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Health Care Weekly Wrap-Up

Federal Update

Senate Permanent Subcommittee on Investigations Initiates Review into Income Verification Procedures for Tax Credits…

The Senate Permanent Subcommittee on Investigations, led by Chairman Rob Portman (R-OH), is launching an investigation into the Department of Health and Human Services’ (HHS) efforts to “assess eligibility and prevent improper payments” of the ACA’s premium tax credits through the federally facilitated and state-based exchanges. Portman’s letter to Secretary Sylvia Burwell asks a series of 15 questions on subsidy distribution and income verification. The letter highlights various reports from government agencies and the media that have shown how the systems are flawed, potentially harming a number of tax credit recipients and wasting taxpayer dollars.

…As Treasury Inspector General Report Finds IRS Unable to Manage Risk of Improper Tax Credit Payments

The Senate investigation into the premium tax credits coincides with the release of a report by the Treasury Inspector General for Tax Administration (TIGTA) on IRS compliance with annual

improper payment reporting requirements. In this report, the Treasury Department watchdog notes the complexity of the ACA premium tax credit (PTC) process and concludes, “Because the IRS and the Department of Health and Human Services are responsible for the administration of the PTC, improper PTC payments can result from weaknesses in either agency’s programs. As a result, the IRS cannot effectively assess the risk of PTC improper payments, estimate the improper payment rate and dollars, or establish corrective actions to address the causes of and reduce improper PTC payments.”

21st Century Cures Legislation Moving to Full Committee Markup

This week, the House Energy and Commerce Health subcommittee approved the 21st Century Cures bill, sending it to the full committee for markup next week. The latest draft of the bill was released this week and while it fills in a lot of the missing provisions from the previous draft, many details remain to be finalized. The bill now includes a section on interoperability of electronic health records, essentially putting teeth into existing law regarding EHR requirements that begin in 2018. The bill include $10 billion over five years in mandatory funding for the National Institute of Health. Chairman Upton has said that he hopes to find a funding offset to pay for the bill by next week.

Rep. Price Releases ACA Replacement

House Budget Committee Chairman Rep. Tom Price (R-GA) released a proposal for repealing and replacing the Affordable Care Act, an update to his previous proposal, “Empowering Patients First Act.” Among other reforms, the major provisions of his plan include repealing the ACA and providing refundable tax credits to individuals based on age. The bill also provides individuals with a one-time tax credit of $1,000 as a contribution to a health savings account to use for out-of-pocket expenses. Furthermore, it would limit the tax exemption available to those with employer-sponsored coverage and allow individuals to choose between the new tax credit or their current employer coverage.

House Passed a Bill to Ban Abortions after 20 Weeks of Pregnancy

This week, the House passed the Pain Capable Unborn Child Protection Act, voting 242-184-1 to place a federal ban on abortions after the 20th week of pregnancy. This is the same bill that Republicans were not able to bring to a vote in January due to disagreements over certain reporting requirements for rape victims.

National Roundup

California. The state’s exchange, Covered California, has released its proposed budget for fiscal year 2015-2016, with a focus on reducing expenses in order to avoid increasing fees charged to exchange customers. Covered California is proposing to spend $58 million, or 15 percent less, next year. After receiving $1 billion in federal grant money to establish and operate the exchange, under ACA rules the exchange must now fund future operations with non-federal money. The exchange will be funded by a fee assessed on exchange enrollees of $13.95 per member per month, the same amount as last year.

The exchange has also lowered future enrollment projections to less than 1.5 million to better align with the lower-than-anticipated enrollment of 1.4 million this year.

Florida. According to Governor Rick Scott, the House Energy and Commerce Committee will hold a hearing this summer on the controversy between the Obama Administration and Scott regarding the Administration’s connection of the ACA’s Medicaid expansion to continued federal funding for Florida’s Low Income Pool (LIP) program. Florida has filed a lawsuit against the Administration, claiming that connecting the two issues amounts to coercing the state into expanding Medicaid.

Hawaii. Hawaii’s state-based exchange revealed at the end of last year that it was facing a funding shortfall estimated at $28 million through 2022, and thus would not meet ACA requirements to be self-sustaining by January of 2015 without an infusion of state funding. The Hawaii State Legislature rejected a plan that would have allowed the exchange to stay afloat by issuing debt. Hawaii officials submitted a contingency plan to the federal government, at the request of CMS, to begin winding down exchange operations, transferring customers to the federal exchange and shifting some operations to state agencies. The future of the exchange remains uncertain as federal and state officials continue to discuss options.

Around Town

A study by the Kaiser Family Foundation analyzes national and state-level data on nursing homes’ quality scores based on CMS’s five-star rating system, finding that nearly 40 percent of nursing home residents are staying at homes with one- or two-star ratings.

A report by the General Accountability Office (GAO) analyzes the CMS approval process for new, extended or amended Section 1115 demonstrations (waivers) and finds a lack of clarity both with the criteria used for decision-making and with the intended use of the expenditures.

A letter sent from six bipartisan senators to HHS Secretary Sylvia Mathews Burwell requests a one-year delay in the FDA’s menu-labeling requirements for grocery stores and similar retail food establishments.

A policy brief from Health Affairs and the Robert Wood Johnson Foundation analyzes the implementation and impact of ACA’s temporary Medicaid primary care physician pay increase.

A study by American Action Forum, reports on ACA premium tax credit, economic and federal mandate impacts if the government loses in the King v. Burwell lawsuit now before the Supreme Court.

A report by the Government Accountability Office finds that, “[E]ach fiscal year from 2009 through 2011, the most expensive 5 percent of Medicaid-only enrollees accounted for almost half of the expenditures for all Medicaid-only enrollees. In contrast, the least expensive 50 percent of Medicaid-only enrollees accounted for less than eight percent of the expenditures for these enrollees.”

