President-elect Trump taps prominent conservatives with strong anti-ACA views for his healthcare transition team; House v. Burwell proceedings on cost-sharing reductions for Marketplace plans are delayed until the new Administration; and a new report finds that one in ten New Jersey adults would lose coverage if Medicaid expansion is repealed.

PRESIDENTIAL TRANSITION UPDATE:

Trump Appoints Heritage Foundation Staffer to HHS Transition Team

Nina Owcharenko, director of the Heritage Foundation’s Center for Health Policy Studies and a vocal opponent of the ACA, has been appointed to President-elect Donald Trump’s Department of Health and Human Services (HHS) transition “landing team.” Former HHS Chief Operating Officer Eric Hargan and former Food and Drug Administration Deputy Commissioner for Medical and Scientific Affairs Scott Gottlieb, both opposed to the ACA, were also selected for the team.

FEDERAL HEALTH AND MEDICAID REFORM ACTIVITY:

CMS Office of the Actuary Releases 2015 Healthcare Spending Data

Total national healthcare spending increased 5.8% to $3.2 trillion in 2015, up from 5.3% in 2014 and following historically low growth rates from 2009 to 2013, according to CMS’s Office of the Actuary. Total healthcare spending accounted for 17.8% of GDP and per capita spending increased 5% to $9,990. Coverage expansions under the ACA continued to impact health spending growth in 2015, led by a 9.7% growth in total Medicaid spending (federal and state) as more people secured coverage through the program. Spending on retail prescription drugs grew 9% (and accounted for 10% of overall health spending) and private health insurance spending increased 7.2%, up from 5.8% in 2014. The report also details spending on out-of-pocket costs, Medicare, hospital care, and physician and clinical services.

New CBPP Briefs Review HHS Secretary Nominee Tom Price’s Health Plan, Medicaid Block Grant Proposals

A new brief from the Center on Budget and Policy Priorities (CBPP) reviews Health and Human Services Secretary nominee Tom Price’s healthcare plan, the “Empowering Patients First Act”, which would repeal the ACA in full, eliminating insurance reforms, income-based subsidies, cost-sharing reductions, Medicaid expansion, and the employer and individual mandates. Instead, the plan would provide a “modest” tax subsidy towards the purchase of insurance, based on age, and expand high-risk pools. CBPP maintains that Price’s plan would allow insurers to exclude coverage of pre-existing conditions, cut currently required benefits, charge higher premiums and co-payments, and reinstate annual and lifetime reimbursement limits. A separate CBPP brief reviews the potential impact of Medicaid block grants proposed by House Republicans—and supported by Price—and finds that block grants would lead to significant cuts in eligibility, benefits, and provider payment rates. It notes that the block grant proposed in House Republicans’ 2017 budget would have cut federal Medicaid funding by $1 trillion—nearly 25%—over ten years. Citing a 2012 Urban Institute report, the brief also suggests that House Speaker Paul Ryan’s (R) 2012 block grant proposal would lead states to drop an estimated 14.3 million to 20.5 million people from Medicaid by the tenth year (in addition to the effects of repealing Medicaid expansion), and would lead to cuts of 30% or more in provider reimbursement rates.

CMS Publishes Informational Bulletins on HIV Care and Blood Lead Testing

A new informational bulletin from CMS describes state opportunities to provide leading-edge HIV prevention services and care to Medicaid and CHIP beneficiaries, including the use of pre-exposure prophylaxix (PrEP) for HIV prevention and antiretroviral treatments for people living with HIV. The bulletin was released jointly by HHS, CMCS, HRSA, and CDC, and is intended to update 2011 state guidance on providing Medicaid coverage to individuals living with HIV. A separate informational bulletin released by CMS reviews coverage requirements for blood lead testing for children enrolled in Medicaid and CHIP, and describes actions states can take to improve blood lead screening rates and reporting, including partnering with state health departments and requiring managed care plans to engage in state efforts to improve screening rates.

