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May 19, 2014

Washington Health Policy Week in Review Archive e8db94cf-5b37-4a96-9ce9-231ec4b34c13

Newsletter Article


CMS Issues Final Version of Health Law Marketplace Rule

By Rebecca Adams, CQ HealthBeat Associate Editor

May 16, 2014 -- The final version of a rule outlining how health law marketplaces will operate in 2015 adopted some but not all of the suggested revisions to an earlier draft that consumer advocates recommended. Insurers also won some concessions but did not get all of the additional funding they sought to cushion potential losses in the markets.

The regulation, released late last week, rules that some state laws limiting the kinds of assistance "navigators" and other counselors who help people enroll in the health insurance exchanges can offer are not allowed. Federal officials said the laws violate the health care law (PL 111-148, PL 111-52).

The 436-page regulation drew aggressive lobbying from health care providers, consumer advocates and other interests. No group got everything it wanted.

The Small Business Majority, an ally of the Obama administration, said it was "incredibly disappointing" that the final rule would allow states to decide whether to further delay a requirement that would allow small business workers to be able to choose which health plan they want to enroll in.

The ability of workers to have a choice of plans has already been delayed. Currently, small business owners select insurance for their workers.

"The final rule allowing states to possibly opt-out of it for yet another year could harm small businesses by putting them at a competitive disadvantage to big businesses that are able to offer a choice of plans to their employees," said John Arensmeyer, founder and CEO of the Small Business Majority. He added that the group believes "delaying this rule violates the law and the spirit of the Affordable Care Act."

The rule also sought to clarify if enrollment assisters such as navigators and certified application counselors would face civil fines if they inappropriately released consumers' personal information, or acted in a fraudulent way.

Consumer groups asked that Centers for Medicare and Medicaid Services (CMS) officials cap the fines, prevent the Department of Health and Human Services (HHS) inspector general from having the power to impose fines and say that assisters could not face fines under both the health care law and other federal laws.

Consumer groups also wanted CMS to clarify that the amount of penalty mentioned in the rule —$100 per day per violator—was the maximum amount but that the agency could set lower fines.

CMS did not agree to an overall limit to the fines. But officials did accept the idea that Office of Inspector General (OIG) shouldn't have the authority to penalize people and that violators should not be fined for running afoul of more than one law. CMS officials also agreed that the agency could lower the fines below $100 per offender per day.

Consumer groups won another victory when HHS accepted a Families USA proposal to publicly release full survey results from consumers that rate health plans. The final rule clarifies that HHS will publicly post full survey results for marketplaces run by the federal government in 2016 instead of just a subset of results that would be included in a plan's quality rating.

CMS officials also finalized some provisions that would affect state laws on navigators, but did not include everything proposed in the original draft. CMS officials said they would revisit the issue in a guidance memo.

The original rule sweetened some financial protections for insurers because administration officials said that they realize that the first year of the health care marketplaces has been rocky.

Insurers are slated to get federal payments to offset the expense of complicated medical cases. Under the original rule's reinsurance program, the federal government would have covered half of the expenses for high-cost patients, starting at $70,000. The extra federal funding would be capped at $250,000.

Under the final version, CMS officials said they would take insurers' recommendation of picking up costs above $45,000.

CMS officials said that if reinsurance collections fall short of what they need to pay out in a particular benefit year, federal officials will pay out the reinsurance collections first, and then pay administrative expenses and payments to the U.S. Treasury on a pro rata basis.

But insurers did not get major changes that they had requested under the risk corridor program, which caps insurers' losses and profits.

The original rule said that CMS would increase the amount of allowable costs for insurers and allow insurers to make higher profits.

The Blue Cross and Blue Shield Association asked CMS to boost profits by 5 percentage points instead of the 2 percentage points that CMS proposed in March. The request was turned down.

CMS officials said in the rule that they expect the risk corridors program to be budget-neutral by the end of three years so that the government pays out no more than it collects.

Insurers had asked CMS to be prepared to pay out more than it collects.

Some were concerned that the agency may not take in enough money to make full payments to insurers.

CMS officials said they "appreciate that some commenters believe that there are uncertainties associated with rate setting, given their concerns that risk corridors collections may not be sufficient to fully fund risk corridors payments." CMS said it was "unlikely" that there would be a shortfall in 2015, but if there was, HHS will use "other sources of funding" —if it available under appropriations.

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Health Centers Seek Staff Amid Medicaid Expansion

By Kerry Young, CQ HealthBeat Associate Editor

May 16, 3014 -- Many community health centers are looking to add staff, particularly bilingual workers, because the expansion of Medicaid through the 2010 health law will boost demand for their services, researchers said.

