Health Insurance

Homeland Security Establishes Final “Public Charge” Rules

Here’s my Best Shot at Explaining What the New Rules Will Do

I’m sure you've the flurry of reports about the Department of Homeland Security (DHS) “public charge” final rule. There will be lawsuit(s) challenging the new rules, but for now the new regulations are scheduled to kick in October 15, 2019.

The bottom line is that the new regulations will change the criteria the federal government uses to make decisions about legal permanent resident applications. The final rules will block legal immigrants from extending their temporary visas or gaining permanent residency if the government decides the applicant is likely to rely on public benefits in the future.

The Feds already consider whether applicants for legal permanent residency receive Temporary Assistance for Needy Families or Supplemental Security Income (SSI) when they evaluate applications for permanent resident status.

When the new Rules take effect on October 15 they’ll also consider whether applicants receive Medicaid (AHCCCS), the Supplemental Nutrition Assistance Program (food stamps), or Section 8 Housing assistance. 

The definition of a "public charge" in the final Rule is: "an individual who receives one or more designated public benefits for more than 12 months in the aggregate within any 36-month period”.

The draft rules released last year had included criteria that would have applied these standards to kids and adults. The final Rule won’t consider whether benefits were used by an applicant’s children. Likewise, if lawfully present kids receive benefits (e.g. Medicaid) that fact won’t be considered against them if the child later applies for legal permanent residency (a “green card”).

Here are some things to remember about this new Rule

  • This is an issue of legal immigration- unauthorized migrants are largely ineligible for public assistance;

  • This doesn't directly impact current legal permanent residents (current green card holders). The public charge test won't be applied to legal current residents (green card holders) applying for citizenship;

  • The new rule isn’t retroactive – meaning public benefits received before 10/15/19 won't be counted as a public charge; and

  • The new rules don't apply to refugees. Existing statute prevents DHS from using these criteria for refugees.

Even though the final Rule excludes benefits received by children, this policy will still have a significant impact on children’s health as well as the health of their families and our communities.

Public health note:  We know from both national reports and from assistors and community organizations working in Arizona, that families are afraid and withdrawing from or reluctant to participate in benefits for which they or their children are legally eligible. Nationally, nearly one in four children have an immigrant parent, and almost 90% of them are US citizens.  Missing out on safety net programs for which folks are entitled can result in bad health outcomes because of social determinants that won't be addressed and missed doctor's appointments which could result in missed developmental screenings and interventions.

The US government has made their decision - and the new policy will be implemented unless overturned by the courts. There's nothing short suing that will undo this decision for now (although a change in top leadership in the executive branch in January 2021 could result in a rollback).

What we can do is to get the word out to families in this category that signing up their kids for safety net benefits to which they're entitled won't count against them when they apply for legal permanent status- nor will it count against their kids if they eventually apply for a green card. We can minimize the public health impact of this decision if the public health system is effective in ensuring that families know this important information! 

States Lowering Marketplace Premiums with 1332 Waivers

One of the successes of the Affordable Care Act was the development of the health insurance Marketplace.  States can have can have a significant impact on what the premiums are on their state's Marketplace plans by using some of the policy tools available in the ACA. 

For example, Section 1332 waivers in the ACA allow states to implement innovative market driven solutions to lower premiums and protect coverage at the same time.  The goal of Section 1332 waivers is to allow states to experiment with alternative payment and delivery models

Recent CMS guidance changed several components of the 1332 waiver processes including allowing executive orders or state regulations to pursue 1332 waivers.

Many states have recently taken administrative action to lower the Marketplace premiums in their states by implementing reinsurance waivers.  Reinsurance programs allow states to reimburse insurers for certain high-cost claims, allowing them to lower premiums overall. In essence, reinsurance (insurance for insurance) creates a backstop for insurers for super-expensive claims - which makes insurance for everybody more affordable. 

So far this year, CMS has approved Section 1332 reinsurance waivers in Alaska, Hawaii, Maine, Maryland, Minnesota, New Jersey, Oregon, and Wisconsin. There are reinsurance waiver applications pending in Colorado (following their passage of HB 19-1168) and North Dakota (following their enactment of HB 1106).

More 1332 waiver applications are on the way too.  Delaware, Montana, and New Mexico enacted legislation authorizing reinsurance 1332 waiver applications - so those waiver applications should be on the way in the near future.   Maryland passed HB 1098 which authorizes (but doesn't require) their state to submit a 1332 reinsurance waiver by January 1, 2020.

Basically, 1332 waivers offer states the opportunity to implement reinsurance waivers that have a direct and beneficial effect on Marketplace premiums that benefit their residents. Seems like a no-brainer in terms of smart public policy. 

