Government Programs & The Uninsured

HMA perspectives on the 2022 federal policy landscape

This week, our In Focus section looks at the current federal policy landscape and trends and the legislative outlook for the remainder of 2022 and beyond. Experts from HMA continue to monitor developments in this area and provide additional updates as more information becomes available.

Legislative Branch

To date in 2022, Congress passed multiple comprehensive bills, including the Inflation Reduction Act (IRA), which was signed by President Biden on August 16, 2022. The IRA extends Exchange plan premium tax subsidies through 2025, institutes an out-of-pocket drug spending cap for Medicare beneficiaries, expands Medicare, Medicaid, and CHIP coverage protections for certain vaccines, allows Medicare to negotiate drug prices, and implements a penalty payment in the Medicare program for prescription drug prices that rise faster than the rate of inflation.

Going forward, stakeholders have an extensive list of immediate Medicare payment issues for Congress to tackle while lawmakers continue to consider fundamental reforms to the program. Priorities include mitigating Medicare payment reductions scheduled for 2023; providing relief to address inflationary cost pressures; extending the 5 percent bonus for physicians participating in Advanced Alternative Payment Models (APMs), which expires at the end of 2022 for Accountable Care Organizations (ACOs); and permanently expanding telehealth access and payment policies after the federal COVID-19 public health emergency (PHE) declaration expires. Many stakeholder groups are also urging the Senate to act on the House-approved legislation, Improving Seniors Timely Access to Care Act (H.R. 3173), to reform Medicare Advantage prior authorization policies.

Congress did not include major Medicaid proposals in the Inflation Reduction Act. Medicaid stakeholders want Congress to revisit certain Medicaid policies in one of the remaining legislative vehicles this year. Significant proposals of interest include closing the Medicaid coverage gap in non-expansion states, enhanced coverage for justice involved populations, and expanding support for home and community-based services (HCBS). States and some stakeholders have also sought more certainty in the timing and guardrails for ending the COVID-19 Public Health Emergency (PHE) policy that links enhanced federal Medicaid funding with the requirement for continuous Medicaid coverage.

Congressional leaders and key influencers are laying the groundwork for 2023 legislative efforts. Congress is likely to defer action on most major legislative issues until after the November mid-terms, including finalizing federal fiscal year 2023 funding for most departments. A change in control of either or both chambers of Congress will likely lead to greater scrutiny of the Biden Administration’s health care policies and actions, which have largely gone untested by this Congress.

Executive Branch

Executive orders have been a major source in driving federal workstreams in 2022. Following enactment of several major bills, implementation responsibilities have shifted to the Executive Branch and stakeholders will have multiple opportunities to further shape and support new programs, regulatory and policy updates, and funding opportunities. Executive orders passed include:

  • Advancing Racial Equity and Support for Underserved Communities, January 21, 2021
  • Promoting Competition in the American Economy, July 9, 2021
  • Improving the Customer Experience, December 13, 2021
  • Access to Affordable, Quality Health Coverage, April 5, 2022
  • Equality for LGBTQI Individuals, June 15, 2022
  • Protecting Access to Reproductive Healthcare Services, July 8, 2022

The Administration will continue to address COVID-19 emergency needs while stepping up efforts to support states, health plans, providers and other stakeholders as they prepare for the post-COVID environment. The current PHE declaration expires October 13, 2022, but since HHS has not signaled that it plans to end the PHE in October, another extension is likely until January 11, 2023. The next advance notification about the end of the PHE would be Nov. 12, 2022. Once the PHE declaration expires, numerous Medicare and Medicaid, TANF, and SNAP flexibilities will end, including Medicaid’s continuous coverage requirement and certain telehealth flexibilities, among others. Additional federal agency guidance is expected to support post-PHE transitions.

The Centers for Medicare & Medicaid Services (CMS) plans to advance new policy direction across several service and delivery areas, including strengthening long-term services and support and innovations via Section 1115 demonstration programs. CMS is expected to approve transformational 1115 proposals in additional states. Several state proposals focus, in part, on building capacity among local and regional entities and community-based organizations to address social drivers of health. Many state proposals are also strengthening behavioral health delivery systems and seek to meet enrollees’ urgent behavioral health needs. Additionally will want to monitor CMS’ regulatory efforts to align and strengthen managed care and fee-for-service (FFS) access and network adequacy policies as well as updates to the agency’s in lieu of services policy in managed care programs.

The Administration is also expected to accelerate work on its top policy priorities and regulatory agenda in advance of the next Presidential election, and this will require ongoing engagement among health care stakeholders.

For additional information on these and other policies, please contact Andrea Maresca, Amy Bassano, Zach Gaumer, Jon Kromm, or Kevin Kirby.

