Oct 10, 2016

Washington Healthcare Update

This Week: Congress remains in recess, but members write letters on Mylan’s EpiPen…CBO says repealing Part B Demo would cost $395 million…CMS releases data on hospice utilization and finds spending and utilization vary in states…Only one more presidential debate to go!

1. Congress

House of Representatives


2. Administration

3. Other

4. State Activities

5. Regulations Open for Comment

6. Reports

1. Congress

House of Representatives

House Lawmakers Question Mylan’s EpiPen Profit Claims

House Oversight Chairman Jason Chaffetz (R-CA) and ranking member Elijah Cummings (D-MD) recently asked Mylan to provide more information about how much it profits from EpiPens, after news reports claimed the company’s profits are 60 percent higher than what it told lawmakers. Mylan CEO Heather Bresch repeatedly claimed during a hearing last month that Mylan makes $100 profit per EpiPen two-pack that it sells. However, The Wall Street Journal and Washington Post reported the profit is actually $160 before taxes. “Failing to disclose tax assumptions that formed the basis for the $100 profit per pack claim, despite opportunities to do so before and during the hearing, raises questions,” the lawmakers wrote in a Sept. 30 letter. They requested information by no later than Oct. 7.

CBO Estimates Repealing Part B Demo Would Cost $395 Million

According to a new estimate from the Congressional Budget Office (CBO), blocking a proposed demonstration project to reform how Medicare pays for physician-administered drugs would cost the government $395 million over 10 years.

The CBO scored a House bill introduced earlier this year to stop a sweeping experiment proposed by CMS’s Innovation Center that seeks to lower payments for drugs under Medicare Part B—projected to be about $18 billion in 2017.

CMS is refining its proposed rule after receiving pushback from lawmakers on both sides of the aisle. It would first change the payment formula to incentivize the use of lower cost drugs, then introduce a variety of value-based payment models. Republicans threatened to block the program as proposed, but the cost of doing so is potentially an obstacle. CMS is expected to release a revised final rule later this year scaling down the experiment and exempting some physician practices.


Senators Seek DOJ Probe Into Mylan’s EpiPen

In an Oct. 5 letter, CMS says companies that incorrectly classify drugs in Medicaid are liable for False Claims Act penalties, and Senate Judiciary leaders want to see if Mylan is liable for misclassifying EpiPen as generic. “Manufacturers that fail to accurately report product and pricing data to the rebate program and pay insufficient rebates may be subject to liability under the False Claims Act, a penalty of up to $100,000 per item of false information under the Rebate Agreement, or other government actions or claims,” CMS states.

Judiciary Committee Chairman Chuck Grassley (R-IA) and committee members Richard Blumenthal (D-CT) and Amy Klobuchar (D-MN) recently asked the Justice Department to investigate whether Mylan violated the False Claims Act. They were among lawmakers who asked CMS to explain why EpiPen was classified as a generic.

Additionally, Sen. Ron Wyden (D-OR), ranking member on the Senate Finance Committee, and Sen. Frank Pallone (D-NJ), ranking member on the House Energy & Commerce Committee, said they are reviewing whether CMS has enough power and resources to ensure drugs are properly classified.

2. Administration

HHS Awards Funding Grants to Help Protect Health Sector Against Cyber Threats

On Oct. 4, HHS awarded two grants totaling $350,000 to strengthen the ability of health care and public health sector partners to respond to cyber threats. The National Health Information Sharing and Analysis Center (NH-ISAC) received both grants to 1) provide cybersecurity information and education on cyber threats to health care sector stakeholders and 2) help build the infrastructure necessary to disseminate cyber threat information securely to health care partners.

Through a streamlined cyber threat information-sharing process, HHS will be able to send cyber threat information to a single entity, which then will share that information widely to support the full range of stakeholders. “This approach helps ensure that smaller health care providers have the information they need to take appropriate action,” according to HHS.

For more information, click here.

HHS Report Reveals People Buying Individual Market Coverage Could Be Eligible for Subsidies

On Oct. 4, HHS released a report demonstrating that two and a half million people who bought health insurance off the Obamacare exchanges may be eligible for subsidies if they shop in the marketplaces. That includes more than 100,000 people in each of six states—California, Florida, Illinois, North Carolina, Pennsylvania and Texas.

