By Jane Norman, CQ HealthBeat Associate Editor

January 18, 2012 -- The Obama administration issued a report recently saying that 28 states and the District of Columbia are "on their way" toward establishing the health benefits exchanges that will serve as marketplaces for individual and small-business policies once the health care law is fully implemented.

The path toward setting up the exchanges has been rocky as state lawmakers and governors battle over how they should be constructed and in some Republican-led states, whether states should move ahead on them at all.

Wisconsin Gov. Scott Walker recently announced that his state will hold off on exchange implementation until the Supreme Court rules on the health care law in March. In Arkansas, as the White House report notes, the legislature blocked an exchange but the Democratic governor has announced his plans to move ahead.

But the report stresses the progress that has been made as many legislatures convene for their 2012 sessions and exchanges are again a topic. In addition, as attention focuses increasingly on a constitutional challenge to the health care law pending before the Supreme Court, it shows how far ahead implementation has moved and how even Republicans are taking part.

In a written statement, White House Deputy Chief of Staff Nancy-Ann DeParle says that the administration is working in partnership with state leaders across the country to ensure that citizens in every state have access "to an exchange and the same kinds of insurance choices as members of Congress."

The report also documents the grant money sent out to states for planning activities and for development of information technology.

The health care law (PL 111-148, PL 111-152) says that the federal government will run an exchange in a state that does not establish one and that exchanges are supposed to be fully certified by Jan. 1, 2013.

But the administration has not seemed eager to take the route of commandeering exchange operation and instead has spelled out to states ways in which exchanges can be federally facilitated or run in partnership with the federal government. States can also try out exchanges on a test basis and put them in place after 2014, when the law will be fully implemented.

Administration officials who would not be identified for the record also held a telephone background briefing with reporters in connection with the report. Asked if the report's statement that 28 states are moving ahead means that 22 states will have federal participation in their exchanges, an administration official said that "it's premature at this point to draw a conclusion" that will be the outcome.

"We think there will be more. We have a set of pending applications for another round of establishment grants. If all of those were approved we'd be well over 30 states," the official said, though the official wouldn't specify how many are pending.

Congressional Republicans later pushed back at the White House report, noting that the 28 states all have accepted $1 million planning and establishment grants but that doesn't necessarily mean those states are actively pursuing exchanges or will be able to meet the law's deadlines for setting them up.

In addition, Republicans said, the federal government has not yet finalized the regulations that states need to shape their exchanges and so there's little certainty for the states as they continue their work. They cited proposals on establishment of exchanges, reinsurance and risk corridors, Medicaid and premium tax credits.

In its report, the White House offers profiles of work on exchanges in 10 states, including some that are parties to the lawsuit challenging the health care law and with Republican leaders.

In Alabama, for example, the Republican governor Robert Bentley, a physician, has issued an executive order that created the Alabama Health Insurance Exchange Study Commission in June, which held five meetings and issued a report in December. Alabama also has received an exchange establishment grant and state legislators are expected to take up a measure to establish an exchange.

In addition, the report says, with the beginning of the new year, states are moving ahead on exchanges, including a vote in the New Hampshire state senate and planning in Alaska.

The report also gives a rundown on how the government is moving ahead with the federally facilitated exchanges - some guidance already has been issued to states by the Department of Health and Human Services and more will be coming. It promises that HHS has the capacity to ensure that every American will be able to purchase health insurance as of Jan. 1, 2014, and points out that HHS last fall issued contracts for information technology, financial management and marketing.

The agency has completed work on important IT processes and business requirements for such exchanges, and is developing working groups with state insurance commissioners and other officials to coordinate rules and systems in each state for their exchange operations, the report says.

Officials on the conference call said that money for operation of the exchanges is coming from $1 billion appropriated by Congress.

They also said that the final exchange regulations will spell out the minimum functions that must be done in both the state and federal-based exchanges. The official did not say when the final rule might come out.

By Jane Norman, CQ HealthBeat Associate Editor

January 20, 2012 -- Nonprofit religious employers must comply with a federal requirement that their health insurance plans provide free contraceptive services to employees. But they will be given a year's transition time, Health and Human Services (HHS) Secretary Kathleen Sebelius announced last week.