Clarifying guidance from the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury says that under the ACA, insurers must cover without any cost-sharing at least one form of birth control from the 18 FDA-approved methods.

Health Care Weekly Wrap-Up

Health Care Weekly Wrap-Up

Federal Update

Senate Passes GOP Budget

The Senate has passed the fiscal year 2016 budget conference agreement with a 51-48 vote, marking the first time Congress has passed a budget since 2009.

The budget lays out many of the congressional Republican policy priorities. As it relates to health care, the budget assumes significant Medicare savings but does not endorse specific policies to achieve the savings target. With regard to Medicaid, the Conference Report “…envisions Medicaid reform based on a framework proposed by the chairmen of the committees of jurisdiction in the House and the Senate, to modernize and improve the program while increasing State flexibility and protecting the most vulnerable populations.”

In addition, the bill instructs the relevant committees to draft legislation to repeal the Affordable Care Act (ACA) through the budgetary procedure known as reconciliation. Reconciliation allows the Senate to pass legislation with a simple-majority vote, avoiding the 60-vote threshold to overcome a filibuster.

Pioneer ACOs Have Saved Medicare $384 Million in Two Years

Accountable Care Organizations (ACOs) are one of the alternative payment models included in the ACA, and are a key element of the Administration’s overarching goal to transform Medicare payments toward value-based payments, rather than those based on volume. This week, Health and Human Services (HHS) Secretary Sylvia Mathews Burwell announced that the pioneer ACOs have saved Medicare $384 million in the two years since their launch.

ACA’s Risk Corridor Program Greatly Underfunded for 2014

The ACA includes three separate programs to mitigate risk for health insurers selling coverage on the law’s exchanges. One of these programs is called risk corridors, which is a temporary program intended to operate from 2014-2016. The program establishes a range of profits and losses for insurers, and shifts money from high-profiting insurers to those with high losses, in order to provide for the sharing of “risk” among insurers.

A new report by Standard & Poor’s says the ACA’s risk corridor program will be significantly underfunded for 2014. Budget neutrality means that the program can only make payments to unprofitable insurers to the extent it receives money from profitable insurers. In their report, Standard & Poor’s write, “Our study of risk-corridor receivables and payables recorded in U.S. health insurance companies’ 2014 annual financial statements found that receivables insurers booked for the ACA corridor far outweigh the payables. In fact, our study indicates that the risk corridor payables are less than 10% of the receivables insurers reported in 2014.”

IPAB Repeal Bill Surpasses 218 Cosponsors

This week, Representatives Phil Roe (R-TN) and Linda Sánchez (D-CA)announced that their bill, H.R. 1190, the “Protecting Seniors’ Access to Medicare Act of 2015,” has gained more than 218 cosponsors, including 19 Democrats, which puts the bill over the threshold number of votes needed to pass in the House. The bill would repeal the ACA’s Independent Payment Advisory Board (IPAB).

The ACA’s IPAB is a board of 15 appointed officials charged with enforcing a pre-determined spending target in Medicare. If Medicare spending surpasses the target, the board is tasked with finding savings to reduce Medicare spending by the applicable amount. The board’s recommendations can only be overridden by Congress if it can come up with a plan of comparable savings. The president has yet to appoint anyone to the IPAB.

National Roundup

California. A report by the HHS Office of the Inspector General (OIG) finds that Covered California, the state’s ACA exchange, needs to improve some of its websites’ security measures. The OIG found that the exchange has adopted security measures but that they have not always complied with federal requirements.

Florida. Republican Governor Rick Scott (R) met with HHS Secretary Sylvia Mathews Burwell this week to discuss an extension of federal funding for Florida’s Low Income Pool (LIP) Program for safety net providers, set to expire on June 30, 2015. The federal government has said that their decision to continue funding for the program will take Florida’s refusal to expand Medicaid into consideration. Governor Scott has filed a lawsuit against the Administration challenging the linkage of funding for LIP with Medicaid expansion, and has filed an injunction with a U.S. District Court judge in Florida to force HHS to reconsider extending funding for the LIP program without taking Medicaid expansion into account. Kansas and Texas, who both have similar supplemental programs for uncompensated care costs, intend to file amicus briefs supporting Florida in its lawsuit against the Obama Administration.

Pennsylvania. Democratic Governor Tom Wolf sent a letter to HHS Secretary Sylvia Mathews Burwell last week announcing Pennsylvania’s intention to establish a state-based marketplace in 2016, but indicating that the state would still depend on HealthCare.gov to facilitate enrollment. This would be a similar arrangement to what New Mexico, Oregon, and Nevada have with the federal marketplace in 2015. The governor indicated the letter was sent to satisfy the first requirement to move towards establishment of an exchange should the Supreme Court rule that subsidies are only available through state exchanges this summer.Governor Wolf also announced the successful transition of 121,234 individuals from the previous Republican Governor Tom Corbett’s Medicaid expansion alternative, “Healthy PA,” to the traditional Medicaid program.

From the States…

New York

This week, Capital Pro did two in-depth pieces on health care-related issues in New York. The first piece discusses the push by New York State health officials to embrace the national move to value-based payments. The article points out that while there is broad agreement that change is necessary and that value is the right target, there is no broad agreement as to what “value” means. Specifically, the article asserts that some of the state’s leading health care actors feel they’re racing toward a goal they don’t quite understand. The second piece talks about the state’s ambitious new health-information project, which state officials are likening to a new public utility. The article says that, thanks to public pressure from the state’s health department and a confluence of private market forces over the last few months, the state may be on the cusp of a breakthrough—positioning New York to be a national leader in health-information technology.

Around Town

The U.S. News & World Report Health Care Index analyzes the increase in consumer costs from 2000 to 2013.

An Issue Brief by Georgetown University Health Policy Institute for the Commonwealth Fund examines how states are regulating provider networks in addition to the ACA’s requirements.