Medicaid managed care spending tops $420 billion in 2021

This week, our In Focus section reviews preliminary 2021 Medicaid spending data collected in the annual CMS-64 Medicaid expenditure report. After submitting a Freedom of Information Act request to the Centers for Medicare & Medicaid Services (CMS), HMA received a draft version of the CMS-64 report that is based on preliminary estimates of Medicaid spending by state for federal fiscal year (FFY) 2021. Based on the preliminary estimates, Medicaid expenditures on medical services across all 50 states and six territories in FFY 2021 was nearly $710.2 billion, with over 59 percent of the total now flowing through Medicaid managed care programs. In addition, total Medicaid spending on administrative services was $30.8 billion, bringing total program expenditures to $741 billion.

Total Medicaid Managed Care Spending

Total Medicaid managed care spending (including the federal and state share) in FFY 2021 across all 50 states and six territories was $420.5 billion, up from $359.6 billion in FFY 2020. This figure includes spending on comprehensive risk-based managed care programs as well as prepaid inpatient health plans (PIHPs) and prepaid ambulatory health plans (PAHPs). PIHPs and PAHPs refer to prepaid health plans that provide only certain services, such as dental services or behavioral health care. Fee-based programs such as primary care case management (PCCM) models are not counted in this total. Below we highlight some key observations:

  • Total Medicaid managed care spending grew 16.9 percent in FFY 2021. The rate of growth has been increasing since the COVID-19 pandemic. Prior to 2020, the rate had decelerated since FFY 2016.
  • Managed care spending growth was due in large part to the COVID-19 pandemic and the resulting higher Medicaid enrollment.
  • In terms of dollars, the increase in Medicaid managed care spending from FFY 2020 to FFY 2021 was $60.9 billion, compared to $46.1 billion from FFY 2019 to FFY 2020.
  • Medicaid managed care spending has increased at a compounded annual growth rate (CAGR) of 16.1 percent since FFY 2007, compared to a 6.6 percent growth in total Medicaid spending.
  • Compared to FFY 2020, Medicaid managed care spending as a percent of total Medicaid spending in FFY 2021 increased by 3.8 percentage points to 59.2 percent.

Figure 1: Medicaid MCO Expenditures as a Percentage of Total Medicaid Expenditures FFY 2007-2021 ($M)

As the table below indicates, 69.4 percent of FFY 2021 spending came from federal sources, which is 12 percentage points higher than the pre-Medicaid expansion share in FFY 2013, and 1.8 percentage points higher than FFY 2020.

Figure 2: Federal vs. States Share of Medicaid Expenditures, FFY 2013-2021 ($M)

State-specific Growth Trends

Forty-five states and territories report managed care organization (MCO) spending on the CMS-64 report, including Alaska, which utilizes a PIHP/PAHP model exclusively. Oklahoma is expected to implement a Medicaid managed care program in 2023. Of the remaining 44 states and territories that contract with risk-based MCOs, average MCO spending in FFY 2021 increased 17.6 percent. On a percentage basis, North Carolina experienced the highest year-over-year growth in Medicaid managed care spending at 63.3 percent due to the implementation of its risk-based Medicaid managed care program. Among states with more mature programs, Colorado experienced the fastest growth in FFY 2021 at 59 percent, followed by Nebraska at 55.6 percent.

The chart below provides additional detail on Medicaid managed care spending growth in states with risk-based managed care programs in FFY 2021.

Figure 3: Medicaid Managed Care Spending Growth on a Percentage Basis by State FFY 2020-21

Source: CMS-64; *Note: Not all states are included in the table.

Looking at year-over-year spending growth in dollar terms, Illinois experienced the largest increase in Medicaid managed care spending at $5.5 billion. Other states with significant year-over-year spending increases in dollar terms included Texas ($5.2 billion), California ($5.2 billion), and New York ($5.1 billion). The chart below illustrates the year over year change in spending across the states.

Figure 4: Medicaid Managed Care Spending Growth on a Dollar Basis by State FFY 2020-21 ($M)

Source: CMS-64; *Note: Not all states are included in the table.

The percentage of Medicaid expenditures directed through risk-based Medicaid MCOs increased by more than  five percentage points in 14 states from FFY 2020 to FFY 2021. The managed care spending penetration rate rose 13.4 percentage points in the District of Columbia, 9.7 percentage points in Indiana, 9.5 percentage points in Nebraska, 9.2 percentage points in North Carolina, and 9.1 percentage points in Illinois.

