By Marissa Evans, CQ Roll Call

May 16, 2016 -- Oklahoma legislators are racing against the clock in an effort to agree on a budget that could expand Medicaid and spare medical providers from severe payment cuts.

The Republican-led legislature and GOP Gov. Mary Fallin are working to pass a budget that will plug a $1.3 billion budget hole. Lawmakers have until May 27 to pass the budget before the session ends.

The Medicaid policy reversal, put forward by sharp Obama administration critics who have opposed the 2010 health law, could expand coverage for an additional 175,000 low-income residents. Medicaid is the federal-state program for the low-income and people with disabilities. The health care law gave states the choice of whether to expand the program.

The unusual move by Republicans is driven by budget realities and a looming cut for hospitals and other medical providers. The Oklahoma Health Care Authority (OHCA), which oversees the state's Medicaid program, has proposed a 25 percent rate cut for providers that would go into effect June 1, a move that could put hospitals and nursing homes out of business. Legislators want to prevent that cut by expanding Medicaid, which will bring federal dollars into the state.

Under the plan that OHCA is proposing to expand Medicaid instead of proceeding with the hospital payment cut, the state would apply for a federal waiver to cover 175,000 uninsured adults and offer them help to pay for a health plan using a subsidy under Oklahoma's Medicaid program. The expansion would take effect by Jan. 1. Enrollees would also be allowed to have an individual health savings account that would help them pay for copays, deductibles and more. The plan also would prepare to shift into Medicaid children and pregnant women who could lose coverage under the Children's Health Insurance Program after Sept. 30, 2019. 

Now that the plan has been presented to the legislature, Nico Gomez, CEO for OHCA, has been visiting the statehouse buttonholing lawmakers.

"We believe the components of the plan could help stabilize the state's Medicaid program," Gomez said in an emailed statement Monday. "OHCA will continue to provide information to state leaders during the final weeks of session as they consider all of the components."

Under the health law, states could expand Medicaid eligibility to individuals with incomes up to 138 percent of the poverty level starting in 2014. The cost of covering the additional beneficiaries is fully covered by the federal government until 2017, when states that expanded will have to start chipping in. By 2020, states will have to cover 10 percent of the cost. So far, 30 states and the District of Columbia have implemented expansion.

Republican governors expanding Medicaid is not new. Alabama Gov. Robert Bentley and South Dakota Gov. Dennis Daugaard also are mulling the idea.

Gene Perry, policy director for Oklahoma Policy Institute, a non-profit that looks at issues in the state, said that the organization has been pushing for expansion for years. He said Oklahoma Republicans' resistance to Obamacare is waning now that provider closures are on the line.

"We're looking at a $1.3 billion hole so we're not surprised this is the year that the [Medicaid expansion] situation has broken down some," Perry said. "It seems like it's a matter of when and not if we're going to accept that."

By Erin Mershon, CQ Roll Call

May 17, 2016 -- The nation's uninsured rate fell below 10 percent for the first time in history last year, according to survey results published Tuesday by the Centers for Disease Control and Prevention (CDC).

The new figures, showing a 9.1 percent uninsured rate, are the latest to underscore the gains of the 2010 federal health overhaul. Before that law took effect, about 14.4 percent of Americans lacked health insurance, according to the same survey data.

The study shows some 28.6 million Americans still go without insurance, about 16.2 million less than the tally before the law took effect. The Obama administration in February estimated that 20 million people gained coverage because of the overhaul.

Among the insured, 9.1 million people gained private coverage through HealthCare.gov or the state-based exchanges, the study says. Those gains were slightly steeper among young adults, 18-24, than among older adults, and also slightly steeper among the poor and nearly poor than among wealthier Americans.

Health and Human Services Secretary Sylvia Mathews Burwell was quick to applaud the new figures.

"Today's report is further proof that our country has made undeniable and historic strides thanks to the Affordable Care Act," she said in a statement. "Our country ought to be proud of how far we've come and where we're going."

By Erin Mershon, CQ Roll Call

May 18, 2016 -- Smaller insurers with experience in Medicaid, such as Centene Corp. and Molina Healthcare, are outperforming the broader insurance industry on the federal health exchanges. Their success is putting a spotlight on their business model as the Obama administration and other insurers seek to stabilize the fledgling individual market.

If Medicaid-like plan features become the norm that could substantially affect consumers and medical providers. Such plans are often popular in the exchanges for their low premiums, but consumers have frequently criticized the way plan networks limit their access to medical providers such as doctors. And physicians criticize the plans for low reimbursement rates.

The financial success of those plans stands out as the health insurance marketplaces for individuals face mounting pressure to stabilize. The nation's largest insurer, UnitedHealth, already dropped out of more than three-fourths of the state exchanges it participated in last year. Analysts estimate the industry suffered losses in the range of $5 billion last year.

