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Weekly Health Policy Update: Exchange Decisions Stall Until Election

Weekly Health Care Wrap-Up

Stakeholders Await Details on Medicaid Primary Care Rate Increase

The Affordable Care Act (ACA) includes a federally-funded increase in Medicaid payment rates for primary care services for two years. The change, which will bring Medicaid primary care rates to Medicare rates, is slated to take effect on January 1, 2013. Yet, states, vendors, physicians, managed care organizations and other stakeholders await further guidance from the Centers for Medicare and Medicaid Services (CMS) on the final specifics of the change. In particular, there remains some uncertainty about the final list of providers eligible for the rate increase and how the increase will be administered through Medicaid managed care plans, among other issues. A proposed rule on the shift was published in the Federal Register on May 11. More information is available here.

Tim Hill Leaving CCIIO, Staying at CMS

Tim Hill, deputy director overseeing health insurance exchanges for the Center for Consumer Information and Insurance Oversight (CCIIO), will be leaving his position to work on other issues within CMS. In a statement, CMS commented, “CMS acting Administrator Marilyn Tavenner has asked Tim Hill to assist CMS with strategic planning as we continue to implement the work of the health care law into the Medicare, Medicaid and CHIP programs as well as private insurance market reforms.” Hill’s announcement comes on the heels of recent departures by former CCIIO exchange lead Joel Ario and CCIIO head Steve Larsen.

House Republicans Issue Subpoena, Seek Details on ACA PR Efforts

House Oversight and Government Reform (OGR) Committee Chairman Darrell Issa (R-CA) sent a subpoena to the Department of Health and Human Services (HHS) this week after failing to receive requested details surrounding the Medicare Advantage Quality Bonus Payment Demonstration. OGR Republicans are citing a recent Government Accountability Office (GAO) report that outlines the demo’s “shortcomings” as evidence that the program merits investigation. Secretary Sebelius has until 5pm today (Friday) to comply with the document requests. Read more here.

Meanwhile, House Ways and Means Committee Chairman Dave Camp and Oversight Subcommittee Chairman Charles Boustany wrote a letter to HHS Secretary Kathleen Sebelius asking for the details of the public relations campaign being used “to drive Internet traffic to pro-Obamacare websites and produce television commercials promoting the Administration’s positions.” The subcommittee requested the documents in May 2012, but received no response. The letter “demands” the documents by October 31, 2012.

From the States

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

Tennessee. In a presentation at the National Academy of State Health Policy conference last week, Brian Haile, director of Tennessee’s exchange initiative, profiled the state’s work to design a “one family, one card,” policy to combat churn and family division among Medicaid and exchange products. Under the proposal, Medicaid managed care companies would also offer a product on the exchange with the same network of providers that would be available to families with at least one family member in Medicaid. Several states are looking at ways to combat churn among subsidized exchange and Medicaid customers. More information on Tennessee’s proposal is available here.

Washington.  CMS has posted a memorandum of understanding (MOU) regarding Washington’s plans to realign how care for dual eligibles is financed. While approximately half of states have expressed interest in the duals demos, Massachusetts is the only other state to reach the MOU phase of development. The MOU can be found here.

Health Insurance Exchanges: State of the States update

With a significant number of states waiting for the outcome of the November 6 election before making an exchange decision, it was a slow week for exchange developments. However, there was some notable reshuffling within CMS and today the Idaho Health Insurance Exchange Working Group is scheduled to have their final meeting before issuing their exchange recommendation to the Governor. Let’s start at the federal level.

This week, the Center for Consumer Information and Insurance Oversight (CCIIO) announced that Tim Hill, deputy director overseeing health insurance exchanges, would be leaving his position for another assignment within CMS.  The move comes weeks before states are expected to begin submitting their exchange Blueprints to CMS and just months after the departure of Steve Larsen, former Director of CCIIO. It is unclear who will replace Hill at CCIIO.

Moving to the states, last week Illinois Governor Pat Quinn (D) sent a letter to CCIIO declaring that it was Illinois’ intention to participate in a federal-state partnership exchange. In his letter, Governor Quinn wrote that he hopes Illinois will pass legislation in the near future that would allow the state to operate a state-based exchange by 2015. Illinois is the third state, along with Arkansas and Delaware, to publicly declare its intent to pursue a federal-state partnership exchange. Other states are still examining the partnership option and there could be additional declarations before the November 16 HHS Blueprint deadline.

Meanwhile, a week earlier Governor Dannell Malloy (D-CT) sent HHS a letterrequesting “the timely issuance” of regulations “regarding the implementation and operation of a Basic Health Program.” Connecticut has been examining the feasibility of developing a Basic Health Program, but lacks the specific regulations needed to make a formal analysis. In his letter, Governor Malloy points out that the decision to implement a Basic Health Program could impact other health reform efforts in the state, including the state’s health insurance exchange and Medicaid program.

Moving west to Minnesota, during a meeting of the Legislative Advisory Commission to review Minnesota’s previous $42.5 million Level One grant award from HHS, Exchange Director April Todd-Malmlov revealed that the exchange anticipated applying for two additional grants in 2013. The total estimated amount of additional grant funding is expected to range between $60 and $80 million. Also this week in Minnesota, the Health Insurance Exchange Advisory Task Force met to discuss recommendations from the Finance Work Group for the Minnesota Exchange on long-term funding options.

In Idaho, the Idaho Health Insurance Exchange Working Group is scheduled to have their final meeting before releasing their exchange recommendation to the Governor. The working group was created earlier this year by Governor C.L. “Butch” Otter (R) to study the exchange issue and determine what would be the best option for Idaho.