The transition will apply to religiously affiliated groups, such as hospitals, charities and universities that currently do not provide contraceptive services. Faith institutions such as churches, synagogues and mosques will continue to be exempt from the requirement, as well as primary or secondary schools closely tied to them, HHS officials said.

The Obama administration's long-awaited decision—disclosed two days before the 39th anniversary of the Roe vs. Wade decision that established abortion rights—was praised by groups like Planned Parenthood and women serving in Congress.

Sen. Barbara Boxer, D-Calif., called it "a critical step forward for women's health that will prevent abortions and ensure that millions of American families have access to affordable birth control." Rep. Nita Lowey, D-N.Y., said that women who work for religious institutions deserve the same access as everyone else to free contraception.

But the move was immediately attacked by Republicans who said it will force religious employers to either violate the tenets of their faith or stop offering health insurance to their employees. Religious groups and Catholic bishops had asked the Obama administration to widen its conscience clause exemption after a first draft of the final rule was published in August.

Senate Republicans said in a blog post that "this decision looks suspiciously like yet another political stunt designed to delay the controversy by another year, until after the president's re-election campaign."

Heads of Catholic hospitals, colleges and other institutions had signed on to a full-page ad in the New York Times and Washington Post in December urging that HHS "protect conscience rights" and amend its proposal. "As written, the rule will force Catholic organizations that play a vital role in providing health care and other needed services either to violate their conscience or severely curtail those services," said the ad.

The U.S. Conference of Catholic Bishops called the HHS rule "literally unconscionable" in a statement on their web site. "We will do all we can to defend the First Amendment,'' said the group's spokeswoman, Sister Mary Ann Walsh. "We're contemplating all possible responses."

The federal government's decision comes not long after another by HHS on birth control that provoked wide controversy, though that one greatly displeased women's health advocates and some congressional Democrats. Sebelius in December overruled Food and Drug Administration Commissioner Margaret Hamburg and said that age restrictions would remain in place on the Plan B "morning-after" pill.

This time around, women's health advocates were much more satisfied. But Sebelius stressed that the administration remains "fully committed" to partnerships with faith-based organizations.

"This decision was made after very careful consideration, including the important concerns some have raised about religious liberty," Sebelius said in a written statement. "I believe this proposal strikes the appropriate balance between respecting religious freedom and increasing access to important preventive services."

The announcement by Sebelius followed an interim final rule published in August that required most health insurance plans to cover all FDA-approved contraceptive services without a co-pay, coinsurance or deductible by Aug. 1, 2012. The services include sterilization. Morning after pills would be covered but to be free would need a doctor's prescription.

These contraceptive services—which do not include abortions—are considered preventive services under the health care overhaul (PL 111-148, PL 111-152). The administration proposal was closely based on Institute of Medicine recommendations published last year.

HHS officials on a conference call with reporters said they received about 200,000 comments on their draft regulation, which they characterized as a "significant" number and higher than normal. Their response was to allow the transition time for employers with religious affiliations because many appeared to need time to change their plans. Those seeking to delay complying with the regulation will have to attest to HHS that they qualify for an additional year, until Aug. 1, 2013, to implement the rule.

"We will work continue to work closely with religious groups during this transitional period to discuss their concerns," Sebelius said in a written statement.

Officials on the HHS call said an estimated one million to two million people work for nonprofits with religious affiliations and potentially would receive new contraceptive coverage under the rule. However, they said they were not able to immediately answer questions about how groups that don't comply might be penalized.

By Rebecca Adams, CQ HealthBeat Associate Editor

January 17, 2012 -- The federal government solved one problem facing the health care overhaul's high-risk pool program when officials agreed to give more money to states that are close to exhausting their allocations. But that created another dilemma: Will some states have to lose some funding as a result?

Congress established the federally funded Pre-Existing Condition Insurance Plan (PCIP) in the 2010 health care law (PL 111-148, PL 111-152) as a way to help patients who couldn't find affordable coverage because of their medical conditions. Funding for the program is capped at $5 billion and expires on Dec. 31, 2013, just before the new insurance exchanges that will insure those people now covered in the high-risk pools begin operating. Some state directors are now concerned that in order to give more funding to the states that have spent all their high risk pool money, the federal Center for Consumer Information and Insurance Oversight (CCIIO) may take money away from states that are behind schedule in spending their allocations.

