Massachusetts’s Marketplace eliminates cost-sharing for addiction treatment in subsidized QHPs; Montana cuts its uninsurance rate in half; and a Kaiser report identifies the 50 most costly drugs for Medicaid.
NATIONAL MEDICAID & HEALTH SPENDING NEWS:
Medicaid Drug Spending Driven Primarily by Volume, Report Finds
A Kaiser Family Foundation report has identified Medicaid’s 50 most costly drugs (before rebates)—measured by both frequency prescribed and per prescription cost—and found that 45 of the 50 are categorized as such at least in part because of the frequency at which they are prescribed and not because of higher per prescription costs. Over half (28) of Medicaid’s 50 most costly drugs are frequently prescribed but not expensive at the “per prescription level,” including ADHD drugs and hydrocodone-acetaminophen, a pain relief drug that was the most frequently prescribed drug in Medicaid over the study period (January 2014 through June 2015). Seventeen of the 50 most costly drugs are both frequently prescribed and expensive prescriptions. These include antiviral medicines, which accounted for 20% of the 50 most costly drugs due to their high frequency and high cost per prescription. The report’s authors cite patents and other forms of “regulatory exclusivity” as drivers of high costs but suggest that statxes can help control drug costs by monitoring utilization and mitigating excessive prescribing.
National Health Spending Projected to Grow 6% Annually, Faster Than GDP
CMS is projecting a 5.8% average annual increase in health spending between 2015 and 2025—1.3 percentage points faster than GDP—driven by improved economic conditions, increasing healthcare prices, and an aging population. The report estimates that health spending will account for one-fifth of the total economy by 2025, up from 17.5% in 2014, and that federal, state, and local government spending will account for 47% of all health spending, up from 45% in 2014. The report attributes the increase in health spending growth between 2013 and 2014 (2.9% to 5.3%) to the ACA’s coverage provisions, though the impact of those provisions on spending growth is not expected to be significant past 2016. The authors further note that the growth of actual and projected health spending has slowed considerably since the early 1990s and that the Congressional Budget Office had previously predicted health spending would account for 20% of the economy by 2003. Finally, the percentage of the U.S. population that is uninsured is expected to be 8% by 2025, down from 11% in 2014.
CMS Examines Medicaid Spending on Newly Eligible Adults
Spending per Medicaid enrollee increased 4.3% to $7,639 in 2015 while spending for newly eligible adults rose 16% to $6,366, according to estimates from CMS’ Office of the Actuary. The authors note that the increase in newly eligible spending was greater than expected based on prior reports and was primarily driven by greater-than-anticipated increases in Medicaid managed care capitation rates. Many states included adjustments in 2015 to reflect a higher level of acuity, morbidity or pent-up demand among newly eligible adults. Total Medicaid expenditures increased an estimated 12.1% between 2014 and 2015, though much of that increase was borne by the federal government’s enhanced funding of newly eligible adults. Federal Medicaid expenditures increased an estimated 16.2% while state expenditures increased an estimated 5.9%. Newly eligible adults accounted for 4.8 million of the 4.9 million new Medicaid enrollees in 2015.
FEDERAL & STATE MEDICAID REFORM ACTIVITY:
CMS Offers Encouragement but Limited “Best Price” Guidance for Manufacturers’ VBP Arrangements
CMS issued guidance to state officials and drug manufacturers encouraging participation in value based purchasing (VBP) arrangements for prescription drugs and directing manufacturers to consult the Medicaid “best price” statute and regulation to assess the arrangement’s impact on their "best price" (the lowest price offered during a rebate period, which must be offered to Medicaid programs). The guidance does not offer new information but indicates that a manufacturer’s best price will depend on the structure of the VBP arrangement. The guidance also urges states and manufacturers to negotiate supplemental rebates as part of VBP arrangements, noting that rebates paid to Medicaid programs and plans are excluded from best price calculations. Further, because most states collect supplemental manufacturer rebates on Medicaid fee-for-service (FFS) and managed care plans, CMS is urging states to negotiate supplemental rebates with manufacturers for some or all of their Medicaid managed care drug claims. As an alternative, states may wish to align their FFS preferred drug list and Medicaid managed care organizations’ formularies for certain drug classes and collect supplemental rebates on those drugs dispensed to managed care enrollees.