The law (PL 111-148, PL 111-152) is intended to aid poor and struggling Americans , who are the "mainstay" of community health center's base, according to a report from the nonprofit Commonwealth Fund. An estimated 4 million patients of health centers who once lacked insurance are expected to get covered this year.

"As a result of the expected surge in patient volume, health centers are worried about their ability to ensure access to good care," the authors said.

The clinics and organizations serve more than 22 million people in about 9,000 locations, according to the National Association of Community Health Centers. According to the Commonwealth report, nearly six of 10 centers that participated in a recent survey cited concerns about shortages of primary care doctors. Almost 70 percent of centers in the survey reported hiring staff to help people apply for insurance coverage. And about 17 percent of the centers are expanding remote access care, such as telehealth to meet demand.

Community health centers, long a bipartisan funding priority on Capitol Hill, face a sharp drop off in federal support in fiscal 2016 that could force a number to close, slash staff, or curtail services. If lawmakers do not intervene, a key part of the strategy for meeting growing demand for health care services as coverage expands under the health law will be undermined, advocates for centers say.

The centers charge on a sliding scale that varies with income and insurance status. Centers do not provide hospital care but do offer an array of other primary care services.

"In helping to meet the complex needs of poor and minority patients, federally qualified health centers are a core component of the health care safety net, and they will continue to serve as providers for new Medicaid patients as the remaining uninsured," the authors said.

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Indiana GOP Governor Proposes Medicaid Expansion Using HSAs

By Rebecca Adams, CQ HealthBeat Associate Editor

May 15, 2014 -- Republican Gov. Mike Pence of Indiana recently proposed an expansion of Medicaid that would have some consumers contribute to the cost of their coverage. But Pence took out some controversial parts of an ongoing state effort, such as limiting benefits and maintaining a waiting list.

If the Centers for Medicare and Medicaid Services (CMS) approves the plan that Pence announced last week, Indiana would become the 28th jurisdiction, including the District of Columbia, to expand Medicaid. That does not include Pennsylvania, which has already sent a plan to CMS for approval. The Indiana expansion would start in 2015.

Indiana's plan will be closely watched by other state officials to see how far CMS officials will go in approving elements such as a health savings account and a requirement that enrollees be referred to job training programs. CMS officials have allowed Indiana to use a health savings account model under a pilot program that the state started in 2008.

Between 334,000 to 598,334 Indiana residents could gain coverage through the expansion, according to state documents.

"There are two futures in health care—government-directed health care or consumer-driven health care," said Pence. "Indiana has chosen consumer-driven health care and intends to give eligible Hoosiers the power to make their own health care decisions."

Medicaid experts are keeping a close watch on whether other states, especially those led by Republicans, follow Indiana's lead.

"It is a significant development that Gov. Pence has indicated his strong interest in accepting the federal Medicaid expansion dollars," said Joan Alker, the executive director of the Georgetown University Center for Children and Families. "I think this could inspire other states to as well."

Alker said that there are clearly details that will need to be worked out between federal and state officials, especially on the issue of the costs that very low-income folks would pay for their Medicaid coverage. But she sounded optimistic that a deal will be reached.

"The Obama administration wants to get to yes, and Gov. Pence wants to build on his Healthy Indiana program —and I think they are both serious about coming to agreement," Alker said.

Under the proposal, Indiana residents who are eligible for Medicaid would be enrolled in an account to pay for medical costs. The individual would have to pay a $2,500 deductible before a private insurance plan would start picking up medical expenses.

The state would provide most of the funds for the savings account, but the individual would be expected to contribute, too. The plan calls for sliding scale contributions that start at $3 per month for an individual earning $214 per month and rise to $25 per month for someone with monthly income of $983 to $1,342. Those contributions are all slightly lower than the payments in the pilot program in 2012.

As long as beneficiaries put money into their accounts, they will have no other costs, except for a copayment of up to $25 for non-urgent use of a hospital emergency room that is waived if the patient calls a hotline before going to the hospital.

If the person does not make the contribution, the consequences would depend on how much income the individual makes.

People who make less than the federal poverty level—which is $11,670 for an individual this year— would be shifted into a less generous plan that does not include the dental and vision benefits that are in the other plan. The basic plan also has more limited pharmacy benefits and would require patients to pay co-payments.

People whose income is between 100 percent of the poverty level and 138 percent of poverty "would risk losing access to the program," according to Pence's plan.

The idea of cutting off benefits for people who don't pay into the account will be controversial.

So will another element of the plan, which requires non-disabled beneficiaries who are working less than 20 hours per week to be referred to the state's job training and job search programs. The beneficiaries will get information on job openings and training initiatives. The idea is a less stringent version of a program proposed in the Pennsylvania Medicaid waiver that CMS officials are currently weighing.

