The President's budget proposes over $600 billion in Medicaid cuts on top of major reductions anticipated in repeal and replace legislation; the Trump Administration asks the Court for more time to decide on cost-sharing reduction payments under House v. Price, while states file a motion to try to force action on the case; and California's Senate Appropriations Committee releases cost estimates for the State's single payer proposal.

AHCA AND FEDERAL BUDGET ACTIVITY AND ANALYSIS:

President's Budget Proposes Steep Cuts to Medicaid, Other Health Programs

The FY 2018 President's Budget released earlier today proposes $627 billion in Medicaid cuts that appear to be on top of the Medicaid cuts included in the AHCA; taken together, the Medicaid reductions appear to exceed $1.2 trillion over the next ten years. In its budget narrative, the Administration affirms its commitment to giving states a choice between a per capita cap or a block grant. Moreover, Office of Management and Budget Director Mick Mulvaney confirmed in a press briefing that the additional Medicaid cuts on top of the AHCA come in part from further slowing the rate of Medicaid spending allowed under capped funding. The budget would also fund CHIP for two years but with a reduced federal matching rate, eliminate requirements that states maintain current CHIP eligibility levels, and eliminate federal CHIP matching funds for children above 250% of FPL. Notably, the budget does not make any major cuts to Medicare. Other proposals include repealing the Independent Payment Advisory Board, defunding Planned Parenthood in all health programs including Medicaid, and substantial cuts to the National Institutes of Health, Centers for Disease Control, and the Food and Drug Administration.

Bipartisan Group of Governors Will Lobby Congress on ACA Replacement

A bipartisan group of governors led by John Kasich (R-OH) and John Hickenlooper (D-CO) are working to develop a consensus ACA replacement proposal to present to Congress that would give states the option of maintaining enhanced federal funding for the Medicaid expansion population. The group reportedly includes governors from Arizona, Michigan, Nevada, Utah, and Tennessee.

6.3 Million Adults With Pre-Existing Conditions Could Face Higher Premiums Under AHCA

A Kaiser Family Foundation brief estimates that 6.3 million non-elderly adults with pre-existing conditions experienced a gap in coverage in 2015 that would have resulted in substantially higher premiums under the AHCA provision allowing states to base premium rates on health status. Individuals who experienced gaps in coverage include those who have been uninsured over a long period of time, as well as those who lose coverage due to changes in employment, household composition, or Medicaid eligibility.

Services for 11 Million Medicare Enrollees at Risk Under the AHCA

The AHCA's Medicaid per capita caps could substantially cut spending for the 11 million low-income Medicare enrollees that are also enrolled in Medicaid ("dual eligibles"), according to a Commonwealth Fund brief prepared by Manatt Health. Many of the Medicaid services provided to dual eligibles are optional, meaning states could eliminate those services in light of the AHCA's funding cuts. Cuts to some services, like home-based care, could increase expensive hospitalizations, the costs of which are borne by Medicare.

FEDERAL AND STATE MARKETPLACE NEWS:

Administration Asks Court to Continue Hold on CSR Case, States File Motion to Intervene

The House of Representatives and the Department of Justice asked the U.S. Court of Appeals for the District of Columbia Circuit to keep on hold the proceedings in House v. Price, the lawsuit originally filed against the Obama Administration arguing that cost-sharing reduction (CSR) payments were being made illegally without a Congressional appropriation. Last week, a group of 15 state attorneys general entered a motion to intervene in House v. Price, which would allow the states to continue making the argument for CSRs before the Court. Also last week, the National Association of Insurance Commissioners sent letters to Congressional leaders and the Office of Management and Budget urging continuation of the CSR payments and warning of higher premiums and potential market exits should they not be made. Numerous reports have also warned of rate increases and insurer exits if CSR payments are not made. Insurers in most states must file rates to participate in the 2018 Marketplaces by the end of June.

CMS Will Allow Direct Enrollment for Marketplace Coverage Through Insurers and Brokers

CMS will begin allowing "proxy direct enrollment" into Marketplace coverage in 2018, meaning individuals will be able to complete the entire enrollment process through an insurer's or web-broker's website, according to guidance released on Wednesday. Currently, individuals may begin the enrollment process on an insurer's or web-broker's website but are redirected to HealthCare.gov for an eligibility determination. The new option will only be available to individuals in states that use the HealthCare.gov eligibility and enrollment platform.

Insurers Continue Filing Rate Requests for 2018 State Marketplace Coverage

Even as the fate of cost-sharing reductions remains unclear, Marketplace insurers continue to submit their 2018 rate filings.

• Arkansas: All three Marketplace plans—Arkansas Blue Cross and Blue Shield, Centene, and QualChoice—have indicated their intention to continue offering products in 2018. Proposed rates are due July 14.
• District of Columbia: Insurers requested 2018 rate increases ranging from 13% to 39.6%, attributing the jump to a sicker-than-expected population and reintroduction of a health insurer fee.
• Kansas: Blue Cross and Blue Shield of Kansas will offer Marketplace plans in 2018, according to a company statement released on Thursday. Minnesota-based Medica, which has capped Marketplace enrollment at 10,000 in Kansas, is currently the only other insurer in the market.
• New Hampshire: All four companies currently selling policies on New Hampshire's Marketplace have applied to do so again next year, though one—Ambetter—will no longer offer small group plans.
• Oregon: Initial rate filings for the individual market request increases ranging from 6.9% to 21.8%, and 2% to 8.5% for the small group market.
• Vermont: Blue Cross and Blue Shield of Vermont asked State regulators for a 12.7% increase in rates for 2018, citing the reintroduction of a health insurer fee and an increase in utilization and drug costs.
• Virginia: Health plans requested rate increases for 2018 ranging from 9.8% to 54%. However, as noted by the Virginia Bureau of Insurance, it is not clear whether rate filings accounted for the potential loss of federal cost-sharing reduction payments.
• Washington: One of Washington's eight Marketplace insurers will not offer plans on the Marketplace in 2018. However, the plan—Community Health Plan of Washington—serves only 400 individuals through the Marketplace.

