Health Insurance

Merger of CVS & Aetna Finalized

Last week CVS Health completed their acquisition of Aetna. You know CVS through their pharmacy stores- and Aetna through their health insurance businesses (in AZ that includes Mercy Care and Mercy Maricopa Integrated Care). 

Aetna will be a stand-alone unit within CVS and led by members of its current management team.  It’s essentially a vertical integration- as it combines Aetna (primarily a health care insurer) with CVS (primarily a retailer).

The US Justice Department required Aetna to divest its Medicare prescription drug business to WellCare Health Plans before approving the merger.

One of the goals of the merger is to integrate Aetna's medical information and analytics into CVS Health's pharmacy data- creating a new model of care delivery.

The new company says they’ll be introducing new programs to target more efficient management of chronic disease with services focusing on self-management for patients with chronic conditions, expansion of chronic care management services at MinuteClinic, nutritional and behavioral counseling and benefit navigation support.  The plan includes expanded preventive health screenings to better manage high cholesterol, high blood pressure and diabetes.

A major focus will be on better managing five chronic conditions: diabetes, cardiovascular disease, high blood pressure, asthma and behavioral health.

There are some academics and other analysts that suggest the merger is anticompetitive and won’t result in better care or outcomes- but it looks to me like it has a pretty good chance of improving outcomes- especially if they focus on better management of chronic medical conditions combined with more convenient and numerous service sites.

CVS has been moving their mission from its traditional pharmacy business model for some time- bringing it more in line with providing health care and other services.  Several years ago- as this new model was emerging, CVS decided to stop selling cigarettes etc. as they rightly saw those sales as inconsistent with that of a business focusing on improving health outcomes.

Marketplace Open Enrollment Ends December 15

December 15 is the last day to apply for Marketplace health insurance.  Most people get health insurance through their employer, Medicare or Medicaid, but about 87,000 Arizonans get their insurance though the Federally Facilitated Marketplace.  Nearly 9 out of 10 people in Arizona that get coverage from www.healthcare.gov receive tax credits – financial help – to make coverage more affordable. 

Each year many Arizonans meet with an Assister, thinking they will buy a www.HealthCare.gov plan, but find out they are in fact eligible for AHCCCS (Medicaid). Some learn their children are eligible for very low cost KidsCare (Children's Health Insurance Program). 

To find out what a comprehensive plan may cost go to www.healthcare.gov/see-plans. By simply entering your zip code, age, number of family members and projected 2019 income, you can look at available plans and find out if you qualify for a discount.  If a single person earns less than $48,560 they may qualify for financial help.  A family of four can earn up to $100,400 and qualify for financial help.

No matter where you live in Arizona, help is available. You can call 1-800-377-3536 or go to www.CoverAZ.org  and click on “Send a Message” to get your questions answered, or visit www.CoverAZ.org/Connector and make an appointment to meet with a local Assister.

Feds Open Door to Subsidizing non-ACA Plans

Last week CMS released new guidance urging states for states to start offering federal subsidies to people buying plans that don’t comply with the ACA.  Their objective is to provide subsidy options for short-term and association health plans, which offer fewer benefits and consumer protections but at a lower cost.  They’ve branded the new subsidy system "State Empowerment and Relief Waivers

If the program stands up to a judicial review, states will be able to who is eligible for health insurance subsidies. Under the ACA, anyone with an income 400% of the federal poverty line is eligible for subsidies on the insurance marketplace. This new guidance would allow states to add to that regulation, like prioritizing younger, healthier populations over lower-income residents.  Importantly, any waiver request would still need to meet the ACA standard that it ensures the waiver plan meets the four statutory standards relating to comprehensiveness, affordability, coverage, and federal deficit neutrality.

Included in last week’s announcement is a provision giving states a way to better manage risk in their Marketplace plans. The Risk Stabilization Strategy that they announced gives states a way to implement reinsurance programs or high-risk pools. Reinsurance programs can lower premiums by providing some protection from expensive risk pools.  Examples are a “claims cost-based model”, a “conditions-based model”, and a hybrid conditions and claims cost-based model.