In 2016, Indiana will allow consumers to use Medicaid dollars to buy private coverage through their jobs. Consumers can choose between get coverage through the state Healthy Indiana program, or putting a state contribution toward the cost of insurance provided by their employers. Parents with kids in the Children's Health Insurance Program also would be able to choose to switch their kids to the family's employer-sponsored insurance plan, with a contribution from the government.

"We are encouraged by Indiana and Gov. Pence's commitment to helping cover more of the state's uninsured population through the Healthy Indiana program and look forward to seeing his proposal," said CMS spokeswoman Emma Sandoe in a statement.

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HHS Plans Outreach to Teach Newly Insured How to Use Benefits

By Rebecca Adams, CQ HealthBeat Associate Editor

May 15, 2014 -- The Department of Health and Human Services (HHS) is preparing to launch a national campaign this summer to help newly insured people understand how to use their benefits, according to a federal official who spoke at a forum on women's health at the nonpartisan Kaiser Family Foundation.

Inside the agency, officials refer to the effort as the "You got covered, so now what?" initiative, said Cara James, the director of the Office of Minority Health.

The work is important because more than 75 million people have low health literacy and have difficulty understanding basic health information, according to a study cited by federal officials.

"It's badly needed," said Alina Salganicoff, the Kaiser Family Foundation vice president and director of women's health policy, at the briefing.

Panelists also discussed findings from a Kaiser survey on health coverage that polled 3,015 women and 700 men between the ages of 18 and 64.

People who are gaining coverage through the health care law (PL 111-148, PL 111-152) may have never had insurance before, or only have a very weak understanding of how coverage works. They may not understand such basic questions as how to pay premiums to renew coverage, what a deductible is or how to find a doctor.

The survey released at the Kaiser briefing shows that 16 percent of the uninsured women who were interviewed and 3 percent of those on Medicaid said the place that they usually get care is the emergency room.

James highlighted the high use of emergency rooms by the uninsured as one example of a behavior that administration officials want to change as people start using their new benefits.

Signing people up for benefits was just the first step in lowering the uninsured rate. Helping people understand the importance of retaining coverage—such as through paying for premiums so people do not lose their individual market plans – is a big concern for insurers and state and federal officials.

The HHS effort would build on a pilot program being tested now in four states.

Obama administration officials created an 18-page booklet in English and Spanish that addresses questions such as "What is my copayment?" and steps to make an appointment. They also produced 10 videos with titles like "My New Health Plan" and "Finding a Provider."

The administration will distribute the information partly through networks of community groups, Head Start agencies and enrollment assisters, said James.

The survey that was presented at the briefing will serve as a baseline that can help policymakers understand the health care law's effects, particularly on women.

About 55 percent of women said they had been contacted by a collection agency in the past 12 months because of a medical bill and 45 percent said they had difficulties paying for basic needs such as food or housing because of medical care.

About 20 percent of women said they put off or postponed preventive services—which some experts believe can lower health spending overall—because of the cost. About 32 percent of women said they were currently paying off medical bills, compared to 22 percent of men.

The survey showed that coverage is changing. The leading source of coverage for young women was their parents' coverage, with about 45 percent of the 18- to 25-year-olds polled saying they are on their parents' plan. Only about 8 percent of women in that age range had their own employer-sponsored insurance. About 19 percent of people in that age range were uninsured.

The survey was conducted from Sept. 19, 2013, through Nov. 21, 2013. The open enrollment period for the new marketplaces began on Oct. 1. The error rate for the sample of women was 2.9 percentage points and for the sample of men was 4.3 percentage points.

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CMS Tries to Avoid More Website Pain with 'SHOP' Exchange

By John Reichard, CQ HealthBeat Editor

May 14, 2014 -- Federal officials plan a test launch in three to five states of a new health insurance exchange website designed for small businesses before deploying it Nov. 15 in the 36 states served by

But small business owners are skeptical the long-delayed "SHOP" website will really work as advertised by the end of the year, even with a deliberate plan to debug the site before its official debut.

"If in fact this means it's only going to launch in three to five states, that's not acceptable," says John Arensmeyer, CEO of the advocacy group Small Business Majority.

Business owners also are downplaying the odds that a much touted "employee choice" feature of the site is going to become operational any time soon. It would offer small business workers an online menu of enrollment choices rather than leave the decision to business owners.

The health care law (PL 111-148, PL 111-152) established the Small Business Health Options Program (SHOP) exchange in the hope of creating a pool of small business customers large enough to be attractive to insurers. The thinking was health plans would compete for market share by offering lower premiums.

