THE WINDOW OF OPPORTUNITY IS CLOSING FOR VA MEDICAID EXPANSION

In February, Virginia's work on the Commonwealth's biennial spending plan budget came to a halt because of the inclusion of provisions for Medicaid expansion. In short, the Republican House backs expanding Medicaid while the Republican Senate does not. Due to the divided GOP support, the regular session was adjourned and no budget was successfully passed. Virginia Governor Northam (D) compelled legislators to deliver as soon as possible. He warned that if a proposal was not drafted and on his desk in the near future, he would submit a budget that expanded Medicaid without some of the compromises made with Republicans; such as, imposing co-pays and work requirements.

Northam stated, "We've obviously compromised. If I send an amendment down, and I will if I need to, some of those compromises won't be in there and it will be closer to the original proposal in the budget Governor McAuliffe and I introduced."

McAullife's budget was rejected last December. The failed budget proposal had provisions for Medicaid expansion without conditions like work requirements or co-pays.

In an attempt to assist low-income citizens, Governor Ralph Northam followed through on his warning and revealed his proposed budget last week. He will deliver it to the Virginia General Assembly on April 11. According to the Virginian governor, the plan mirrors McAullife's plan but it will also incorporate an amendment created to invest in a revenue reserve fund.

Northam states, "Virginians have waited long enough for a balanced budget that expands health care access and invests in economic opportunity through education, workforce training, mental health and addiction services, and better pay for public servants. The General Assembly will return on April 11th to pass the budget Virginians deserve, but we shouldn't wait until then to get to work. My team and I are ready to work with the General Assembly money committees to get Virginia families, local governments, institutions of higher education and many others the certainty and resources they deserve by passing a budget that expands health coverage."

Under Gov. Northam's budget, Medicaid expansion would be available to almost 400,000 citizens. As a result of savings from the expansion, investments could then be made into workforce development, opioid addiction prevention, education, mental health services, and increases in pay for state workers. Additionally, the amendment would direct revenues that exceeded those predicted in the budget to a revenue reserve fund. This investment would serve to provide the state additional financial security in economic downturns.

According to Northam, "The budget I am introducing makes a strong investment in our Commonwealth's cash reserves. However, in a period of unprecedented volatility in Washington and economic uncertainty across the globe, we should do everything we can to shield Virginia taxpayers against an unexpected revenue shortfall. By including this amendment we can maintain a fiscally conservative budget and send a message to Virginians and to the rating agencies that this budget will invest wisely while also preparing for unexpected downturns."

After the budget was introduced, House Republicans went on the record claiming that the governor's proposal is "the start of a process that we are confident will lead to the adoption of a new budget long before July 1."

After the announcement, Senate Majority Leader Thomas K. Norment (R) criticized the proposal when Northam characterized it as a guide for discussion. Norment said, "That he (Gov. Northam) continues to make Obamacare's Medicaid expansion integral to that budget, and his refusal to base his plan on a more current revenue forecast means the current standoff can not be resolved quickly."

Medicaid's landscape continues to be a focus between Virginia's lawmakers in 2018. Due to the dispute among Republicans and Northam's recent proposal, it is unclear if Medicaid expansion will occur or if there will be work requirements and other conditions for eligibility. Legislators will reconvene in a special session on April 11 but if they do not successfully pass a budget, Virginia would have its very first government shut down.

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A MEDICAID MODEL THAT INCLUDES WORK REQUIREMENTS, PREMIUMS, TIME LIMITS & DRUG TESTING

In 2017 the GOP and Trump Administration made a number of attempts to reform Medicaid by trying to repeal the Affordable Care Act (ACA) and enforce federal spending caps for the Medicaid program. Although these initiatives were not successful, the future of the Medicaid program is still vulnerable to administrative actions from CMS. It is evident that this administration has a very different vision for the future of Medicaid than its predecessor.

A report performed by the Henry J Kaiser Family Foundation highlights Medicaid's changing landscape. For example, states that grew their Medicaid programs under the ACA such as Kentucky, Indiana, Arkansas, Arizona, and New Hampshire are additionally pursuing work requirements and other conditions for beneficiaries. In addition, some states that did not adopt expansion under the Obama administration, like Virginia, are now taking it into consideration under the condition that work requirements are put into effect.