Finally, according to the minutes of a September 25 meeting with stakeholders in West Virginia, the state is exploring “regional exchanges.” West Virginia is working with the National Academy of State Health Policy (NASHP) to “research potential regional exchanges, develop reciprocal agreements with other states, potentially share risk pools, develop ways to help bring down administrative costs, and explore potential for shared IT systems.” This is not the first time West Virginia has looked to collaborate with other government entities on complex health IT systems. Two weeks ago, it was announced that the Virgin Islands (VI) will be joining West Virginia’s Medicaid Management Information System by July 2013.

Weekly Health Policy Update: Exchange Decisions Stall Until Election

Study Projects More Coal Plant Retirements, But Are EPA Regulations To Blame?

Earlier this month, The Brattle Group released a discussion paper, which projects that approximately 59 GW to 77 GW of coal plant capacity is likely to be retired by 2016.  The report notes that these estimates are about 25 GW higher than the retirement levels Brattle estimated in its December 2010 analysis. These projections are likely to fuel the proverbial fire over the future of the coal industry in the U.S., but there are a couple points worth noting.

First, the Brattle report projects the retirement of 59 GW-77 GW of power “due mainly to lower expected gas prices.” Specifically, the report projects that the natural gas prices will only increase to $4-5/MMBtu by 2015 and $6-8/MMBtu by 2025. The report does acknowledge uncertainties relating to natural gas prices, specifically as they relate to the impact of U.S. LNG exports in the next several years. Even with this uncertainty and/or modest natural gas price increases, the report argues that market factors will continue to favor natural gas in the near-term over coal.

Second, the report suggests that EPA regulations are not playing as large of a role in the retirement of coal-fired power plants as suggested by critics of these rules. In particular, the report notes that coal-fired power plants face “less restrictive requirements on the compliance deadlines and equipment than previously predicted” under EPA’s Mercury and Air Toxics Standards (“MATS”) regulations. This is not to suggest that there are not substantial costs associated with complying with MATS and other air regulations. The Brattle report estimates that coal plants will spend $126-144 billion by 2016 on environmental upgrades. Nonetheless, the report emphasizes that market conditions – not EPA regulations – are driving decisions by operators to close coal-fired power plants.

Finally, the report comes amidst a considerable amount of regulatory uncertainty. The report acknowledges some of this uncertainty, citing the D.C. Circuit Court of Appeal’s recent decision vacating the Cross-State Air Pollution Rule (“CSAPR”). CSAPR would have established a cap-and-trade system for SOx and NOX emissions in 27 Eastern U.S. states. The Administration is requesting a rehearing of this decision, but in the interim, utilities will be deprived of certainty as to what their obligations may be with respect to cross-state SOx and NOx emissions. There is also significant uncertainty as to whether EPA, in the next several years, may require GHG emissions reductions at existing facilities.

EPA regulations will remain a hotly-debated issue in the waning weeks of the campaign, but irrespective of the election results, low natural gas prices will likely continue to play a significant role in decisions relating to the potential retirement of coal-fired power plants.

Study Projects More Coal Plant Retirements, But Are EPA Regulations To Blame?

Weekly Health Policy Update: More Questions for HHS

Weekly Health Care Wrap-Up

Republican Senators Question HHS on Meaningful Use…

This week, Republican Senators Richard Burr (NC), Tom Coburn (OK), Pat Roberts (KS) and John Thune (SD) sent a letter to Secretary of Health and Human Services (HHS) Kathleen Sebelius expressing their concern regarding the Meaningful Use program.  Specifically, the senators request that representatives from the Centers for Medicare and Medicaid Services (CMS) and the Office of the National Coordinator (ONC) convene a meeting with staff from the Senate Finance and HELP Committees to address questions such as:

• Does the use of electronic health records (EHR), in some circumstances, actually increase the utilization of diagnostic tests rather than reduce them?

• Have some health care providers received federal subsidies for EHR systems they had in place prior to the adoption of federal standards and mandates?

• Has the digitalization of records and broader adoption of EHRs increased providers’ billing of Medicare and thereby increased the overall costs of the program for taxpayers?

• What is the administration’s strategy for meaningful interoperability?

The letter comes on the heels of another letter sent by Republican leaders of the committees of jurisdiction in the House that requested the incentive program be suspended.

…While Others Question HHS on Medical Malpractice Reform

Also this week, Senators Grassley (R-IA) and Hatch (R-UT), along with Representative Lamar Smith (R-TX), renewed their request to receive additional details about the projects funded under the Agency for Healthcare Research and Quality’s  (AHRQ) medical liability and patient safety grant program.  The lawmakers’ most recent inquiry, which follows up on their original letter in April, expresses concern that the roughly $23 million in funding did not go to fund “traditional” medical malpractice efforts and that the grants did “not fulfill the president’s commitment to move forward on medical malpractice reform.”  The letter requests a response by October 29.

Bella Indicates Timeline for Duals Demos

In a speech this week at the National Academy for State Health Policy’s Annual State Policy Conference, Melanie Bella, Director of the Medicare-Medicaid Coordination Office, indicated that approximately 14 of the 25 states which have applied for the new financial alignment demonstration targeting dual eligibles are likely to be ready in 2013.  Eleven other states will likely launch as part of the demo in 2014.  The initiative seeks to move increasing numbers of duals into capitated or managed fee-for-service arrangements to better coordinate care and lower costs.  While the demonstration program has thus far been received with much enthusiasm by many states, some policymakers have expressed concern that it could be moving too quickly and could leave some of the nation’s most vulnerable at risk.  Thus far, the Coordination Office has released a memorandum of understanding with the state of Massachusetts, which hopes to begin its new duals program next year.  More information about the proposed demonstrations can be found here.