Centene and Molina, meanwhile, not only profited in 2015 from their exchange business under the health care law, but are considering expansion, executives outlined on recent earnings calls. 

Replicating or at least matching the Medicaid plans' profits will be paramount for both their competitors and the Obama administration, since insurer participation in the exchanges is a key metric for gauging the success of the 2010 federal health overhaul. The law aimed to establish competitive marketplaces where consumers could choose from an array of plan offerings.

"Plans that have experience in Medicaid and understood [that market] faster are now doing better taking care of this population," said Ceci Connolly, president of the Alliance of Community Health Plans, whose membership includes several Medicaid managed care plans, which contract with states to provide coverage.

Many health plan executives mistakenly thought newly insured exchange consumers would behave like workers who are covered by employers, but it turns out that exchange consumers are more like Medicaid enrollees, Connolly said. "Part of the reason why we see those departures by some of the big national for-profits is that it took them too long to appreciate the unique challenges of these customers," she said.

A Different Approach

Many other insurers are struggling to adjust to the new market. More than 650 counties may have just one insurer participating on the exchange this year, according to an ongoing Kaiser Family Foundation analysis.

Medicaid-focused insurers fared better than any other type of insurer in 2014 as the new health law marketplaces were launching, according to a report released Monday by the McKinsey Center for U.S. Health System Reform. The analysis documented losses across all types of plans–but while nonprofit co-operatives and provider-led plans saw negative margins in the double digits, Medicaid insurers saw losses of just 2.7 percent.

The administration is set to highlight the exchange success of Medicaid managed care organizations, among others, at a June 9 forum on best practices for insurers.

"One theme that's consistent is that success in the Marketplace requires a different approach to providing care than was required for success in the old individual market," wrote Health Insurance Marketplace CEO Kevin Counihan in a statement.

Medicaid managed care companies cover about 55.3 million Americans, about 77 percent of the country's Medicaid beneficiaries. In an effort to keep their costs down, the plans often focus on coordinating patients' care and helping them manage their diseases. The plans curb costs by encouraging preventive care and offering limited provider networks of doctors and other hospitals.

Molina and Centene have done that in the new health exchanges, too. They attract customers already familiar with their brand—and in many cases, their exchange customers have just transitioned from their Medicaid plans. The companies limited their exchange participation mostly to states where they already offer plans in Medicaid.

"It's an extension of our Medicaid business," said J. Mario Molina, president of Molina Healthcare, in an interview. "We're focused on customers who had been on Medicaid, who may have been our patients. We want to give them the opportunity to stay here."

Keeping Costs Low

Perhaps the biggest draw for Medicaid-like plans on the exchanges is their cost. They already use narrow networks of providers—an easy lever for insurers to hold down prices that many plans participating in the exchanges are adopting.

A spokeswoman for America's Health Insurance Plans (AHIP), the industry's lobbying arm, emphasized that the success of managed care plans is driven by their low-cost offerings, given how price-sensitive consumers are. Clare Krusing of AHIP also cautioned against the broader idea that the exchanges might become a second Medicaid.

Experts including Connolly and Joe Antos, an American Enterprise Institute health care scholar, said consumers might not dislike narrow networks if they are matched with better care coordination and lower prices.

Medicaid managed care companies are accustomed to negotiating low rates with providers, so they may be in a better position to negotiate their exchange payments, said Antos.

Antos explained that a hospital administrator will expect higher rates from a big insurer like UnitedHealth, which pays more for employer-based coverage than Medicaid plans pay. "Whereas with Molina or Centene, they're already down at rock bottom, and they can say, 'We're going to bring in a lot more people and we can pay you a bit more.' That sounds like a good deal," he said.

Narrower networks also may make the plans less inviting to sick customers, which many insurers in the exchanges criticize as a major factor behind rising premiums, according to Katherine Hempstead, senior adviser at the Robert Wood Johnson Foundation.

Managed care plans also may be better than competitors at designing benefits for the types of people their plans attract. Both Molina and Centene customers use less medical care than those covered by competitors, according to a review of insurer data by Hempstead. That can keep costs down.

Ed Haislmaier, a senior fellow at the Heritage Foundation, attributes customers' lower utilization of care to the design of benefits. The plans often charge much higher copays for emergency room visits than other insurers to encourage consumers to skip costly hospital services in favor of cheaper care elsewhere. The plans will also often charge lower copays for primary care visits than their competitors.

"This is a population that when they need care, they go to the emergency room. You're going to have to change that behavior" to limit costs, Haislmaier said. "And [Medicaid plans] understand that population."

And to be sure, Molina cautioned that the company is "not printing money" from its exchange business. "We're seeing about the same financial performance that we do in Medicaid," he said.