Data from the RAND Health Reform Opinion study published in Health Affairs finds that between September 2013 and February 2015, 22.8 million people have gained health insurance coverage and 5.9 million have lost health insurance coverage, for a net gain in coverage of 16.9 million.

The annual health benefits report from ADP Research Institute tracks key health benefit metrics for a diverse sample of nearly 200 large employers from 2011 through enrollment for plan year 2015.

A scorecard on Medicare payment reform from the Catalyst for Payment Reform finds that more than 40 percent of Medicare fee-for-service spending in 2013 went towards increasing value.

A study published in Health Affairs finds that premiums in the ACA’s Small Business Health Options Program (SHOP) Marketplaces are about 7 percent cheaper than the same tier-level plans available off the exchange.

An analysis by the Kaiser Family Foundation estimates the impact of the ACA’s Medicaid expansion on health coverage, enrollment, and costs in the 21 states have not adopted the expansion.

Health Care Weekly Wrap-Up

Legislative Hearing on 21st Century Cures

On Thursday, April 30th, the House Energy and Commerce committee held a hearing to discuss the newly released discussion draft of the 21st Century Cures Act.  (Background, additional information, and a link to the full text of the current document can be found here).

This bill is seen as a significant and comprehensive legislative activity focused on biomedical research and regulatory reform.  The Bill will likely be introduced by the its prime sponsors – Committee Chairman Fred Upton (R-MI) and Rep. Diana DeGette (D-CO) – in the next few months and is likely to be added to the Prescription Drug User Fee Act (PDUFA) reauthorization in 2016.

Witnesses for the hearing included:

Dr. Kathy Hudson

Deputy Director for Science, Outreach, and Policy

National Institutes of Health

Witness Testimony (Truth in Testimony and CV)

Dr. Janet Woodcock

Director of the Center for Drug Evaluation and Research

US Food and Drug Administration

Witness Testimony (Truth in Testimony and CV)

Dr. Jeff Shuren

Director of the Center for Devices and Radiological Health

US Food and Drug Administration

Witness Testimony (Truth in Testimony and CV)


Patients are the cornerstone of 21st Century Cures and patients are now being included more often in the regulatory process surrounding rare and neglected diseases, and as part of the risk/benefit discussion.

  • FDA has already established a program called “Voice of the Patient,” and will facilitate 20 meetings with patients to incorporate their voices into the drug development process.
  • FDA realizes that patients are experts in their diseases and need to be heard.
  • FDA recognizes that the patient voice and experience needs to be organized in a way to include patient input in drug development.

Breakthrough status for innovative medical devices is seen as an important improvement to the device approval process.

  • Breakthrough status is seen as complementary with existing activity at FDA, but will speed access of the device to patients and providers.
  • Breakthrough status will allow for greater collaborations with the sponsors and FDA, including discussions about how to shift some of the data requirements from pre-approval to post-marketing commitments.

The growing role of biomarkers was discussed extensively, with Dr. Woodcock questioning whether new legislative language was needed to expand FDA’s use of biomarkers as part of the drug development process. It was specifically stated that “no additional authority” was needed surrounding biomarkers.

  • Although there are important new biomarkers coming online and regulatory acceptance of some of these biomarkers is slow, that is because not a lot of confidence currently exists, including how to make them robust.
  • FDA is already working collaboratively with the Biomarkers Consortium, the Critical Path Initiative, and the Accelerating Medicines Partnership to ensure new biomarkers (including genomic and proteomic technologies) are appropriately understood and used in the drug development process.

There was recognition of both the potential for increased burden on FDA in terms of producing at least 15 new Guidance Documents, as would be required by the current legislation, as well as the need to provide sufficient resources to allow FDA and NIH to accomplish the tasks that the legislation has defined.

Research on novel antibiotic development and antimicrobial resistance was discussed extensively. Some key points include:

  • NIH needs to have increased funding to address the development of novel antimicrobials and also novel ways to approach antimicrobial resistance.
  • Dr. Woodcock stated that antimicrobial resistance is one of the most important issues that need to be addressed and that not enough can be done to incentivize industry to address this problem.
  • There was agreement that the GAIN Act has been helpful, but again, not seen as doing enough to incentivize industry, and that additional incentives and regulatory flexibility may be needed (with appropriate labeling).
  • NIH stated that the antimicrobial research group within NIH is highly coordinated with industry in order to prevent duplication of ongoing industry research and development.

Continuous-flow drug manufacturing was discussed as an important innovation in manufacturing.

  • Continuous flow provides the opportunity to decrease waste, is seen as the future of drug manufacturing, and creates the ability to bring manufacturing back to the U.S.
  • FDA believes that continuous flow cannot be incentivized or accelerated fast enough and sees this as a critical innovation that needs to be invested in.
  • Some companies see the regulatory barriers (such as would occur if a company moved an approved product from batch to continuous-flow manufacturing) as a hindrance to adopting continuous flow, so grants and other incentives need to be brought to the table to reduce these barriers.
  • Continuous flow may have a high cost for entry, but should be a lower cost in the long run, due to higher-quality production, smaller manufacturing footprint, and less production waste.

The hearing had a lot of discussion about the role of children, women, and minorities in biomedical research and how, given the requirements of NIH to include these populations in clinical trials (as possible), data may be made more readily available to understand the response and treatment options for these populations.

The last question raised was whether there was anything significant missing from the discussion draft; suggestions included:

  • Inclusion of the necessary resources for FDA to implement the work that is envisaged.
  • Clarification of issues involving patient-level data-sharing mandates.
  • The belief that pediatric cancers are left out of the patient-centered therapeutics revolution and there needs to be a focus on pediatric cancers and cancer pathways that exist in children.

Please contact us if you’d like to discuss any of the issues raised in the bill or the hearing.