STATE MEDICAID EXPANSION AND REFORM NEWS:

Alabama: State Will Request Second Delay for Managed Care Implementation Due to Uncertainty Following Election

The State Medicaid agency will request CMS approval to further postpone the launch of its Regional Care Organization managed care program from July 1, 2017 to October 1, 2017. The program’s original October 2016 start date was previously postponed to July 2017 as a result of an $85 million Medicaid funding shortfall. Governor Robert Bentley (R) attributes the delay to uncertainty about long-term funding amid discussion of potential Medicaid changes under the Trump administration.

Indiana: CMS Approves Continuation of Non-Emergency Transportation Waiver

The State's request to extend its temporary waiver of non-emergency medical transportation (NEMT) in its Medicaid expansion program has been approved through January 31, 2018. CMS will work with the State on a federal evaluation to analyze the impact of the NEMT waiver. The waiver excludes certain populations, such as pregnant women and the medically frail. CMS has approved a small number of time-limited NEMT waivers and has recently received similar requests for extensions from Arkansas and Kentucky.

Iowa: Medicaid MCOs Report Financial Losses

The State's three Medicaid MCOs continue to report losses, according to the latest quarterly report released by the State Medicaid agency. The report shows underwriting losses of between 18% and 25% from July through September. It comes one month after Governor Terry Branstad (R) said the MCOs would receive an additional $127.7 million, including $33.2 million in State funds, in response to higher-than-expected prescription drug prices and utilization rates. Even with the additional payment, the State still saved $29.7 million from July through September due to the transition to managed care, according to the report.

Kansas: Kansas Health Institute Revises Medicaid Expansion Enrollment Estimates

The Kansas Health Institute (KHI) estimates that 152,000 individuals over 10 years would enroll in Medicaid and CHIP if the State expanded Medicaid, down from an earlier estimate of 240,000 new enrollees. The revised estimate reflects new survey data showing more insured Kansans, and revisions to expected take-up rates for expansion and previously-eligible populations. The report also shows higher estimates of the per capita cost for expansion enrollees, and reflects a drop in federal support for expansion beginning in 2017 under the ACA. The revised net costs to the State remain in the same range as earlier projections, and do not include possible offsetting savings, such as reduced State costs for uninsured Kansans or existing Medicaid populations.

Massachusetts: Medicaid ACO Pilot Program Launches on Schedule

MassHealth (the State Medicaid program) launched a one-year ACO pilot on December 1, as authorized under the State’s recently approved 1115 waiver amendment. The full MassHealth ACO initiative is scheduled to launch in December 2017. The pilot includes six provider-led ACOs that will be retrospectively accountable for shared savings and losses on the total cost of care for approximately 160,000 attributed members. The six pilot ACOs include the State's largest health systems and hospitals as well as a new network of community health centers, together accounting for approximately 2,500 primary care clinicians across 330 practice sites.

Minnesota: Medicaid Managed Care Plan Ends Contract With the State, Citing High Costs

Medica has ended its Medicaid managed care contract with Minnesota, citing low reimbursement rates and higher-than-expected enrollment and costs. As a result, approximately 310,000 beneficiaries will be required to select a new plan by May 1, 2017. Medica was one of eight plans selected by the State last year in its first ever statewide competitive bidding process for Medicaid managed care—a process that produced bids below what the State paid in the past. The State also experienced a major transition in plan enrollment as a result of that competitive bidding process when UCare, previously the largest plan, was outbid, and approximately 360,000 enrollees had to change plans.

New Jersey: One in Ten Adults Would Lose Coverage if Medicaid Expansion Is Repealed

More than 500,000 adults, or 10% of the State’s adult population, will lose health coverage if Medicaid expansion is repealed, according to a new report from the non-profit and non-partisan group New Jersey Policy Perspective. Repeal would also cost the State $3 billion in federal funding in 2018 and over $11 billion by 2021, compounding the State’s existing financial crisis. The study authors call on the State’s congressional delegation to oppose ACA repeal and on Governor Chris Christie (R) to encourage President-elect Donald Trump to maintain expansion.