"No one wants to lose funds," said Vernita Bridges-McMurtrey, the executive director of the Missouri Health Insurance Pool and a past board chair of the National Association of State Comprehensive Insurance Plans (NASCHIP), which represents risk pools nationwide. "No one who sees the success in their programs or is totally committed to the mission of their programs wants to see funding diminished. We know there are people out there in all our states who'd benefit from these pools."

CCIIO spokesmen did not provide details about how any potential redistribution of funds will work.

"We continue to work within the $5 billion allocated to us by Congress," said Brian Chiglinsky, echoing similar comments earlier this month by another spokesman. "This is an ongoing process and we continue to work with other states to meet their needs. We will adjust each state's yearly allotment as necessary."

Several high-risk pool directors who were interviewed on last week said they believe that some states will lose funding in 2013.

The PCIP program can be administered either by a state or by a federal contractor. States that run their own programs signed an original contract with federal health officials in 2010, when the program began, and undergo an annual reassessment of that contract. In several states, the federal government has committed in amendments to the original contract to providing a higher amount of funding than was originally projected. High-risk pool directors say that federal officials are vague about what their spending levels will be in 2013.

The federally funded program complements separate state-run programs that already existed in 35 states.

CCIIO officials told reporters on Jan. 5 that nine states have requested additional funds: Alaska, California, Colorado, Montana, New Hampshire, New Mexico, Oregon, South Dakota and Utah. Federal officials have not spelled out which states received higher funding for 2012 in their contract amendments, but NASCHIP chairperson Amie Goldman said that she believes they all got more. Directors in Alaska, California, Montana and New Hampshire have confirmed that they will receive more money than they were originally scheduled to get.

In 23 states, the federal government runs the program. Federal officials have not said whether funds might be shifted from those states to those run by the states.

The reason why some states are using their funding more quickly than expected is largely due to higher medical costs than anticipated. In many states, enrollment continues to lag below projections. But the patients in the pools have higher medical bills than actuaries projected. The costs for those patients also are higher than people with similar conditions who are enrolled in the older state-run programs that are still operating.

California is one of the states that is receiving a higher allocation in 2012 than officials previously expected to get. The program was the last state high-risk pool to start, in October 2010. As of the end of November, it had 5,972 patients, and its capacity was about 6800 patients. That convinced CCIIO officials to provide an additional $118 million, bringing the state's total contribution from the federal government to $347 million.

The state had projected costs of about $1,000 per patient per month. Instead, actual costs were $3,100 per member per month.

Janette Casillas—the executive director of the nation's largest high-risk pool, which is in California—said that state law prohibits the legislature from pitching in additional resources—a situation that many states face. Resources for the program come largely from federal funding and premium dollars from patients.

In Montana, the state expected to get $16 million through 2013. Instead, it will get $22 million through the end of 2012, said Cecil Bykerk, a consultant who runs three high risk pools. That is despite the fact that enrollment is below 300 patients, when the state hoped for more than 400 by now.

In Alaska, the number of patients is modest. At its height, 72 patients were enrolled, but that number recently fell to 46 people. The state had expected about 100 enrollees. But the costs are so much higher than expected that the state will get about $14 million through the end of 2012, when it had originally expected $13 million through the end of 2013.

The example in Alaska helps explain why patients' medical costs are greater than anticipated. To qualify for the federal program, people have to be uninsured for at least six months and either have been turned down for coverage by an insurer, or have a doctor's note certifying they have a chronic medical problem. Most state-run programs that preceded the federal plan don't have that requirement.

The patients in the new program have more pent-up demand than those in the other state-run programs, said Bykerk. Other high-risk pool directors have found the same phenomenon.

The program is "attracting truly uninsured people who've never had insurance before," Bykerk said.

One patient's story helps explain why the numbers of enrollees fluctuate and why costs per patient are so high. Bykerk said at a recent meeting, a patient praised the program for its help in paying for her knee surgery. But she said that after she got help for her condition, she dropped out and stopped paying the premiums that support the program's expenses.

"It's really this ability to pop in, get your condition serviced immediately and pop out that is contributing to the problem," said Bykerk, who also sees this trend in Montana and Iowa where he oversees high-risk pools.