Wisconsin Medicaid Work Requirement Approved

CMS approved Wisconsin’s Medicaid work requirement waiver, making them the 5th state to have their work requirement waiver approved.  Wisconsin is the 1st state to receive approval for work requirements since a federal court ruled them unconstitutional in Kentucky.

Medicaid members between the ages of 19 and 49 will be required to work, volunteer, be in school or in a job training program for at least 80 hours a month. Recipients who don’t comply after 48 months will lose their eligibility.  The state is also allowed to charge premiums for what is normally free and to raise those premiums for people with riskier health behaviors like smoking.

Of the four other states CMS has given the greenlight to, only Arkansas has implemented work requirements. Indiana and New Hampshire will start enforcing them in January, and Kentucky's have been sent back to CMS for review.

Arizona’s Work Requirement Request

A 2015 AZ law requires AHCCCS to annually ask the CMS for permission to require work (or work training) and income reporting for “able bodied adults” and a 5-year lifetime limit on AHCCCS eligibility. 

Late last year AHCCCS submitted their annual official waiver request including a requirement to become employed, actively seek employment, attend school, or partake in Employment Support and Development activities (with exceptions) and a requirement to bi-annually verify compliance with the requirements and any changes in family income.  CMS hasn't yet ruled on the AZ request.

HB 2228 requires AHCCCS to exempt of tribal members from the work requirements but CMS has suggested that they won’t be approving waiver requests that exempt tribal members because they believe exempting them could raise civil rights issues.  

For now it's status quo.

CMS Opens Door to Waivers that Subsidize Weaker Health Insurance Plans

Section 1332 of the Affordable Care Act gives the HHS and the Department of Treasury authority to review and potentially approve a “State Innovation Waiver” related to Marketplace insurance if a state’s waiver application provides “coverage to a comparable number of residents of the state as would be provided coverage absent the waiver” and “provides coverage that is at least as comprehensive and affordable as would be provided absent the waiver”, and "doesn't increase the Federal deficit".

If a state’s waiver is approved by HHS, a state can get pass-through funding equal to what they would have received without the waiver.  Back in 2015 the Obama Administration issued guidance regarding the requirements to get a 1332 waiver. 

Last week CMS replaced the 2015 guidance with new guidance for 1332 waivers that would (if the guidance stands up to judicial review) allow states to implement what CMS is calling “State Relief Empowerment Waivers”.  It’s a name they invented- not a name that’s outlined in the ACA.  The new guidance will likely have an impact beginning in the 2020 open enrollment period- not the current open enrollment period.

CMS says they will now allow a wider range of insurance coverage levels in waiver requests, including plans that don’t comply with the ACA’s basic coverage requirements. For example, state 1332 waivers will now be able to include Association Health Plans and short-term limited duration insurance. Under the guidance, states could get a federal subsidy to subsidize the purchase of these plans. 

To be honest I don’t think the short-term limited duration insurance part of the guidance will stand up to judicial review because the ACA states that the waivers must provide coverage that is at least as comprehensive and affordable as would be provided absent the waiver. Short term limited duration plans and some association health plans do not.

Association Health Plans and short-term plans don’t necessarily include coverage for essential health benefits, which can leave plan participants with high out-of-pocket costs or discourage individuals from seeking timely treatment. For example, short term plans don’t usually cover pre-existing conditions and generally don’t offer coverage for behavioral health services, prescription drug costs, or maternity care.

Under the new guidance, CMS’ analysis of affordability and coverage will be based on the types of coverage made available to state residents rather than on the coverage that residents buy.  Again, I wonder how they’ll keep this in accord with the statutory ACA requirements of 1332 waivers. 

CMS says their analysis will focus on the aggregate effects of a waiver rather than on the effects on a subgroup of state residents. In other words, CMS will consider the overall improvements in affordability and coverage for state residents- even if there’s a negative effect for a subset of folks. 