Legislative Hearing on 21st Century Cures

Health Care Weekly Wrap-Up

Federal Update

Democrats Introduce Bill to Repeal ACA’s “Cadillac Tax”

This week, Representative Joe Courtney (D-CT) introduced the Middle Class Health Benefits Tax Repeal Act, with 48 cosponsors, the vast majority of whom were Democrats. The bill would repeal the Affordable Care Act’s (ACA) excise tax on high-cost health plans. Beginning in 2018, the ACA imposes a 40 percent excise tax on high-cost, “Cadillac” health plans defined as any plan costing more than $10,200 for an individual and $27,500 for families. The tax is not indexed to medical inflation and will eventually affect a greater number of plans. The tax is opposed by both business and labor groups, including the Chamber of Commerce and the AFL-CIO.

Representative Frank Guinta (R-N.J.) has also introduced similar legislation. The Congressional Budget Office estimates that the Cadillac tax will generate $87 billion in revenue from 2016-2025.

House Passes GOP Budget Conference Agreement

The House has passed the fiscal year 2016 budget conference agreement which is expected to be voted on in the Senate next week. If the concurrent budget resolution passes, it will be the first time since 2009 that Congress has passed a budget.

As it relates to health care, the budget assumes the Senate budget proposal’s level of Medicare savings, which is the same as the President’s budget proposal. However, the budget does not offer specific policies to achieve the savings target, but instructs the relevant committees to find savings. However, the House has included an amendment that explicitly endorses the Medicare reform previously championed by former House Budget Committee Chairman and current House Ways and Means Committee Chairman Paul Ryan (R-WI), known as premium support. In regards to Medicaid, the Conference Report “…envisions Medicaid reform based on a framework proposed by the chairmen of the committees of jurisdiction in the House and the Senate, to modernize and improve the program while increasing State flexibility and protecting the most vulnerable populations.” In February, Senate Finance Chairman Hatch (R-UT) and House Energy and Commerce Chairman Upton (R-MI) released the Patient Choice, Affordability, Responsibility, and Empowerment (CARE) Act which they describe as a “blueprint” for replacing the ACA and reforming Medicaid.

In addition, the conference agreement would repeal the ACA through the budgetary procedure known as reconciliation. Reconciliation allows the Senate to pass legislation with a simple-majority vote, avoiding the 60-vote threshold to overcome a filibuster.

OIG Alerts CMS to Potential Issues with Exchange Establishment Grants

This week, the Office of the Inspector General (OIG) sent an alert to the Centers for Medicare and Medicaid Services (CMS) regarding the use of exchange establishment grants by state-based marketplaces (SBMs) for operational expenses. The law expressly prohibits the use of establishment grants for operational purposes after January 1, 2015, and requires SBMs to be self-sustaining.

The OIG found that CMS’s current guidance on what constitutes an allowable expense is unclear. The report continues by stating, “In media reports and during our review of SBMs’ budget information, we have observed that some SBMs face uncertain operating revenues in 2015 and future years. Because operating revenues are uncertain, there is a risk that SBMs might use establishment grant funds to cover operational costs.” The OIG recommends that CMS provide more detailed guidance for state-based marketplaces.

The federal government has awarded more than $5 billion in exchange grants to states to help build their marketplaces under the ACA.

21st Century Cures Discussion Draft Released

This week,the House Energy and Commerce Committee released a bipartisandiscussion draft of its 21st Century Cures Initiative, which launched about a year ago. The Committee also held a hearing to discuss the draft, where criticism was aimed at the lack of new funding for the Food and Drug Administration (FDA), despite the increased responsibility put on the agency.

According to Rep. DeGette’s (D-CO) press release, the discussion draft includes provisions to, among other things, incorporate the patient perspective in the discovery, development, and delivery process, increase funding for the National Institutes of Health (NIH), foster development of treatments for patients facing serious or life-threatening diseases, and repurpose drugs for serious or life-threatening diseases and conditions.

National Roundup

Florida. Republican Governor Rick Scott has officially filed a lawsuit against the Obama Administration for linking the renewal of funding for its Low-Income Pool (LIP) program to adoption of the ACA’s Medicaid expansion. The lawsuit claims that CMS’s coupling of the funding is coercive, and breaks with the Supreme Court’s decision in NFIB v. Sebelius, which established that the federal government cannot coerce states into expanding their Medicaid programs by withholding existing funds.

Montana. Democratic Governor Steve Bullock has signed a version of the ACA’s Medicaid expansion into law, becoming the 29th state to expand. However, the state still needs to submit a waiver to CMS and get it approved.

Utah. After failing to gain legislative approval of his Medicaid expansion proposal this past March, Republican Governor Gary Herbert has announced that Utah will start from scratch on a new Medicaid expansion proposal. The governor met this week with HHS Secretary Burwell to discuss the options.

From the States…

New York

It was reported this week that New York’s health department will be moving ahead with its $6.4 billion reform of New York’s Medicaid delivery system, despite the fact that the Federal Trade Commission (FTC) issued a warning last week that the plan may violate anti-trust law. According to the FTC, the state’s Certificate of Public Advantage (COPA) has the potential to encourage anti-competitive behavior, because “Allowing certain health care collaboratives to obtain COPA approval is likely to lead to increased health care costs and decreased access to health care services for New York consumers.” The FTC is specifically concerned about providers sharing competitively sensitive information and engaging in joint negotiations with insurance companies. The state Department of Health issued a statement in response, saying that the agency “does not anticipate that the issues the FTC raises will have any impact on the Performing Provider Systems (PPS) that are working to transform the Medicaid system to provide improved care at a lower cost.”

In other news, the New York State Health Foundation issued two reports this week that show value-based payments are making gains on the once dominant fee-for-service payment model in the state. According to the reports, which looked at commercial health care payments and Medicaid payments in 2013, approximately one-third of payments are now value-based.

Around Town

An estimate by Manatt Health Solutions for Maine Health Access Foundation finds that Maine’s Medicaid expansion costs in 2016 would be offset by savings generated from the greater federal matching rate and from replacing state General Funds with Medicaid funds.