Figure 5: Medicaid MCO Expenditures as a Percentage of Total Medicaid Expenditures in States with a 5 percent or Greater Increase from FFY 2020 to FFY 2021 ($M)

Source: CMS-64

The table below ranks the states and territories by the percentage of total Medicaid spending through Medicaid MCOs. Iowa reported the highest percentage at 97.2 percent, followed by Puerto Rico at 95 percent, and Hawaii at 94.4 percent.

We note that in many states, there are certain payment mechanisms which may never be directed through managed care, such as supplemental funding sources for institutional providers and spending on retroactively eligible beneficiaries. As a result, the maximum achievable penetration rate in each state will vary and may be below that achieved in other states. The Medicaid managed care spending penetration rate is greatly influenced by the degree to which states have implemented managed long-term services and supports (MLTSS) programs.

Figure 6: Medicaid MCO Expenditures as a Percent of Total Medicaid Expenditures, FFY 2016-2021

Non-MCO Expenditures

Despite the rapid growth in Medicaid managed care over the last 10 years, program spending still represented approximately 59 percent of total Medicaid expenditures in FFY 2021. So where is the remaining fee-for-service (FFS) spending (approximately $291 billion) going? First, as noted above, there are many states/territories with Medicaid managed care programs in which certain beneficiaries or services are carved-out of the program, and these are typically associated with high-cost populations. The total amount of non-MCO spending in the 44 states with risk-based managed care in FFY 2021 was $260.4 billion. Assuming an average “full penetration” of 85 percent of total Medicaid spending, then HMA estimates that an additional $221 billion in current FFS spending could shift to a managed care model just in the states that already employ managed care for a subset of services and/or beneficiaries.

Thirteen states/territories did not utilize a comprehensive risk-based managed care model in FFY 2020. In general, the 13 states/territories that do not utilize managed care today are smaller states. Oklahoma, with $5.3 billion in Medicaid spending is expected to shift to risk-based Medicaid managed care in 2023. Total Medicaid spending across all 13 non-managed care states/territories was $29.8 billion. The 13 states/territories that did not employ a risk-based comprehensive Medicaid managed care model in FFY 2021 were Alabama, Alaska, American Samoa, Connecticut, Guam, Maine, Montana, Northern Mariana Islands, Oklahoma, South Dakota, Vermont, Virgin Islands, and Wyoming.

In terms of spending by service line, the largest remaining FFS category is home and community-based services at $69.5 billion, which accounts for 24 percent of FFS spending. Inpatient hospital services represent 21 percent of FFS spending at $60.8 billion.

Figure 7: Fee-for-Service Medicaid Expenditures by Service Line, FFY 2021

While the CMS-64 report provides valuable detail by service line for all FFS expenditures, it does not capture how spending directed to Medicaid MCOs is allocated by category of service. Therefore, it is not possible to calculate total MCO spending by service line, a challenge that will only intensify as more spending runs through MCOs.

Bolstering the youth behavioral health system: innovative state policies to address access & parity

This week, our In Focus section highlights an HMA Issue Brief, Bolstering the Youth Behavioral Health System: Innovative State Policies to Address Access & Parity, published in August 2022. The brief examines policies aiming to advance access and availability of behavioral health services (encompassing mental health and substance use disorders) for youth. Below we explore opportunities for states to adopt levers to ensure access to the full continuum of children’s behavioral health services. States should consider developing a multi-faceted strategy to address accessibility issues including:

  • A policy mechanism for insurance coverage and funding for infrastructure, support and services across behavioral health, child welfare and Medicaid
  • A robust delivery system for provision of services
  • Comprehensive benefit design
  • A mechanism to monitor network adequacy, access, and parity

The COVID-19 pandemic has exacerbated rates of depression, anxiety, and other behavioral health issues among youth – with suicide now the second leading cause of death among ages 10-12. Pre-pandemic, 1 in 5 children experienced a mental health condition every year and only 54 percent of non-institutionalized youth enrolled in Medicaid or CHIP received mental health treatment. Between March 2020 to October 2020, mental health–related emergency department visits increased 24 percent among youth ages 5 to 11 and 31 percent among ages 12 to 17, compared with 2019 emergency department visits.

Youth covered by Medicaid and the State Children’s Health Insurance Program (CHIP), and the Early and Periodic Screening, Diagnostic and Treatment (EPSDT) of the Medicaid Act require state Medicaid agencies to provide enrollees under age 21 with access to periodic and preventive screenings, and services that are necessary to “correct or ameliorate” medical conditions, including other additional health care services such as behavioral health conditions. It remains the responsibility of states to determine medical necessity on a case by-case basis. As of 2020, states are mandated to submit a CHIP state plan amendment to demonstrate compliance with the new behavioral health coverage provisions. However, behavioral health services are not a specifically defined category of benefits in federal Medicaid law and coverage of many services is at state discretion. The 2008 Mental Health Parity and Equity Act (MHPAEA) requires that Medicaid managed care and private health insurers who do reimburse for behavioral health services provide behavioral health benefits to cover mental health and substance use services that is no more restrictive than the coverage generally available for medical and surgical benefits. While MHPAEA was designed to reduce inequities in coverage between behavioral and physical health services, it does not reduce inequities in reimbursement as payers are not required to cover behavioral health services.

