The incoming Trump Administration selects HHS and CMS leadership; Alaska moves forward with its proposed 1332 waiver for its ACA reinsurance program; and a new Manatt Health report considers the role of Medicaid supplemental payments in the value-based payment environment.

TRANSITION ACTIVITY:

New HHS Secretary and CMS Administrator Selected

President-elect Donald Trump has nominated Representative Tom Price (R) to be the Secretary of the U.S. Department of Health and Human Services, pending Senate confirmation. Price has been in the House of Representatives since 2004 and has introduced legislation to repeal the ACA in every Congress since 2009; his most recent budget proposal includes Medicaid block grants. Trump has also selected healthcare consultant Seema Verma to be the Administrator of the Centers for Medicare and Medicaid Services. Verma helped to design Indiana’s alternative Medicaid expansion program and has worked on Medicaid waivers in Kentucky, Ohio and other states.

ELECTION REACTIONS AND ACTIVITY IN THE STATES:

Arizona: Former Governor Voices Support for Medicaid Expansion

Former Governor Jan Brewer (R), who served from 2009 to 2015, is encouraging President-elect Donald Trump to support Medicaid expansion and to examine Arizona’s model in particular, according to the Associated Press. Brewer noted that approximately 400,000 Arizonans have gained insurance since the State expanded Medicaid in 2014.

Iowa: Insurance Commissioner Cautions Against ACA Repeal, Governor Notes Uncertainty on Medicaid Expansion

Repealing the ACA without a replacement would have "disastrous consequences" for Iowans, State Insurance Commissioner Nick Gerhart told NPR, including increased use of emergency rooms and increased hospital charity care for individuals previously enrolled in Marketplace coverage. Gerhart also offered a 10-point plan to improve the ACA, including the adoption of high-risk pools, elimination of the individual mandate, and use of more flexible benefit designs. Separately, Governor Terry Branstad (R) said it was not clear whether the State would maintain its Medicaid expansion, but that the 145,000 expansion adults were not likely to lose their coverage entirely, according to Radio Iowa.

Kansas: State Slows Renewal of Medicaid Managed Care Program, Citing Incoming Trump Administration

State officials have indefinitely delayed a planned request for proposals for Medicaid managed care companies, previously slated for release this year, in anticipation of expected changes to Medicaid from the incoming Trump Administration. However, the Division of Health Care Finance, which oversees the State’s Medicaid managed care program, indicated it still intends to renew the program should major components of Medicaid, such as funding mechanisms and rules about what states must cover, remain intact. The program operates under a section 1115 waiver and expires on December 31, 2017.

Nebraska: Lawmakers Suspend Medicaid Expansion Efforts

Nebraska lawmakers, who have introduced four different Medicaid expansion bills since 2013, announced they will no longer pursue expansion in the 2017 legislative session in light of uncertainty about the future of the ACA.

FEDERAL AND STATE MEDICAID REFORM NEWS:

Report Proposes Reforms to Medicaid Supplemental Payments to Support Value-Based Purchasing

A new report from The Commonwealth Fund and Manatt Health explores how Medicaid supplemental payments—disproportionate share hospital payments and upper payment limit payments—could be redeployed by states to support value-based payment strategies while still supporting safety-net hospitals. The report explores several options, including: redirecting funding for supplemental payments into base payment rates and applying value-based strategies to such payments; tying payments to patient outcomes and delivery system reform priorities; and targeting supplemental payments to hospitals with large uncompensated care costs. The report also reviews recent policy and regulatory developments that are prompting re-evaluation of the use of supplemental payments.

CMS Highlights Medicaid/CHIP Enrollment Strategies for American Indians and Alaska Natives

CMS released an informational bulletin detailing strategies states can implement (in close collaboration with Tribes, Tribal organizations, and Indian healthcare providers) to increase enrollment of American Indian and Alaska Native families and children into Medicaid and CHIP. Strategies suggested include: increase access to online eligibility portals, station eligibility workers at federally qualified health centers, partner with Tribes to administer Medicaid and share administrative matching funds, allow express lane eligibility for children, and use presumptive eligibility and 12-month continuous eligibility when possible. The bulletin also highlights a number of best practices for outreach and enrollment with Tribal communities.

