CMS to Propose Rules for PPACA’s Coordination of Eligibility, Appeals for Exchange, SHOP, Medicaid, and CHIP

On January 14, 2013, CMS announced the advance release of a proposed rule addressing the coordination of the application, enrollment and appeal processes among the various health insurance affordability programs, i.e., Medicaid, the Children’s Health Insurance Program (CHIP), the small business health options program (SHOP), the tax credit for payment of health insurance premiums, and advance payment of the tax credit. In addition, the proposed rule will address the determinations that employer-sponsored insurance does not meet the requirements for minimum essential benefits, actuarial value, or affordability and appeals of those determinations. The proposed rule also would make major changes to the requirements for verification of citizenship or immigration status and to the requirements and limitations of cost sharing that may be imposed on Medicaid beneficiaries, implementing provisions of the Children’s Health Insurance Program Reauthorization Act (CHIPRA) (P.L. 111-3).

The consolidated application and enrollment provisions of this proposed rule are essential to the implementation of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) and Health Care and Education Reconciliation Act (HCERA) (P.L. 111-152); allowing consumers to apply for all relevant health care programs in one place and to submit required data only once is a key aspect of the legislation. Whether or not the states choose to expand Medicaid or to operate a health insurance exchange, states are required to share information necessary to determine eligibility for enrollment in a qualified health plan (QHP) through the exchange, the premium tax credit, and advance payment of the premium tax credit.

The proposed rule would implement the adoption of the modified adjusted gross income (MAGI) standard for determining eligibility for Medicaid. Because individuals may be eligible for more than one form of assistance, and different members of a household might be eligible for different programs, under the proposed rule, the automatic disregard of 5 percent of household income is applied only when it would affect an individual’s eligibility under the category with the highest income limit. Specific provisions address attribution of income for families whose legal obligations and/or tax status do not mesh well with the MAGI determination process, for example, unmarried couples living with children from a partner’s previous relationships or multi-generation households.

The requirements to demonstrate United States citizenship or lawful immigration status apply to all of the affordability programs. In order to promote flexibility and ease of administration, CMS proposes to maximize the use of electronic interfaces and data matching and to eliminate the four-tiered system of acceptable documentation to establish citizenship and identity. The Secretary will create a “federal hub data base” to be used by both the exchanges and state Medicaid agencies to verify immigration status or citizenship. References to specific immigration forms would be abolished. School or religious records would be accepted more liberally. The agency or exchange would be expected to attempt to verify the status electronically in real time through the federal data base or, where applicable, the vital records offices of other states, and to require applicants to bring paper documentation only when the electronic data is unavailable or inconsistent. Applicants would be granted benefits pending the verification.

The health insurance exchanges and small business health options programs (SHOPs), where established, would be sources of coverage for individuals and small employers. The SHOPs would provide qualifying employer-sponsored coverage and would share data with the exchange as needed for the purpose of eligibility determinations. The exchanges and SHOP, where applicable, would determine whether a plan meeting requirements for minimum coverage, actuarial value, and affordability is available to an individual. An individual could appeal the determination of ineligibility for benefits, enrollment in the exchange, premium assistance or the tax credit. An employer could appeal determinations that the coverage provided does not meet the requirements for coverage, actuarial value, or affordability. Standards for the notice and process are provided. The proposed rules governing individuals’ appeals are to be coordinated with the appeals of Medicaid denials.

The proposed rule would implement multiple changes to presumptive eligibility. Hospitals would be permitted to determine patients presumptively eligible, subject to standards the state may impose concerning completion of applications and subsequent determinations of eligibility by the state agency.

All applicants and enrollees would have the option to receive their notices and determinations electronically. Because of the technical difficulties in establishing the electronic communications capability, this provision would have a delayed effective date, and HHS seeks comments on the date.

The proposed rule would streamline the requirements for Medicaid cost sharing and premium payments. The dollar limits would be increased, and the Medicaid and CHIP agencies would be required to abide by the same “lock-out” time limits as other coverage.

Individuals interested in submitting comments should take note that the comment period ends February 13, 2013. Although publication in the Federal Register is set for January 22, 2013, CMS is using the date of the advance release to measure the 30-day period.

Fate of Generic Drugs in India Awaits High Court Ruling

According to a recent Washington Times article, the fate of India’s $26 billion generic drug industry is awaiting a ruling by India’s Supreme Court early this year. India, which produces much of the world’s generic cancer, malaria, tuberculosis and AIDS drugs that are provided to poor countries, has been accused of ignoring intellectual property and causing Western drug companies to reconsider investing money in drug development.

The pending Supreme Court opinion centers around the Novartis drug Glivec, a cancer fighting drug. Novartis attempted to patent a new form of the drug, giving it another 20 years of patent protection. Patient advocacy groups argue that the drug has not been substantially altered and that Novartis is “evergreening” in order to block generic access to the drug. Novartis has released the following statement about the pending decision:

The Glivec case is about gaining clarity on the application of patent law in India, which is important to the economic future of the country. Novartis challenged the decision not to grant a patent to our life-saving medicine Glivec because we strongly believe safeguarding incentives for innovation through the granting of patents leads to better medicines for patients. We also believe that working through the judicial system is a legitimate approach to gaining clarity on the unique aspects of India’s patent law. Novartis actively supports innovative approaches to increase access to medicines, such as public-private partnerships, tiered pricing arrangements and shared contribution models in addition to donation programs. More than 95% of all Glivec patients in India receive their medicine free of charge through the Glivec International Patient Assistance Program (GIPAP).

Doctors Without Borders, a secular humanitarian aid organization issued an open letter to Novartis and its CEO regarding the litigation, which states, in part:

India’s patent law has prevented market monopolies of Novartis’s cancer drug Gleevec and many other essential drugs, including those used to treat HIV. This has allowed generic competition to drive prices down and increase access to those that cannot afford the prices of patented medicines. In India, Gleevec costs over CHF 2,100 a month [about $2,180]; the generic costs CHF 170 [about $176]….. If you are successful, you will set a legal precedent and weaken the Indian patent law of much of its meaning. Because your actions will affect the supply of medicines—both in India and beyond, as Indian generics supply 80 percent of the HIV/AIDS medicines used in the developing world, to take just one example—we urge you to reconsider.

The implications of the court’s ruling have global implications on world health and drug development.  Stay tuned for further news as it develops.