Will Arizona be next in line to seek a reinsurance waiver to help reduce Marketplace premiums in AZ? 

Washington Passes Medicaid Buy-In Law

This week Washington Governor passed the nation’s first Medicaid buy-in law.  The new law will offer a new health insurance option to people who make too much money to qualify for Medicaid but not enough to afford private health coverage. 

Washington's new law directs their state Medicaid agency to contract directly with at least one private health insurer to offer a "qualified health coverage" plan that meets Affordable Care Act standards on the state’s marketplace. It will expand subsidies to people making up to 500% of the federal poverty line, or $62,450 a year, for a single person.

The tiered public plans are expected to be up to 10% cheaper than comparable private insurance, in part because of savings from a cap on rates paid to providers. The WA public plans are set to be available to all residents regardless of income by 2021.  Here’s more info in a Time Magazine article from this week.

In addition to Washington, legislation to study or start a public option or Medicaid buy-in program is currently pending in Colorado, Connecticut, Maine, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey and Oregon.

The basic idea is to leverage the buying power of state Medicaid programs to negotiate better premium rates that offer a lower-cost alternative to the health-care marketplace and spur competition which would lower premiums overall.

US Justice Department Won't Defend the ACA

A couple of months ago a federal judge in Texas (Judge Reed O’Connor) dealt a blow to the ACA when he ruled in Texas v. Azar that it's unconstitutional in its entirety- including the implementation of market reforms (e.g. protections for folks with pre-existing conditions), the health insurance marketplaces, and the expansion of Medicaid. He didn’t issue an injunction ordering the suspension of the law - so the ACA will remain the law of the land for now.

Last week the DOJ made it crystal clear that they have no intention of defending any of the provisions of the ACA (including covering pre-existing conditions) because they agree with the plaintiff States. That clear message came in a short statement by the Attorney General when he notified the court that they fully side with Judge O’Connor’s decision in Texas v. Azar & won't defend the ACA.

The December 2018 ruling isn’t the last word. The case has been appealed to the federal appellate court system.  It will probably end up with the US Supreme Court…  which has a different cast of characters than it did when the ACA was originally upheld back in 2012 by a 5-4 vote.

Since then, Gorsuch replaced Scalia and Kavanaugh replaced Kennedy.  Both Scalia and Kennedy voted against the ACA- so not much on that score has changed.

Chief Justice Roberts voted with the majority that upheld the law.  His argument rested on the ACA’s link to the financial penalties for not having health insurance. But remember, the financial penalties for not having health insurance were removed from the IRS tax codes in last year's federal tax overhaul, pulling out the structure that Roberts used in his argument.

In the 2012 Ruling, Justice Roberts wrote that: “… the Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a taxbecause the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.” 

Roberts rejected the Administration's argument that the federal government's authority to regulate interstate commerce provides the authority needed for the ACA to be constitutional (the Court struck down that argument 5-4).

The bottom line is that the ACA, including its protections for folks with pre-existing conditions, may very well be in jeopardy if Roberts views the ACA as fundamentally different now that the financial penalties are gone.

How Can AZ Prepare for a Post ACA America?

It's easy to see how the ACA could end up being struck down in a couple of years once this case gets to the highest court. Gone would be the health insurance market reforms like protection for folks with pre-existing conditions, community rating pricing and guarantee issue as well as Medicaid expansion and the health insurance marketplaces.

Prior to the ACA, the standards to protect people with pre-existing conditions were determined at the state level.  Most states including AZ had very limited protections. 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.

Fortunately, Arizona is partially in control of our own destiny if the ACA is struck down. We couldn't do much about Medicaid rolling back to pre-ACA levels or the loss of subsidies on the Marketplace, but we could have some control over the market reforms like pre-existing condition exclusions, community pricing, and guarantee issue.

Several states have enacted their own laws to be consistent with the ACA market reforms. Several states already have their own laws that incorporate some or all the ACA insurance market protections. Arizona could do the same. 

The good news is that we have time before the Texas v. Azar case makes it to the Supreme Court. A good 1st step would be for the Governor to ask our state agencies to generate (or commission) a report outlining the real-life impact in Arizona in the event that the Texas v. Azar suit is successful. The report would put forward options for state-based health insurance market reform laws to require things like prohibiting pre-existing condition exclusions.

Such a report would give the Arizona State Legislature an analysis to evaluate public policy options for state-based market reforms.

I know what you're thinking, it's impossible to pass these kind of market reforms in Arizona.  Maybe, but many thought that Arizona's expansion of our Medicaid system back in 2013 was impossible.  That case study shows that with the right kind of leadership on the 9th floor, anything is possible.

State Legislature Bill Update

More than 700 bills have so far been proposed by members of the Arizona State Legislature so far.  Our Public Health Policy Committee is busy sifting through them and looking for those that will have a public health impact.  We’re not done looking through them yet- but below is a summary of what we know so far.

