THE ASSOCIATION FOR COMMUNITY AFFILIATED PLANS PUSHES BACK ON PROPOSED MEDICAID CUTS

by Howard Green

The Association for Community Affiliated Plans (ACAP) has launched a massive advertising campaign imploring Republican senators from Medicaid expansion states to oppose any Medicaid cuts.

The message from ACAP: Medicaid is economically critical because it supports workers.

“Medicaid cuts will put millions of jobs at risk,” the advertisement says.

The television ads will be on the air in Colorado, Arizona, West Virginia, Ohio and Nevada — Republican swing states that expanded Medicaid. These states have at least one moderate Republican senator who has conveyed trepidations over changes to Medicaid.

The Association for Community Affiliated Plans represents Medicaid plans that administer the program for more than 20 million enrollees in 29 states.

“We are reminding Senators that protecting Medicaid protects workers and small businesses in their states — half of working people who rely on Medicaid for coverage work for small businesses,” said Margaret A. Murray (ACAP CEO) in a recent press release.

ACAP does not support the current bill from the Senate, called the Better Care Reconciliation Act (BCRA), stating in a letter that “because the BCRA makes massive cuts to federal Medicaid funding and does not protect plans from unsound rates, ACAP has no choice but to oppose this legislation.”

Medicaid has surfaced as one of the most challenging concerns of repealing and replacing the Affordable Care Act. Senators from expansion states do not want to responsible for their constituents losing coverage, while the other Senators don’t want to be rebuked for holding fast to conservative principles.

In a report, the Congressional Budget Office (CBO) projected the BCRA would lead to a reduction of 15 million Americans on Medicaid by 2026. The bill includes a $772 billion reduction in Medicaid funding for the poor and disabled.

The Better Care Reconciliation Act phases out the ACA’s Medicaid expansion starting in 2021, and would regress to pre-ACA levels by 2024.

Many moderate Republican senators, such as Rob Portman (Ohio) and Shelley Moore Capito (W.Va.), were promoting a 7-year phase out of additional federal funding for Medicaid expansion. Neither one of them has communicated how they would vote on the bill; however, last Friday, Senator Dean Heller (R-Nev.) said that he was in opposition to the bill in its current incarnation. Last weekend, Senator Ben Sasse from Nebraska said the bill doesn’t really repeal the ACA but is “largely a Medicaid reform package.”

Read more here. 

MEDICAID PLANS DRIVE CONTINUED FUNDING FOR PROGRAM IN LETTER TO SENATE

By Howard Green

The recently released Senate health care plan, if passed, would greatly scale back Medicaid financing. This would cripple the program that serves healthcare to a significant portion of the population. Reforming the program is critical; yet, the recent proposal has brought the health insurance industry to their feet. Chief executives in the industry have filed a joint letter to the Senate imploring them to reconsider their plan for financing Medicaid. The letter requests that Senators carefully consider the consequences of drastically altering Medicaid funding. CEO's from the countries largest Medicaid plans signed the letter. They claim that the ACA, along with its underlying structure to finance Medicaid, should be reformed in ways that encourage savings rather than cutting funding to the states.

" This year's discussion began with a focus on the ACA's individual insurance market, but current healthcare proposals go further and do not enact meaningful, needed repairs to the ACA," the letter says.

" However, our primary concerns lie in the impacts these policies will have on the 74 million low-income, disabled and elderly Americans whose healthcare coverage through Medicaid rests in the hands of the Senate as you craft new legislation and policy options."

As an alternative to the funding cuts under consideration, the joint letter urges Senators to integrate other options to preserve accessibility to quality care:

• Reduce regulation to increase efficiency
• Waiver flexibility for states
• Restructure the pharmacy program
• Value-based pricing
• Alternative payment methods for healthcare providers based on population
• Flexibility in utilizing Medicaid funds
• Consolidation of administration and benefit design for the dual-eligible

These health plan leaders universally advocate Medicaid reform, but they are united against the current proposal from the Senate.

" We are not advocating to maintain the status quo; rather we are advocating for meaningful Medicaid reform," the letter says.

The letter recognizes that the policies currently being deliberated in Congress, the federal government would introduce a limit on the funding it would offer to states each year starting in 2020, and in place of actuarial calculations the government would use 2016 Medicaid costs trended forward by the Medical Consumer Price Index. That strategy is projected to diminish the federal share of Medicaid funding by more than $800 billion over 10 years, amounting to a 25% shortfall in covering the actual cost of Medicaid.

" While this may appear positive from an immediate budgetary perspective, these amounts spell deep cuts, not state flexibilities, in Medicaid. There are no hidden efficiencies that states can use to address gaps of this magnitude without harming beneficiaries or imposing undue burden to our health care system and all U.S. taxpayers," the letter says.

" Reducing the federal government's share of Medicaid in this manner is not meaningful reform to bend the cost curve. It is simply an enormous cost shift to the states. It does nothing to address underlying drivers of the cost of care, like expensive new drugs and therapies, and an aging population living longer with disability."

In order to make up for the reduction in funding, States would need to raise taxes, reduce benefits, cut reimbursement, and remove some eligible beneficiaries.