Right now, there are only eight 1332 waivers (they were approved under the 2015 guidance).  Those 1332 waivers mostly focused on reinsurance programs to lower premiums in the federal marketplaces.

Several More Insurers Enter AZ Marketplace

Consumers who buy their health insurance from the federal marketplace at www.HealthCare.gov will have new options and new prices to consider before they make a decision for 2019 coverage. During the upcoming open enrollment period (November 1 through December 15)  there will be 4 companies to choose from with several different plans.  Pima County will go from 1 to 3 companies for 2019 and the remaining 13 counties will continue to have BlueCross BlueShield of Arizona as their HealthCare.gov insurance company.

Because financial assistance for Affordable Care Act plans is tied to the price of the price of a Silver plan in each county or zone, Arizonans will generally see more financial assistance and little, if any, change in their current monthly premium. 90% of Arizonans who get coverage from HealthCare.gov receive financial assistance in the form of refundable tax credits to help lower their monthly premium.

November 1 to December 15 is open enrollment this year at www.healthcare.gov.  Free local help from unbiased health insurance Assisters is available by calling 1-800-377-3536 or by visiting www.CoverAZ.org/Connector.

Health Insurance for People w Pre-existing Conditions in Jeopardy Again

A main driver for passing and implementing the Affordable Care Act was to ensure that people with pre-existing health conditions could buy health insurance.  Prior to the ACA- people with pre-existing medical conditions like diabetes faced real challenges getting health insurance.

Indeed, one of the most consistently popular parts of the ACA are the provisions that help people get  coverage regardless of health status.  The ACA prevents health insurance companies from denying someone a policy because they have a preexisting condition (called the “guaranteed issue” requirement), refusing to cover services that people need to treat a pre-existing condition (called “preexisting condition exclusions”), or charging a higher premium based on a person’s health status (called the “community rating” provision).   

You can think of pre-existing conditions exclusions, guarantee issue, and community rating as the three legs of the ACA stool.  Despite these largely popular provisions, there are people that want to knock over the stool.  Back in February, 20 states (including Arizona) filed a lawsuit in Texas federal court seeking to invalidate the 3 legs of the stool: preexisting condition exclusions, community rating, and guaranteed issue.

This most recent legal attack argues that the removal of the individual mandate penalty by the most recent federal tax cut legislation makes the ACA unconstitutional (the US Supreme Court upheld the ACA several years ago, in part, because the tax penalty provision provided a statutory hook for the ACA to rest on).  The lawsuit argues that because the mandate is an essential feature of the ACA, the rest of the law must be struck down too.  If the lawsuit eventually succeeds these central provisions of the ACA would go away and an estimated 17 million people could become uninsured again.

During the Obama Administration, the federal government defended the ACA from lawsuits like these.  Those days are over.  A couple of months ago, the U.S. Department of Justice announced that they agree with the plaintiff States that the ACA’s individual mandate is unconstitutional. The administration urged the court to strike down the law’s guaranteed issue, preexisting condition exclusion, and community rating provisions.

Prior to the ACA, standards to protect people with preexisting conditions were primarily determined at the state level.  Most states including AZ had very limited protections. Before the ACA, many insurers maintained lists of up to 400 different conditions that disqualified applicants from insurance or resulted in higher premiums.  35% of people who tried to buy insurance on their own were either turned down by an insurer, charged a higher premium, or had a benefit excluded from coverage because of their preexisting health problem.

If the Federal courts (ultimately the US Supreme Court probably) rule in favor of the plaintiffs, States could still play as a regulator of insurance, as they could enact and enforce their own laws to protect residents from discrimination due to preexisting conditions.  In fact, several states already have their own laws to incorporate some or all of the ACA’s protections (Arizona does not). 

Oral arguments have been scheduled for next week in the Texas lawsuit. Arguments are scheduled to take place next Monday before Judge Reed O’Connor.  Whatever the Federal TX Court rules, the result will likely be appealed to the UA Appellate Court and eventually probably the US Supreme Court.