From the States

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

West Virginia. The Virgin Islands (VI) will be joining West Virginia’s Medicaid Management Information System (MMIS), according to an announcement late last week.  In 2011, the VI entered into a memorandum of understanding with the state and has since been working with CMS and the system’s vendor, Molina, to make the change operational.  The VI are expected to be fully incorporated into West Virginia’s system by July of 2013.  More information is available here.

New Jersey.  The New Jersey Assembly this week voted 44 to 33 to approve legislation to establish a health insurance exchange in the state.  Identical legislation was passed in the state’s Senate on October 4. Governor Christie has indicated he will not make a health insurance exchange decision until after the November 6 elections. More information is available here.

Health Insurance Exchanges: State of the States update

With 27 days until the November 16 deadline for states to declare their exchange plans to HHS, we continue to wait to see how or if states will approach exchanges. This week, Utah and North Carolina offered insights into their exchange options, but first we start in Colorado.

Last week in Colorado, Governor John Hickenlooper (D) sent a letter to HHS stating his intent for Colorado to operate a state-based exchange. In addition to naming the Exchange’s Executive Director Patty Fontneau as the point of contact for any interaction with CCIIO, the letter also stated that Colorado will be relying on the federal government to administer the exchange’s reinsurance and risk adjustment programs during its first year of operation.

Also last week, CMS awarded A. Reddix & Associates (ARDX) a multi-million dollar contract to develop training and guidance materials for individuals and organizations that will interface with exchanges, including “insurance issuers, agents, brokers, Pharmacy Benefit Managers, Third Party Administrators, and State Reinsurance Vendors.” ARDX will develop manuals and other training materials in addition to hosting a variety of in-person and virtual training sessions. The project is expected to run through September 2014.

Checking in with some of the other states, North Carolina officials are now nearly certain that they will not have a state-based exchange by the 2014 HHS deadline. According to Kerry Hall, director of public information with the state Department of Insurance, “People have come to understand there is no time to set up a state-based exchange before the deadline.” As for the state’s current plans, state agencies are working with the federal government to establish roles as the state prepares for a federal exchange. According to Julie Henry, a Department of Health and Human Services (DHHS) spokesperson, “DHHS is working with the Department of Insurance to investigate what we’ll need to do. It’s a conversation right now with our federal partners.” It remains unclear whether North Carolina will have a federally facilitated exchange or pursue a federal-state partnership.

According to an article in the Salt Lake Tribune, Utah lawmakers are still undecided whether they will update the state’s current health insurance exchange, “Avenue H, ” to comply with the ACA. Ally Isom, a spokesperson for Governor Gary Herbert (R) told the paper that Utah does not “anticipate having a final decision until mid-November, and possibly even later.” Also of note, Rep. James Dunnigan (R), Chairman of the Health System Reform Task Force, told The Tribune that he has heard that HHS might move the Blueprint deadline back to December 1. However, it’s still unconfirmed. As he told reporters, “we’re still verifying that.”

In Vermont, the Vermont Chamber of Commerce announced that it is launching a new insurance exchange, Chamber Preferred, for Chamber members to use beginning January 1, 2013. According to Betsy Bishop, president of the Vermont Chamber of Commerce, the Chamber decided to launch the exchange after many Chamber members expressed concern over the creation of Vermont’s state-based SHOP. Plans call for the Chamber’s exchange to offer a wide range of insurance options including: “life, disability, accident, critical illness, long-term care, dental, vision insurance and more, as well as health savings accounts and telemedicine services. Health insurance will be offered to the extent Vermont law allows.” It is unclear how the Chamber’s new exchange will fit into Vermont’s broader exchange plans. Beginning January 1, 2014, all companies in Vermont with 50 or fewer employees will be required to purchase insurance through the state-created SHOP.

Finally, yesterday afternoon the New Jersey Assembly voted 44 to 33 to pass health insurance exchange legislation, A-3186. Identical legislation was approved in the Senate on October 4. The bill now heads to Governor Chris Christie (R) who has said he will not act on the legislation until after the November 6 elections. Earlier this year in May, Governor Christie vetoed similar legislation because he believed it was premature to enact legislation before the Supreme Court ruled on the constitutionality of the ACA.

Weekly Health Policy Update: More Questions for HHS

2012 Congressional Lame Duck Session: Webinar Summary and Recording

A momentous session of Congress looms ahead…

We are carefully watching developments in advance of the elections to gauge likely directions once voters have spoken. There won’t be much time—or open deliberation—once the Lame Duck begins. Most decisions, if there are any, will come as a result of closed door meetings between Congressional leaders and the White House, or if elected, the President-elect’s camp. Industry actors are already moving to develop and pre-position their views on the shape of a budget deal, including a “down payment” provision, if there is one, and any tax reform or other Code changes being considered.

With the 2012 Congressional lame duck session fast approaching, there are a number of important issues for which public and private sector actors should be prepared.

To help look more deeply into these topics, including a budget overview, sequestration, defense authorization legislation, taxes, and the implications of the Presidential and Senate elections, we held an online webinar this week.

We invite you to click here to watch and listen to a recording of the session.

You may also download our presentation here as well.