An Issue Brief by the Kaiser Family Foundation looks at how nine safety-net hospitals have fared under the ACA’s implementation.

A study by the Institute of Medicine (IOM) outlines the core metrics for health and health care progress. Also, IOM’s name officially changed this week to “National Academy of Medicine.”

A report by the American Action Forum analyzes different aspects of the ACA’s impact thus far.

A study published in the Journal of the American Medical Association finds that Democrats received more physician contributions than Republicans did in the 2014 election cycle by ten percentage points.

An analysis by the Kaiser Family Foundation examines the experience of Ascension Health system’s 131 hospitals across 16 states and D.C. The report looks at a variety of measures including charity care, Medicaid shortfalls, and Medicaid discharges.

An analysis by Kaiser Family Foundation of insurance market data shows that the individual insurance market has grown from 10.6 million at the end of 2013, to 15.5 million individuals at the end of 2014.

Health Care Weekly Wrap-Up

Health Insurance Exchanges: State of the States

This week, CMS announced that 68,000 persons had signed up for coverage during the Special Enrollment Period (SEP) and a Treasury Inspector General for Tax Administration report showed that as of March 6, the Internal Revenue Service had received 66.7 million individual returns, with only 737,000 returns claiming a premium tax credit to subsidize enrollment in private insurance.

Read the full Health Insurance Exchanges: State of the States post on our Exchanging Views blog.

Health Insurance Exchanges: State of the States

Health Care Weekly Wrap-Up

Federal Update

CMS Links Uncompensated Care Pool Fund Requests to Medicaid Expansion

Last week, the Centers for Medicare and Medicaid Services (CMS) sent a letter to Florida outlining how the agency will review the state’s request for renewed funding for its Low Income Pool (LIP) program. The letter explained that the state’s Medicaid expansion status under the ACA was an important consideration in extending funds for the LIP program. CMS’s linkage of Medicaid expansion to other supplemental funding for providers has caused Florida Governor Rick Scott (R) to reconsider whether his state should pursue a Medicaid expansion. Further, Scott has pledged to sue the Obama Administration, claiming that linking the funds to expansion is coercive pressure to expand Medicaid, which the Supreme Court found unconstitutional in NFIB v. Sebelius.

This week, CMS told states in both expansion and non-expansion states that expansion status would be a part of their decision-making process when considering supplemental funding requests for the LIP program moving forward. Nine states have these types of additional uncompensated care programs: Arizona, California, Florida, Hawaii, Kansas, Massachusetts, New Mexico, Tennessee, and Texas.

Without ACA Subsidies, 90-Day Coverage Grace Period Would End in FFM States

Legal scholars are once again debating the potential outcomes of the forthcoming King v. Burwell decision, which will decide whether enrollees in states served by the Federally-facilitated Marketplace can continue to receive subsidies. Under the ACA, exchange enrollees who are receiving premium tax credits are able to maintain coverage through their insurer for 90 days if they fall behind on or stop paying their insurance premium. Thus, if the Supreme Court were to rule in King v. Burwell that residents in the 34 states with a federal exchange can no longer receive the ACA’s subsidies, the grace period would no longer apply. State protections would then apply, which typically only allow a grace period of 30 days.

As Brett Norman writes for PoliticoPro, “[T]he disappearance of the ACA’s 90-day grace period could make life more difficult for many of the 8 million-plus Americans now receiving subsidies. Not only would they see premiums spike because of the lost tax credits, they would lose that extra time to pull the money together to make up the difference and avoid plan cancellations.”

68 Thousand Signed Up for Coverage during Federal Tax Season Special Enrollment Period

This year, the Federally-facilitated Marketplace offered a tax time special enrollment period (SEP). This SEP was available to any individual who did not enroll in coverage during Open Enrollment 2, was required to pay the individual mandate penalty for lacking health coverage in 2014, and who met certain additional requirements. It provided these people the opportunity to obtain coverage and thus avoid the penalty next year. This week, CMS reported that as of April 13, more than 68,000 had signed up for coverage during the SEP, which runs until April 30.

Senator Ron Johnson Introduces Post King v. Burwell Legislation

Senator Ron Johnson (R-WI) has introduced legislation to address a potential Supreme Court ruling in King v. Burwell that would eliminate the availability of ACA’s tax credits in states with a Federally-facilitated Marketplace.

Johnson’s plan would allow exchange enrollee’s to keep their current health plan and subsidy until August 2017. New enrollments between now and then would be allowed, but without subsidies. The bill also repeals the law’s individual mandate, employer mandate, and benefit mandates.

National Roundup

Florida. As the state budget debate continues in Florida, Governor Rick Scott and the state House remain opposed to including Medicaid expansion in the budget. As negotiations continue, groups including the Hospital Association have been pushing hard for Medicaid expansion, claiming it will help alleviate the burden of uncompensated care costs. In response, the Governor and his Administration have put together a report showing the financial status and profits of hospitals. The Governor has also said he will launch a commission to “examine the revenues of Florida hospitals, insurance and healthcare providers and how any taxpayer money contributes to the profits or losses of these institutions in Florida.”

Montana. The State Senate has passed an amended version of the ACA’s Medicaid expansion and the bill is headed to Democratic Governor Steve Bullock’s desk, who has said he will sign the legislation. Once signed, Montana’s proposal will need to be approved by the federal government.

Puerto Rico. The Puerto Rico Healthcare Crisis Coalition plans to launch a lobbying campaign to protest low federal reimbursement for Puerto Rico’s Medicare Advantage plans. The coalition says that CMS plans to cut their plan payments by 11 percent in 2016 which will reduce payments to their health system by $1.2 billion. They claim that “Without federal action, the MA program will shut down on June 5, 2015.”

From the States…

A complete roundup of this week’s exchange action in the states is available through our State of The States: Health Insurance Exchanges publication here.

