CMS steps up emergency preparedness under Final rule

CMS is requiring Medicare and Medicaid providers to take additional steps to plan for disasters and emergency situations under a new Final rule. In addition to requiring providers to develop their own plans for emergency scenarios, the Final rule obligates Medicare and Medicaid providers to prepare for emergencies by coordinating with federal, state tribal, regional, and local emergency preparedness systems. The rule also imposes training requirements on providers. The Final rule, issued as an advanced release, is set to be published in the Federal Register on September 16, 2016.

Best practices

Under current rules, providers are required to have some emergency preparedness. For example, hospitals must provide for emergency power and lighting in specified areas and provide facilities for emergency gas and water supply. However, CMS believes the current requirements fall short. The Final rule seeks to improve on the status quo by centering requirements on what CMS calls “common and well-known industry best practice standards” for emergency preparedness, including the development of: (1) risk assessment based emergency plans; (2) policies and procedures based upon the risk assessment; (3) a coordinated communication plan to reach within facilities, across providers, and to State and local public health departments and emergency systems; and (4) and a training and testing program including drills and exercises.

Provider-specific requirements

Although all providers are obligated to comply with the Final rule’s best practices, specific requirements vary for individual provider types. For example, outpatient providers, ambulatory surgical centers, and end-stage renal disease facilities are not obligated to develop policies and procedures for provision of subsistence needs. For other providers, there are additional requirements. For example, under their emergency plans, hospitals, critical access hospitals, and long term care facilities must install emergency and standby power systems. Health care providers and suppliers impacted by the rule have one year from the effective date—60 days after publication—to comply with the new regulations.

Analysts say block grants, per capita caps an ineffective, problematic strategy

Block grants and per capita caps that have been proposed to replace the current Medicaid funding model have sparked concerns about states’ inability to effectively manage their programs by limiting enrollment and reducing benefits. An Urban Institute publication focuses on a slightly different issue, pointing out that the amount of federal funding each state receives varies significantly, and that basing allotments on historical spending would lock states in to these relative amounts. This strategy could limit states’ ability to expand benefits and coverage.

How they work

States currently receive federal matching based on a certain percentage of expenditures. If Medicaid were to be financed through block grants, states would receive a fixed payment based on historical spending levels, adjusted for growth. Per capita caps would similarly set allotments for specific group based on historical rates of spending per enrollee, adjusted for growth. Per capita income affects the percentage of federal match, favoring low-income states, and state benefit design (which populations are covered and which additional benefits are provided) impacts spending levels.

Block grants would essentially base allocation on the current level of expenditures, which is intended to give state programs a fixed budget leading to additional efficiency and federal savings. Per capita caps would impact spending per enrollee instead of overall, and would provide additional funding if the number of Medicaid enrollees increases. However, the predetermined cap may not be sufficient to provide current services, and in such a case the burdens would be passed on to the state government, patients, and providers.

Data

The Urban Institute assessed current spending levels in the aggregate, per low-income resident, and for subgroups. The results emphasized the differences in spending and federal funding. In the District of Columbia, almost $12,000 is spent per low-income resident, and the federal spending comes out to $2.4 million. In New York, spending per low-income resident was about $5600, while federal spending was almost $38 million. Ultimately, spending per low-income person varied by a factor of almost 10 to 1 (cut roughly in half by excluding the District of Columbia).

Analysis

Freezing aggregate payments and growing them at the same rate would make such stark federal spending differences permanent. Although applying different growth rates to states based on different spending levels could help, analysts believe that this approach would not have a significant impact for some time. Similarly, applying per capita caps would vary significantly by state. The Urban Institute believes that applying either of these approaches to Medicaid programs would be problematic, and noted that Medicaid spending is not a significant issue when compared to other types of spending.

If enrolled in Medicaid, end marketplace coverage or lose subsidies, HHS warns

The government has run out of patience with individuals enrolled in both Medicaid and private coverage on the marketplaces paid for through federal subsidies established by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). HHS Secretary Burwell authorized the federal exchange to notify consumers with someone in their household receiving duplicate coverage to immediately end coverage with premium tax credits. The existence of impermissible duplicate coverage was uncovered by a Government Accountability Office (GAO) investigation.