Ambitious efforts are underway to prioritize behavioral health services for youth. The Department of Health and Human Services (HHS) recently called for states to prioritize and maximize efforts to strengthen youth mental health. The American Academy of Pediatrics (AAP), American Academy of Child and Adolescent Psychiatry (AACAP) and Children’s Hospital Association declared a national emergency in children’s mental health. In addition, passage of the Bipartisan Safer Communities legislation includes significant funding for mental health screening, expansion of community behavioral health center (CCBHC) model; improving access to mental health services for children, youth, and families through the  Medicaid program and CHIP; increasing access to mental health services for youth and families in crisis via telehealth; and investments to expand provider training in mental health, supporting suicide prevention, crisis and trauma intervention, and recovery.

Click here to read the Issue Brief.

For questions, please contact:

Caitlin Thomas-Henkel
Uma Ahluwalia
Devon Schechinger
Debbi Witham

Congress approves major health care proposals but the work is just beginning for CMS and stakeholders

On August 7, 2022, the Senate passed the Inflation Reduction Act of 2022 (the IRA). The House approved the bill on August 12, and President Biden is expected to sign the IRA into law in the coming weeks.

The IRA addresses a range of policy topics across health care climate, energy, and taxation. Regarding health care, the IRA makes structural changes to the Medicare Part D prescription drug benefit and provides new authority for the Medicare program to address the pricing of prescription drugs in the Part B and Part D programs. The measure also extends the temporary enhanced assistance for health coverage purchased from Marketplaces, which was first approved in the American Rescue Plan Act (ARPA). In addition, the IRA updates vaccine coverage policies in Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP). 

While the IRA provides a critical framework for the structural changes to the nation’s largest public health insurance programs, the U.S. Department of Health and Human Services will be responsible for building out the policy and operational components necessary to support implementation.  

Notably, the Centers for Medicare and Medicaid Services (CMS) will lead implementation of the IRA’s Medicare and Marketplace provisions. The changes to the Part D benefit and the development of entirely new processes and policies to support the IRA’s drug pricing provisions require significant resources and consideration of direct as well as indirect impacts for the health care market. The agency can use a variety of regulatory tools to support implementation, including issuing standalone Requests for Information (RFIs), convening stakeholder engagement sessions, updating policy manuals, and undertaking notice and comment via the formal rulemaking process, among others.

CMS’ strategic plan emphasizes the value of stakeholder engagement, and this is likely to lead to multiple opportunities for public input, particularly as CMS implements the new Medicare provisions of the IRA. For example, the agency must develop the policy parameters for reforming the Part D benefit design and is likely to seek input from Medicare Advantage (MA) and MA Prescription Drug Plans (MA-PDPs), providers, vendors, and consumer advocacy groups among others to inform its approach. CMS will also need input from the stakeholder community as it establishes the timelines, reporting, and negotiating mechanisms impacting Part B and D prescription drugs pricing and how it will implement the inflation penalty policies outlined in the IRA.

The IRA’s extension of the American Rescue Plan Act’s (ARPA) enhanced eligibility for premium assistance through 2025 provides more near certainty around eligibility and enrollment for this market. This may led to renewed momentum for CMS to engage with states and stakeholders on Marketplace policies and structures.

Many of the details around how the IRA’s health care policies will be implemented are unknown at this time. Stakeholders will want to monitor CMS’ progress and provide feedback with data-informed analysis and concrete and practical recommendations as these opportunities are announced. 

An overview of many of the IRA’s health care provisions follows. Our team of experts can provide tailored analysis and support to clients as they begin to unpack the full breadth of the IRA’s policy changes and implications for Medicare Advantage and Part D plans, providers, vendors, consumer advocacy groups and other stakeholders.