State officials say that they would like more clarity from CCIIO officials about what their 2013 funding allocations will be.

Casillas said that some state officials "are concerned that there is not a clearer direction or commitment from the federal government about what the allocation is in 2013."

"While it's a federal program, we are administering it in California for the federal government, and we are basically the face of the program," Casillas said. "So we want to make sure that for every individual we are enrolling, there are sufficient dollars to keep them through the 2013 timeframe. That point is a little concerning to some state PCIP directors ... Here we are in 2012. You want to know you have sufficient funding not just in 2012 but in 2013. For those of us administering the program, 2013 is around the corner."

By Nellie Bristol, CQ HealthBeat Associate Editor

January 18, 2012 -- States generally maintained Medicaid and Children's Health Insurance Program (CHIP) eligibility levels in 2011 despite recession-related budget pressures. But coverage for poor adults remains far below that for children, a new 50-state survey concluded.

The survey by the Kaiser Commission on Medicaid and the Uninsured and the Georgetown University Center for Children and Families credits the health overhaul (PL 111-148, PL 111-152) for its maintenance of effort requirements and the health care law and other federal actions for providing options for technological improvements.

"Amid state fiscal challenges, the requirement in the Affordable Care Act (ACA) that states maintain their eligibility levels and enrollment and renewal procedures was essential to preserving coverage during 2011," the report says. "In addition, some states made targeted eligibility expansions and many used technology to boost program efficiency and make it easier for families to enroll."

The health law requires as a condition of receiving federal Medicaid funding that states maintain eligibility, enrollment and renewal policies that were in place as of March, 2010. Exemptions include coverage of adults above 133 percent of poverty if the state can document a budget deficit. States also are not required to renew expiring waivers or continue coverage that is fully state-funded.

Reflecting policies adopted over the year, the study found that 25 states simplified enrollment or renewal procedures and 11 expanded eligibility. No state restricted enrollment or renewal while two restricted eligibility. Most states did not impose additional cost-sharing, the report adds.

Beyond annual premium adjustments, only one state, Colorado, increased enrollment fees for children's programs. Two others, Texas and Utah, increased copayments. In programs for parents and other adults, Washington state decreased premiums while Alaska, Massachusetts, Minnesota and Nebraska increased copayments for parents in Medicaid.

Eight of 11 eligibility expansions related to children's coverage. But New Jersey, Washington, and Minnesota also increased Medicaid coverage for low-income adults. Two other states, Arizona and Nevada, cut back on adult coverage. Arizona froze enrollment for adults without dependent children and Nevada discontinued coverage for some parents and pregnant women, the report says. Neither change was subject to health law requirements. Overall, only 18 states cover parents with full Medicaid benefits at or above the poverty level while 17 states limit full coverage to parents earning less than half the poverty level.

In another notable trend, the report says 25 states used information, technology and expanded matching funds from the federal government to update sometimes decades old enrollment systems.

"These improvements have the dual benefit of reducing paperwork requirements for families and eligibility workers while streamlining program administration," the researchers said. "Moreover, these actions assisted states in balancing the competing demands of increased case loads and decreased staffing, while also helping them to prepare for the new eligibility changes that will take effect in 2014 under the ACA." Actions taken included using Social Security Administration data to verify citizenship, simplifying renewal options, enhancing online application functions and eliminating interviews for parents.

The expense involved "has long prevented many states from upgrading to new technology," the report says. In response, the Centers for Medicare and Medicaid Services in April 2011 offered a temporary 90 percent federal matching rate, up from 50 percent, for states to upgrade or replace systems to prepare for enrollment increases anticipated with the health overhaul. As of January this year, 18 states have been approved for system upgrades while another 11 have submitted plans to CMS, the report says.

The report highlighted the enrollment procedures in Oklahoma as the first "fully-automated, real-time" system. Individuals can apply on line and receive an immediate decision on their applications. Subsequently, they can review coverage or update information. "Using this system, the state processes more than a thousand applications per day, and 90 percent receive on-the-spot eligibility decisions, even when state offices are closed," the report says.