HOW THIS NEW MEDICAID MODEL IMPACTS THE STATES

The new vision for the Medicaid program is a stark contrast to that of the ACA's. The Kaiser Family Foundation predicts that the work requirements and additional restrictions will affect about 24.5 million people including non-elderly and non-disabled adults. As a result, childless adults are at the greatest risk of losing coverage. In spite of the large population that will be affected by new conditional requirements, it is important to keep in mind that the work requirements and restrictions will not affect the majority of those participating in the program. For instance, children, elderly, disabled, and pregnant enrollees make up more than half of Medicaid enrollees and are either exempt from such laws or covered by federal law.

The work requirements and other conditions are a sign that states entertaining these waivers are making use of them as a method to reduce costs by reversing Medicaid expansion or introducing downsized programs. Medicaid professionals see this as a significant threat and inconsistent with how waivers have been used traditionally. The executive director of Georgetown University's Center for Children and Families, Joan Alker, sees them as a way to simply cut coverage. According to Alker, "Under any previous administration, waivers have not been used to devise ways to cut coverage."

The state of Kentucky, led by Governor, Steve Beshear (D), was amongst the states that had expanded its Medicaid program under the ACA, increasing coverage to an additional 350,000 enrollees. According to Gallup, the state saw a significant drop in its uninsured rates between 2013 and 2016 from 20.4% to 7.8%. Regardless of the increase in eligibility the newly elected Kentucky Governor, Matt Bevin (R), did not agree with the expansion. He believes that the program is for the most vulnerable people and the work requirement works to protect the program and its services. In August 2016, Governor Bevin put forth a new plan that included work requirements to HHS.

According to Kentucky.gov, "the submission of this waiver is the result of many months of extensive research, planning and time spent traveling the state listening to Kentuckians," said Gov. Bevin. "Kentucky HEALTH will allow us to continue to provide expanded Medicaid coverage, but unlike the current Medicaid expansion under Obamacare, it will do so in a fiscally responsible manner that ensures better health outcomes for recipients." Shortly after the New Year, CMS approved Kentucky's Section 1115 demonstration waiver, Kentucky Helping to Engage and Achieve Long-Term Health aka "KY HEALTH." Health Law Policy Matters has documented what this will mean for the state and notes that the full implementation is expected to begin in July of 2018.

After a 5-year period, The Commonwealth Fund predicts that enrollment rates would drop nearly 15 percent. This figure consists of enrollees made eligible from the expansion and traditional enrollment. According to Governor Bevin, those 100,000 people would need to receive insurance coverage from an employer or through a private provider. This may be challenging since KFF has reported that 60% of adults on Medicaid are currently working.

Health professionals, including Cindy Mann of Manatt Health, are worried about the direction Medicaid is headed. They believe that the repercussions of work requirements are not being taken into account. Mann stated, "the people who policymakers and the public would want to protect, with medical conditions, barriers to employment, they're going to be exempt. But the system isn't geared to get these people out of harm's way. It's the people who are least able to gather the paperwork required that will get caught in the cracks and will lose their coverage."

The debate over Medicaid comes down to two competing philosophies. Republicans claim that the program has expanded beyond its initial objective, thereby endangering its capacity to provide coverage and services to the most vulnerable. They argue that work requirements and conditional restrictions are aimed at those individuals for whom the program was never intended; furthermore, the conditions for enrollment are designed to help people become independent from Medicaid. Democrats view the approval of 1115 waivers as a way to simply cut coverage since attempts to reform the program in 2017 were a failure. Democrats argue that Medicaid is intended to provide insurance and not to encourage employment. Cutting costs and reducing coverage only prevents the program from performing its primary mission. As legislators debate, some states have already received approval for their work requirement waivers. It seems, that this is only the start and its very likely that more states will follow suit.

