By Rebecca Adams, CQ HealthBeat Associate Editor

October 14, 2014 -- States that opted not to expand Medicaid under the health law will experience more spending growth this year than states that are growing the program, according to an analysis by the nonpartisan Kaiser Family Foundation.

The state-by-state findings were presented at a briefing last week during which Medicaid directors spoke about their experiences implementing the law and other significant changes in the federal-state health program for the poor.

"Clearly we are in a new era," said Diane Rowland, executive director of the foundation's Kaiser Commission on Medicaid and the Uninsured.

The health care law (PL 111-148, PL 111-152) allows states to broaden eligibility in Medicaid for people with income of up to 138 percent of the federal poverty level. GOP governors and legislators in 23 states have refused to so far, citing concerns that such an expansion will be unaffordable. But the report shows that states that chose not to expand are projected to see a 6.8 percent increase in the amount of state taxpayer dollars that support Medicaid in fiscal 2015. States expanding the program will only see a 4.4 percent rise in state spending. So far, 27 states and the District of Columbia have expanded Medicaid.

The spending growth in non-expansion states will come even though enrollment is expected to grow at much lower rates than in expansion states. The number of people enrolled in non-expansion states is likely to go up by 5.2 percent, compared to 18 percent in expansion states in fiscal 2015.

The findings are partly explained by the higher federal matching rates for states that broaden eligibility. The Centers for Medicare and Medicaid Services is paying all of the costs of covering newly-eligible individuals who qualify because of expansion through 2016. That higher matching rate will phase down until it is 90 percent of the costs in 2020 and beyond.

The federal government pays lower matching rates for people who qualify under the old eligibility rules for traditional Medicaid. In the current fiscal year, the federal government is picking up 50 percent to almost 73.6 percent of costs for people who qualify under the rules in place before the health law was enacted.

Some states that previously got lower matching rates for beneficiaries with limited benefits have shifted the cost to the federal government, which is picking up all the costs for those individuals.

With the federal government taking care of most of the costs, total spending in states that expanded will jump by 18.3 percent while total spending in states that did not expand is projected to go up by 6.5 percent.

There was less of a gap during states' fiscal 2014. Then, expansion states saw slightly higher spending growth increases. These states experienced a 6.6 percent increase in their budget spending while total federal and state spending on the program in the expansion states rose 13.1 percent.

States that did not broaden eligibility saw their state Medicaid costs rise by 6.1 percent while total spending in the states rose 5.6 percent.

Republicans concerned about the rising total costs say the federal government may not keep its promise of the 90 percent match in the law.

Even GOP governors who want to expand Medicaid may face a challenge convincing fellow Republicans to go along. Darin Gordon, the director of the Tennessee Medicaid program TennCare, said at a recent forum that his state legislature and the Obama administration have differing perspectives on the specifics of an expansion plan.
Because of the need to address a multitude of issues and perspectives, Gordon said, "it's not an easy process."

Virginia Medicaid director Cindi B. Jones said that Democratic Gov. Terry McAuliffe "spends every waking hour" thinking about how to achieve expansion in the state. State officials have presented a variety of ideas to lawmakers, she said, but all were rejected.

"We keep forgetting it's just politics," she said.

After the briefing, Jones predicted that Virginia legislators might change their minds in 2016 or 2017, when hospital reimbursement cuts deepen and fiscal pressures increase.

Before then, expansion is unlikely, she suggested, although state officials will keep pushing for it. "I don't think the governor sees it [happening] either, although he hates to give up," she said.