  • Part B and Part D Drug Pricing. Requires the Secretary of HHS to select a list of drugs eligible for negotiation, and enter into agreements with select manufacturers, negotiating a “maximum fair price” (MFP) for each selected drug in the Medicare program. The Secretary is required to negotiate on a certain number of drugs per year, 10 drugs in 2026; 15 drugs in 2027 and 2028, and 20 drugs in 2029 and subsequent years.  The number of drugs negotiated will accumulate over the years, such that up to 60 drugs could be negotiated by 2029.  Manufacturers who are not in compliance will face an excise tax that could far exceed the cost of drugs sold over time and civil monetary penalties.
  • Prescription Drug Inflation Rebates. Requires manufacturers to pay rebates for Medicare Part B and D drugs with prices rising faster than inflation. The rebate calculation would be based on units and pricing in Medicare and would determine an inflation-adjusted payment amount based on the percentage by which the price exceeds the inflation benchmark, as determined by the Consumer Price Index for All Urban Consumers (CPI-U). If a manufacturer fails to pay the rebate, then they would be subject to a civil monetary penalty either equal to or at least 125 percent of the rebate amount for the quarter.
    • The Part D inflation rebate takes effect October 2022 for Part D drugs and biologics.
    • The Part B inflation rebate begins January 2023 for single-source drugs or biologics and certain biosimilar products. The IRA also includes an inflation growth cap on beneficiary coinsurance in Part B, beginning April 2023.
  • Part B Payment for Biosimilar Biological Products. Amends Medicare’s Average Sales Price (ASP) payment methodology in cases where the ASP during the first quarter of sales is unavailable to establish a payment rate for biosimilars. The IRA also updates Medicare Part B reimbursement for certain biosimilar products for a five-year period beginning on October 1, 2022, by increasing the add-on payment from six percent of the reference product’s ASP to eight percent of the reference product ASP.
  • Medicare Part D Assistance for Beneficiaries and Benefit Design. Increases the qualifying income amount (federal poverty level (FPL)) for the full Low-Income Subsidies (LIS) under Part D, from 135 percent of the FPL to 150 percent of the FPL, starting in 2024. The IRA also adjusts the cost-sharing requirements in the Part D benefit by:
    • Eliminating cost sharing in the catastrophic phase of the benefit in 2024;
    • Setting an annual out-of-pocket (OOP) limit for enrollees at $2,000 beginning in 2025;
    • Capping monthly premium increases for a prescription drug plan in 2024 through 2029 at six percent per year.  The Secretary may make a one-time adjustment to the beneficiary Part D premium contribution percentage in 2030 to ensure longer-term beneficiary premium reduction; and  
    • Adjusting the benefit coverage liabilities for the initial coverage phase and catastrophic coverage phase.
  • Coverage for Insulin. Requires Medicare to cover select insulin products and not apply a deductible or impose cost-sharing more than $35 or 25 percent of the negotiated price (including all discounts) for a 30-day supply. Beginning in July 2023, Medicare must exempt from beneficiary deductibles insulin provided through durable medical equipment (DME) and ensure that coinsurance for a month’s supply of insulin administered through DME does not exceed $35. High-deductible health plans (HDHPs) will be able to cover selected insulin products with no deductible without impacting their status as a HDHP, starting in 2023.
  • Medicare, Medicaid, and CHIP Coverage for Vaccines. Requires full coverage of Advisory Committee on Immunization Practices (ACIP)-recommended adult vaccines under Medicaid and CHIP without cost-sharing. The IRA also increases the Federal Medical Assistance Percentage (FMAP) by one percentage point, for adult medical assistance for such vaccines and their administration, during the first eight fiscal quarters on or after the date of the IRA’s enactment.
    • Requires Medicare Part D provide full coverage without cost sharing of ACIP-recommended adult vaccines for plan years beginning on or after January 1, 2023.
  • Enhanced Temporary Assistance for Marketplace Coverage. Extends the ARPA’s expansion of Advanced Premium Tax Credit (APTC) eligibility and amounts through 2025. ARPA modified the affordability percentages used for the calculation of APTC to increase subsidy amounts for individuals eligible for assistance.

Experts from HMA and HMA companies are supporting clients as they begin to strategize and formulate initial recommendations for federal agencies and plan for implementation.  We will continue to monitor developments in this area and provide additional updates as more information becomes available. 

Early bird registration discount expires July 11 for HMA conference on the future of publicly sponsored healthcare, October 10-11 in Chicago

Be sure to register for HMA’s 2022 Conference by Monday, July 11, to get the special early bird rate of $1,695 per person. After July 11, the rate is $1,895.

Nearly 40 industry speakers, including health plan executives, state Medicaid directors, and providers, are confirmed for HMA’s The New Normal: How Medicaid, Medicare, and Other Publicly Sponsored Programs Are Shaping the Future of Healthcare in a Time of Crisis conference, October 10-11, at the Fairmont Chicago, Millennium Park.

In addition to keynote sessions featuring some of the nation’s top Medicaid and Medicaid executives, attendees can choose from multiple breakout and plenary sessions on behavioral health, dual eligibles, healthcare investing, technology-enabled integrated care, social determinants of health, eligibility redeterminations, staffing, senior care, and more.