State Action to Stem Rising Prescription Drug Costs

By Association for State and Territorial Health Officials Staff

The high cost of prescription drugs is a persistent problem in the United States, with about 10 percent of overall health spending attributed to prescription drugs. In recent years, there has been increased interest among states to address the rising cost of prescription drugs. Just this year, 24 states passed 37 bills to stem rising drug costs. In total, state legislatures have introduced 160 bills targeting prescription drug costs in 2018.

States have pursued a wide range of strategies to tackle the high cost of prescription drugs, including policies that address drug price transparency, rate setting requirements to prevent price gouging, drug importation programs, generic drugs companies, and pharmacy benefit manager transparency.

 

Drug Price Transparency

Controlling healthcare costs is one of the three elements of the Triple Aim, along with improving population health and patient care experience. As a first step toward controlling costs, states are seeking more price transparency requirements from drug manufacturers. In 2018, six states passed legislation addressing drug price transparency. Many of these laws adopt more stringent transparency policies requiring drug manufacturers to justify price increases over certain thresholds. For example, Connecticut requires drug manufacturers to justify price increases for specific drugs if the price increases by 20 percent or more in a year or 50 percent over three years.

 

Price-Gouging and Rate Setting Requirements

Anti-price gouging and rate setting requirements use information collected from transparency laws to allow states to impose penalties for excessive drug price increases. Currently, Maryland is the only state with an anti-price gouging law. The policy allows the state Medicaid agency to notify the state’s office of the attorney general when an essential off-patent brand name drug or generic medication has an excessive price increase.

Maryland’s attorney general can then request justification from manufacturers for the price increase. If the rationale of the price increase is deemed unjustified by “the cost of producing the drug, or the cost of appropriate expansion of access to the drug to promote public health,” the state can impose civil penalties or use other mechanisms to penalize the manufacturer. However, a lawsuit has since been filed in federal court by drug manufacturers asserting violations of Constitutional law as it relates to interstate commerce. To date, twelve other anti-price gouging bills have been introduced in states, although none have been enacted.

 

Drug Importation

Earlier this year, Vermont became the first state to pass a drug importation bill, allowing the state to import wholesale prescription drugs from Canada for use by all state residents. The law requires the designation of a state agency to become a licensed drug wholesaler, or to contract with a licensed drug wholesaler. Several steps remain before Vermont’s program can go into effect, including the state health department receiving federal approval from HHS by July 2019. In addition, although the Utah legislature failed to pass a bill that would have created a program for importing drugs from Canada, the legislature requested that the Utah Department of Health conduct a feasibility study associated with drug importation.

 

Generic Drugs

Recently, Maine passed a law requiring brand name manufacturers to make samples of drugs available to generic drug manufacturers, with the intention of promoting competition by increasing access of information for companies developing lower-cost generic drugs. The law states that, “In order for there to be competition in the prescription drug market, developers of generic drugs and biosimilar biological products must be able to obtain quantities of the reference listed drug or biological product with which the generic drug or biosimilar biological product is intended to compete.”

 

Pharmacy Benefit Managers

Several states have passed bills regarding pharmacy benefit managers (PBMs), which require increased transparency and disclosure of information on drug rebates and concessions. For example, Nevada passed a law in 2017 requiring PBMs to disclose the amount of rebates received from drugs used to treat diabetes. Connecticut’s drug price transparency law also requires PBMs to provide information on rebates and other price concessions received from drug companies. Mississippi passed a law preventing PBM gag clauses, which stop pharmacists from sharing information with patients on lower-cost drug options.

 

Other State Policies

In Montana, the legislature passed a bill establishing an interagency committee to study state drug pricing and spending trends, which will make recommendations to the state legislature on drug pricing policies in late 2018. In addition, New York implemented an annual cap on drug spending in its Medicaid program. Under the law, if spending projections extend beyond the cap, the state health department must identify the costliest drugs and attempt to negotiate additional rebates with manufacturers. This law also gives the state the authority to develop an independent panel that can penalize manufacturers through various mechanisms.