California: Marketplace to Extend Open Enrollment Period, Reports Healthy Risk Mix

Covered California, the State-based Marketplace, is planning a three-month open enrollment period, despite a recent federal rule that shortened the HealthCare.gov open enrollment period to six weeks. A new analysis also found that Covered California's 2017 enrollees were slightly healthier than in 2016 and had fewer chronic conditions, an indication that the Marketplace is attracting new, healthier enrollees. The study was conducted by Covered California, the California Department of Health Care Services, and the University of California, San Francisco.

FEDERAL AND STATE MEDICAID UPDATES:

State Attorneys General Seek Greater Access to Federal Funding for Medicaid Fraud and Abuse Investigations

A group of 38 Republican and Democratic state attorneys general are asking the Trump Administration to widen their authority to investigate Medicaid fraud and abuse. Specifically, the group requests greater flexibility in using federal funds to investigate and prosecute cases of abuse and neglect of Medicaid enrollees outside of nursing homes, hospitals, or other healthcare facility settings.

Children's Medicaid and CHIP Participation Rates Continue to Climb

The percentage of eligible children enrolled in Medicaid and CHIP rose to 93.1% in 2015, up from 88.7% in 2013, while the number of children eligible for Medicaid and CHIP that remained uninsured declined by 40% to 2.1 million (representing 57.4% of all uninsured children), according to an Urban Institute report.

Oklahoma: State Pauses Medicaid Managed Care Implementation, Citing Uncertainty on Federal Rules

Governor Mary Fallin (R) has asked the State Medicaid agency to delay the start date of the new Medicaid managed care program for the aged, blind, and disabled until July 1, 2018 because of concerns around a January CMS rule that prevents states from adding new or increased "pass-through payments" into managed care contracts. Oklahoma could lose $650 million in supplemental payments under the rule if they moved forward with the managed care model. Enrollment in the State's new managed care program had been expected to begin in January 2018 and services were to begin in April 2018. In addition, the House passed a resolution on May 16 asking the State to refrain from awarding contracts for the managed care program.

Pennsylvania: Medicaid to Expand Hepatitis C Coverage

Governor Tom Wolf's (D) administration announced that Medicaid coverage would be expanded for treatment of hepatitis C. Previously, State policy had been to wait until a patient showed signs of liver damage before authorizing treatment. The State will begin phasing in expanded coverage on July 1, 2017.

Texas: State Seeks to Reinstate Federal Medicaid Funds for Family Planning, Excluding Planned Parenthood

Texas is requesting to reinstate its federal 1115 waiver to fund family planning services under Medicaid. The Obama Administration terminated the waiver in 2011 after the State excluded Planned Parenthood from the program, despite the federal requirement that Medicaid include "any willing provider." The State has continued to fund some family planning services outside of Planned Parenthood clinics with State funds. Other states looking to exclude Planned Parenthood from their Medicaid family planning programs are likely to be watching the outcome of the Texas waiver request closely.

OTHER FEDERAL AND STATE HEALTH REFORM NEWS:

CMS Announces CPC+ Round Two Regions

Practices in Louisiana, Nebraska, North Dakota, and the greater Buffalo region of New York will be able to apply for round two of the Comprehensive Primary Care Plus (CPC+) initiative, CMS announced. CPC+ is a multi-payer medical home model that offers fiscal incentives to primary care practices that offer enhanced care coordination, care management, population health management, and other enhanced primary care services and meet certain quality standards. Nearly 2,900 practices are currently participating in round one, which launched last year.

Uninsurance Rate Remains Steady, Ending Six-Year Decline

The uninsurance rate held steady between 2015 and 2016 at 9%, according to updated estimates from HHS's National Center for Health Statistics. Prior to 2016, the uninsurance rate had declined every year since 2010, when the ACA was signed into law.

CHRONIC Care Act Passes Senate Finance Committee

A bill that would extend enhanced services to Medicare beneficiaries with chronic conditions passed the Senate Finance Committee on Thursday with unanimous, bipartisan support. The CHRONIC Care Act of 2017 includes a two-year extension of the Medicare Independence at Home demonstration, provides greater flexibility for Medicare to reimburse for telemedicine services, and provides greater latitude for accountable care organizations to offer monetary incentives for patients that stay within their provider network.

California: Single Payer Could Cost $400 Billion Annually

The Senate Appropriations Committee estimates that single payer healthcare system legislation currently being considered would cost the State $400 billion annually. Existing federal, state, and local funding could cover about half of the annual program cost, but $200 billion in additional tax revenues would still be needed, which the report notes could be achieved through a 15% payroll tax. The report also indicates that reduced spending on healthcare coverage by employers and employees would offset some of the new taxes. The Committee plans to hold another hearing on the bill.

STATE STAFFING UPDATE:

Rhode Island: Governor Makes New Health Cabinet Appointments

Governor Gina Raimondo (D) will nominate Eric Beane as Secretary of the Executive Office of Health and Human Services (EOHHS) and Courtney Hawkins as director of the Department of Human Services (DHS). Beane was previously acting director of DHS and Hawkins served as chief policy officer to the Providence Mayor. Acting EOHHS Secretary Anya Rader Wallack will return to her position at Brown University's School of Public Health.