Among the topics we discussed included:

Tax Reform

Will tax reform be accomplished in the November-December Lame Duck Session? Not likely given there is no apparent consensus on a single plan, the breadth and importance of it, and the need to bring the public along. Even Bowles-Simpson is still evolving. More likely: agreement may be reached (as part of a grand bargain on the debt) on a process for achieving tax reform legislation in 2013, with a December down payment on the debt involving taxes and spending.

What’s Happening after 12/31 if Nothing Gets Done?

Pre-2001 individual tax rates, and rates for capital gains, dividends and the estate tax will return, on top of the new Medicare taxes imposed as part of the Affordable Care Act. The payroll tax reductions expire. The AMT, without a “patch”, will impact 27 million new taxpayers for tax year 2012.  Marriage tax penalty relief expires, the Child Tax Credit shrinks, and the Extenders expire.

Dilemma: Why isn’t fixing the “Fiscal Cliff” a No-Brainer?

Letting Sequestration occur will result in $487 billion in deficit reduction in 2013, but will (by CBO estimate) create negative (-.5%) growth and increase unemployment back to above 9%. Both sides have different approaches to deal with the situation with no clear path to resolution before the elections. Republicans generally want to reduce the deficit by spending reductions, while Democrats want to employ a mix of revenue increases and spending reductions.

What are the Options?

“Cold Turkey”: Let current policy expire, snap back tax rates to pre-2001 levels, etc. and presumably force action early in 2013.

“Kick the Can Down the Road”: Defer all pending changes from current policy for one year giving Congress time to act (also without Sequestration) in 2013.

“Short-Term Compromise”: Adopt a “down payment” package of tax and spending provisions suitable to placate markets; defer most tax increases (but not all); patch AMT for 2012; pass a reduced Extenders package.

Agree on a framework (with enforcement teeth) for concluding a ‘grand bargain’ on the budget/debt in 2013.

Potential Outcomes in Lame Duck?

Romney Wins, Republicans Sweep Congress: Effort made to delay implementation of “Cliff” provisions at least until new Administration can offer up a “grand resolution.” Promise of “swift action” in 2013.

Romney Wins, Congress Same: Same as above. Obama response is key.

Obama Wins, Democrats Sweep Congress: Obama seeks agreement in Lame Duck on a process in 2013 to achieve grand resolution on budget and taxes, gives Republicans a say in 2013.

Status Quo: Obama seeks agreement on a process, but failing that uses leverage of Sequestration and tax hikes to hammer out a short-term “down payment”. Ultimately, most current policy gets extended pending action in 2013.

2012 Congressional Lame Duck Session: Webinar Summary and Recording

In Rare Use of Opinion Procedure Release, DOJ Opines on Who is a “Foreign Official” under the FCPA

The Justice Department recently issued an opinion procedure release on the question of who is a “foreign official” under the Foreign Corrupt Practices Act.   The DOJ determined that a member of a royal family of a foreign country was not a foreign official simply by dint of his membership in the royal family, “so long as he does not directly or indirectly represent that he is acting on behalf of the Royal Family or in his capacity as a member of the Royal Family.”  It explained that such determinations are based on a variety of factors:

“[T]he question requires a fact-intensive, case-by-case determination that will turn on, among other things, the structure and distribution of power within a country’s government; a royal family’s current and historical legal status and powers; the individual’s position within the royal family; an individual’s present and past positions within the government; the mechanisms by which an individual could come to hold a position with governmental authority or responsibilities (such as, for example, royal succession); the likelihood that an individual would come to hold such a position; an individual’s ability, directly or indirectly, to affect governmental decision-making; and numerous other factors.”

Commentators have argued that the DOJ’s focus on the status of the official contradicts earlier DOJ positions in briefs and other guidance in which the duties of the official are paramount.  At the very least, this DOJ opinion procedure release will now have to be considered part of the mix in determining who is a foreign official.  The question may be clarified if and when the DOJ’s long-anticipated FCPA guidance is issued.

In Rare Use of Opinion Procedure Release, DOJ Opines on Who is a “Foreign Official” under the FCPA

Weekly Health Policy Update: Exchange Blueprints Deadline Approaching

Weekly Health Care Wrap-Up

With Congress on recess and agency action remaining sluggish, it was another slow week in Washington, with all eyes focused on the race for the presidency. While October 1 marked the beginning of the readmission and value based purchasing programs included as part of the Affordable Care Act (ACA), the health care industry continues to wait for additional guidance around exchanges, Medicaid and essential health benefits as well as announcements around bundling and dual eligible demonstrations.

It remains unclear what the balance of power will look like in our nation’s capital come 2013, but an interesting article this week explores the “erosion of moderates in Congress,” citing models created by University of Georgia professor Keith Poole and Princeton professor Howard Rosenthal that find the polarization in the House and Senate to be at nearly all-time highs. The health care industry has to look no further than the Senate Finance Committee to see the potential impact of retiring members, where Senators Snowe (R-ME), Conrad (D-ND), Bingaman (D-NM) and Kyl (R-AZ) will be leaving arguably the most powerful committee in the upper chamber.

For more information about how the presidential election could influence down ticket races across the country, join MLA for the latest in its campaign textbook series, Down the Ballot: Why the Top of the Ticket Matters, on Tuesday at 10am. Contact Jane Carey at jbcarey@mckennalong.com for more information.

From the States

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

California.  A study by the California Health Benefits Review Program raises questions about the definition of pediatric oral and vision care as part of the essential health benefits requirements included under the ACA. In particular, the study discusses the lack of clarity around the age criteria associated with the pediatric benefits as well as how the benefits will be handled when families purchase medical coverage in conjunction with stand-alone ancillary plans.