By Nellie Bristol, CQ HealthBeat Associate Editor

January 20, 2012 -- Federal and state oversight will be critical to ensuring the plans states choose to represent essential health benefits meet both the requirements of the health overhaul and the needs of patients with chronic disease and disabilities, said Marc Boutin of the National Health Council.

Of the 500 potential benchmark plans in the states, "some of them will be excellent, some of them not as excellent and some of them potentially could be disastrous," he said at a National Health Council briefing on Capitol Hill. "Somebody needs to have the oversight to say 'I'm sorry this benchmark is not going to address what was statutorily required by the Accountable Care Act.' " The council is coalition of groups representing people with chronic diseases and disabilities.

In particular, Boutin said, regulators should look out for plans that do not provide adequate services in the areas of pediatric care, mental health and substance abuse, and rehabilitation and habilitation, saying there are no good benchmarks for those services. Through oversight, enrollees should be protected from discrimination against high-cost patients, have adequate medical necessity appeals processes and be fair and equitable for all participants, he added. Boutin is vice president and chief operating officer for the group.

The Centers for Medicare and Medicaid Services (CMS) issued a pre-regulatory bulletin Dec. 16 to indicate how the benefits would be determined under the health law (PL 111-148, PL 111-152). The approach has caused anxiety for a number of patient groups that said it leaves many questions unanswered and creates the potential for varying benefits levels among the states.

Boutin said that while flexibility could be good for people with disabilities, there are gaps in the current approach that need to be addressed to ensure equitable coverage. In addition to oversight, Boutin said, there should be standards for determining what services will be excluded. "Are we going to exclude services for autism? Are we going to exclude services for infertility? Are there other kinds of services we are not going to address? That is going to be a challenge," he said. "And right now, it's left to the benchmarks with no descriptive language as to how that will be addressed."

He also called for a "consistent national policy" on medical necessity and an appropriate and accessible appeals process.
While generally positive about the guidance if it is followed up with adequate regulatory details, Boutin criticized the plan in its treatment of prescription drugs.

"I do not understand what the secretary was thinking in limiting the formularies to one medicine per class," he said. "That is fundamentally not workable." He said it could particularly cause problems for people with HIV and mental health issues and could lead to higher health costs when people cannot get access to needed drugs. He suggested CMS "leave the benchmark alone" when considering prescription drug policies, since many of the plans will have more flexible programs than proposed in the bulletin.

By Melissa Attias, CQ Staff

January 20, 2012 -- The health care overhaul can play a key role in addressing health disparities among racial and ethnic groups, advocates told supporters of the law last week.

While infant mortality, obesity and diabetes rates still show significant inequities among different communities, speakers at Families USA's 17th annual conference said implementation of the law is an opportunity to help close those gaps.

"Health care reform won't end health disparities, but the law does provide us a foundation to build on and to move the conversation forward," said Janet Murguia, president and CEO of the National Council of La Raza, a Hispanic civil rights organization.

Murguia said the coverage options created under the law (PL 111-148, PL 111-152) are "vital" to tackling disparities, particularly in the Latino community. She praised the expansion in Medicaid for low-income families and the private insurance marketplace set up by the law, but urged supporters not to treat health equity as a side issue as implementation progresses.

"Health care reform implementation without intentional and deliberate action on disparities only serves to widen the gaps in health," she said. "On the up side, addressing the needs of these communities could potentially strengthen support for reform, and broad reforms, as it faces challenges in the future."

David Satcher, who served as surgeon general under President Bill Clinton, and L. Toni Lewis, chairwoman of SEIU's health care division, also emphasized the importance of education in counteracting attacks on the health care law. Satcher said how little people know about the overhaul is "amazing" and cautioned that misinformation could have a real impact.

"People distort what it is, what it says," said Satcher, who currently serves as director of the Satcher Health Leadership Institute at Morehouse School of Medicine. "If we're not careful, you know, that distortion is going to end up with us right back where we were, trying to figure out how people are going to get health care."

While advancements in the health care system are critical, Satcher also highlighted the link between health outcomes and social conditions, particularly poverty.

"The fact of the matter is that there are a lot of people who live in conditions that make it very difficult for them to get out in the morning and be physically active. It's not safe. And there are others who live in communities where there are no grocery stores and fresh fruits and vegetables that are affordable, or none at all," he said. "We have to deal with the social conditions that also surround these problems."