Oklahoma: CMS Approves One-Year Extension of SoonerCare Waiver

The Oklahoma Health Care Authority received a one-year temporary extension of its SoonerCare 1115 waiver, which authorizes a premium assistance program for employer-sponsored insurance, and a limited benefit premium assistance “individual plan” for certain people whose employers do not participate in the employer-sponsored premium assistance program. The extension is granted through December 31, 2017.

Oregon: Governor Requests $20.4 Billion in Funding for Oregon Health Authority

Governor Kate Brown (D) has requested $20.4 billion in funding for the Oregon Health Authority (OHA) for the 2017-2019 biennium budget cycle, a 1.3% increase from 2015-2017. The requested increase would fund a variety of initiatives, including coverage for undocumented minors and additional mental health and addiction services. It also reduces the administrative allowance included in rates for Coordinated Care Organizations. OHA had previously requested $21.5 billion for the 2017-2019 biennium budget cycle, citing a projected gap in funds that would result if CMS does not approve the State’s pending $1.3 billion 1115 waiver extension.

Rhode Island: CMS Approves Waiver Funding Health System Transformation

Governor Gina Raimondo (D) recently announced a newly approved 1115 waiver amendment that will provide $296 million in new federal funding for health system transformation. The amendment will support the State’s initiative to shift managed care contracts towards alternative payment models by 2020, including ensuring that MCOs are fully capitated and contracting under shared saving agreements with State-certified provider-led ACOs called “Accountable Entities.” The transformation program will be limited to 5 years, beginning in 2016; funding for the last two years is contingent upon the renewal of the waiver in 2018.

FEDERAL AND STATE MARKETPLACE UPDATES:

Court of Appeals Delays House v. Burwell Proceedings Until February 2017

The federal Court of Appeals for the District of Columbia Circuit has approved a motion by the House of Representatives to delay proceedings in House v. Burwell, until further motions by the parties are submitted by February 21, 2017. The Department of Justice filed a brief last week opposing the motion. The Justice Department is appealing a district court decision that held that the government was illegally making payments to health plans under the ACA’s cost-sharing reduction program. This delay in proceedings will enable the Trump Administration and Congress to influence the outcome of the case, which has important implications for Marketplace plans and consumers in the coming year.

Colorado: Marketplace Plan Selections Increased 23% From Last Year

Nearly 38,000 individuals selected a plan through Connect for Health Colorado (the State-based Marketplace) through the end of November, representing a 23% increase over last year, according to new data released by the Marketplace. This year’s increase is even greater than the 19% jump in Colorado Marketplace enrollment that occurred between November 2014 and November 2015.

Washington: Report Underscores Stable Insurance Market, Recommends Maintaining State-Based Exchange

A new consultant report, commissioned by the Washington Health Benefit Exchange (the State-based Marketplace) and Office of the Insurance Commissioner, highlights the Exchange’s stability and recommends the State maintain the Exchange's statutory and regulatory framework. The report notes that Washington has seen growth in the number of carriers offering plans on the Exchange and in enrollment, and has experienced relatively modest increases in Exchange premiums. The group also reports a more even distribution of market share across Exchange carriers in 2016 than in 2014, as well as an increase in the number of narrow-network Exchange plans.

STATE STAFFING UPDATE:

Iowa: Insurance Commissioner Resigns

Insurance Commissioner Nick Gerhart said he would resign effective December 23, 2016. Deputy Insurance Commissioner Doug Ommen will serve as interim commissioner; he was previously Missouri's insurance commissioner before joining Iowa's insurance division in 2013. Gerhart had recently cautioned against ACA repeal without a replacement, saying that such a repeal would have "disastrous consequences."