Manatt on Health Reform: Weekly Highlights: November 2014 #2

by Manatt, Phelps & Phillips, LLP

With the conclusion of the midterm elections last week and open enrollment just around the corner, this week’s news highlights both renewed pledges from the opposition and a flurry of implementation activity in the states. Congressional leadership takes aim at the ACA, Medicaid expansion suffers a blow, state Marketplaces release 2015 health plan rates, federal officials announce more modest enrollment projections and new guidance on minimum essential coverage, and SCOTUS agrees to weigh in on subsidies. Read on for more details.


Senate Majority Leader Mitch McConnell Renews Commitment to ACA Repeal

In the wake of midterm elections that gave Republicans control of Congress, incoming Senate Majority Leader Mitch McConnell (R-KY) vowed to renew his commitment to repealing the ACA in a Wall Street Journal op-ed he co-authored with House Speaker John Boenher (R-OH). In a press conference, McConnell said that while he may not get the 60 votes needed to repeal the law in full, he plans to target provisions that are “unpopular among Americans,” including the medical device tax, the individual mandate, and the employer mandate.

Little Change for Medicaid Expansion Prospects in Opposition States

Midterm outcomes in several states where Medicaid expansion was at issue reduces the likelihood that these states – including Florida, Kansas, Maine, and Wisconsin – will shift course and expand Medicaid in the coming years. Even in Florida, where voters reelected Governor Rick Scott (R) who has publicly supported expansion, analysts predict Medicaid expansion will remain at status quo because the administration has not taken significant action to convince the legislature to move forward.

Arkansas: Governor-Elect Undecided on Private Option

Governor-Elect Asa Hutchinson (R) has indicated he will not announce his position on the Private Option (Arkansas’ Medicaid expansion program) until late January, at the earliest, according to the Arkansas News Bureau. At the same time, Republican majorities now hold 64 (up from 51) of the 100 seats in the House and 24 (up from 21) of the 35 seats in the Senate. To continue the Private Option – which currently covers more than 200,000 Arkansans and has been credited with Arkansas having the largest percentage point drop in its uninsured population in the country - the legislature is required to approve the program’s appropriation by a 75% supermajority on an annual basis. In 2014, the appropriation vote passed with one vote to spare as reported by the Arkansas Times.

California: Voters Reject Rate Review Proposition

Approximately 60% of Californians voted against Proposition 45 which would have authorized the State Insurance Commissioner to review and reject health insurance rate increases. As a result, Covered California will remain the primary rate review authority for qualified health plans offered through the Marketplace.

South Dakota: Voters Approve “Any Willing Provider Measure

Voters in South Dakota passed by a 62% margin a measure requiring insurers to include all providers that are willing and qualified in their health plan networks, according to the Argus Leader. While supporters successfully argued that the measure will offer patients more freedom in choosing their physicians, critics assert it will cause premiums to rise.


U.S. Supreme Court Agrees to Hear Marketplace Subsidies Challenge

The U.S. Supreme Court announced it will hear an appeal to King v. Burwell, a high-profile case regarding the legality of subsidies offered on the federal Marketplace to low- and middle-income consumers.

HHS Revises Enrollment Projections

HHS announced 2015 enrollment projections and revised its estimate of individuals who obtained coverage through state and federal marketplaces in 2014. The agency anticipates 9 million to 9.9 million individuals will obtain coverage through the marketplaces for 2015, notably less than the Congressional Budget Office’s estimate that 13 million individuals would obtain coverage. HHS reduced the number of individuals who obtained coverage through the marketplaces in 2014 from 7.3 million to 7.1 million.

Window Shopping Opens Early on

The window shopping feature of went live five days before the official start of Open Enrollment. The updated feature enables individuals to preview health insurance plans before applying for Marketplace coverage, without having to input any personal information. Among other improvements, the site now displays plans after calculating an individual’s expected financial assistance package as well as a provider directory for each plan.