Tobacco Bills:

SB 1009 Electronic Cigarettes, Tobacco Sales (Carter)

Expands the definition of tobacco products to include e-cigarettes. Among other things, it'll make it clear that it's illegal to sell e-cigarettes to minors. The penalty for selling to minors remains at $5K. Being heard in Senate Health & Human Services Committee Wednesday Feb 23 at 9 am.

HB 2024 Electronic Cigarettes. Smoke Free Arizona Act (Kavanaugh)

Includes e-cigarettes in the definition of tobacco products and smoking for the purposes of the Smoke Free Arizona Act.  Because the Act was voter approved- this modification to the law will require a 3/4 majority of both houses.

HB 2073 Vapor Products; Regulation (Shope)

This bill would basically set up a regulatory program at the ADHS to inspect and license electronic cigarette manufacturers in Arizona and specify that only licensed electronic cigarette manufacturers can sell products in Arizona.  It’s unclear what the objective of this bill is and we have not yet taken a position on it yet.


Maternal & Child Health:

SB 1088 Dental Care During Pregnancy (Carter)

This bill would expand AHCCCS covered services to include comprehensive dental coverage during pregnancy and appropriate the required state match funding.

SB 1040 Maternal Mortality Report (Brophy-McGee)

This bill would require the Child Fatality Review Team subcommittee on maternal mortality to compile an annual statistical report on the incidence and causes of "severe maternal morbidity" with recommendations for action.  The current law requires a review of the data but no report.

 

HB 2125 Child Care Subsidies (Udall)

Makes a supplemental appropriation of $56 million from the Federal Child Care and Development Fund block grant in FY2018-19 to the Department of Economic Security for child care assistance. Another bill, HB 2124 would allocate the money as follows: $26.7 million for provider rate increases, $14 million to serve children on the waiting list, and $13.1 million to increase tiered reimbursement for infants, toddlers and children in the care of DCS. HB 2436 is a similar bill.

HB 2337 Family Planning (Salman)

Would repeal the statute requiring the Department of Health Services to apply for the federal Title X family planning grant.

Injury Prevention:

HB 2069 Texting and Driving (Kavanaugh)

Makes texting while driving on a highway a nonmoving civil traffic violation.  The penalty for the 1qst violation would be $100 and the second offense would be $300.  If a crash is involved the penalty would be $500 but if someone died it would be $10K.   subject to a civil penalty of $500, except that if the accident results in the death of another person, the civil penalty is $10,000.

HB 2165  Distracted Driving (Townsend)

A person who drives a vehicle while participating in an activity that willfully distracts the person from safely operating the vehicle is guilty of reckless driving, a class 2 (mid-level) misdemeanor.  I’m not sure if texting and driving would qualify or not- it probably does.

HB 2172  Rear Facing Car Seats (Bolding)

Kids under two years of age need to be in a rear-facing restraint system unless the child weights at least 40 pounds or is at least 40 inches tall.

HB 2246  Motorcycle Helmets (Friese)

Motorcycle riders over 18 would be required to wear a helmet unless they pay a fee that would be set by ADOT. Violations would be a $500 civil penalty, but no points or other sanctions. 

HB 2075  Electronic Prescribing (Cobb)

Pushes the electronic prescribing requirement in last year’s Opioid Epidemic Act back to January 2, 2020 in all counties.  Being heard in House Health & Human Services Committee Thursday Feb 24 at 9 am.

Firearm Safety

HB 2247 Bump Stocks (Friese)

This bill would outlaw the sale of bump stocks on firearms.

HB 2248 Firearm Sales (Friese)

This bill would require a background check for all sales at gun shows.

HB 2161 Order of Protection (Hernandez)

A person who is at least 18 years of age and who is either a law enforcement officer, a “family or household member” (defined), a school administrator or teacher or a licensed behavioral health professional who has personal knowledge that the respondent is a danger to self or others is permitted to file a verified petition in the superior court for a one-year Severe Threat Order of Protection (STOP order), which prohibits the respondent from owning, purchasing, possessing or receiving or having in the respondent’s custody or control a firearm or ammunition for up to one year.

HB 2249  Mental Health and Firearm Possession (Friese)

An immediate family member or a peace officer is authorized to file a verified petition with a magistrate, justice of the peace or superior court judge for an injunction that prohibits a person from possessing, controlling, owning or receiving a firearm. Any court may issue or enforce a mental health injunction against firearm possession, regardless of the location of the person. Information that must be included in the petition is specified. If the court finds that there is clear and convincing evidence to issue a mental health injunction against firearm possession, the court must issue the injunction. Information that must be included in the injunction is specified.