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IS MEDICAID MANAGED CARE IN DANGER?

The AHCA, which narrowly passed in the House of Representatives, aims to cap federal Medicaid funding. The major drop in funding could possibly put an end to Medicaid Managed Care as we know it. Converting the open-ended entitlement program to a system of per capita caps or block grant payments would make it very challenging for Medicaid managed care plans to continue to function. The CBO estimates, that over a ten-year period, federal Medicaid spending would be reduced by $834 billion.

States that did not end their Medicaid expansion programs could likely see an increase in enrollment. According to Joe Moser, "States are going to look for what gives them budget predictability, and that's what managed care does. You will see more states expanding their managed care populations to more critical populations." PwC at the moment estimates that 73% of Medicaid beneficiaries are covered by Medicaid managed care; however, this does not account for those in need of long-term care or the disabled. It is very easy to presume that by shifting these groups to managed care; states could reduce costs as federal funding begins to dry up. Ari Gottlieb, of PwC stated, "A per capita cap could accelerate the trend of managed care." Still, insurers contend that the proposed fixed-payment formula will put plans at risk. They vehemently disagree that the formula would offer adequate resources for an unanticipated economic recession, new public health needs, or new prescription medications and treatments.

Under the proposal, the guideline for state's per-capita beneficiary group spending would be established off of the 2016 fiscal year. Payments would rise yearly at the rate of the Medicaid component of the CPI. The elderly, blind, and disabled payments would also increase at CPI plus one percentage point. Medicaid spending in 2016 reached $548 billion. The consulting firm, Health Management Associates measured that Medicaid managed care spending went from $238 billion in 2015 to $269 billion in 2016.

Anna Gupte, an analyst at Leerink Partners, strongly believes that the 2016 baseline will make it more likely that states will cut payment rates to managed care plans if costs or enrollments increase. Medicaid plans' operating margins average around 2%. "I expect margin compression as states claw back rates in Medicaid to offset the funding pressure from the rollback in Medicaid funding and a move to per capita caps."

Insurance companies are looking to the Senate for a correction in the AHCA's framework for federal Medicaid payments to the states. More specifically, they would like the calculating baseline year to adjust every two years. Additionally, insurers want states to be required to adhere to federal actuarial soundness in arranging payment rates to Medicaid plans. John Lovelace, president of UPMC, stated, "The concept of a per capita cap is fine. It's a devil in the details conversation."

The situation could be critical if there are zero protections in place and the bill passes without any revisions. Meg Murray, CEO of ACAP, whole-heartedly opposes the House bill's Medicaid provisions. "What we're worried about is that plans wouldn't be able to survive. It could end up fundamentally undermining the Medicaid managed care system and all the good things that have come out of it."

Read more here.

H.R. 938 MISSES THE POINT: THE NEED TO MAKE MEDICAID MORE EFFICIENT

By Howard Green

H.R. 938, the Medicaid Third Party Liability Act, was recently presented by Rep. Michael Burgess (R-Texas) to help Medicaid save money. As legislators return to Washington this week, health care remains at the top of their agenda. The primary issue amongst Republicans is how to handle the Medicaid debate, particularly in states that expanded the program, or are choosing to expand under the ACA. But they will have a challenging time funding the expansions without continued federal support. The outcome of the decision is sure to affect patients, health care workers and the overall economy.

The Trump administration has left all sectors involved in health care with uncertainty. The promise to repeal and replace the Affordable Care Act with the AHCA passed by a razor thin margin last month in the House of Representatives. Waivers to alter Medicaid are being submitted to HHS for review. And the publication of the president's budget creates ambiguity with regard to the level of federal funding states can count on.

Trump's budget, "A New Foundation for American Greatness," eviscerates spending in almost every department except defense. While it has little to no chance of passage, health care professionals caution that it shouldn't be ignored because it demonstrates clear intent. "It's hard to imagine that it'll be enacted fully, but at a minimum, it reflects the priorities of the administration," says Elizabeth Burak, senior program director at Georgetown University's Center for Children and Families.

The administration's submitted budget would slash Medicaid spending by $800 billion over a decade. This is above and beyond suggested cuts in the American Health Care Act to replace the ACA, which the President's budget assumes will become law. If both the President's proposed budget and the AHCA were to pass, states will encounter well over a $1 trillion reduction in Medicaid funding.

Trump's budget director, Mick Mulvaney, emphatically argues that the decreases in funding, along with the shift to per capita caps and block grants, would offer states more flexibility in the administration of their respective Medicaid programs. However, most health care experts believe that such deep cuts would only give states flexibility in disenrollment plans for a large swath of Medicaid beneficiaries.

So currently, more than ever, Medicaid plans should be concentrating their efforts on finding ways to further efficiency and cost savings ahead of potential funding cuts. Discovering ways to save taxpayer money is certainly a good practice regardless of the political headwinds, but now; Medicaid overseers can not rest on their laurels and assume the status quo of federal funding will continue. They need to begin getting aggressive in cost control. Recently, House Bill H.R. 938 was presented to do just that.