But Haislmaier says he expects Medicaid-like offerings to capture a growing share of the new market.

"If nothing changed and this thing just worked itself to an equilibrium...you're probably left with one or two insurers in both states that look like Molina or Centene; maybe three or four in a big state," he said. "It's a very different program than what the proponents thought they were designing and what people have expected. It is a niche market."

By Joe Williams, CQ Roll Call

May 20, 2016 -- Under pressure from House Republican leaders to move mental health legislation, Energy and Commerce Chairman Fred Upton of Michigan is circulating a revised draft that would remove several contentious provisions in an effort to gain bipartisan support.

Congressional aides who have seen the draft caution additional changes will likely be made, but that the latest version moves closer toward a Democratic alternative (HR 4435) by Rep. Gene Green, D-Texas.

Democrats strongly opposed the initial legislation (HR 2646) from Rep. Tim Murphy, R-Pa., arguing that it weakened patient privacy protections and would have made changes to the Substance Abuse and Mental Health Services Administration (SAMHA) that they felt would have undermined the agency.

The updated draft makes several concessions that Republicans hope will satisfy Democrats.

The committee initially hoped to hold a full panel markup next week. But since neither Democrats nor Murphy have signed off on the revisions, aides say it is more likely the full committee will take up the measure in June.

Energy and Commerce spokeswoman Jennifer Sherman said conversations over the bill continue every day and that the panel is moving in the right direction.

"Chairman Murphy's bill is of great importance to Chairman Upton and he looks forward to moving the Murphy bill, which will make a real difference in the lives of so many families in need. We are getting closer to delivering meaningful reforms, and look forward to advancing a final bill to the full committee soon," she said in an emailed statement.

Changes from Murphy Bill

Murphy's legislation proposed loosening restrictions in the Health Information Portability and Accountability Act (HIPAA) (PL 104-191) to make it easier for relatives of people with behavioral health conditions to receive confidential patient information if it was considered necessary to protect the individual or the public.

The new draft by Upton drops that provision and instead substitutes language that would make it the sense of Congress that the Department of Health and Human Services should review HIPAA privacy regulations.

Aides expect some language on privacy to make it into the final version.

While the new bill still would establish a position for an assistant secretary for mental health and substance use disorders at the Department of Health and Human Services, the position would not absorb the responsibility of the administrator for SAMHSA as Murphy initially proposed.

A bill circulated in 2014 from Murphy initially had the two positions as separate roles.

The new draft also would scale back a controversial and costly provision to end a limit on Medicaid coverage for inpatient mental health care at institutions.

The new language would codify provisions in a recent Medicaid managed care rule from the Centers for Medicare and Medicaid Services (CMS) that offers matching federal reimbursements to psychiatric hospitals and facilities for less than 15 days a month for patients in managed care plans.

Lawmakers in both chambers had hoped to add such a provision to the mental health bills, but with an estimated price tag of $60 billion over 10 years, the challenge has been paying for it. Senate Finance Chairman Orrin G. Hatch, R-Utah, previously said he was hoping to find funds for it, without specifying how.

A previous law, the Mental Health Parity Act (PL 104-204), mandated that any insurance plans that cover mental health and substance abuse must provide equal benefits for those needs as for physical health care. Murphy's initial bill included language requiring CMS to report on federal investigations into compliance with the law. That language would be scaled down in the version Upton is circulating, which aides say was sent to Democrats last week.

The new version also would reauthorize parts of a fund under SAMHSA that provides grants to address mental health needs of importance to states and other local entities. The program had a fiscal year 2016 budget of $909 million. One of the programs expected to gain continued support under the fund is the National Child Traumatic Stress Network. That organization was established by the federal government to improve care and access to services for traumatized children and their families.

As introduced, Murphy's original bill would provide states with existing assisted outpatient treatment laws a 2 percent increase in block grant funding. Such laws exist in 46 states for court-ordered treatment for mentally ill people, such as those with a history of not taking their medication. That provision was dropped in the new draft.

The new bill would still establish a National Mental Health Policy Lab, which would pursue policy initiatives impacting mental health and substance use. But a provision allowing the lab to use block grants to independently push forward initiatives was removed. 

Senate Republican leaders earlier this month surveyed their party on that chamber's mental health legislation (S 2680) to see if there were any objections to the bill. Congressional aides say several offices expressed concerns, which they expect to slow down the legislation from advancing in the chamber.

By Kerry Young, CQ Roll Call

May 20, 2016 -- Medicare intends to help doctors in solo or small practices adapt to the complex demands of a new system that will raise or lower their reimbursements, a federal official said.