CMS and IRS Release Guidance on Minimum Essential Coverage

CMS released guidance clarifying the types of Medicaid coverage that are considered minimum essential coverage (MEC), including coverage for medically needy individuals, individuals covered under 1115 waivers, and certain low-income pregnant women. In general, coverage provided to low-income pregnant women is considered MEC if it is equivalent to full Medicaid benefits. However, the federal MEC approval process will differ for states depending on whether the state has chosen to cover all or some pregnant women in their state plan. The CMS guidance also addresses hardship exemptions and special enrollment periods for individuals enrolled in Medicaid coverage that does not meet MEC requirements. To ensure continuity for women who become pregnant while covered by QHPs with financial assistance, the IRS released related guidance indicating that such women will have a choice between staying in their QHP with financial assistance or enrolling in Medicaid.

Guidance Forthcoming on Hospitalization Coverage Requirements for Large Employers

The Obama Administration plans to release guidance clarifying that large employer plans that do not provide “substantial coverage” for inpatient hospitalization services or physician services will not meet minimum value requirements, according to a notice released by the Department of Treasury. Experts say the policy change would close an ACA loophole that enabled large employers to offer plans lacking hospital coverage, according to Kaiser Health News. The guidance is expected to be released next year.


California: Five Percent Increase in Proposed SHOP Premium Rates

Covered California announced proposed premium rates for the Small Business Health Options Program (SHOP) for the 2015 plan year. The proposed rates represent a 5.2% weighted average increase across the six health plans that participated in 2014. Covered California submitted the proposed rates to state regulators for final approval.

Delaware: Qualified Health Plan Rates Approved

The Delaware Health Care Commission approved qualified health plan rates for the 2015 plan year and discussed the process for updating plan standards for 2016. The 2015 rates increased between 1.5% and 16% across all metal levels except for bronze plans and were approved by the Insurance Commissioner.

Maine: Bureau of Insurance Publishes 2015 Rate Calculator

The Bureau of Insurance published a rate calculator with the 2015 approved rates for the three insurers offering plans on the individual Marketplace: Anthem Health Plan of Maine, Harvard Pilgrim Health Care, and Maine Community Health Options. The online calculator allows individuals to estimate premium costs based on family size, county of residence, age and smoking status.

Michigan: Marketplace Premium Estimator Unveiled

In anticipation of the 2015 Open Enrollment Period, the Michigan Department of Insurance and Financial Services released an online Marketplace Premium Estimator. Michigan residents can use the Marketplace Premium Estimator to calculate monthly premiums and available tax credits before purchasing health insurance through the federal Marketplace.

Rhode Island: New Carrier, More QHP Options and Stable Rates in 2015

Rhode Island announced that three carriers, up from two in 2014, will offer qualified health plans (QHPs) on the State-based Marketplace in 2015. The three carriers - Blue Cross & Blue Shield of Rhode Island, Neighborhood Health Plan of Rhode Island, and UnitedHealthcare - will offer 20 QHPs for individuals and 20 QHPs for small businesses on the Small Business Health Options Program (SHOP) Marketplace. This represents an increase from the 28 QHPs offered to individuals and small businesses in 2014. An analysis by NORC at the University of Chicago and The Commonwealth Fund found that 2015 premiums for individuals will remain on par with 2014 rates, averaging $280 for a 40-year-old non-smoker, while the benchmark plan premium will decrease by 12% to $260.

West Virginia: Cooperative Plan Delays Entrance into Marketplace

West Virginia Health Cooperative announced it will delay joining the Marketplace until 2016 due to the plan’s concerns about its capacity to handle the expected demand from consumers. As a result, only one issuer, Highmark West Virginia, is slated to offer products in the State Marketplace in 2015.


Colorado: Medicaid Cost-Reduction Program Results in $31 Million in Savings

The Accountable Care Collaborative (ACC) saved the Colorado Medicaid program $31 million on medical services during the 2013-2014 fiscal year. The ACC, which enrolls Medicaid beneficiaries in a Regional Care Collaborative Organization (RCCO), covers approximately 60% of Medicaid recipients. Beneficiaries enrolled in the ACC for more than six months used emergency room services 8% less and were readmitted to hospitals 33% less than non-ACC enrolled beneficiaries.

New Mexico: Human Services Secretary Resigns

Two days after her reelection, Governor Susana Martinez (R) announced the resignation of Human Services Secretary Sidonie Squier effective December 1, 2014. Squier led the Human Services Department, which operates the state’s Medicaid program since 2011. The Governor’s Office announced its intent to have a permanent replacement for Squier by early December.

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