HHS said 6.9 million people now buy insurance in the individual market outside of the exchanges and 5 million of them would be qualified to buy coverage in the Obamacare marketplaces. Fifty percent of those 5 million could get premium tax credits—available to those with incomes up to about $100,000 for a family of four who shop on the exchanges. The subsidies are not available outside of the exchanges.

More than three quarters of the 26.9 million people eligible to buy Obamacare exchange plans, including those who are not currently insured, would qualify for the subsidies, HHS estimates.

Facing large premium increases in many states for Obamacare plans, HHS is ramping up its outreach efforts, especially to younger and healthier people, ahead of the open enrollment period that starts Nov. 1.

CMS Releases Hospice PUF and Update to the Market Saturation and Utilization Data Tool

On Oct. 6, CMS released a privacy-protected public data set, the Hospice Utilization and Payment Public Use File (Hospice PUF), which provides information on services provided to Medicare beneficiaries by hospice providers. CMS also released an update to the Market Saturation and Utilization Data Tool, formerly called the Moratoria Provider Services and Utilization Data Tool. For the first time, this tool will include information on hospice services.

The Hospice PUF contains information on utilization, payments, submitted charges, diagnoses and hospice beneficiary demographics organized by provider and state. The Hospice PUF covers calendar year 2014 and includes information on 4,025 hospice providers, over 1.3 million hospice beneficiaries and over $15 billion in Medicare payments. With this data, CMS will analyze geographic variation in the delivery of hospice care, as well as variation across individual hospice providers. The Hospice PUF also includes a number of metrics on hospice beneficiary demographics and diagnoses to facilitate analyses of differences in the patient population across providers.

The data shows that Medicare, in 2014, spent an average of $11,933 per hospice beneficiary for an average of 70 days of care. However there were significant regional variations in spending and utilization with states in the South spending more on hospice than other states. The state with highest per beneficiary spending was South Carolina and the state with the lowest was Wyoming. The update to the Market Saturation and Utilization Data Tool includes interactive maps and supporting data sets that show national-, state- and county-level provider services and utilization data for three reference periods and the following health service areas: Home Health, Ambulance (Emergency, Non-Emergency, Emergency & Non-Emergency), Independent Diagnostic Testing Facilities (Part A and Part B), Skilled Nursing Facilities and Hospice.

The Market Saturation and Utilization Data Tool can be used by CMS to monitor market saturation as a means to prevent fraud, waste and abuse. There are a number of research uses for these data, but one objective of making these data public is to assist health care providers in making informed decisions about their service locations and the beneficiary populations they serve.

To view a fact sheet on the Hospice PUF, click here.

CMS Selects Quality Improvement Organization to Support Quality Improvement at Indian Health Service Hospitals

On Oct. 4, CMS awarded a new contract to help support best health care practices and other operational improvements for Indian Health Service (IHS) federal government-operated hospitals that participate in the Medicare program. HealthInsight, a current Quality Innovation Network–Quality Improvement Organization (QIN-QIO), will partner with IHS hospitals to improve the quality of care for the Medicare patients they serve.

The goals for the QIN-QIO are to support, build and redesign if needed IHS hospital operating infrastructure in order to provide high-quality health care services to Medicare beneficiaries. The contract will focus on leadership, staff development, data acquisition and analytics, clinical standards of care and quality of care related to the Medicare program. CMS expects that this work, while focused on Medicare beneficiaries, will result in systemic change that improves all of the care provided at the facilities. Over the course of the contract (approximately three years), the QIN-QIO will:

  • Develop effective leaders through training and networking;
  • Build strong hospital systems through team-based care and clinical quality improvement;
  • Strengthen patient, family and tribal engagement at the project and local levels;
  • Promote and spread best practices in hospitals through Web-based Learning & Action Networks and direct technical assistance;
  • Ensure that clinical, operational and safety standards are met or exceeded;
  • Assist with the development of hospital improvement plans; and
  • Establish baseline data to ensure plans for improvement are successful and sustainable.

This action expands upon the May 2016 announcement of a CMS and IHS partnership to reduce hospital-acquired conditions and avoidable readmissions.

The IHS, an agency in the U.S. Department of Health and Human Services, provides a comprehensive health service delivery system for approximately 2.2 million American Indians and Alaska Natives.

CMS Distributes Letters Regarding Physician Quality Reporting System Negative Payment Adjustment

CMS has begun distributing letters to Physician Quality Reporting System (PQRS) individual eligible professionals (EPs), EPs providing services at a Critical Access Hospital (CAH) billing under method II, and group practices regarding the 2017 PQRS negative payment adjustment.