There will also be a Pre-Conference Workshop on The Future of Payment Reform: Delivering Value, Managing Risk in Medicare and Medicaid, on Sunday, October 9.

Visit our website for complete details: https://conference.healthmanagement.com/ or contact Carl Mercurio. Group rates and sponsorships are available. The last HMA conference attracted 500 attendees.

State Medicaid Speakers to Date (In alphabetical order)

  • Cristen Bates, Interim Medicaid Director, CO Department of Healthcare Policy & Financing
  • Jacey Cooper, Medicaid Director, Chief Deputy Director, California Department of Health Care Services
  • Kody Kinsley, Secretary, North Carolina Department of Health and Human Services
  • Allison Matters Taylor, Medicaid Director, Indiana
  • Dave Richard, Deputy Secretary, North Carolina Medicaid
  • Debra Sanchez-Torres, Senior Advisor, Centers for Disease Control and Prevention
  • Jami Snyder, Director, Arizona Health Care Cost Containment System
  • Amanda Van Vleet, Associate Director, Innovation, NC Medicaid Strategy Office, North Carolina Department of Health & Human Services

Medicaid Managed Care Speakers to Date (In alphabetical order)

  • John Barger, National VP, Dual Eligible and Medicaid Programs, Humana, Inc.
  • Michael Brodsky, MD, Medical Director, Behavioral Health and Social Services, L.A. Care Health Plan
  • Aimee Dailey, President, Medicaid, Anthem, Inc.
  • Rebecca Engelman, EVP, Medicaid Markets, AmeriHealth Caritas
  • Brent Layton, President, COO, Centene Corporation
  • Andrew Martin, National Director of Business Development (Housing+Health), UnitedHealth Group
  • Kelly Munson, President, Aetna Medicaid
  • Thomas Rim, VP, Product Development, AmeriHealth Caritas
  • Timothy Spilker, CEO, UnitedHealthcare Community & State
  • Courtnay Thompson, Market President, Select Health of SC, an AmeriHealth Caritas Company
  • Ghita Worcester, SVP, Public Affairs & Chief Marketing Officer, UCare
  • Mary Zavala, Director, Enhanced Care Management, L.A. Care Health Plan

Provider Speakers to Date (In alphabetical order)

  • Daniel Elliott, MD, Medical Director, Christiana Care Quality Partners, eBrightHealth ACO, ChristianaCare Health System
  • Taylor Nichols, Director of Social Services, Los Angeles Christian Health Centers
  • Abby Riddle, President, Florida Complete Care; SVP, Medicare Operations, Independent Living Systems
  • David Rogers, President, Independent Living Systems
  • Mark Sasvary, Chief Clinical Officer, CBHS, IPA, LLC
  • Jim Sinkoff, Deputy Executive Officer, CFO, SunRiver Health
  • Tim Skeen, Senior Corporate VP, CIO, Sentara Healthcare
  • Efrain Talamantes, SVP & COO, Health Services, AltaMed Health Services Corporation

Featured Speakers to Date (In alphabetical order)

  • Drew Altman, President and CEO, Kaiser Family Foundation
  • Cindy Cota, Director of Managed Medicaid Growth and Innovation, Volunteers of America
  • Jesse Hunter, Operating Partner, Welsh, Carson, Anderson & Stowe
  • Bryant Hutson, VP, Business Development, MedArrive
  • Martin Lupinetti, President, CEO, HealthShare Exchange (HSX)
  • Todd Rogow, President, CEO, Healthix
  • Joshua Traylor, Senior Director, Health Care Transformation Task Force
  • James Whittenburg, CEO, TenderHeart Health Outcomes
  • Shannon Wilson, VP, Population Health & Health Equity, Priority Health; Executive Director, Total Health Care Foundation

CMS breathes new life into Medicaid HCBS investment opportunities

On June 3, 2022, the Centers for Medicare & Medicaid Services (CMS) notified states that they will have an additional year, until March 31, 2025, to use funding from the American Rescue Plan Act (ARPA) to strengthen their Medicaid home and community-based services (HCBS). CMS’ update extends important flexibility to ensure state Medicaid programs and stakeholders, including beneficiaries, realize maximum benefit from federal investments in expanding and enhancing HCBS services.

For over a decade, the Medicaid program has been leading transformations of state long-term services and supports systems (LTSS), including physical and behavioral health services and health-related social needs. These efforts primarily focus on broadening eligibility, making more significant Medicaid investments in HCBS, and improving beneficiaries’ access to HCBS programs. The COVID-19 pandemic heightened attention to beneficiaries’ disparate experiences with accessing HCBS and exacerbated pre-COVID challenges faced by the LTSS workforce.