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PRESIDENT TRUMP'S BUDGET FOR FISCAL YEAR 2019

The Trump administration has made considerable efforts to reform the ACA. In spite of all of the failed efforts in 2017, the Whitehouse is once again targeting the nation's healthcare safety net. The recently introduced budget for Fiscal Year 2019 clearly outlines the president's aim to restructure Medicaid over the following twelve months.

REVISE THE AFFORDABLE CARE ACT AND REFORM MEDICAID

The Trump administration will continue its attempts to remove and replace the ACA with a bill reminiscent to what Senators Graham and Cassidy presented last fall. Had the Graham/Cassidy bill passed, the landscape of Medicaid would have dramatically changed. The approximated number of uninsured Americans would have risen to 20 million by 2026 and federal health care expenditures would be cut in 10 years by $215 billion.

In Trump's budget proposal, the funding from the ACA for Medicaid expansion and premium subsidies would be distributed as block grants to each state. In addition, the proposal would put into place a per-person spending cap for Medicaid. Trump's proposed budget places serious cuts for Medicaid above and beyond the Graham/Cassidy block grants. For instance, $675 billion would be cut from federal spending and Medicaid would experience a $1.4 trillion cut due to offset spending on block grants.

While the president's health care reform initiatives have not yet materialized, the numerous attempts are definite indications of intent for the nation's healthcare system. In the event that the GOP can secure a larger Senate majority in the upcoming midterm elections, the administration's vision could quite possibly become a reality.

BIG PHARMA AND MEDICAID DRUG PRICES

Though the Trump administration has not made any progress to bring down the price of pharmaceuticals, the budget does include a number of drug cost proposals. For instance, Medicaid could create drug formularies of preferred drugs so private insurers could negotiate drug prices with pharmaceutical companies. However, it is uncertain if President Trump and Congress would approve the formulary system.

MEDICAID COULD GO THROUGH ADDITIONAL CUTS

Aside from the $1.4 trillion in reform cuts and spending caps, the president might also:

• Cut $2.2 billion by denying benefits to individuals that cannot verify their immigration status
• Cut $1.3 billion over 10 years by increasing the copayments of beneficiaries for improper use of the ER
• Cut $2 billion by 2028 by authorizing asset and income testing for Medicaid eligibility

The president has made evident through his budget that he plans to restructure healthcare and Medicaid. Although the president and the GOP's attempts did not happen last year, it is clear that they will continue their efforts in 2018.

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MANAGED MEDICAID MARKET IN 2018

Over the past year, the Trump administration and the GOP had a strong push to reverse the ACA in addition to reforming Medicaid. With the New Year in progress, it is very clear that the uncertainty in Medicaid's future is a reason for concern among Medicaid managed care organizations.

In 2017 the Senate and House both failed to reform the Federal Medical Assistance Percentages (FMAP) structure from fixed per capita allotments to block grants for states. President and CEO of Medicaid Health Plans of America, Jeff Myers, explained, "its kind of like being in a major gunfight when the gun smoke's all around you. It's still very cloudy and there are going to be lots of challenges this year, but I think 2017 kind of changed the nature of the debate." Legislators have "a very different perception of Medicaid. Trying to swing a hammer at it is not effective".

These bills aimed to get rid of enhanced FMAP funding for the program. The CBO foresees that the White House and GOP's efforts to restructure funding through the bills could have initiated massive reductions in federal expenses to Medicaid between $772 billion and $834 billion.

Myers recognizes that Medicaid is complicated and has a "meaningful impact on state budgets far beyond just treating their most disadvantaged citizens." Because of this, the probabilities are slim that Medicaid financing will experience fundamental restructuring from Congress.

Nonetheless, The Tax Cuts and Jobs Act of 2017 passed shortly before Christmas repeals the ACA requirement for purchasing health insurance coverage. According to the CBO, eliminating this mandate could possibly lead to millions of uninsured people between 2019 and 2027. The president of EBG Advisors, Bob Atlas, notes, "Medicaid is implicated because when people in fulfilling their obligations under the mandate go to sign up, many of them discover they are eligible for Medicaid and by law are steered in that direction. So, if fewer uninsured people are going through the enhanced process of seeking coverage, fewer are going to end up on Medicaid."