Alaska: Proposed FY 2019 Budgets Include Different Medicaid Funding Cuts
Governor Bill Walker (I) released two potential FY 2019 budget scenarios: the “No Action Plan” reduces Medicaid and “other health formula” funding by 25% while an alternative reduces funding by 10% by restructuring the State’s Permanent Fund, as described in Senate Bill 128. Both plans do not implement any new taxes and assume no legislative action to reduce spending despite a $4 billion deficit in the FY 2017 budget. The No Action Plan would require $1.5 billion in State revenue while the plan dependent on SB128 would require $3.4 billion ($1.5 billion of current revenue and $1.9 billion to be generated by the passages of SB128).
California: Improved Accountability and Restructured Managed Care Recommended to Improve Medi-Cal Delivery System
A new report published by the California Healthcare Foundation (CHCF) and authored by Manatt Health identifies a number of pathways to improve the delivery system of Medi-Cal, the State's Medicaid program, in light of the program’s enormous enrollment increase and new funding available through the State's Medi-Cal 2020 waiver. The report’s recommendations were informed by in-depth interviews with a diverse array of Medi-Cal officials, legislators and their staff, representatives from managed care and provider organizations, and other stakeholders. Key recommendations include: intensify efforts to integrate care for people with mental illness; revise rate setting methodologies to strengthen provider accountability; rethink the structure of managed care delivery; and align Medi-Cal incentives with Covered California, the State-based Marketplace. The authors note several barriers to implementing these changes, such as Medi-Cal's current financing structure and its fragmented administration system, though they also note the shared vision among Medi-Cal’s stakeholders as a strength of the program.
California: Voters to Decide on Making Medi-Cal Hospital Fee Permanent
California voters will vote on a complex measure in November that would make permanent a fee that certain general acute care hospitals pay to the State as part of the Hospital Quality Assurance Fee (HQAF) Program. The program supports supplemental payments to California hospitals that serve uninsured and Medicaid-enrolled patients, and it helps fund children's health coverage and grants to public hospitals. Funds generated by the program are also matched by federal dollars. In the past, HQAF funds have been diverted from their intended purpose for other initiatives. Some stakeholders are concerned that the ballot measure’s complex wording could make it difficult for voters to make an informed decision.
Indiana: Preliminary Reports Evaluate First Year of Healthy Indiana Plan 2.0
Nearly three-fourths of those eligible for the Healthy Indiana Plan (HIP) 2.0 enrolled for at least one month during the first year (407,746 individuals), according to an evaluation prepared for the Indiana Family and Social Services Administration. HIP 2.0 (the Medicaid expansion program) offers a "Basic" plan to members below 100% of FPL and a "Plus" plan that is required for individuals between 100% and 138% of FPL and optional for those below 100% of FPL. Both plans include a Personal Wellness and Responsibility (POWER) Account that functions similarly to a health savings account. Plus enrollees are required to pay into the POWER account and therefore receive additional benefits. The report found that over 90% of Plus enrollees made their required contributions to POWER accounts. Approximately 8% of Plus members with incomes below 100% of FPL failed to make a payment and were therefore transitioned to the Basic plan; 6% of Plus enrollees with incomes greater than 100% of FPL were disenrolled for failure to pay. Anthem’s Public Policy Institute separately released a white paper indicating that roughly 82% of all Plus members have incomes below 100% of FPL and therefore opted to pay for the enhanced coverage. Anthem is one of three issuers that serve HIP 2.0 members.
Maryland: State Submits Three-Year 1115 Waiver Renewal Request Aimed at Reducing Barriers to Care
Maryland is seeking a three-year renewal of its 1115 Medicaid managed care waiver to continue HealthChoice (the managed care program) and implement initiatives to improve access to care including transitional programs for justice-involved individuals. In light of the State's heroin and opioid epidemic, the renewal also proposes a broader range of substance abuse services and residential treatment options to Medicaid enrollees. The community health pilot programs proposed in the waiver would provide housing-related support to Medicaid enrollees who are at risk for homelessness and evidence-based home visiting services to high-risk pregnant women and children up to age two. The renewal would also expand dental coverage for former foster youth and provide Medicaid presumptive eligibility to individuals newly released from incarceration, enabling them to enroll into Medicaid as they transition out of the criminal justice system. The waiver renewal application is available for public comment through August 14, 2016 and, if approved, would become effective in 2017.
Missouri: Private Vendor Will Verify Eligibility for Several Social Services, Including Medicaid, Beginning 2017
Governor Jay Nixon (D) allowed SB 607 to become law (by neither signing nor vetoing), thereby requiring a private vendor to verify and review applicants’ and recipients’ eligibility for public assistance programs; the State, however, maintains the authority to make the final determination. The third-party review includes assessing demographic information such as date of birth and Social Security numbers as well as income on a quarterly basis, for programs including: supplemental nutrition assistance program; temporary assistance for needy families; child care assistance program; and MO HealthNet, the State’s Medicaid program. Lawmakers supported the measure as a mechanism to reduce fraud and abuse.