Kansas.  Kansas officials continue to assess the readiness of managed care plans to implement the state’s transition to Medicaid managed care. Kansas is expected to make a determination by October 19 as to whether they can begin to assign Medicaid enrollees to the new managed care plans. Meanwhile, state officials will meet with CMS on October 18 in Baltimore in hopes of gaining approval for their Medicaid 1115 waiver. Kansas expects to officially launch its move to Medicaid managed care on January 1, 2013. Read more about the state’s reforms and see an implementation timeline here.

Nevada.  Governor Brian Sandoval (R) announced that he will not make a decision on the Medicaid expansion in Nevada until after the elections. He cited not having enough guidance from the federal government and his desire to wait for state revenue projections as reasons for his timeline.

Oregon.  The state’s plan to integrate dental services into the care delivered by coordinated care organizations (CCOs) has been delayed after two state legislators signed a petition against the change. The move was scheduled for January 1, 2013, pending CMS approval, but the Oregon Health Authority has pushed it to June 2013 as a result of the petition. Read more here.

Health Insurance Exchanges: State of the States update

With only 34 days to go until states are required to file their Blueprints with HHS, exchange planning is coming down to the wire, as the presidential election is in full swing. This week, Idaho’s Health Exchange Working Group reviewed a slew of presentations to help them determine a course for the state’s exchange and Minnesota posted a presentation signaling the state’s exchange Blueprint outline. But first, let’s start with a public dustup in Mississippi.

According to reports by Bloomberg, in Mississippi, Governor Phil Bryant (R) and Insurance Commissioner Mike Chaney (R) have been publicly diverging on the future of the state’s health insurance exchange. While Governor Bryant has asked Commissioner Chaney to slow exchange preparations, Chaney has continued to make progress. For example, Chaney submitted Mississippi’s EHB selection to HHS last week even though in September, Governor Bryant asked him not do so. The upcoming Blueprint deadline has the potential to create another schism between the two. Chaney, who is in favor of creating a state-based exchange, told reporters, “I will file a blueprint for the exchange on November 16, unless I get a court order from some idiot out there trying to stop me.” HHS spokeswoman Erin Shields Britt declined to comment on who has the authority to decide a state’s exchange option; however, the Blueprint guidance issued earlier this year states a, “State’s Declaration Letter must be signed by the State’s Governor.” The Governor also has an option to name a designee to sign the exchange application.  It remains unclear how this process will unfold in Mississippi.

On Tuesday, the Idaho Health Exchange Working Group met to ponder Idaho’s exchange options. The group first heard from KPMG who ran through the costs associated with Idaho’s exchange options. To create a state-based exchange, KPMG estimated start up costs of $77 million and then an additional $10 million a year in operation expenses. For a federal-state partnership, the firm estimated it would cost $15.5 million to get the partnership up and running and $1.7 million in operations costs. KPMG did not offer any estimates on the costs associated with a federally facilitated exchange. The group also heard a presentation from consultant Jack Grovner, who reviewed the state’s option of creating a private nonprofit to house the exchange. In addition, Arkansas provided an overview of its experience pursuing a federal-state partnership exchange with the work group. Of note, Cynthia Crone of the Arkansas Insurance Department said the state was very confident that their Blueprint for a federal-state partnership exchange would be approved. In regards to the possible cost of running a federal-state partnership exchange, Jay Bradford, commissioner of the Arkansas Department of Insurance, said that “the feds will levy a fee for their services, and your people will pay for it in the price of their insurance.”

On the topic of Blueprints, this week Minnesota posted a presentation that reviewed the state’s Blueprint application planning. At nearly 100 slides, only the most dedicated exchange watcher will read it front to back, but the PowerPoint contains a few interesting pieces. For example, the presentation states that the exchange’s governance structure and legal authority to operate is an “Open policy area, will not be attested to as complete.” Also this week in the North Star State, Barb Juelich, finance director for Minnesota’s exchange, told state lawmakers that yearly operational costs for Minnesota’s state-based exchange could run between $30-40 million.  While the exchange has not determined its long-term funding plan, it is evaluating several options that will be discussed in greater detail at a meeting in two weeks.

Moving into odds and ends, California’s Insurance Commissioner Dave Jones wrote the California Health Benefit Exchange urging the Board to allow stand-alone vision plans to be sold on the individual exchange. The Board’s decision last month to allow stand-alone plans to be sold in the SHOP but not the individual exchange caused an outcry from some California-based vision insurance companies.

Meanwhile, across the nation in New Jersey, the Assembly Health and Senior Services Committee met on Thursday to consider health insurance exchange enabling legislation (A-3186). The committee voted in favor of the bill by a 6-4 vote and made amendments to make it identical to legislation that was approved last week in the Senate.

In Kentucky, the vice presidential debate was not the only news making headlines.  The Health Benefit Exchange last week awarded a $101.5 million contract to Deloitte for the development and implementation of the exchange’s eligibility and enrollment, plan maintenance and billing system.

Finally, the Virgin Islands’ Health Reform Implementation Task Force had a meeting with the two consulting firms hired to analyze whether the territory would create a health insurance exchange. To review, New Wave Telecomm will evaluate the territory’s current IT systems while the Value Advisory Group will analyze the insurance market. The task force expects to review the IT analysis by mid-December and the insurance market report in January 2013.

Weekly Health Policy Update: Exchange Blueprints Deadline Approaching

2012 Congressional Lame Duck Session: Webinar Notice

With the 2012 Congressional lame duck session fast approaching, there are a number of important issues for which public and private sector actors should be prepared.