The letter indicates that the recipient did not satisfactorily report 2015 PQRS quality measures or satisfactorily participate in a qualified clinical data registry in order to avoid the 2017 PQRS negative payment adjustment and, therefore, all of their 2017 Medicare Part B Physician Fee Schedule (PFS) payments will be subject to a 2.0 percent reduction.

The 2017 PQRS payment adjustment letter being sent to individual EPs includes a Tax Identification Number (TIN)/National Provider Identifier (NPI) combination; the adjustment applies only to the individual EP associated with the TIN/NPI noted within the letter and not the clinic or facility.

The 2017 PQRS payment adjustment letters being sent to PQRS group practices includes a TIN only and applies to all EPs who have reassigned their billing rights to the TIN.

For the 2015 reporting period, the majority of eligible clinicians successfully reported to PQRS and avoided the negative payment adjustment. CMS expects that trend to continue, under the new Quality Payment Program. The new program will replace PQRS and the Value Modifier program, as well as the separate payment adjustments under the Medicare Electronic Health Record Incentive Program, with a streamlined program that has reduced quality reporting requirements and a flexible design that allows eligible clinicians to pick their pace of participation in the first year.

To learn more about the new Quality Payment Program, click here.

CMS Finalizes Changes to Medicare Advantage Value-Based Insurance Design Modelt

CMS’s Center for Medicare and Medicaid Innovation recently announced refinements to the design of the second year of the Medicare Advantage Value-Based Insurance Design (MA-VBID) model. The MA-VBID model is an opportunity for Medicare Advantage plans (MA plans), including Medicare Advantage plans offering Part D benefits (MA-PD plans), to offer clinically nuanced benefit packages aimed at improving quality of care while also reducing costs.

In the second year of the model, beginning Jan. 1, 2018, CMS will: open the model test to new applicants; conduct the model test in three new states—Alabama, Michigan and Texas; add rheumatoid arthritis and dementia to the clinical categories for which participants may offer benefits; make adjustments to existing clinical categories; and change the minimum enrollment size for some MA and MA-PD plan participants.

Value-Based Insurance Design (VBID) generally refers to health insurers’ efforts to structure enrollee cost sharing and other health plan design elements to encourage enrollees to use high-value clinical services—those that have the greatest potential to positively impact enrollee health.

The MA-VBID model will begin Jan. 1, 2017, and run for five years. CMS expects to release a Request for Applications for the second year of the model test in the fall of 2016 and will accept proposals from MA and MA-PD plans to offer VBID benefits in 2018.

In its first year, CMS will test the model in seven states: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania and Tennessee. Beginning Jan. 1, 2018, CMS will also test the model in Alabama, Michigan and Texas.

CMS will accept applications for the second year of the MA-VBID model via a Request for Applications (RFA), to be released shortly. Once released, application materials will be available here.

CMS Selects Participants for Part D Enhanced Medication Therapy Management Model

On Oct. 3, CMS’s Center for Medicare and Medicaid Innovation (Innovation Center) announced the participants in the Part D Enhanced Medication Therapy Management (MTM) model. The Enhanced MTM model offers an opportunity and financial incentives for basic stand-alone Part D Prescription Drug Plans (PDPs) in selected regions to offer innovative MTM programs in lieu of the standard CMS MTM model, aimed at improving the quality of care while also reducing costs.

CMS will test changes to the Part D program that aim to achieve better alignment of PDP sponsor and government financial interests, while also creating incentives for robust investment and innovation in MTM targeting and interventions. The objectives for the model are for stand-alone PDP sponsors to identify and implement innovative strategies to optimize medication use, improve care coordination and strengthen system linkages.

The Enhanced MTM model test will begin Jan. 1, 2017, with a five-year performance period. CMS will test the model across five Part D regions: Region 7 (Virginia), Region 11 (Florida), Region 21 (Louisiana), Region 25 (Iowa, Minnesota, Montana, Nebraska, North Dakota, South Dakota, Wyoming) and Region 28 (Arizona). Regions were evaluated based on variation in market competition; the range of geographic, population and market characteristics; and the range of Parts A and B spending variance.