MEDICAID EXPANSION FOR MORE STATES 

In addition to enhanced FMAP funding, it is probable that more states will look to expand Medicaid. Maine for example, pushed a referendum through to grow the program but it was blocked by Governor LePage (R). He wants the state to fund their program before expansion is taken into consideration. On the other hand, VA Governor-elect Northam (D) is seeking to expand the program despite the opposition from state legislatures. Having said that, the move to expand the program is unresolved within the House of Delegates.

Bob Atlas, also pointed out that Medicaid budgets could be drastically strained from the new tax law. By restricting the deductibility of state and local income and property taxes, states with higher taxes will be pressured by taxpayers to lower them also.

MHPA stresses that behavioral health costs, drug spend, and long-term care cost are the primary factors that Congress must deal with in order to improve Medicaid spending. Presently, MHPA is completing a proposal for revisions to the Medicaid Drug Rebate Program. They are of the opinion that the program promotes improper pharmaceutical pricing incentives. Their objective is to design Medicaid drug pricing off of the Medicare Part D program.

POTENTIAL MEDICAID WORK REQUIREMENTS

Myers and Atlas are in agreement that states will aim to relieve financial pressures on the program by adjusting Medicaid enrollment via the Section 1115 demonstration waiver process. Atlas claims, "a number of Republican-led states are proposing to implement work requirements as a condition of eligibility for so-called nondisabled people." At this point, seven states have submitted such waivers to CMS. As a result, MCO's have sought partnerships with local agencies to join their recipients with employment opportunities. Atlas notes that apart from work requirements, measures to raise the frequency of eligibility recertification and to get rid of retroactive eligibility will trigger intense controversy in Medicaid enrollment. It is a legitimate possibility that these types of modifications will be met with lawsuits.

MEDICAID MANAGED CARE REGULATION REVISIONS

For now, Plans are anxious to see CMS's revisions to the Medicaid managed care rule from 2016. Last year, Seema Verma from CMS, committed to a, "full review of managed care regulations in order to prioritize beneficiary outcomes and state priorities."

According to Myers, "I think generally the questions we have are, if they're going to redo the managed care regs, are they making it easier for our state partners to provide data to CMS that's valuable to both, are they ensuring that there's no duplication of efforts so that plans aren't being asked for one more thing that people don't actually use, and then lastly, in any type of reform are they ensuring that the actuarial soundness requirements are met? Because if those aren't met, then services can't be provided."

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THE MAJORITY OF UTAH RESIDENTS ENDORSE THE EXPANSION OF MEDICAID UNDER ACA

By Howard Green

Just under 60% of Utah residents side with the expansion of Medicaid under the ACA so as to include a greater number of low-income adults, according to a recent poll. A strong majority of Utahns stand behind a complete Medicaid expansion, according to the poll carried out by Dan Jones and Associates for UtahPolicy.com.

Thirty-six percent protest the expansion of Medicaid under the Affordable Care Act, whereas four percent said they "don't know."

There certainly are hopes from activists that a voter referendum next year will expand the state's Medicaid program. The group has up until the middle of April to gather the required 113,143 signatures to get on the November 2018 ballot. Those that advocate the initiative were motivated after a similar effort in Maine passed by voter referendum last month.

Activist groups in Idaho are also aiming to get on the state's ballot next year.

31 states and Washington, D.C., have extended Medicaid under the Affordable Care Act.

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GAO REPORTS $95 BILLION WASTED IN FISCAL 2016

By Howard Green

The GAO announced this week that The Centers for Medicare & Medicaid Services will need to create a much more rugged risk-based anti-fraud solution for the Medicare and Medicaid programs. Improper payments within both programs totaled about $95 billion in fiscal 2016.

The GAO, in a report published on December 5, 2017, indicated that CMS's anti-fraud objectives merely "partially align" with the GAO's fraud risk framework, which gives guidance on developing anti-fraud initiatives. The report notes that despite the fact that CMS has implemented anti-fraud training programs for stakeholders such as service providers, it does not require equivalent awareness training for agency staff members.

