while issuers with the highest claims costs received a risk adjustment payment of approximately 11% of total collected premiums.

Connecticut: CO-OP HealthyCT Prohibited From Issuing or Renewing Policies, 40,000 Impacted

State Insurance Department Commissioner Katharine Wade announced that the Department has prohibited CO-OP HealthyCT from issuing new policies or renewing existing ones as of July 5, requiring its 40,000 policyholders to seek new coverage once their HealthyCT coverage expires. Coverage in individual plans will expire at the end of December 2016, while group plan members who renewed coverage on July 1, 2016 will maintain coverage through June 30, 2017; group plans up for renewal August 1, 2016 and beyond will not be renewed. Commissioner Wade cited contributors to HealthyCT’s financial instability, including a federally mandated $13.4 million payment that HealthyCT must make to CMS as part of the ACA’s risk adjustment program and anticipated risk corridor payments that were not received.

Minnesota: Blue Cross to Withdraw From Individual Market, 103,000 to Lose Coverage

Blue Cross Blue Shield (BCBS) of Minnesota announced it will stop selling policies on Minnesota's individual market (both on and off the Marketplace) starting in 2017, requiring 103,000 individuals to select a new health plan for 2017. Approximately 20,000 of the impacted consumers bought policies on MNSure, the State-based Marketplace. BCBS reported a loss of $265 million in 2015 and projected a $500 million loss in the individual market over the next three years. BCBS's subsidiary, Blue Plus, which currently covers 13,000 individual market consumers, will continue to offer HMO options on the individual market.

STATE MEDICAID EXPANSION NEWS:

Alaska: Legislative Council Drops Medicaid Expansion Lawsuit

The joint legislative council that sued Governor Bill Walker (I) over his executive order expanding Medicaid voted to drop its lawsuit after Superior Court Judge Frank Pfiffner ruled that the House could not substitute itself as the plaintiff in the case. The council's vote effectively ends the lawsuit. Pfiffner dismissed the lawsuit last March, ruling that Governor Walker had the authority to expand Medicaid without legislative approval. More than 17,000 individuals have gained Medicaid coverage since the expansion took effect last September.

Oklahoma: New Revenues and Savings Would Offset Most Medicaid Expansion Costs, Report Finds

A “considerable portion” of the cost of expanding Medicaid in Oklahoma would be offset by new revenues and cost savings generated by an expansion, according to a new report from Manatt Health commissioned by the Oklahoma Hospital Association. The report found that expansion would cost the State $739 million over five years though all but $196 million would be offset by savings and revenue including: increased availability of enhanced federal matching funds for current Medicaid enrollees ($301 million in savings); increased revenue from an existing 3% hospital assessment ($52 million in revenue); and lower general fund spending on uninsured care ($190 million in savings). Additional savings are possible due to CMS’ recent rule expanding the circumstances under which 100% federal funding is available for individuals who receive Medicaid services through the Indian Health Service (IHS). The new rule would lower the State’s cost of insuring both the expansion population and current Medicaid enrollees who access care through the IHS. The study’s findings also do not reflect the broader economic impact of expansion found in states that have expanded Medicaid, including job creation, and increased economic activity and tax revenue. The report estimates that 272,000 individuals would enroll in the new adult group under Medicaid expansion in 2019 after a “ramp-up” period.

Tennessee: Task Force Proposes Phased Medicaid Expansion

The Legislature’s health care task force has proposed expanding Medicaid to individuals with incomes up to 138% of FPL in two stages: first to military veterans and individuals with mental illness or substance abuse disorders, then to all individuals. The task force did not release a written version of the plan, though media reports indicate the program encourages integrating behavioral and physical health treatment and “includes a work and education component.” The second phase of the expansion would be contingent on the success of the first phase, based on metrics that may include costs per member, enrollment levels, health outcomes and emergency room utilization. Task force chairman Cameron Sexton (R) said he expects there will be several months of negotiations with the federal government prior to presenting the proposal to the Legislature. Separately, the federal government authorized a two-month temporary extension of the State’s Medicaid managed care waiver, while State and federal officials continue to discuss uncompensated care pools, according to Modern Healthcare.