The Centers for Medicare and Medicaid Services (CMS) is preparing to try to ease the burdens on small practices of the transition to a new physician payment system Congress created in an overhaul (PL 114-10) last year, said Kate Goodrich, director of the agency's Center for Clinical Standards and Quality, on Friday. Doctors could face cuts of as much as 4 percent in 2019 if they do poorly next year on reporting measures and other requirements of the new system, known as the merit-based incentive payment system.

The agency will soon put out a request for proposals for a $100 million pool of funds for technical assistance for small and rural practices and those in areas with shortages of doctors, she said.

CMS also is seeking to establish informal partnerships with medical societies and companies that sell electronic health records systems to help doctors prepare for the change.

"We recognize that we can't do it all from Baltimore alone," Goodrich said at an Alliance for Health Reform meeting, referring to the location of CMS. "There's no way that's ever going to be successful."

Goodrich also said that the outlook for small and solo doctors in the new payment system is not as grim as CMS' own figures suggest. Many doctors and medical groups were alarmed at a CMS estimate that about 87 percent of doctors in solo practice would see their Medicare pay reduced if their results for 2017 were similar to 2014, CMS said. Only about 18 percent of those in practices of 100 or more doctors would be so penalized.

Many doctors in small practices simply opted not to participate in certain quality reporting efforts in 2014, skewing this data, according to Goodrich. In looking at data on small practices that did participate, it appears their performance on quality reporting systems is "fairly comparable" to that of larger ones, she told reporters after the meeting.

In many cases, small practices will be exempted entirely from the new system because they don't see many people enrolled in Medicare, she said. The draft rule proposes excluding doctors with less than $10,000 in Medicare claims and fewer than 100 patients enrolled in the program for senior citizens and the disabled.

"We think that a lot of these practices don't see a lot of Medicare patients," Goodrich said. "They may meet the low-volume cutoff."

CMS will release its decision on criteria for this exemption in the final rule. This is one of myriad decisions that the agency will need to hash out in the months ahead in order to have the rule done in time for use next year. CMS is accepting comments on the 962-page draft rule through June 27.

"I am worried about CMS and how they are going to get ready," said Ashley Thompson, senior vice president for public policy analysis and development at the American Hospital Association, at the Alliance event. "The final rule has to be out by Nov. 1."

By Erin Mershon, CQ Roll Call

May 19, 2016 -- Hepatitis drug spending grew by more than 600 percent between 2013 and 2014, according to a new report from the Blue Cross Blue Shield Association (BCBSA). Overall, the plans associated with the group experienced a 26 percent jump in spending on specialty drugs over those two years.

The six-fold increase comes as lawmakers and regulators face increasing pressure to address the rising costs of prescription drugs. In just the last year, the issue sparked congressional hearings, new proposed regulation and comments from the presidential frontrunners in both parties.

Insurance companies like those affiliated with Blue Cross Blue Shield have encouraged policymakers to curtail spending on prescription drugs, citing the costs as a major driver of premium increases. Pharmaceutical companies, meanwhile, say insurers are cherry-picking data and focusing on outliers.

Overall, BCBSA found that annual spending on specialty pharmaceutical drugs rose by $87 per member, in a survey of claims data from 70.5 million members. The association said the increasing prices of those drugs was the main driver in the growth of that spending; increasing utilization had a smaller effect.

The group, which spent $14.6 billion on specialty drugs overall, saw hepatitis spending skyrocket from $150 million to $1.09 billion. But that 612 percent rise was unusual—spending on inflammatory drugs, which saw the next biggest increase, grew by 29 percent between 2013 and 2014. Other drug categories had smaller increases.

The Pharmaceutical Researchers and Manufacturers of America called the report "misleading" in a statement. They blasted the insurance industry for what they said was an effort to discourage patients with costly conditions from enrolling in their plans, pointing to research from Avalere Health that they say shows health plans put medicines for conditions like cancer and multiple sclerosis on the highest cost-sharing tier of their formularies, "even when generics are available."

The report "cherry-picks data in an attempt to justify discriminating against patients with chronic conditions such as cancer, rheumatoid arthritis, and multiple sclerosis," spokeswoman Holly Campbell said.

The BCBSA report also found that in 2014, specialty drug spending was 17 percent higher for members in the individual market than those in the employer market--largely because individual market consumers were utilizing more drugs, especially for cancer, viral infections and hepatitis.

BCBSA's data included claims from both the pharmacy and medical benefits membership, and the data showed a far higher increase for drugs covered by the former. They attributed the difference in part to increasing use of new oral and self-injectable specialty medications that are typically covered under the pharmacy benefit.

They also attributed the difference to a "pharmatization" of drugs—"a tendency of health plans to move existing medications billed through medical benefit to pharmacy benefit in order to improve management of these medications," according to the report.