Harm Reduction:

HB 2148 Syringe Access Programs (Rivero)

Decriminalizes syringe access programs, currently a class 6 felony. To qualify, programs need to list their services including disposal of used needles and hypodermic syringes, injection supplies at no cost, and access to kits that contain an opioid antagonist or referrals to programs that provide access to an opioid antagonist.

SB 1119 Tanning Studios (Mendez)

Would require people under 18 that want to use a commercial tanning bed service to have permission from their parent or guardian.

Vaccines

HB 2162 Vaccine Personal Exemptions (Hernandez)

This bill would remove the personal exemption option for parents to enroll in school even though they haven’t had all the required immunizations.

HB 2352 School Nurse and Immunization Postings (Butler)

School districts and charter schools would be required to post on their websites whether a registered nurse is assigned to each school as well as required reports on immunization rates.

Agency Administration

HB 2004 Nuclear Management Fund (Kavanaugh)

Assesses the Palo Verde nuclear plant $2.55M and gives it to ADEM, ADHS and other jurisdictions to compensate them for off-site nuclear emergency response plan response activities.  Being heard in House Appropriations Committee Wednesday Feb 23 at 2 pm.

 

HB 2280  Interfacility Ambulance Transports (Weninger)

A person may operate an "interfacility transfer ambulance service" by applying to the Department of Health Services for a certificate of operation with defined requirements.   The requirement to transport a patient under medical direction to the nearest, most appropriate facility as defined by federal medicare guidelines does not apply to an interfacility transfer ambulance service with a certificate of operation.

SB 1011 Information and Referral Service (Carter)

Appropriates $1.5 million from the general fund in FY2019-20 to the ADES for a statewide information and referral service for health care services, community services, human services and governmental services.  


AHCCCS Coverage & Services

HB 2347 Medicaid Buy-in (Butler)

Would require AHCCCS to set up a program in which eligible people could pay a premium and receive Medicaid health insurance.

HB 2350 HB2513 SB1134 Kids Care (Butler, Brophy-McGee, Cobb)

These bills Would appropriate funding so that Kids Care could continue after the federal match rate goes below 100% on October 1, 2019.

HB 2351 Medical Services Study Committee (Butler)

Establishes a 14-member Medical Services Purchase Program Study Committee to research and make recommendations for establishing and implementing a medical services purchase program. The Committee is required to submit a report of its findings and recommendations to the Governor

HB 2120  Chiropractic Coverage (Barto)

Would add chiropractic services to the list of reimbursable services under AHCCCS.  Being heard in House Health & Human Services Committee Thursday Feb 24 at 9 am.

SB 1088 Dental Care During Pregnancy (Carter)

This bill would expand AHCCCS covered services to include comprehensive dental coverage during pregnancy and appropriate the required state match funding.


Food Safety & Insecurity

HB 2178  Milk Manufacturing License Exemption

A restaurant wouldn’t be required to get a license to manufacture or distribute frozen desserts or frozen milk products if the product is manufactured or distributed and sold at the same facility for on-site consumption

HB 2186  School Meals (Udall)

Schools are required to provide a school meal to a student who requests it regardless of whether the student pays for a school meal or owes money for previous meals. Local education agencies are prohibited from taking a list of specified actions relating to unpaid school meal fees, including announcing or publicizing the names of students with unpaid school meal fees, requiring a student who cannot pay for a meal or who owes unpaid meal fees to work for a meal, and attempting to collect unpaid school meal fees from a student. Local education agencies are prohibited from using a debt collector to attempt to collect unpaid school meal fees.


Access to Care

HB 2218 State Loan Repayment (Blanc)

Makes a supplemental appropriation of $250,000 from the general fund in FY2019-20 to the Department of Health Services to pay off portions of education loans taken out by physicians, dentists, pharmacists, advance practice providers and behavioral health providers participating in the primary care provider loan repayment program. 

HB 2376  Associated Health Plans (Barto)

An association health plan is authorized to operate in Arizona if the plan is in compliance with federal laws and regulations, and if the plan's governing documents require the plan to be actuarially sound and the plan is actuarially sound.

Medical Marijuana

HB 2149  Cannabis Definition (Rivero)

Syncronizes the definitions of marijuana and cannabis in the state criminal code and the Arizona Medical Marijuana Act.  There has been some confusion in certain counties- as medical marijuana patients have been prosecuted for possessing extracts and preparations of marijuana that they bought at dispensaries. The appeal of this prosecutions will be heard by the state supreme court. This would make it more clear in state law that extracts and preparations are included in the Act.

HB 2412  Medical Marijuana Cards (Powers Hannley)

This bill would make medical marijuana cards valid for 2 years instead of the current 1 year.

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.