California: Whole Person Care Pilot Participants Selected

The Department of Health Care Services has selected 17 county health agencies and providers to participate in a Whole Person Care pilot authorized under the State’s 1115 waiver. The pilot, which has an estimated budget of more than $2 billion, aims to coordinate services for those with high utilization rates of physical health, behavioral health, and social services. Approximately 290,000 beneficiaries are expected to enroll.

Idaho: Officials Will Request $11 Million for Parolee Mental Health Services

Idaho health officials will request $11.2 million in new State funding during the 2017 legislative session to provide mental health and drug abuse services to previously incarcerated individuals at the “highest risk” of returning to prison. The new mental health and drug abuse spending is part of the State’s ongoing Justice Reinvestment Initiative, which was signed into law in March 2014 and aims to reduce spending on corrections and reinvest savings in strategies that reduce recidivism and increase public safety. A spokesman for the Idaho Department of Health and Welfare indicated that the services would likely have been financed by Medicaid, rather than State dollars, if Idaho had opted to expand Medicaid eligibility.

Pennsylvania: Medicaid Increases Payment Rates for Long-Acting Reversible Contraception

Beginning December 1, Medicaid will increase fee-for-service payment rates to outpatient providers for long-acting reversible contraception (LARC) and begin reimbursing providers for immediate postpartum insertion of LARC separate from bundled payments for labor and delivery services. The Department of Human Services, which oversees Medicaid, expects these policy changes to prevent an estimated 870 unplanned pregnancies per year. A CMS information bulletin released in April outlined several reimbursement strategies state Medicaid agencies can use to improve LARC access and utilization, including those adopted by Pennsylvania, and highlighted best practice payment and policy strategies in several states.

FEDERAL AND STATE MARKETPLACE ACTIVITY:

Department of Justice Opposes House Request to Delay House v. Burwell Proceedings

The Department of Justice (DOJ) filed a brief opposing a motion by the House of Representatives to delay proceedings in House v. Burwell; in their motion to delay, the House cited a “potential resolution” to the case being discussed by the House and President-elect Donald Trump’s transition team. The DOJ has been preparing to file a final brief in the case, due on the last day of the Obama Administration. The lawsuit disputes the legality of funding for the ACA’s cost sharing reduction program. Any final court decision or settlement could have important implications for Marketplace plans and consumers in the coming year.

Alaska: State Releases Draft 1332 Waiver for Individual Market Reforms

The State released a draft 1332 waiver proposal seeking federal funding for its reinsurance program, which was created in response to steep premium increases in the 2017 individual market and successfully reduced those increases from 42% to 7%. The waiver would allow the State to recover $52 million, which the State estimates the federal government would save on advanced premium tax credits in 2018 due to the lower premiums. The waiver is also expected to increase individual market enrollment by more than 1,500 people.

California: Marketplace Names New Chief Deputy Executive Director

Covered California, the State-based Marketplace, announced that Doug McKeever will become as the chief deputy executive director beginning January 3, 2017. McKeever will report to Executive Director Peter Lee and will manage the Plan Management, Outreach and Sales, Marketing, Service Center, and Policy divisions. Responsibilities include improving consumer services and health plan relations. McKeever is currently a senior-level executive with the California Public Employees’ Retirement System (CalPERS).

New York: OIG Says State Misallocated $150 Million in Marketplace Funds

A Department of Health and Human Services' Office of Inspector General (OIG) report maintains that New York did not properly follow federal cost allocation requirements when implementing its State-based Marketplace, resulting in an overpayment to the State of up to $150 million. According to the OIG report, the State overestimated the number of enrollees who would use the Marketplace to enroll in a plan, and allocated funds to the Marketplace that should have been allocated to Medicaid. The report recommends that New York return misallocated funds to the federal government and retroactively revise its cost allocation plan. The New York State Department of Health disputed the findings, stating that "the allocation formula…reasonably reflected the distribution of the state population that would benefit from the Marketplace" and that "the method and supporting data was submitted to CMS and approved."