Six Part D sponsors that operate a total of 22 Plan Benefit Packages and provide benefits to an estimated 1.6 million beneficiaries in eligible Part D Regions will participate in the first year of the model. Upon approval from CMS, the selected basic stand-alone PDPs in these regions can vary the intensity and types of MTM interventions they provide based on beneficiary risk level and seek out a range of strategies to individualize beneficiary and prescriber outreach and engagement.

For more information, click here.

AHRQ, CMS Award $13 Million to Test and Implement New Children’s Quality Measures

On Oct. 3, the Agency for Healthcare Research and Quality (AHRQ) and CMS announced awards totaling $13.4 million in funding over four years to six new Pediatric Quality Measures Program (PQMP) grantees focused on implementing new pediatric quality measures developed by the PQMP Centers of Excellence (COE).

Quality measures are used to evaluate or quantify specific health care processes, outcomes, patient perceptions or other factors related to health care delivery. The pediatric quality measures are used by state Medicaid and Children’s Health Insurance Programs (CHIP) and other public and private programs, providers, plans, patients and their families to measure and improve the quality of children’s health care.

The initial phase of the PQMP funded seven COEs to develop new and innovative pediatric measures. This next phase of work will implement and test these newly developed pediatric measures in real-world settings to learn more about how they work when used in the front lines of care.

The new grantees will have two key goals focused on assessing the feasibility and usability of the new measures within the Medicaid and CHIP patient populations at the state, health plan and provider levels to support performance monitoring and quality improvement.

For more information, click here.

Anti-Tobacco Groups Sue FDA Over Rules for Graphic Warning Labels

Eight anti-tobacco groups are suing the FDA to force the agency to issue rules requiring graphic warning labels on cigarette packages. The suit filed in federal court in Boston comes more than four years after FDA’s first proposal for the labels was struck down by the U.S. District Court for the District of Columbia following a challenge from tobacco companies. FDA said afterward that it would issue new rules, but has yet to do so.

The agency was required to roll out the label requirements by the Tobacco Control Act of 2009. But after FDA issued a final rule in 2011, U.S. District Court Judge Richard Leon called the warnings “compelled commercial speech” that violated the First Amendment and appealed to emotion rather than focusing on factual information as other government-authorized warnings do.

The labels first proposed by FDA would have included graphic images of a cadaver, diseased lungs and rotted teeth displayed over half of the front and back of cigarette packs.

The American Cancer Society, the American Cancer Society Action Network, the American Lung Association, the American Academy of Pediatrics, the American Heart Association, the Campaign for Tobacco-Free Kids, Truth Initiative and many individual pediatricians filed the lawsuit on Oct. 4.

NIH Releases Recommendations to Prevent Youth Suicide

On Oct. 4, NIH released a list of recommendations to help prevent youth suicide. These recommendations are a product of a workshop it convened on youth suicide prevention research in March. The list, published in the Annals of Internal Medicine, focuses on improving data systems to help identify people at risk for suicide, as well as improving research around risk factors including knowledge around biomarkers and biological processes. The researchers say the list gives a roadmap to reach the ultimate goal of eliminating suicide.

Mylan Settles With DOJ

Mylan has agreed to pay $465 million to resolve questions over whether it overcharged Medicaid for EpiPens by incorrectly classifying the drug as a generic. Mylan is not admitting to any wrongdoing as part of the settlement with the Justice Department announced Oct. 7. The company maintains that the anaphylaxis treatment was classified with CMS as a non-innovator or generic drug long before the company acquired EpiPen in 2007, based on longstanding written guidance from the federal government.

CMS initially told the company that owned EpiPen in 1997 that it could be classified as a generic for Medicaid rebate purposes. It is unclear when CMS may have reconsidered this classification, but the issue was brought to its attention by lawmakers in 2014. CMS acting administrator Andy Slavitt in a recent letter to lawmakers said CMS had told Mylan the product is incorrectly classified, but he did not say when this was communicated to the company or why the rebate process has not yet been changed.

The government spent $960 million on EpiPens over the past five years, CMS told lawmakers earlier this week.

3. Other

NAIC Asks Congress to Ensure Prioritization of Policyholder Claims in Event of Insurer Insolvency

The National Association of Insurance Commissioners (NAIC) is asking Congress to ensure that HHS lets states determine which creditors come first in the line for assets of insolvent co-ops.