This year, the SHOP exchange will be available for employers with 50 or fewer full-time workers. In 2016, it expands to those with as many as 100.

A Centers for Medicare and Medicaid Services (CMS) official said the agency "is committed to delivering a robust online SHOP marketplace on"

The soft launch starts Oct. 20 under a plan outlined late last week by CMS officials. That day, employers in the test states will be able to register for an account, upload a roster of their workers, establish contact with a broker and get a determination whether they're eligible to shop for coverage on the SHOP exchange.

On Nov. 7, they'll be able to browse available plans. And starting Nov. 15 small businesses in all the states served by the federal exchange will be able to actually enroll in plans online.

Currently, SHOP enrolls small businesses in coverage using paper applications, typically with the assistance of insurance agents and brokers.

The plan also outlines another series of milestones and deadlines leading up to the launch. Plans must apply to compete in the SHOP by June 27. In the following weeks, CMS will review the submissions and seek more data as needed before formally certifying them to participate between Oct. 14 and Nov. 3. End-to-end testing of the website with all participating insurers will begin in mid-September and run through early November.

CMS failed miserably to deliver on such timelines when it tried to launch for individual coverage last fall. Delays in developing and testing the site piled up. But the agency stuck to its Oct. 1 hard launch, triggering multiple rounds of second-guessing about whether it should have been delayed or phased in more gradually.

Insurers and employers aren't reassured that the seemingly more deliberate approach to the SHOP exchange means that it will open on time. "Implementation of the proposed SHOP program will be complex and is untested," the trade group America's Health Insurance Plans said in comments April 21 on proposed exchange rulemaking. "We recommend that issuer testing should begin as early as May of this year."

An insurance industry official, who was not authorized to discuss the matter, said "the timing with the soft launch is okay," but cautioned that there is still functionality that needs to be built out and tested. "Obviously the plans would like testing to begin as soon as possible," the official said.

"Hopefully, this will be a little more successful than the Titanic was the last go around," said Neil Trautwein, vice president of the National Retail Federation, in a telephone interview. Noting federal officials are still manually enrolling people on the SHOP exchange while trying to get the "back end" of fixed to it can sync individual enrollments with insurance company files, he said, "I'm skeptical they will be able to get this up and running."

The employee choice function adds yet another layer of complexity and appears to be even farther off in the future, Trautwein added. The insurance industry official commented that employee choice "is a bit in flux." CMS has proposed that state regulators have the final say as to whether this option should be available in 2015, the official said .

Arensmeyer said he's okay with the soft launch plan if in fact it means the SHOP website will work in all the states this fall. But he said CMS hasn't made guarantees. Like Trautwein, Arensmeyer also faulted CMS for having limited contact with small business advocates in recent months. "We've been sensitive to the need to get the individuals exchanges up and running first," he added. But now, "we want them very heavily focused on SHOP."

A CMS spokesman said "We are committed to implementing SHOP in a way that best serves the interests of workers and small businesses and utilizes the lessons of the first year of implementation, which includes piloting in a few states before the full launch on time this fall."

If the agency can't meet that deadline it has one consolation: SHOP enrollment goes year round, unlike that for individuals.

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Sale of Noncompliant Health Plans Prompts Debate over Transitional Policy

By Rebecca Adams, CQ HealthBeat Associate Editor

May 9, 2014 -- The Centers for Medicare and Medicaid Services (CMS) said last week that it will phase in a restructuring of the Quality Improvement Organization Program that the agency believes will be more efficient and save money.

During the first phase of the restructuring, two of the private contractors that help CMS with quality improvement efforts will take a lead role in working with the program's case review and monitoring activities. That work will be done separately from the traditional quality improvement activities that contractors do.

The companies will focus on ensuring consistency in the review process and taking into account local factors in decisions. CMS announced that it has selected two contractors to do that work: Livanta LLC, located in Annapolis Junction, Md., and KePRO, located in Seven Hills, Ohio.

During a second phase, CMS will award contracts to organizations that will directly work with providers and communities on quality initiatives to improve patient safety, reduce harm, and improve clinical care.

The trade association for quality improvement organizations (QIO) said it supported the changes.

Todd Ketch, executive director of the American Health Quality Association, said the changes "will place even greater emphasis on improving the health status of communities; providing beneficiary-centered, reliable, accessible and safe care and providing better care at a lower cost."

He added, "In the years ahead, QIOs will continue to focus on improving the way in which providers coordinate patient care across settings, reducing health care associated infections, improving care for high-incidence conditions like diabetes and heart disease, and more. We applaud CMS' commitment to continuing to provide boots-on-the-ground QIO technical assistance that has been integral to national quality improvement efforts."

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