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Medicaid–CHIP Exchange Rule Draws Concerns from Patient Advocates

By Rebecca Adams, CQ HealthBeat Associate Editor

July 8, 2013 -- A final health law regulation—dubbed by some the "cats and dogs" rule for its wide-ranging scope—is raising concerns among policy analysts over provisions relating to Medicaid, the Children's Health Insurance Program (CHIP), and insurance exchanges.

The 606-page regulation punted on some matters that stakeholders were waiting for. The rule did not include a final word on a certified application counselor program in the new marketplaces, which will start to enroll consumers on Oct. 1. Other provisions that were not finalized include those affecting appeals processes in the new marketplaces and how they would be coordinated with Medicaid and the Children's Health Insurance Program, the simplification of Medicaid eligibility categories and other provisions affecting CHIP.

Administration officials said they released the most critical provisions now and will take more time to finalize others in subsequent rules. They did not spell out when additional rules will be released.

One children's health provision that the rule did address disappointed some patient advocates. The final regulation limits waiting periods for young people who are eligible for coverage under the CHIP program to 90 days. But some advocacy groups had hoped that the Obama administration would eliminate the waiting periods.

"This was the 'big ask' in our comments on the proposed regulations, and frankly we're disappointed that the administration missed an opportunity in their rulemaking to eliminate this red-tape barrier to continuous coverage, which can have lifelong consequences for children who are left uninsured for even small amounts of time," said Tricia Brooks of the Georgetown University Center for Children and Families. The group is also hoping that the administration will require Medicaid or CHIP coverage for all babies in their first year of life if their mothers are on Medicaid and offer coverage to former foster care children until they turn 26. This rule did not address that issue.

AIDS activists and other patient advocates were disappointed that for people enrolling in Medicaid under the health law's expansion, the rule appeared to scale back prescription drug benefits from what was included in the proposed regulation.

The original version appeared to offer broad coverage of drugs, as is common today for people in the current Medicaid program. Medicaid typically covers all medicines made by companies that participate in the drug rebate program.

But the final rule said that adults who will gain coverage in January if a state expands the eligibility of its Medicaid program will get benefits that mirror those available to people enrolled in plans in the new marketplaces.

That means plans will have to cover either one drug per class or the same number of drugs that are covered in each class of drugs included in the state Medicaid plan that a state uses as a benchmark in its exchange, whichever is greater.

"We are totally shocked by this radical departure from current Medicaid practice," said Carl Schmid, deputy executive director of The AIDS Institute. "This will limit patients in the expanded Medicaid program to far fewer drugs, potentially denying them access to the medications prescribed by their doctors and putting their health at risk. To announce this when no one was looking just adds insult to injury," he added, referring to the release of the regulation on the day after the July Fourth holiday.

Andrew Sperling, director of federal legislative advocacy for the National Alliance on Mental Illness, said that advocates are concerned because it's still not clear exactly what plans in every state will offer, even though open enrollment starts in less than three months.

We cannot risk patient drug regiments being interrupted or having access to a lifesaving treatment be denied," said Sperling in a statement. "If this ends up being the case, we will be back to urge the Administration to abandon its approach so that no patient will be denied coverage of medically necessary services."

Patient advocates are also concerned that the rule appears to allow states to use other ways to pare down the use of drugs, such as limits on the amount of coverage or prior authorization requirements before patients can get medicine. Federal officials said that plans could not discriminate against patients and there must be appeal procedures in place to help make sure patients get the medication they need.

Washington and Lee Law School Professor Timothy Jost noted in a blog post that the rule requires an insurance applicant to attest whether he or she has employer coverage, how much it costs and what it covers. Employers must supply that information to the applicant by the employer.

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