As of Oct. 3, only six of the original 23 co-ops created with the ACA start-up loans are still up and running. One co-op, Evergreen Health in Maryland, plans to switch from a nonprofit co-op to a for-profit company by 2017. Congress has pressed HHS to recoup about $2.3 billion spent on the loans, but now NAIC suggests HHS is pushing too hard by claiming a right to funds that should instead cover policyholders. CoOpportunity, which failed last year, has sued HHS over its attempts to recoup money for its debt.

Because the ACA does not preempt state liquidation laws, any “regulation that purported to alter the priority of claims in liquidation would be void, because it would exceed the agency’s regulatory authority and would violate the McCarran-Ferguson Act,” NAIC writes. “State liquidation laws expressly govern the extent to which a creditor may or may not use netting as self-help in collecting its claims against an insolvent insurer, and the ACA did not give HHS the authority to preempt those laws through rulemaking.”

NAIC also points out that HHS fails to account for all the money owed to insurers, especially the money owed via the risk corridors program.

To see the letter, click here.

4. State Activities

Alaska: Alaska and Xerox Reach Settlement Over Medicaid Payment System

The state of Alaska has reached a settlement with Xerox over its Medicaid payment system. Alaska will pay the vendor the $25.9 million it owes, as long as it provides $1.5 million in hardware system upgrades and other additional work. The state filed a complaint against Xerox in 2014 after the system’s launch that was riddled with issues. Alaska has spent nearly $112 million on the system so far.

California: Specialty Drug Costs Jump 30 Percent for California Public Employees’ Retirement System

Specialty drug costs jumped 30 percent last year to $587 million for the California Public Employees’ Retirement System, one of the nation’s largest health care purchasers. Specialty drug prescriptions account for less than 1 percent of all prescriptions but more than 25 percent of the state agency’s $2.1 billion in pharmacy costs. Hepatitis C drugs drove the majority of cost increases. Medications for rheumatoid arthritis, cancer and multiple sclerosis were also among the top ten most prescribed specialty drugs.

Kentucky: CMS Authorizes Kentucky to Switch to

On Oct. 4, CMS officially authorized Kentucky to switch to for the start of 2017 open enrollment next month. Kentucky is the first state to ditch a functional Obamacare exchange for the federal enrollment website. Republican Gov. Matt Bevin campaigned on a promise to repeal the state-based system, known as Kynect, set up under his Democratic predecessor, Steve Beshear.

While permitting the state to move ahead, CMS wrote that it remained concerned about the amount of disruption individuals could face whether they are enrolled in exchange coverage, Medicaid or CHIP. CMS said it will monitor how Kentucky reaches out to consumers about the new enrollment process.

Maryland: Co-op to Switch to For-Profit Insurer

Maryland’s co-op—Evergreen Health—will switch to a for-profit insurer in order to prevent the possibility of a shutdown. Evergreen’s governing board approved a deal on Oct. 3 in which private equity investors would take over the insurer from the federal government, and it arranged for a temporary loan to sustain operations until the conversion is complete. The switch still needs approval from state and federal regulators. If the deal goes through, only five of the ACA’s nonprofit insurers will remain. Evergreen sued the federal government this summer over the ACA’s risk adjustment program.

Washington, D.C.: Aid-in-Dying Legislation

On Oct. 5, the D.C. Council’s Health and Human Services Committee held a markup on legislation that would allow terminally ill patients to end their lives with a lethal prescription. The legislation outlines requirements for both verbal and written requests by a qualifying adult to an attending physician. Two witnesses would also need to attest that the terminally ill person is acting voluntarily. Five states authorize such “aid-in-dying” laws: California, Montana, Oregon, Vermont and Washington.

For a video of the markup, click here.

West Virginia: West Virginia Saves $1 Million on Inmates With Medicaid

Officials from West Virginia’s Division of Corrections estimate Medicaid expansion has saved the agency a projected $1.15 million between January and June of this year. The division began signing up eligible inmates for Medicaid in 2014 when the state expanded Medicaid under the ACA. Inmates can qualify for Medicaid after they have been admitted to a hospital for more than 24 hours. Some 367 inmates have enrolled. Savings are based on the average cost of inpatient hospitalization that the agency would have otherwise paid.

Wisconsin: UW-Madison Cuts Student Workers’ Hours

The University of Wisconsin-Madison is cutting back hours for student employees to a maximum of 29 hours per week. This move is in response to the Affordable Care Act (ACA) requirement that large employers provide health benefits to full-time employees, defined under the law as those working an average of 30 hours weekly. Student employees argue the move will make it harder for them to stay in school. The university says there are fewer than 30 student workers averaging that many work hours on the campus, although the Student Labor Action Coalition disputes that claim.