New York

Health-care related news out of New York this week seemed to revolve around State Comptroller Thomas DiNapoli, who late last week approved the award of a five-year, $565 million contract to Xerox from the state. The contract is for Xerox to redesign and operate the state Medicaid program’s information management system. The approval from DiNapoli came after his agency found that protests from competitors were based on insufficient grounds.

Then earlier this week, Comptroller DiNapoli released a new report showing that New York paid more than half a billion dollars over the past four years in improper Medicaid claims. The report titled “Ensuring Integrity in New York State Medicaid” lays part of the blame on the state health department and its management and oversight of the state Medicaid program. Particularly problematic, according to the Comptroller report, is the state’s electronic Medicaid claims processing system, or eMedNY, which is currently in the process of being replaced. The Comptroller report was met with a sharp rebuke from the state Medicaid director, Jason Helgerson, who characterized it as a “complete mischaracterization of the state of New York’s Medicaid program,” and said that almost all of the issues raised in the report have been addressed.

Around Town

A perspective article in the New England Journal of Medicine by lawyers Sara Rosenbaum and Timothy Westmoreland argues that the Medicaid reforms included in the proposed Patient CARE Act are unconstitutionally coercive in light of the NFIB v. Sebelius decision.

A survey by Genworth Financial examines the cost of long-term care in the U.S., finding that it continues to steadily increase.

The April Health Tracking Poll by the Kaiser Family Foundation shows that, for the first time since November 2012, Americans’ opinion of the ACA is more favorable than unfavorable by one percentage point.

An analysis from the Foundation for Government Accountability compares projections for Medicaid enrollment against actual Medicaid enrollment in 17 states that expanded Medicaid.

CMS guidance on exchange eligibility redeterminations and re-enrollment for 2016.

Health Care Weekly Wrap-Up

Health Insurance Exchanges: State of the States

This week, the Senate passed, and the President signed a bipartisan bill to replace the Medicare physician payment formula and extend CHIP funding, the Senate had a hearing on the implementation of the ACA’s tax provisions, and CMS named a new Medicaid director.

Read the full Health Insurance Exchanges: State of the States post on our Exchanging Views blog.

Health Insurance Exchanges: State of the States

Health Care Weekly Wrap-Up

Senate Passes and President Signs Bipartisan Bill to Replace Medicare Physician Payment Formula and Extend CHIP Funding

On Thursday afternoon, President Obama signed H.R. 2, the “Medicare Access and CHIP Reauthorization Act of 2015,” into law. The new law will replace the “Sustainable Growth Rate” (SGR) formula used to pay physicians and other professionals with new systems for establishing annual payment updates under Medicare. Payment rates will be frozen for the next three months and then increased by 0.5 percent for the last six months of 2015. From 2016 through 2019, payment rates will be increased by 0.5 percent per year. Starting in 2019, payments to providers will be adjusted depending on individual participation in an Alternative Payment Model (APM) or the Merit-Based Incentive Payment System (MIPS).

The Senate passed the bill late Tuesday night by a vote of 92-8 after Senate leaders had locked in a bipartisan agreement to vote on six amendments—all of which were rejected by the chamber. Efforts by conservative members who wanted offsets to pay for the entire cost of the package failed. The Congressional Budget Office estimated would add $141 billion to the deficit through fiscal 2025. The Office of the Actuary (OACT) at the Centers for Medicare and Medicaid Services (CMS) estimates the physician update will cost $150.5 billion over the next 10 years and the Medicaid and CHIP provisions will cost another $25 billion over 10 years. The package is partially offset with $62.2 billion in Medicare savings and $10.5 billion in the health insurance marketplace. The marketplace will spend less than under current law because individuals will stay on Medicaid and CHIP for longer periods.

Senate Hearing on Implementing the ACA’s Tax Provisions

The Senate Homeland Security and Governmental Affairs Committee held ahearing on Tax Day with testimony from Internal Revenue Service (IRS) Commissioner John Koskinen on the challenges of implementing the ACA. The Commissioner testified that roughly half of all recipients of the ACA’s premium tax credits are getting a lower refund through the tax credit reconciliation process, and another 45 percent are getting larger tax refunds. The reconciliation process requires tax credit recipients to reconcile the amount of tax credit they received with their actual annual income, in order to determine the amount of credit they were eligible for.

CMS Announces Grant Funding for Marketplace Navigators

CMS announced funding over three years to support Navigators in Federally-facilitated Marketplaces (FFM) and State Partnership Marketplaces. The extended funding period is intended to provide Navigators stability and cut down on start-up costs. A total of $67 million in grant funds is available for the first year.

ASPE Report on Medicare Spending Growth

A report from the Department of Health and Human Services’ (HHS) Assistant Secretary for Planning and Evaluation (ASPE) analyzes the per capita spending growth rate for Medicare beneficiaries since 2000. The report shows that the growth rate was much slower from 2009 to 2012, at 1.8 percent, compared to 5.9 percent from 2000 to 2008. The report shows there was even slower growth of just 0.2 percent in 2013. The report concludes that Medicare spent about $316 billion less between 2009 and 2013 than it would have spent had the 2000-2008 spending trend continued.

The report suggests several different reasons why spending growth has slowed, but does not quantify the degree to which any factor had an impact. These include the ACA’s changes to Medicare Advantage payments, the ACA’s productivity adjustments to Medicare providers, alternative payment models, and CMS’s program integrity activities.

CMS Names Wachino Top Medicaid Official

In an email sent to staff on Friday, CMS Acting Administrator Andy Slavitt wrote that Vikki Wachino, who has been serving as acting director of the agency’s Center for Medicaid and CHIP Services since late December, has been named Director of Medicaid. Wachino took on the role of acting director when Cindy Mann informed the agency of her departure in January.