FEDERAL AND STATE MEDICAID REFORM UPDATES:

Report Details Medicaid Strategies for Combating Opioid Addiction Epidemic

A new report from the Robert Wood Johnson Foundation and Manatt Health details the role Medicaid can play in fighting the nationwide opioid epidemic. The authors explore a variety of strategies that state Medicaid programs can use to prevent and treat opioid use disorders and other substance use disorders (SUDs), including tailoring benefit designs, implementing Health Homes targeted towards individuals with opioid use disorders and other SUDs, and leveraging Medicaid’s purchasing power to expand use of best practices in SUD prevention and treatment. The report also details how states can use 1115 waivers to draw down additional federal funding to transform the payment and delivery of SUD services. For example, under an 1115 Delivery System Reform Incentive Payment (DSRIP) waiver, New Hampshire is creating regional integrated networks of physical health, behavioral health, and social service providers. Through 1115 waivers, states can also institute strategies to strengthen behavioral health workforce capacity; implement targeted clinical programs for beneficiaries with SUDs such as community re-entry for justice-involved populations and school-based substance abuse screening; expand SUD benefits beyond a state’s standard Medicaid benefit package or to populations that would not otherwise be eligible for Medicaid; and increase access to care management and care coordination services. The report’s authors conclude that Medicaid is “the most powerful vehicle” states have to fund and deliver treatment and prevention services for opioid addiction, particularly for states that have expanded Medicaid, noting that the expansion population has a higher prevalence of SUDs than those eligible for traditional Medicaid.

Florida: Lawsuit Settlement Aims to Increase Medicaid Children’s Access to Services

A U.S. District Judge approved a settlement agreement that requires Florida to establish, through its contracted Medicaid managed care organizations, an “Incentive Plan” under which pediatricians and obstetricians have a “reasonable opportunity” to earn Medicare-equivalent reimbursement rates, beginning in October of this year. The settlement ends a 10-year-long class action lawsuit between the Florida Academy of Pediatrics, the Florida Academy of Pediatric Dentistry, parents of children enrolled in Medicaid, and the State. The settlement also requires Florida's Agency for Health Care Administration to ensure that Medicaid managed care plans meet certain national benchmarks, such as increasing the percentage of Medicaid-enrolled children receiving preventive medical and dental care. Additionally, the State will be required to resolve specific difficulties with eligibility and enrollment for children, such as improper terminations of eligibility. A federal court will retain jurisdiction of the case through 2022 to ensure the State fulfills the requirements of the settlement, which is being funded out of Medicaid program savings.

Massachusetts: State Negotiates Drug Rebate Program to Expand Access for Hepatitis C Treatment

MassHealth (Medicaid) announced that it successfully negotiated a new drug rebate program with two drug manufacturers for Hepatitis C treatments. The program, which goes into effect in August, is expected to expand treatment options for any Medicaid-enrolled individual who has the virus, while holding the State’s annual treatment costs steady at $200 million. Between December 2013 and January 2016, MassHealth covered Hepatitis C drugs for approximately 4,430 members at a total cost of $318 million.

New Hampshire: Substance Use Disorder Benefits Extended to More Medicaid Enrollees

The State Department of Health and Human Services (DHHS) extended substance use disorder (SUD) benefits that are already covered for the State’s Medicaid expansion population to 140,000 traditional Medicaid enrollees as of July 1, 2016. The more comprehensive set of SUD benefits is available through both fee-for-service and managed care and includes screening services, residential treatment, opioid treatment programs, recovery support services, and recovery monitoring, among others. The expansion of SUD benefits to traditional Medicaid enrollees will also support existing initiatives under the State’s recently-approved DSRIP demonstration, which includes an increase in SUD provider capacity and infrastructure.

Wyoming: Medicaid Reduces Benefits and Provider Rates in Response to Budget Cuts

A $90 million Department of Health (DOH) budget cut for the fiscal year 2017-2018 biennium, announced by Governor Matt Mead (R) last month, went into effect on July 1; DOH will also lose $43 million in federal matching funds. More than half of the State budget cuts ($54 million) come from Medicaid. In response to those cuts, DOH has planned to end dental and vision services for adult Medicaid enrollees, with the exception of emergency services, and to reduce most provider reimbursement rates by 3.3%, among many other cost-saving measures. Governor Mead has argued that if the State had expanded Medicaid, the cuts would not have been as severe.

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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