Section 9817 of ARPA provides an increase for Medicaid-funded HCBS by offering states the option to claim an additional 10 percentage point increase in federal match (FMAP) for the one-year period from April 1, 2021, to March 31, 2022. To receive the higher federal funding, states cannot make changes to the amount, duration, and scope of covered HCBS; they cannot reduce HCBS provider payment rates; and they cannot make eligibility standards for HCBS programs or services stricter until all additional funds are expended. CMS also requires states to submit a spending plan and narrative that describes planned enhancement activities.

Notably, a state must reinvest the higher federal funding in Medicaid HCBS while maintaining the spending levels they had in place on April 1, 2021. According to CMS’s new guidance, states can now use the funds until March 31, 2025, rather than March 31, 2024, under the previous guidance.

Actions Stakeholders Can Take to Maximize the Extra Time

The updated spending deadline is grounded in a better understanding of the level of effort and time necessary for states to identify, build consensus, and implement specific actions to include in a state’s HCBS spending plan. HMA works with states, providers, health plans, and other stakeholders, including consumers, who will benefit from the additional time to make investments. Our work includes supporting states as they align the multitude of needs and priorities with the available funds and supporting robust stakeholder engagement efforts to inform the plans.

The following are some of the most impactful “next steps” that states and stakeholders can pursue to best utilize the additional time to reinvest in Medicaid HCBS programs:

  • States can communicate with stakeholders, including health plans, providers, community organizations, consumers, and others, to share how the extension impacts the state’s spending plan.
  • States and stakeholders can renew their engagement to consider potential changes to the spending plan activities, timelines, or both. Stakeholders may have additional opportunities to offer input to refine further and prioritize the design and delivery of augmented or new services, systems, and related initiatives.
  • State Medicaid, aging, and various other programs and providers have more time to strengthen their collaboration to meet the needs of individuals of all ages who are living with disabilities.
  • States, vendors, health plans, and providers can evaluate through evidence, analysis and stakeholder feedback, if the projects they are pursuing are effective and/or should be modified. For example, it may be beneficial to provide more flexibility in the deadlines for case management and referral systems builds and implementation of the training for workers on these new systems.
  • States and their stakeholder partners can refocus on workforce issues, including examining eligible provider types and scopes, evaluating provider network issues, considering the role of virtual services, conducting provider and managed care rate setting studies, and other changes to support the HCBS direct care workforce.
  • States can develop reasonable timeframes to strengthen existing efforts or pursue new initiatives to develop and implement managed long-term services and supports for certain groups of Medicaid beneficiaries.

Looking ahead, states and all stakeholders need to assess the impact of these investments. ARPA funds are a significant investment in strengthening Medicaid LTSS programs, but these transformative efforts require sustained commitment. There is continued uncertainty around additional federal Medicaid funding over the long term that are necessary to address ongoing needs and make further progress towards high-quality, accessible HCBS services. Understanding the extent to which the funds are achieving the desired structural transformations and the impact on Medicaid beneficiaries can guide future areas of federal and state focus and investments.

For more information please contact HMA consultants Kevin Hancock, Principal, Andrea Marescaa, Principal, and Aaron Tripp, Principal.

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Low-cost carriers in ACA: insights from the 2018-2021 market experience

This week, our In Focus highlights a white paper from Wakely, an HMA Company, exploring the potential design elements and expected effects of a public option or a low-cost plan being newly introduced in the Affordable Care Act (ACA) individual market.

1332 state innovation waivers have been in place for a number of years and allow states to implement programs that increase access to and the affordability of healthcare coverage, subject to approval by the Department of Health and Human Services (HHS) and Department of Treasury (Treasury). Nearly all waiver programs in effect in 2021 employ a reinsurance program aimed at reducing the overall claim costs and premiums for members by reimbursing issuers for a portion of claim costs over a specified threshold.

A number of states have been exploring other ways to structure a waiver program, including introducing a public option plan into ACA markets (individual and small group plans subject to the ACA market reforms). The definition of a “public option plan” has evolved over time and can vary, but more commonly refers to a privately funded health plan with some level of government oversight or additional requirements established to improve consumer value and facilitate cost containment.

A public option plan aims to further increase access to coverage and affordability by offering a new qualified health plan, typically with a lower premium relative to existing premiums in the market. A public option plan specifically aims to extend a more affordable coverage to individuals who are currently not eligible for ACA subsidies (e.g., family glitch, non-citizens, and those with higher incomes). The plan could be structured in a variety of ways such as a state-sponsored product, state employee health plan buy-in, Medicaid plan buy-in, or a private plan offered by existing issuers. Colorado and Washington will require health plans to offer public option plans with a target premium reduction relative to other plans in the market, with constrained rate increases over time, giving health plans the opportunity to arrive at the lower premiums through their own means, for the 2023 plan year. Lower premiums would likely be achieved through a combination of lower provider reimbursement and lower risk margins.