National Roundup

Colorado. The cost of operating the state’s exchange, Connect for Health Colorado, is now projected to be much higher than originally anticipated. New financial projections estimate that it could cost as much as $44 million annually to sustain the exchange’s operations, higher than the previous $26 million estimate. This year, the exchange user fee is 1.4 percent, but may rise to 3.5 percent, matching the federal exchange, in order to finance exchange operations going forward.

Florida. Republican Governor Rick Scott announced this week that he intends to sue the Obama administration. The lawsuit will challenge CMS’s move to link renewed funding for the state’s Low-Income Pool (LIP) program and the ACA’s Medicaid expansion. CMS told Florida in a letter this week that the state’s Medicaid expansion status is “an important consideration” in weighing whether it will renew $2.2 billion in funding for the state’s LIP program, which funds safety-net providers. Current funding for the LIP program expires on June 30, 2015.

Montana. The Montana House of Representatives passed the state Medicaid expansion measure 54-42 Saturday morning. The compromise plan first passed by the state Senate, called “The Montana Health and Economic Livelihood Partnership (HELP) Act,” now has returned to the Senate for final approval because of amendments added in the House. Governor Steve Bullock (D) has said he will sign the bill if it reaches his desk.

From the States…

A complete roundup of this week’s exchange action in the states is available through our State of The States: Health Insurance Exchanges publication here.

New York

It was reported this week that New York’s Medicare Accountable Care Organizations (ACOs) are seeing mixed results one year into the program. According to tworeports from the United Hospital Fund, nine of 16 participants in the state’s program reported a total of $103 million in savings, while the rest of the participants reported losses totaling $49.5 million. Despite the losses, the leaders of the organizations reported an overall positive experience, and said that logistical challenges related to setting up networks had prevented them from realizing the full potential of the program.

Around Town

An Issue Brief by the Commonwealth Fund examines the requirements of the ACA’s State Innovation Waiver program and describes how states might use it.

A proposed rule by CMS for the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs makes changes to meaningful use requirements to align Stages 1 and 2 with Stage 3.

A survey by the Urban Institute finds that the uninsured rate has dropped by 15 million people since the ACA’s first open enrollment period began in October 2013.

A report by the Urban Institute looks at the recent slowdown in health spending growth by examining the national health spending projections from CMS, and finds the slowdown is likely for non-ACA related reasons.

A report by the American Mental Health Counselors Association says that states that have not adopted the ACA’s Medicaid expansion are restricting uninsured people from accessing mental health services.

A survey from the Commonwealth Fund analyzes health insurance and care utilization disparities in the four largest states, including both expansion and non-expansion states.

A report from the Competitive Enterprise Institute, the think tank behind King v. Burwell, claims that states knew that the ACA’s exchange subsidies were at risk when determining their marketplace structure based on emails and a letter sent to HHS by seven states.

Health Care Weekly Wrap-Up

Health Care Weekly Wrap-Up

Federal Update

Study Shows State-based Marketplaces Have Higher Attrition Rates and Fewer New Enrollees than Federal Marketplace

A report by Avalere Health finds significant enrollment differences between states running their own marketplaces and states relying on the federal marketplace, HealthCare.gov.

The study breaks down the percentage of 2014 enrollees that retained exchange coverage in 2015 and the number of new enrollees in 2015 for each state. On average, states using the federal marketplace retained 78 percent of their 2014 enrollees in 2015. In comparison, states operating their own marketplace only retained 69 percent of their previous customers. In addition, states on the federal marketplace had an average increase in new enrollees of 61 percent in 2015. In stark contrast, states running their own marketplaces only experienced a 12 percent average increase in new enrollments from 2014 to 2015. One of the possible causes of the disparity between state and federal marketplaces offered by Avalere is that “state exchanges had more enrollees who over-reported income in 2014.” In its report, Avalere specifically cites California’s experience, with the state shifting 200,000 private health insurance enrollees to Medicaid for 2015 due to changes in their eligibility. The District of Columbia, Idaho, Maryland, Massachusetts, Nevada, and Oregon are excluded from the analysis because complete data for these states were not available.

The latest enrollment reports show 8.8 million people signed up for coverage on the federal marketplace in 2015, and 2.8 million in State-based Marketplaces.

CMS Finalizes 2016 Payment Rate for Medicare Advantage

This week, the Centers for Medicare and Medicaid Services (CMS) released its final payment rate notice for Medicare Advantage (MA) plans. The final rate notice will see MA rates increase by an average of 1.25 percent in 2016. This is an increase from the advance payment notice released in February that estimated a payment decrease of 0.9 percent. The rate has changed because the CMS Actuary now estimates that the national per capita growth rate in fee-for-service Medicare will be higher, resulting in a higher average payment to MA plans.

Treasury Department Announces Penalty Relief for Marketplace Enrollees who Received Inaccurate Forms

This past February, CMS announced that approximately 800,000 people who bought coverage through HealthCare.gov in 2014 received a statement (Form 1095-A) that contained an error related to the second-lowest-cost Silver plan. Some State-based Marketplaces have also had similar problems sending out correct 1095-A forms. Following the misstep, the IRS encouraged most taxpayers to wait until they received a corrected form, but also said that any taxpayers that filed their taxes using information from the incorrect form would not have to file an amended return with the correct information.

Since then, CMS has sent the majority of those affected the proper documents, but there are still some enrollees who may not have received the updated information and thus cannot file an accurate return.

In response to this problem, last Friday the Treasury Department announcedrelief for individuals who cannot file an accurate return on time because they received an erroneous tax document relating to their exchange coverage. The Treasury says that individuals in this situation should file for an automatic tax extension by April 15, and will not be penalized as long as they file their taxes by October 15, 2015. However, persons filing for a tax extension still need to pay any estimated taxes they owe by the April 15 deadline.