Other findings in the Kaiser report show that:

• Across all states, total Medicaid spending grew by an average of 10.2 percent in state fiscal 2014, the year that ended on June 30 in most states. Total Medicaid spending in fiscal 2015 is expected to rise by 14.3 percent on average.
• Officials in about three-fourths of states said they do not expect a shortfall in state Medicaid budgets.
• Experimentation in delivery system changes is widespread. Thirty states added or expanded a delivery system reform in fiscal 2014, while 40 states plan to do so in fiscal 2015. Those changes included putting patients in health homes or patient-centered medical homes that coordinate care, the integration of Medicaid and Medicare benefits for people who are eligible for both programs and the use of accountable care organizations that give providers incentives to collaborate.
• Thirty-one states reported expanding Medicaid eligibility in fiscal 2014, including effects beyond the health law. Nine states reported they will expand eligibility in fiscal 2015.
• Only four states—Arkansas, Indiana, Louisiana and Maine—cut back on eligibility in fiscal 2014 and none planned to do so in fiscal 2015.
• Twenty-one states expanded benefits in fiscal 2014 while four scaled back benefits. In fiscal 2015, 22 states expanded benefits compared to two states that reduced benefits.
• State officials were concerned about the expiration of higher federal payments for primary care doctors on Dec. 31. About one-third of states said they would continue payments that are higher than the historical average for primary care, while one-third said they would not and another third said they were unsure.
• States continued to expand their reliance on managed care to coordinate Medicaid benefits. Thirty-three states expanded managed care in either fiscal 2014 or fiscal 2015.
• Most states expressed concern about high-cost specialty drugs, especially Gilead Sciences Inc.'s hepatitis C drug Sovaldi, which the Food and Drug Administration approved in December.
• Forty-seven states in fiscal 2015 expanded the use of community-based long term care, reducing the number of people who were institutionalized.

"It's a time of historic change," said long-time Medicaid consultant Vern Smith, managing principal with Health Management Associates, who helped Kaiser produce the report.

By Rebecca Adams, CQ HealthBeat Associate Editor

October 17, 2014 -- Enrollment in the Medicaid and the Children's Health Insurance Program (CHIP) continued to edge up in August, reaching almost 68 million people, according to a new report from the Centers for Medicare and Medicaid Services (CMS).

The program had grown by August by about 15 percent, or 8.7 million people, compared to a three-month average from July to September the year before. Connecticut and Maine were not included in this count because they did not supply complete data.

Separately, nearly 950,000 others signed up for Medicaid before Oct. 1, 2013, through an early expansion option offered through the health care law (PL 111-148, PL 111-152). Seven states took advantage of that opportunity.

From July to August of this year, Medicaid and CHIP enrollment rose by about 735,279 people, according to the report. 

The number of people who signed up continued to be higher in states that expanded Medicaid than in those that didn't. States that broadened eligibility saw enrollment increase by an average of 22 percent, while states that didn't expand saw enrollment grow by about 5 percent. Those numbers are similar to previous estimates, although enrollment growth in expansion states had been estimated in July to have grown by about 20 percent.

Ten states that expanded Medicaid had a 30 percent or higher boost in the number of people covered.

The health care law allows states to expand Medicaid for people up to 138 percent of the federal poverty level, with the federal government picking up all of the costs through 2016.

CMS Deputy Administrator Cindy Mann noted that in New Hampshire, Medicaid coverage started on Aug. 15. Mann said that although the expansion was in effect for only half of the month, New Hampshire's enrollment rose by nearly 8 percent in August, compared to the previous month.

Mann pushed states that have not expanded to do so.

"Not only would expanding Medicaid in all states change the lives of some of our most vulnerable neighbors, the expansion would also strengthen our health system and our economy," she wrote in a blog post. "Increased coverage for the uninsured reduces hospitals' uncompensated care and lowers 'cost shifting' to businesses and everyday Americans that see higher health insurance premiums when those costs are passed on to them."  

By Kerry Young, CQ HealthBeat Associate Editor

October 15, 2014 -- The American Medical Association (AMA) and other doctors' groups recently asked the federal government to overhaul rules on electronic health records, seeking more of an emphasis on making systems talk to each other.

Medical practices and hospitals are too often locked in an outdated approach under current federal rules, leaving potentially valuable and even critical data siloed in systems that don't communicate with each other, information technology and health groups have argued. In the letter to Health and Human Services (HHS) Secretary Sylvia Burwell, the medical groups said current rules are forcing their members to focus more on meeting federal standards than finding systems that would help them practice medicine.