Wisconsin: Co-op Receives Private Financing

Wisconsin’s co-op—Common Ground Healthcare Cooperative—has received unspecified private financing that will allow the organization to remain in business into the 2017 health plan year. The co-op signed a non-disclosure agreement that prohibits releasing any information on who provided the funding and how much was given. The co-op has about 18,000 enrollees.

5. Regulations Open for Comment

IRS, Treasury Release Proposed Rule on QHP Benchmarks

The IRS and Treasury Department, in a proposed rule released July 6, proposed to alter how qualified health plan (QHP) benchmarks are determined so that they account for the costs of pediatric dental benefits. If finalized, the rule would go into effect for the 2019 plan year.

Although pediatric dental care is one of the 10 “essential health benefits” that plans are required to cover under the Affordable Care Act (ACA), several plans do not include such coverage, and consumers instead buy stand-alone dental products. Meanwhile, the marketplace determines the amount of tax credits a family can receive to cover the cost of coverage based on the second-cheapest silver-level plan.

However, as the proposed rule said, “because qualified health plans that do not offer pediatric dental benefits tend to be cheaper than qualified health plans that cover all ten essential health benefits, the second lowest-cost silver plan (and therefore the premium tax credit) for taxpayers purchasing coverage through a Marketplace in which stand-alone dental plans are offered is likely to not account for the cost of obtaining pediatric dental coverage.”

Treasury and IRS added that the existing rules “frustrate” the goal of making all essential health benefits affordable to those receiving premium tax credits, so the administration wants to update its interpretation to ensure all 10 services are addressed.

“Consistent with this interpretation, the proposed regulations provide that for taxable years beginning after December 31, 2018, if an Exchange offers one or more silver-level qualified health plans that do not cover pediatric dental benefits, the applicable benchmark plan is determined by ranking (1) the premiums for the silver-level qualified health plans that include pediatric dental benefits offered by the Exchange and (2) the aggregate of the premiums for the silver-level qualified health plans offered by the Exchange that do not include pediatric dental benefits plus the portion of the premium allocable to pediatric dental benefits for stand-alone dental plans offered by the Exchange,” the proposal said.

The rule aims to create the ranking by adding the premium for the lowest-cost silver plan that does not include a pediatric dental benefit to the premium for the cheapest stand-alone dental plan, and the premium for the second-cheapest silver plan without pediatric dental benefits to that of the second-lowest stand-alone dental plan. The second-cheapest amount from this combined ranking would be the taxpayer’s applicable benchmark plan premium, the rule said.

HHS Proposes Updates to Title X Rules

On Sept. 2, HHS proposed to preclude Title X grant recipients from using criteria in their selection of family planning providers that are unrelated to the ability to deliver services effectively.

Since 2011, 13 states have attempted to restrict participation by family planning providers in Title X based on factors unrelated to their ability to provide services. The Title X program provides funding for certain family planning services, including STD screening and treatment, but funding is not used to pay for abortions. Although Planned Parenthood is not mentioned by name in the proposed rule, it has often been the subject of defunding actions by states and Congress.

In the proposed rule, HHS said the effects already felt by the restrictions in many states justify the department’s rulemaking. HHS said grant recipients that do not provide services directly would also be required to follow the updated standards when choosing subrecipients.

HHS also proposed that a tiered structure governing how funds are distributed would not be allowed unless it can be proven that a provider in a top tier delivers Title X services more effectively than a lower-tier provider. According to the Guttmacher Institute, a research organization that supports reproductive rights, four states have a priority system for distributing family planning funds, which often disadvantages family planning centers.

CMS Proposes Changes to Risk Adjustment in 2018 Marketplace Rules

On Aug. 29, CMS issued the proposed annual Notice of Benefit and Payment Parameters for 2018, which outlines additional steps to strengthen the Health Insurance Marketplace. CMS is issuing this rule earlier in the calendar year in order to provide more certainty to the Marketplace as it continues to mature.

Beginning in 2017, the proposed policies will take steps to strengthen the risk adjustment program. First, the rule proposes updates beginning in 2017 to better reflect the risk associated with enrollees who are not enrolled for a full 12 months. Second, beginning in 2018, the rule proposes to use prescription drug utilization data to improve the predictive ability of CMS’s risk adjustment models. Third, also beginning in 2018, the rule proposes to establish transfers that will help to better spread the risk of high-cost enrollees, a change that would improve the risk-sharing benefits of the program.