To help look more deeply into these topics, including a budget overview, sequestration, defense authorization legislation, taxes, and the implications of the Presidential and Senate elections, we will be holding an online webinar next Wednesday, October 17 at 2:30 pm.

2012 Congressional Lame Duck Session: Webinar Notice

Weekly Health Policy Update: Exchange Developments Continue

Weekly Health Care Wrap-Up

“Gang of 8” Considers Fiscal Reform Package

The so-called “Gang of 6,” a bipartisan group of senators who gathered much of last year to consider approaches to deficit reduction, appear to be resuming their efforts and growing their ranks. According to Politico, Senators Durbin (D-IL), Conrad (D-ND), Warner (D-VA), Chambliss (R-GA), Crapo (R-ID) and Coburn (R-OK) have been joined by Senators Bennet (D-CO) and Alexander (R-TN) in the bipartisan talks, and the group has plans to meet with former Senator Alan Simpson and Erskine Bowles, authors of the much-talked-about Simpson-Bowles deficit reduction proposal. The news comes as the “fiscal cliff” grows nearer and rumors swirl that Congress may act to avert the cliff in the Lame Duck session of Congress in exchange for a commitment to comprehensive deficit reduction in 2013.

OPM Releases Draft Multi-State Plan Program Application

The US Office of Personnel Management (OPM) released a draft of the application for multi-state plans under the Affordable Care Act (ACA). Comments will be accepted through October 22. According to the draft, applicants can phase in their participation and are not required to cover all markets within a given state initially. Specifically, issuers may phase in their multi-state offering over four years, but must offer coverage in at least 60 percent of states in year one. The application is meant to encompass participation in both the individual and SHOP exchanges. The ACA directs OPM to contract with at least two multi-state plans.

House Republicans Call for Suspension of Meaningful Use Incentive Payments

Republican leaders of the House Energy and Commerce and Ways and Means Committees sent a letter to Secretary of Health and Human Services (HHS) Kathleen Sebelius this week urging her to suspend Meaningful Use incentive payments and revisit the agency’s approach to the program. Specifically, theletter urges HHS to “rethink [its] strategy related to Meaningful Use criteria and instead focus on the stated goal of making health care delivery more efficient and affordable.” The group is particularly concerned with the lack of interoperability between electronic health record systems.

HHS Hires PR Firm to Promote Exchanges

This week, HHS signed a $3 million contract with public relations firm Weber Shandwick to handle communications surrounding  the federally-facilitated exchange (FFE). The contract is set to end in April 2013, well before the October 1, 2013 open enrollment period and the January 1, 2014 “go live” date for exchanges. More information is available here.

From the States

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

Less than Half of States Select Essential Health Benefits Benchmarks

According to the latest count by Avalere Health, 23 states and the District of Columbia submitted their essential health benefits benchmarks to HHS this week, leaving the majority of states without a benchmark. HHS has said that October 1 was not a hard deadline for states to select a benchmark, however, it remains unclear when the agency will move to institute a fallback option in states that did not make a selection. Many states have indicated they are unable to make an essential health benefit decision without final guidance from HHS. Find a comprehensive map following EHB implementation progress here.


Health Insurance Exchanges: State of the States update

What do 23, 27 and 41 have in common? If you are an exchange watcher, you should know. This week, 23 states and the District of Columbia submitted EHB selections to HHS, 27 chose not to submit by the target date and we now have 41 days until the November 16 deadline for states to submit their exchange blueprints to HHS. For the meaning behind these numbers, let’s start with EHBs.

Monday, October 1, was the target date for states to submit their EHB selections to HHS (although HHS has clarified in the past that the date was not a hard deadline for choosing a benchmark plan). While many states expressed concern that they could not choose their EHB selection without final guidance from HHS, it is worth noting that a few states who have engaged in serious exchange planning, such as Nevada and Minnesota, did not submit EHB selections as of yet, but are expected to do so in the future. It remains unclear when HHS will move to establish “fallback” benchmarks in states that do not make a selection.

On Wednesday, the DC Health Benefit Exchange Authority Executive Board voted to require individuals and small businesses purchasing insurance through the individual and small group markets to do so through the Exchange. The Board ultimately voted to stray from an initial recommendation to require all businesses with 100 or fewer employees to use the SHOP. In addition, the Board voted to merge the individual and small business markets and use the federally-administered risk adjustment and reinsurance programs. The recommendations now head to the DC City Council for a 30-day period of review.

Also this week, the New Jersey Senate moved quickly to approve health insurance exchange enabling legislation. S. 2135 was passed by the Senate Commerce Committee on Monday and later approved by the full Senate on Thursday by a 21 to 17 vote. The bill maintains some differences from the exchange legislation vetoed by Governor Chris Christie (R) in May of this year. In particular, S.2135 expands the number of Exchange Board members from eight to ten and removes their annual $50,000 salary. However, the bill’s long-term prospects remain unclear. On Monday, Governor Christie told reporters “I won’t make a decision until I have to. I don’t have to make one until the 16th, so I want to make sure I’m as fully informed as I can be.”

On the IT front, the Connecticut Health Insurance Exchange announced this week that it has selected Deloitte as its system integrator to “develop and implement the Exchange’s extensive operating technology and Internet website.” The press release did not announce the size of the award, but according to a budget presentation to the Exchange Board, the Exchange has initially budgeted $48 million for the design, development, implementation for the HIX platform and system integrator.