 

Future Opportunities

Emerging state legislation to address the rising cost of drug prices in demonstrates potential paths forward to address drug prices at the state level. The National Academy of State Health Policy (NASHP) has developed model legislation to address drug price transparency, drug importation, rate setting, and pharmacy benefit managers. The NASHP resource includes model legislation for states, bill text from states that have already passed legislation, and relevant briefing documents.

Federal Policy Decisions Eroding Health Insurance Stability

It’s been a few weeks since I’ve written about what’s happening with the Affordable Care Act- and there’s been some recent action- so here goes.

First of all, there’s good evidence that stable health insurance coverage helps people get preventive and primary care services that improve outcomes and downstream healthcare spending.  The Affordable Care Act included several provisions that helps people get these kinds of preventive services.  One of the primary goals of the ACA was to create broad access to robust health insurance coverage through: 

  • Employer mandated coverage for large employers;
  • An mandate to be insured or face a tax penalty to encourage full participation;
  • Subsidies and out-of-pocket protections for purchasing in the individual federal marketplaces;
  • Guaranteed issue and community rating of premiums;
  • Expansion of Medicaid to low-income adults; and
  • Ten essential health benefits for all marketplace insurance sold on the individual federal marketplaces, which includes requirements to cover services for mental health, substance abuse, and reproductive health.

It’s been working.  In the last several years the percentage of uninsured working-age adults decreased from 20% in 2013 to 12% by 2016 (nationally).  It would have been an even bigger decrease if all states had expanded Medicaid.  This  coverage expansion has led to increased access to preventive services, higher rates of having a usual source of primary care and increased affordability of care. 

However, progress is now stalling because of policy changes that have been made by the President like:

Cost Sharing Reduction Payments Stopped

In October 2017, the President announced that he was ending cost-sharing reduction payments (a program that previously reimbursed health insurance companies for the out-of-pocket protections available to some individuals who purchased coverage on the individual marketplaces). This caused higher premium rates in the individual marketplaces this year. 

Short Term Health Plans

The President also issued Executive Order 13813, which expanded “association health plans” and short-term, limited duration insurance. These plans create parallel markets in which healthier individuals move to cheaper plans that offer barebones coverage, destabilizing the marketplace.

Last week HHS and the US Department of Treasury followed through on the EO and issued a final rule that will allow consumers to buy short-term health plans to provide coverage for up to 36 months. These plans don’t need to comply with ACA requirements like covering essential health benefits, pre-existing conditions or the requirement to sell to any consumer regardless of health status.

These plans will likely attract younger, healthier and drive them out of the risk pool, which will increase costs in the ACA compliant plans.  It’s estimated that about 600,000 Americans will enroll in these short-term health plans, increasing federal spending on marketplace subsidies by $200M in 2019 and $28B over ten years.

Individual Mandate Effectively Expiring

As part of the new federal tax law, the individual mandate tax penalties will be $0 starting on January 2019, which will further erode the goal of increasing coverage and stabilizing insurance markets. In July 2018, the Commonwealth Fund predicted that eliminating the tax penalty will result in at least 2.8 million fewer Americans with coverage.  The nonpartisan Congressional Budget Office estimates that the number of people with health insurance will decrease 4M by 2019 and 13M by 2027.   CMS also cut funding for the federally-facilitated Exchange Navigator Program which will also contribute to decreased enrollment rates.

Risk Adjustment Payments

CMS announced in July that it would freeze $10.4B in 2017 risk adjustment payments. Luckily CMS released a final rule a couple of weeks ago to reinstate payments, so that’s an additional destabilizing thing that thankfully won’t happen at least for now.

Everyone benefits from access to primary and preventive services (including behavioral and reproductive health services), specialty care, and culturally appropriate care. If the individual insurance market continues to destabilize or doesn’t include affordable plans that offer comprehensive services, consumers may face expensive and inaccessible healthcare options. 

Many of the decisions that the President has been making make that outcome more likely in my opinion.