In addition to the improvements to risk adjustment, the proposed rule contains other provisions to improve the Marketplace consumer experience and strengthen the individual and small group markets as a whole. The proposed rule would give consumers additional tools for assessing the networks of competing plans; broaden availability of this year’s new standardized plan options by accommodating state cost-sharing rules; and create consumer protections for consumers enrolling through the direct enrollment channel. The proposed rule would also create multiple child age bands that address instances in which consumers could face large premium changes after turning age 21; amend the guaranteed renewability regulations to provide additional flexibility for issuers to remain in an insurance market in certain situations; and codify several special enrollment periods that are already available to consumers in order to ensure the rules are clear and to limit abuse. It also seeks information on a number of suggestions offered by issuers, consumers, providers and others on further improving the risk pool, such as additional changes to special enrollment period policies or outreach; clarifying coordination of benefit rules between Medicare, Medicaid and the Marketplace; and providing greater certainty on the amount of user fee revenue spent on education and outreach.

To see the proposed rule, click here.

6. Reports

Avalere Analysis Finds Consumers Enrolling Through SEPs Have Higher Costs, Lower Risk Scores

A new analysis from Avalere finds that individuals who enroll in exchange coverage during special enrollment periods (SEPs) have higher costs and lower risk scores than open enrollment period consumers. The study underscores issuers’ complaints that people may be using SEPs to wait until they are sick to enroll.

Specifically, 2015 SEP enrollees cost 5 percent more per member, per month, but their risk scores were about 20 percent lower on average. For that policy year, about 940,000 people—or 15 percent of exchange enrollees—signed up outside of open enrollment. SEP enrollees were also covered for a shorter period of time, staying in plans for only about 3.6 months compared to the 7.8 months for those who enrolled during open enrollment.

The analysis of enrollee costs, enrollment duration and risk scores is based on the Inovalon’s Medical Outcomes Research for Effectiveness and Economics Registry® (MORE2 Registry®) from 2014 and 2015. SEP figures are based on CMS’s 2015 data and include enrollment through the federal exchange.

“This is one of many technical problems that is presently destabilizing this program, and should be fixed by the Administration and the Congress to ensure continuity for patients,” said Dan Mendelson, President of Avalere.

GAO: CMS Should Improve Accessibility and Reliability of Expenditure Data for SNFs

A new GAO report found that CMS collects and reports expenditure data from skilled nursing facilities (SNFs), but it has not taken key steps to make the data readily accessible to public stakeholders or to ensure their reliability. GAO examined three areas in its report: 1) the extent to which the expenditure data CMS collects from SNFs and provides to the public are accessible and reliable; 2) how SNF costs and margins vary by facility characteristics; and 3) how SNF nurse staffing levels vary by facility characteristics and the relationship between SNF nurse staffing levels and margins.

GAO recommends that CMS improve public stakeholders’ ability to locate and use SNF expenditure data and ensure the accuracy and completeness of the data. HHS concurred with the first but not the second recommendation.

Health Affairs Study Shows Obamacare Improved Access to Care

According to a study published in Health Affairs, people who gained coverage through Medicaid or the Marketplaces in 2014 were much more likely to receive preventive services and have a usual source for obtaining medical care compared to their counterparts who remained uninsured.

About one in four (27 percent) previously uninsured people who did not have a regular source for care in 2013 gained one after obtaining exchange coverage. Similarly, 18 percent of previously uninsured individuals reported obtaining a regular care provider after signing up for Medicaid in 2014. By contrast, only 11 percent of individuals who were uninsured in 2013 and 2014 reported the same improvement in accessing medical care.

Other studies have documented that the ACA’s coverage expansions are improving access to health care. But the study’s authors said previous research did not reveal the extent to which people who obtained exchange plans or Medicaid were able to access care more easily relative to those who were still uninsured.

Researchers used newly available data from the national Medical Expenditure Panel Survey-Household Component for 2013 and 2014 and examined four indicators: having a usual source of care, getting an annual checkup, receiving a blood pressure screening and obtaining a flu shot.

To see the full study, click here.

If you have any questions, contact the following individuals at McGuireWoods Consulting:

Stephanie Kennan, Senior Vice President
Charlie Iovino, Vice President
Caroline Perrin, Research Assistant

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