Continuing on the topic of RFPs, late Thursday afternoon CMS announced that it had awarded PR firm Weber Shandwick a $3.1 million contract to develop a PR campaign for the federally facilitated exchange. The contract runs through April 2013. Just to compare, the California Health Benefit Exchange in March 2012 awarded Oglivy a $900,000 contract to create a statewide marketing, outreach and education strategy that concludes in October 2013.

Finally, in California, the Exchange released a draft RFP for outsourcing SHOP operations. Comments will be welcome through October 8. The Exchange plans to release the final RFP on October 12.

And before we go, for your light weekend reading, PwC’s Health Research Institute released a new report this week: “Health Insurance Exchanges: Long on options, short on time.” The report examines the future customer base for exchanges, implications for the insurance industry and the options states have for creating a public exchange. Also of note, PwC estimates that 40% of the expected individual exchange enrollees will come from five states: California, Texas, Florida, New York and Illinois.

Weekly Health Policy Update: Exchange Developments Continue

Debate Focuses on Candidates’ Tax Plans: Kiss Those Itemized Deductions Goodbye?

The first Presidential debate included a good deal of focus on the tax reform plans of Mitt Romney and Barack Obama and exposed a concept common to both that some might have missed in the hard-charging exchanges.  If you itemize your deductions, depending on the level of your income, you may want to pay attention.

Mr. Romney indicated his support for extending for everyone the Bush-era tax cuts which the President has argued should be eliminated for deficit reasons for joint filers with incomes over $250,000.  In addition, the Republican standard-bearer wants to further reduce individual rates across the board by 20%.  Much of the interaction between the two men was over the cost of that proposal.  The President argued that the approach would mean $5 trillion in added debt to the U.S. Treasury.  Mr. Romney countered that his plan is designed not to add to the deficit, and that he would close loopholes and make deductions less available to upper income individuals to pay for the lower rates he envisions, and added further that the burden (relative to other income categories) on middle class taxpayers would not be increased.

As for the President, in addition to limiting the availability of the Bush-era rates for upper income individuals—a subject he dwelled on in the debate–his FY 13 budget includes reinstituting a phase-out of the value of itemized deductions (the so-called “Pease” provision, named after the late Rep. Don Pease (D-OH) who originally authored it) for joint filers with adjusted gross income (AGI) above a $250,000 threshold.  Deductions would be reduced by 3% of the amount AGI exceeds the threshold up to a limitation of no more than 80% of otherwise allowable deductions.  Clearly, this would make the system more progressive with regard to higher income taxpayers—most of whom take itemized deductions against higher tax rates.

The two positions beg the question of what the revenue goals might be in 2013, when it is anticipated that Congress will address tax reform.  Will the legislative effort, which is likely to be monumental given the difficulties involved (the last major tax reform in 1986 was the product of two years of effort), have as one of its aims adding net revenues to spending cuts to lower the country’s debt exposure over time, or will it be directed only to the other stated goals of tax reform—enhancing the economy by lowering rates and simplifying the system–on a revenue-neutral basis?  Another question:  will the pledge both candidates appeared to take not to increase taxes on middle class taxpayers mean that the relative burdens imposed by today’s Tax Code on all income classes will be maintained, or of necessity will there be an effort to increase the share of revenues paid by upper income Americans?

In the case of the Romney plan, some offsetting provisions would need to be secured in order to maintain revenue neutrality (as measured by the non-partisan Joint Committee on Taxation) if, as he indicated, neutrality is a design feature of his program .  At one point in the debate, Mr. Romney suggested that a flat dollar limit might be selected to cap the value of itemized deductions.  It was not clear whether that flat amount would apply to all taxpayers who itemize, but it would certainly apply disproportionately to higher income taxpayers.

Listed below are the major individual “tax expenditures” ranked by revenue cost, and a chart prepared by the New York Times which describes, by income category, who benefits from some of the many “tax expenditures” that both candidates appear to be targeting—and some (e.g., the Earned Income Tax Credit) they seem to be leaving alone.

As the debate on tax reform goes forward, despite their very different goals for the tax system, it might be worthwhile to keep an eye on what both candidates appear to have in common.

Debate Focuses on Candidates’ Tax Plans: Kiss Those Itemized Deductions Goodbye?

Weekly Health Policy Update: Several Seek Exchange Information from HHS

Weekly Health Care Wrap-Up

Hatch Seeks FFE Information…

Senator and Finance Committee Ranking Member Orrin Hatch (R-UT) sent a letter to HHS Secretary Kathleen Sebelius this week asking several questions about the establishment of the Federally-Facilitated Exchange (FFE) in light of the upcoming November 16 deadline for states to submit their exchange Blueprints.  In particular, the letter points to the final exchange regulations specifically, saying the regulations, “omitted scores of necessary information to answer questions facing states…In fact, the final regulations include 30 different references to issues that will be addressed in future regulations or rulemaking and it includes 64 additional references to future guidance on issues not addressed in the final rule, including details on the Federally-Facilitated Exchange.” The complete letter can be found here.

…While RGPPC Looks for Clarification

Meanwhile, the Republican Governors Public Policy Committee (RGPPC) has sought similar information in several letters to HHS since the Supreme Court ruling, with little success. Republican Governors Association (RGA) Chairman Virginia Governor Bob McDonnell sent another letter on Tuesday, this time addressed to President Barack Obama, seeking answers to questions regarding exchanges and Medicaid.  Read the letter here.