CMS Proposes Mental Health Parity Rule for Medicaid and CHIP

This week, CMS issued a proposed rule that would extend the Mental Health Parity and Addiction Equity Act of 2008 to Medicaid managed care plans and the Children’s Health Insurance Program (CHIP). The law requires group health plans that provide behavioral health coverage to provide the benefit on the same terms as medical and surgical care. In 2010, the Affordable Care Act (ACA) applied the law to plans sold in the individual market.

CMS Releases “Doc-Fix” Cost Estimate

This week, CMS released an estimate of the financial effects of H.R. 2, the so-called “Doc-Fix” bill which has passed the House, and is awaiting approval in the Senate next week. The CMS report estimates that from fiscal year 2015 through 2025, the “Doc-Fix” bill would increase combined federal spending for Medicare, Medicaid, and the health insurance marketplace by $102.8 billion. The report also says that the physician payment updates included in the bill would “eliminate the significant and immediate problems with the current SGR formula approach,” and that by avoiding “implausible payment reductions,” the result would be a budget cost of $150.5 billion for fiscal years 2015 through 2025 compared to the current-law baseline. However, the report says that this cost would be partially offset by other provisions in the bill that are estimated to have a net reduction in federal expenditures of $47.7 billion—resulting in the $102.8 billion net cost.

While the short term impact on Medicare providers is positive, the CMS actuaries project that payments to providers in the long term will be less than under current law. Even physicians with “exceptional performance” would see a significant reduction in payments in 2025. The CHIP analysis will also likely garner attention in the Senate. While the House leadership described the legislation as a two-year extension, the additional federal funding will extend beyond 2017.

CMS Innovation Center Releases ACO Model Slides, Health Care Innovation Awards Evaluation Reports

This week, the CMS Innovation Center released slides on the “Next Generation ACO Model” which provide information on the timeline for preliminary beneficiary engagement, what next generation ACO entities may look like, as well as information on coordinated care rewards, benefit enhancements, implementation plans and voluntary alignment.

The Innovation Center also released seven evaluation reports related to their Health Care Innovation Awards. The Awards provide funding of up to $1 billion to organizations that are implementing the most compelling new ideas to deliver better health, improved care and lower costs to people enrolled in Medicare, Medicaid and Children’s Health Insurance Program (CHIP). Thus far, there is little hard evidence to report these projects as successes or failures for a variety of reasons including projects taking longer to establish, staff turnover, and small sample sizes. The evaluations promise that future reports will supply more complete information and hard data.

National Roundup

California. Covered California, the state’s public exchange, has announced that 18,000 people have signed up for coverage during the exchange’s tax season Special Enrollment Period. The Special Enrollment Period was created to give those who did not know or understand there was a tax penalty for being uninsured in 2014, or who learned they may face a penalty for 2015, the opportunity to sign up for coverage and avoid the penalty next year. The Special Enrollment Period is open until April 30, 2015.

Florida. Republican Governor Rick Scott has shifted his stance on the ACA’s Medicaid expansion and is now in opposition to Florida expanding the program. The shift comes amid budget negotiations that include a debate over the coupling of the ACA’s Medicaid expansion and the federal government’s continued funding for the federal Low-Income Pool (LIP) program that is scheduled to expire after June 30 this year. The LIP program provides federal funding for safety net providers. Governor Scott said in a statement, “We still have several weeks left for budget negotiations; however, given that the federal government said they would not fund the federal LIP program to the level it is funded today, it would be hard to understand how the state could take on even more federal programs that CMS could scale back or walk away from.”

Montana. The Montana state House voted on Thursday to pass a modified version of the ACA’s Medicaid expansion, offered by Republican Senator Ed Buttrey, that would require beneficiaries to pay premiums and participate in workforce development training. The bill was able to garner bipartisan support to pass out of the Republican-dominated state Senate last week but was voted down by the House Human Services Committee this week. However, Democrats then used a “silver bullet” to send the bill to the House floor for a vote, regardless of the Committee’s vote. According to Kaiser Health News, “In the early days of the legislative session in January, leaders from both parties agreed to give each other six “silver bullets” to “blast” pet bills out of unfavorable committees and onto the House or Senate floor for broader debates and votes.” Democratic Governor Steve Bullock supports expansion and is expected to sign the bill. If signed into law, the proposal still needs to be approved by CMS.

From the States…

A complete roundup of this week’s exchange action in the states is available through our State of The States: Health Insurance Exchanges publication here.

Around Town

A chart by The National Academy for State Health Policy projects when states will run out of their existing federal Children’s Health Insurance Program (CHIP) funds if Congress does not reauthorize program funding before its scheduled expiration on October 1, 2015. It shows that 10 states would run out of funding by the end of the calendar year.

A survey by the Employee Benefit Research Institute finds that both employers and workers decreased their contributions to health savings accounts (HSAs) in 2014. The study also says that 15 percent of the population (about 26 million people) were enrolled in a consumer-directed health plan that accompanied HSAs in 2014.

A report from the State Health Reform Assistance Network estimates savings and revenues by the end of 2015 will exceed $1.8 billion across eight states that have expanded Medicaid. The greatest source of savings to the state general funds has occurred because states have been able to shift certain high-cost individuals who were previously eligible under “medically needy” or disabled categories into the new adult eligibility group and claim the 100 percent federal match rate.

An analysis by the Urban Institute examines health spending projections made prior to the ACA, immediately after the ACA was enacted.

Health Care Weekly Wrap-Up

Health Insurance Exchanges: State of the States

This week, Avalere released an analysis showing that the Federally-facilitated Marketplace retained more consumers in private health coverage from Open Enrollment 1 to Open Enrollment 2 than many State-based Marketplaces and at Covered California’s Plan Management Advisory Group, staff proposed modifying the 2016 Standard Benefit Designs to put a “maximum ceiling on the consumers’ share of cost per prescription fill”.

Read the full Health Insurance Exchanges: State of the States post on our Exchanging Views blog.

Health Insurance Exchanges: State of the States