FEDERAL & STATE HEALTH REFORM NEWS:
Connecticut: Proposal to Implement Cost Containment Strategies Considered by State Health Care Cabinet
A sweeping proposal presented to Connecticut's Health Care Cabinet by a State-hired consulting firm recommends six cost containment strategies, including implementation of risk-based contracts with consumer care organizations and pursuing and a Delivery System Reform Incentive Payment (DSRIP) program. The report also recommends establishing a statewide health information exchange to enable more sophisticated data analysis, support for which would be provided through the DSRIP program. The Health Care Cabinet was required under 2015 legislation to study healthcare cost containment models in other states and report back findings and recommendations to the Legislature by December 1, 2016. Health Care Cabinet members plan to finalize their recommendations by September and approve a final report by November.
Montana: Uninsurance Rate Cut in Half Since 2015
The percent of Montanans without health insurance fell from 15% to 7.4% over the past year, which State officials credit to the State’s Medicaid expansion and the availability of coverage through HealthCare.gov. The State recently announced that more than 47,000 individuals have enrolled in coverage through the expanded Medicaid program, far surpassing Governor Steve Bullock's (D) initial enrollment estimate of up to 26,000 individuals by June 2016. According to a State Health Coverage Report, approximately 76,000 individuals remain uninsured.
Pennsylvania: State Receives $23 Million to Combat Opioid Crisis
The Pennsylvania Department of Human Services (DHS) received $15 million in State funding and $5 million in federal matching funds to open 20 Opioid Use Disorder (OUD) Centers of Excellence, which will coordinate Medicaid patients' care during their treatment. The Centers will target the State’s approximately 4,500 residents currently unable to access treatment. Additionally, the Department received a $3 million federal grant to educate and double the number of primary care physicians able to provide OUD treatment in rural areas. Approximately 3,400 Pennsylvanians died of drug overdoses in 2015, a 23% increase from 2014. Opioids were detected in more than 80% of the deaths.
STATE MARKETPLACE NEWS:
Illinois: Health Insurance CO-OP to Shut Down
Land of Lincoln Health will close “in the coming months,” requiring approximately 49,000 customers to find new coverage. Acting Department of Insurance (DOI) Director Anne Dowling is awaiting a court order that would allow the DOI to take control of Land of Lincoln to ensure an orderly mid-year liquidation. Dowling has also requested CMS permission to conduct a 60-day special enrollment period (SEP) for the CO-OP’s policyholders, who will be notified once the SEP has been approved. Dowling attempted to prevent the CO-OP from closing by delaying the CO-OP’s required $31.8 million risk adjustment payment until it had received its risk corridor payment from the federal government, though CMS “didn’t agree with [the] plan." The CO-OP will become the 16th CO-OP to close.
Massachusetts: Marketplace Proposes FY 2017 Budget With Reduction in Deficit
The Massachusetts Health Connector, the State-based Marketplace, proposed an FY 2017 budget that would generate a deficit of $4.4 million, down from a $13 million shortfall in FY 2016. The Connector cited continued stabilization activities and higher expenses for HIX operations costs allocated to the Connector as some of the contributing factors of the deficit, which would be covered by cash reserves. Revenue and expenses are expected to increase relative to FY 2016. While federal funding for general operations is no longer available, federal funding will continue to support time-limited activities. Revenues drawn from the Commonwealth Care Trust Fund will increase to support operating expenses. The Health Connector projected nearly 245,000 members by June 2017, with a 25% increase in the State's subsidized Marketplace category.
Massachusetts: State-Based Marketplace Eliminates Cost-Sharing for Addiction Treatment in Subsidized Plans
The Massachusetts Health Connector, the State-based Marketplace, will require subsidized qualified health plans (QHPs) to eliminate copays for medication-assisted addiction treatments beginning in 2017, a change that will impact 169,000 enrollees. The subsidized QHPs will also be required to increase access to residential recovery programs known as clinical stabilization services by making a “good faith effort" to contract with all service providers in their coverage areas, according to The Boston Globe. The State's Opioid Addiction Working Group had identified cost-sharing as a barrier to addiction treatment and worked with Health Connector staff to identify solutions. The Health Connector Board of Directors approved the new product requirements at its monthly board meeting on July 14.