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 programsupports 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.