The report also declared that CMS does not have a fraud risk assessment for Medicare and Medicaid, in conjunction with an anti-fraud strategy for both programs.

"By developing a fraud risk assessment and using that assessment to create an anti-fraud strategy and evaluation approach, CMS could better ensure that it is addressing the full portfolio of risks and strategically targeting the most-significant fraud risks facing Medicare and Medicaid," the GAO stated.

In response, HHS said it will develop risk-based anti-fraud strategies for both Medicare and Medicaid after it completes its ongoing fraud-risk assessment of the federal healthcare marketplace.

The report was driven in part by earlier GAO assessments that determined both Medicare and Medicaid as having a great risk for fraud, waste, and abuse.

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TACKLE MEDICAID’S IMPROPER CLAIMS PAYMENTS WITH DATA, NOT ‘PAY AND CHASE’

By Howard Green 

The federal government must quickly move away from the “Pay and Chase” model where Medicaid routinely makes improper claims payments (those that were the liability of primary insurance plans), then retrospectively identifies the claims with third party liability. To make this change, the government must review and remedy the current, antiquated processes that are in place.

Medicaid is the payer of last resort; in other words, by law, all other sources of insurance coverage must pay for claims before Medicaid will pay for the care of an enrollee. This federal requirement is called third party liability (TPL). This means claims payments are the obligation of a third party other than the enrollee or Medicaid. To employ the Medicaid third party liability requirements, federal regulations mandate that states have processes in place to identify other health insurance (OHI) and process claims accordingly.

As much as 13 percent of Medicaid enrollees across thenation hold additional insurance other than Medicaid. 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. Given the large numbers of Medicaid enrollees with “other health insurance,” the timely identification of TPL and mitigating improper claims payments equates to massive savings for the program.

In a recent GAO report, Medicaid accounted for 25% of government-wide improper payments amounting to $36 billion. The GAO noted that while states have improved TPL efforts in recent years, the increasing proportion of Medicaid enrollees with private health insurance creates additional opportunities to avoid and recover Medicaid funds (GAO 2015).

 TWO WAYS TO AVOID COSTS ASSOCIATED WITH IMPROPER CLAIMS PAYMENTS

Pay and chase. If primary insurance is discovered after a claim had been paid improperly, the Medicaid plan must pay the claim and then attempt to recover the money from the primary insurer. This has been the primary model for most TPL efforts; unfortunately, this approach is burdened with hefty administrative costs. When “Pay and Chase” is used to recover improper claims payments, an average of only 17% of the funds ever gets recovered. This is precisely why Medicaid programs must hasten their move away from the “Pay and Chase” model.

Cost avoidance. If the Medicaid plan is aware that an enrollee has primary insurance coverage when the claim is filed, the plan can reject the claim and instruct the provider to submit it to the potential primary payer. The GAO has noted that this type of cost avoidance accounts for most of the savings to Medicaid associated with TPL (GAO 2015).

The Centers for Medicare & Medicaid Services’ stated that methods for identifying and preventing improper payments “not reassuring.” House Ways and Means Oversight Subcommittee Chairman Peter Roskam (R-IL) rebuked CMS for utilizing “pay and chase” methods of investigating improper payments.

“Despite the fact that Congress has given the agency expanded authority to stop payments before they are made, it continues to rely on pay-and-chase, or making the payment and only checking after the fact to see if it was proper,” Roskam said in his hearing remarks.

In order to address these problems, CMS issued guidance that requires states to uphold the cost avoidance standard for pharmacy claims and eliminate waivers that permit “pay and chase” methodologies.

Based on this guidance, states have responded by developing coordination of benefits (COB) programs that rely on self-reported recipient eligibility data and/or on stagnant data collected by TPL vendors for pay and chase purposes. This data is incomplete, latent and not sufficient for true cost avoidance. In order to successfully meet CMS’ cost avoidance guidelines, an effective real time, point of sale solution would be required to cost avoid claims and mitigate the need for “Pay and Chase.”

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