CMS Announces Partnerships to Reduce Readmissions Among Nursing Facility Residents

On Thursday, the Centers for Medicare and Medicaid Services (CMS) named seven organizations chosen to participate in their initiative to reduce hospitalizations among nursing facility residents.   Participating facilities, which include a range of providers and community-based organizations, will partner with nursing facilities to employ evidence-based interventions with the goal of reducing readmissions specifically among dual eligibles. The program aims to reduce hospital readmission rates by 20 percent by the end of 2013.  Read more about the initiative and the selected organizations here.

Bipartisan Bill Introduced to Reexamine Scoring of Preventive Health Savings

Texas Congressman Michael Burgess (R) and Virgin Islands Delegate Donna Christensen (D) introduced a new bill this week that will allow the Congressional Budget Office (CBO) to project savings from preventive health care beyond the normal ten-year window.  The lawmakers claim that preventive health care can only be judged on a long-term basis and therefore CBO scoring must be allowed to reflect savings further into the future.  Lawmakers and many health care experts have argued that the benefits of preventive care are not scored adequately under the CBO’s current methodology.

From the States

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

Next Round of States Receives Exchange Establishment Grants

The US Department of Health and Human Services (HHS) this week announced the next round of exchange establishment grants. Six states received funding, including Arkansas, Colorado, Kentucky, Massachusetts, and Minnesota, which received Level 1 awards, and the District of Columbia, which received Level 2 funding. Additional information about how the states plan to use the funds is available here.

Health Insurance Exchanges: State of the States update

This week saw a flurry of letters seeking insight and additional information on exchanges as well as another round of Establishment Grant awards from HHS. Let’s start with HHS.

HHS announced on Thursday that five states and the District of Columbia had received new exchange grants. Arkansas, Colorado, Kentucky, Massachusetts and Minnesota will be receiving additional Level One grants, while the District of Columbia will receive a $73 million Level Two grant. Many recipients, primarily the District of Columbia, Colorado, Massachusetts and Minnesota, plan on using their grants to continue funding their exchange IT procurements and other system upgrades. Kentucky, however, will use its $4.4 million grant to fund additional studies on improving health access and planning for its Navigator program. The District of Columbia is the seventh government to receive a Level Two grant. Previous recipients include Connecticut, Maryland, Nevada, Rhode Island, Washington and Vermont.

And while HHS was busy reviewing grant applications, HHS Secretary Kathleen Sebelius and the Obama administration received several letters from Republican policymakers this week seeking additional clarification on exchange and Medicaid issues. On Tuesday, Utah Senator Orrin Hatch (R) sent a letter to Secretary Kathleen Sebelius expressing his concern that states are being asked to make decisions on their exchange implementation program without key facts from HHS. “Without specific details provided through the rulemaking process with cost estimates and a clear understanding of the roles and responsibilities of the states and the federal government, states are not in a position to make an informed decision,” wrote Hatch.

HHS also received another letter from Pennsylvania’s Insurance Commissioner, Michael Consedine, asking “for clarity on the process and timing for decision making at both the state and federal levels” on the EHB selection process. According to Consedine, the lack of firm EHB regulations from HHS has made it difficult for Pennsylvania “to make even an informed and consequential recommendation by September 30.”  He also expressed concerns that HHS would alter or override his state’s EHB selection. Thus, in addition to sending HHS a copy of Pennsylvania’s EHB study, Commissioner Consedine wrote that the Pennsylvania Department of Insurance “will be directing interested parties to submit their comments and recommendations” to HHS for consideration.

President Barrack Obama also received a letter from Governor Bob McDonnell (R-VA), Chairman of the Republican Governors Association, with a long list of questions regarding exchanges and the Medicaid expansion. Among his questions, Governor McDonnell asked if exchange implementation deadlines would be extended and whether there would be costs for states associated with the FFE.

But President Obama and Secretary Sebelius weren’t the only officials receiving letters this week. Governor Scott Walker (R-WI) received a letter from 37 Democrat legislators urging him to immediately call a Special Session of the legislature to enact legislation for a state-based exchange. Lawmakers also asked Governor Walker to restart exchange planning so that Wisconsin could begin preparing its exchange blueprint to submit to HHS by November 16. Wisconsin has performed minimal exchange planning since Governor Walker closed the Office of Free Market Health Care and in early 2012 the state returned its Early Innovator grant.

To the west, Governor Dennis Daugaard (R-SD) announced that South Dakota will not be creating a state-based exchange due to cost concerns. According to a cost analysis, the annual operating costs for a state-based exchange were estimated to run between $6.3 million to $7.7 million and could have resulted in exchange user fees running in the $2-3 per person, per month range.  While the state is opting out of running its own exchange, according to news reports, Idaho is expected to make a decision on its EHB coverage next week.

And heading further west still, the California Health Benefit Exchange is seeking comments on its draft Qualified Health Plan solicitation. The comment period closes October 4.

Finally, states are beginning to consider whether to contract out the operation of their SHOPs to third parties. In recent weeks, California and Connecticut have been reviewing staff studies on whether it would make sense to contract out SHOP administration. In Connecticut, the evaluation is only in the early steps of the process, with the SHOP Advisory committee reviewing a staff presentationon the pros and cons of contracting SHOP operations. In contrast, the California Health Benefit Exchange Board voted last week to release an RFP to solicit proposals for a third party to run and administer the SHOP. While it is expected that the California Exchange will retain all policy making control and determine which QHPs are allowed to be sold on the SHOP, the external contractor would likely be responsible for operations such as agent management, eligibility and enrollment and customer service. Expect a solicitation to be released by the California Exchange in the very near future.

Weekly Health Policy Update: Several Seek Exchange Information from HHS