"Removing a heavy handed set of certification mandates and allowing instead for a flexible and scalable standard ... will promote the delivery of more innovative and usable solutions," the groups wrote. "This in turn will allow data to move more freely across the health care system, reducing data lock-in and promoting more usable systems."

In addition to the AMA, the letter was signed by the American Academy of Family Physicians and the National Rural Health Association. The letter was released by the group as the Office of the National Coordinator for Health Information Technology (ONC) convened the first joint meeting of the Health Information Technology Policy and Standards Committees, an effort aimed at making electronic health systems better communicate.

"We have heard loudly and clearly that interoperability is a national priority, and that there is value in this effort spearheaded by ONC as the federal government's coordinator of health IT policy," said Karen DeSalvo, the national coordinator for health information technology, in a blog post last week. "It is also apparent that there is enthusiasm, capability and a willingness to cooperate and collaborate in ways not previously seen."

DeSalvo's comments were welcomed by the Health IT Now Coalition, a broad alliance of groups that includes among its members Oracle Corp., Aetna Inc., Boeing Co. and medical groups such as the American Health Care Association. In a statement, Joel White, the executive director of the Health IT Now Coalition, asked that the relevant committees at the Department of Health and Human Services, work to move away from the current approach on electronic health records.

"We are thrilled that DeSalvo has issued a call to action that immediately challenges the status quo to think beyond pecuniary interests to transforming health care," White said. "The problems that exist in interoperability are largely understood. The dialogue should now transition to how we best achieve interoperability, and it should be done as quickly as possible."

By Rebecca Adams, CQ HealthBeat Associate Editor

October 15, 2014 -- Children's health advocates are making a final push to convince Congress to act during the lame duck session and extend funding for the Children's Health Insurance Program (CHIP).

A coalition of more than 1,000 state and national advocacy groups is drafting a letter to send to lawmakers next week.

Funding for the program expires when the next fiscal year begins, on Oct. 1, 2015. About 10.2 million children are covered by CHIP.

Lobbyists say they are continuing to meet with lawmakers in their districts and elsewhere to push for another four years of continued funding, but the advocates are aware that Congress may view the issue as one that can be addressed next year.

The letter will note that state officials are already planning their budgets beyond the expiration date for funding. Uncertainty over the program's future will make it difficult to know what states' share of costs will be and whether they should be planning to revise their CHIP programs.

CHIP was created and funded over the years with bipartisan support. The program is credited for dramatically expanding health care benefits for children.

The organizations involved include the American Public Health Association, Children's Hospital Association, First Focus, National Alliance on Mental Illness, NAACP, and the National PTA.

By Rebecca Adams, CQ HealthBeat Associate Editor

October 15, 2014 -- Federal officials trying to spur medical providers in rural or underserved areas to form accountable care organizations (ACOs) are offering up to $114 million in upfront investments to as many as 75 provider groups.

ACOs that join the Medicare Shared Savings Program in 2016 are eligible, as are other ACOs that joined the program in 2012, 2013, or this year. Provider groups can spend the money on infrastructure or redesigning medical care that uses health information technology.

"The ACO Investment Model will give Medicare Accountable Care Organizations more flexibility in setting quality and financial goals while giving them greater accountability for delivering quality care efficiently," said Centers for Medicare and Medicaid Services Administrator Marilyn Tavenner. "We are working with these organizations to make necessary investments that encourage doctors, hospitals and other health care providers to work together to better coordinate care and keep people healthy."

The application deadline for organizations that started in the Shared Savings Program in 2012 or 2013 will be Dec. 1, 2014. Applications will be available next summer for ACOs that joined the Shared Savings Program this year or will start in 2016.

The extra help to providers is available as officials at the CMS officials continue to reevaluate their approach to ACOs. Federal officials saw a dropoff in interest in one of their ACO models, known as the Pioneer program, that incentivized providers to participate in ACOs. Networks that don't achieve their goals face financial penalties by CMS. Some organizations, realizing they could be penalized for participating, have switched from the Pioneer program to the shared savings program, which is a better deal financially. Nineteen ACOs now participate in the Pioneer program, down from 32 three years ago.

However, the shared savings program has grown from 27 organizations in 2011 to 338 this year.