Given the nature of premium subsidization in the individual ACA market, where premium subsidies are tied to the second lowest cost silver (SLCS) plan in the market, the introduction of a lower cost public option plan has a mixed impact on market growth and the types of member segments that benefit. Since Washington State is the only Exchange that currently offers a public option plan, there is minimal experience available to understand the impact a public option plan may have on the market. As a result, our goal was to look at states where a new issuer has entered a market as a low-cost plan over the last four years, to better understand plan enrollment migration (how many members switch to the low-cost carrier), competitors’ reactions, and the reduction in premium needed to incentivize members to take up coverage. This market dynamic potentially closely mimics a public option plan that offers lower premiums being introduced in a market. Over the last four years (2018-2021), we identified 51 instances of new issuers entering an individual on-Exchange market. Of those 51 new entrances, 25 met our criteria of a low-cost plan.

The analysis showed mixed impacts of a low-cost plan introduction in ACA markets, with minimal impact on the uninsured, but with improved affordability, particularly for the unsubsidized. The detailed observations are discussed further in this paper.

Link to White Paper

Please contact Ksenia Whittal at [email protected] with any questions.

Behavioral health crises drive bipartisan action in Congress

Agreement about the severity of the nation’s mental health and substance use disorder crises is rising above the partisan politics in Congress. In fact, these are among a handful of issues driving work on bipartisan legislation across all the key House and Senate committees with jurisdiction over behavioral health programs and policies this year.

On May 18, the U.S. House of Representatives Energy and Commerce Committee unanimously approved the “Restoring Hope for Mental Health and Well-Being Act of 2022” (H.R. 7666). This legislation incorporates a collection of bipartisan bills to update and reauthorize over 30 Substance Abuse and Mental Health Services Administration (SAMHSA) and Health Resources and Services Administration (HRSA) programs addressing the mental health and substance use disorder (SUD) crisis. The bill also advances initiatives to strengthen the 9-8-8 National Suicide Prevention Lifeline implementation efforts, invest in the crisis response continuum of care, and support strategic opioid crisis response plans among numerous other policies. Energy and Commerce is one of several House committees planning to advance behavioral health bills this year.

U.S. Senate committee leaders have been similarly engaged in developing bipartisan proposals to address mental health and substance use disorders. Senate Health, Education, Labor and Pensions (HELP) and Finance committee leaders are expected to reveal their proposals as soon as this summer. The Finance Committee’s proposal will focus on Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) policies and could reflect findings from the committee’s report, “Mental Health Care in the United States: The Case for Federal Action.” Similarly, HELP members Sens. Chris Murphy (D-CT) and Bill Cassidy (R-LA) introduced the Mental Health Reform Reauthorization Act to extend several expiring mental health programs, which could be incorporated in that Committee’s comprehensive proposal. Across committees, there has been an interest in strengthening parity, supporting integration of primary and behavioral health care, increasing access to youth mental health screenings, scheduling fentanyl analogues, and easing requirements for prescribing Medication Assisted Treatment.

What To Expect

Congressional leaders have consistently expressed their desire to advance bipartisan legislation to address the urgent needs and gaps in the mental health and SUD care delivery systems, as well as support education and research.  While these are key areas to watch, the diminishing number of legislative days on the congressional calendar and climate surrounding November’s mid-term elections create uncertainty for the timing and scope of Congress’ work. It remains to be seen whether a package of health care proposals, such as reauthorization of the U.S. Food and Drug Administration’s user fee programs, the Cures 2.0 legislation to advance biomedical research, mental health and substance use disorder legislation, and the PREVENT Act could be sent to President Biden’s desk before the end of September.

HMA companies are supporting clients impacted by the policy changes being discussed and the program funding addressed in these legislative proposals. Understanding the landscape for federal change allows state and local governments and stakeholders to plan for and shape these opportunities. For more information, please contact Andrea Maresca, Principal, Federal Policy, HMA; Matt Gallivan, Director, Leavitt Partners; and Laura Pence, Director, Leavitt Partners.

The family glitch and changes to premium tax credit eligibility

This week, our In Focus section reviews the Biden Administration’s proposed rule revising eligibility standards for premium subsidies for families, released on April 5, 20221. The proposed rule would “fix” the family glitch and, therefore, dramatically increase the number of people eligible for premium tax credits. This brief describes what the regulation would do and the implications for the individual market.

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