H.R. 938, known as The Medicaid Third Party Liability Act, aims to remove loopholes that forces Medicaid to pay for claims that are the liability of primary payers. As much as 13 percent of Medicaid members around the nation hold additional insurance other than Medicaid, which is called Third Party Liability (TPL). Types of TPL include employee insurance, Workers' Compensation, Medicare, COBRA health insurance from former employment, casualty insurance, dental insurance, eye insurance and insurance to cover pharmaceutical costs. In these instances, Medicaid pays last, and if a Medicaid member holds other insurance coverage, that insurer pays first and then Medicaid pays any remaining costs.

H.R. 938 was formed to increase savings and promote efficiency by eliminating loopholes that third parties have been capitalizing on. The bill protects against payers that are liable for costs from holding back payments to Medicaid. The primary provisions in H.R. 938 that help Medicaid avoid the costs of improper claims payments are:

• H.R. 938 would thwart efforts of liable commercial payers to deny reimbursement of claims due to a lack of prior authorization.
• H.R. 938 would afford Medicaid Managed Care Organizations (MCOs) the same rights as state-run Fee For Service plans to be the payer of last resort.
• H.R. 938 would replicate the same prompt payment standards regularly enforced in the commercial marketplace, but in this case, the recovery of improper claims payments made by Medicaid that are really the liability of a primary insurer.

While the provisions of The Medicaid Third Party Liability Act are solid steps in the right direction, they are in a sense addressing the symptoms of improper claims payments, rather than the disease of "Pay & Chase". What we need is more pressure or incentive to persuade Medicaid plans to get better at identifying TPL prior to improperly paying for claims. The Social Security Act, signed into law by President Franklin Roosevelt in 1934, states in the statute § 1902( a)( 25) of the law "... that the State or local agency administering such plan will take all reasonable measures to ascertain the legal liability of third parties ... to pay for care and services" delivered to Medicaid recipients.

Passage of the Medicaid Third Party Liability Act (H.R. 938) will help recover money that was spent incorrectly, but until we shift our focus from Pay & Chase to prospectively preventing the costs of improper payments, Medicaid will still see substantial amounts of waste.

Learn more here. 

PROPOSED MEDICAID REDUCTIONS FROM PRESIDENT TRUMP'S ADMINISTRATION

By Howard Green

Medicaid could receive funding cuts due to Trump's 2018 budget proposal and this may fundamentally transform how the Medicaid program operates. The proposals goal is to give individual states flexibility. According to the budget, states will have an option between receiving a block grant in the fiscal year 2020 or they can choose to receive Medicaid funds as a per-capita cap grant. This is the foundation of the American Health Care Act, which, if passed in the Senate, would take the place of the Affordable Care Act.

Richard Frank, a Harvard Medical School professor, feels this will fundamentally change how Medicaid would operate. "It's no longer an open-ended matching program" and the proposal "fundamentally changes the kind of contract that exists between the states and the federal government." The CBO estimates that 14 million people will no longer have access to Medicaid by 2026 as a result of the AHCA eligibility requirements.

IN THE PAST, STATES RECEIVE MONEY FOR MEDICAID FOR:
New treatments

Treatment expenses

An increase in healthcare needs

In addition to the federal government match, states themselves fund a considerable amount for their Medicaid programs. This is beginning to exhaust resources locally and federally because Medicaid has always been an open-ended entitlement program.

The possible passage of the proposed budget plan has states on their feet to grow their Medicaid programs. Since the implementation of the ACA, eligibility requirements became relaxed and contributed in broadening access to a larger percentage of the population. To compensate for the increased amount of enrollees, states received enhanced federal funds. States such as North Carolina, Virginia, and Kansas made efforts to expand in March but failed.

NO MEDICAID PLAN IS FLAWLESS

Richard Frank is troubled with the proposal's two funding choices because the medical care CPI does not account for shifts in the population or unexpected crises. For instance, overall improved health and longer life spans have risen in recent years. People are more healthy and living longer. This means in the near future, the amount of eligible enrollees to the program will increase and create a larger demand on Medicaid. Dr. Frank feels that the costs for elderly people's healthcare would jump at a faster rate than the medical care CPI.

In addition, the per-capita funding option would organize people into groups based on age or disabilities. This is problematic since the groups would be too broad and would not allow for effective distribution of available funds. The Harvard medical professor estimates there will be a 9% shortfall, which translates into $10 billion annually that states would have to satisfy. On the other hand, the CBO estimates that spending will be reduced 25% by 2026 compared to the ACA.

STATE'S OPTIONS

In the current landscape, states will need to either cut expenses or invest in their programs. If they cut costs, beneficiaries will lose coverage and the eligibility requirements will become stricter for future enrollees. It's thought that substance abuse and mental illness treatment would be the first to be discontinued. This is problematic given that opioid deaths increased 15% between 2014 and 2015. The medical care CPI doesn't account for that growing rate.

At this point, there is a significant amount of criticism as to what should be done and how it should implemented. What is certain is that the demand for Medicaid is increasing and there are many opinions on the best course. Currently, a majority of the public thinks the program should remain the same.

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