GAO investigation

The GAO investigated of the possibility of obtaining duplicate coverage in states that use the federal marketplace, and found that CMS did not appropriately control the risk of coverage gaps and duplicate coverage for those transitioning between Medicaid and marketplace coverage. The GAO identified two specific issues that materially contributed to the problem. The federal exchange is operated by federal officials, but the Medicaid programs are operated by state. The GAO found a vulnerability involving communications between the two, as records for Medicaid enrollees switching to exchange coverage were not transferred as closely to real time as possible. CMS indicated its belief that states transferred records at least daily, but this was not the case for one of the four states investigated out of the 34 that use the federal exchange. Additionally, CMS did not strive to detect duplicate coverage. Although CMS intended to implement periodic checks by the end of July 2015, it had not established the frequency of the checks or a mechanism for monitoring how effective the checks were.

Duplicate coverage situations

The GAO found that three different scenarios involving duplicate coverage were occurring, and only one was authorized by federal law. When individuals transition from exchange coverage to Medicaid coverage, the effective dates of coverage may overlap. Exchange coverage can only be ended with at least 14 days of advance notice, while Medicaid coverage is effective no later than the date an eligibility change is reported. The term of duplicate coverage might be extended in cases where a Medicaid eligibility determination takes a longer period of time than anticipated. Because this type of duplicate coverage is caused by program design, it is allowable.

Two other instances of duplicate coverage were discovered. In one state, the GAO found that 3,500 individuals were covered by both Medicaid and marketplace insurance in a six month period, and that many individuals failed to end subsidized coverage through the exchange after becoming eligible for Medicaid.  The GAO also found that the reverse was true, as Medicaid enrollees also enrolled in subsidized exchange coverage. CMS received recommendations to strengthen its controls.

Notifications

The notification letters indicate that CMS followed the GAO’s recommendations to identify those with duplicate coverage. The New York Times reported that the letters boldly warned that someone in the recipient’s household may lose their exchange subsidy. Anyone in the household that is enrolled in either Medicaid or the Children’s Health Insurance Program (CHIP) is instructed to immediately end subsidized coverage. Failure to do so will result in immediate cessation of any financial assistance for premiums, deductibles, and other costs. By taking these actions, the government is attempting to avoid paying its portion of Medicaid coverage, as well as offering tax credits for marketplace coverage.

Prescription fill rates rose for newly insured, especially Medicaid enrollees

New Medicaid enrollees saw the largest increase in prescription fill rates between 2013 and 2014 than any other group, at 13.3 fills on average. Health care transaction tracking showed that the uninsurance rate dropped by 30.4 percent during this time for those filling prescriptions. The results of research, published in Health Affairs, also revealed that program spending for prescriptions increased, and patients spent less out of pocket even as they filled more prescriptions.

Methods

The analysis started with health care transaction data for 6.7 million patients that filled prescriptions at retail pharmacy locations in January 2012. Researchers then followed individual patients’ drug transactions, including the uninsured paying cash for prescriptions, until December 2014. This method allowed tracking of health care service use, costs to patients, and costs to payers. Patients were assigned to five coverage categories based on the coverage source that paid for the highest number of prescriptions: Medicare, Medicaid, private, uninsured, or other. Patients were only assigned to the uninsured category when all transactions for the year were paid in cash or through an assistance program, including discount cards.

Coverage changes

Between 2013 and 2014, the uninsurance rate dropped by 30.4 percent among the prescription drug users analyzed. Although the reductions were roughly similar when analyzed by gender and age, females were more likely to gain coverage. States that expanded their Medicaid programs under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) saw a 39.1 percent reduction in the uninsured, while nonexpansion states were at a 22.6 reduction.

Prescription drug spending

Those who were uninsured in 2013 but gained either private or Medicaid coverage in 2014 saw a dramatic increase in prescription drug use. Those transitioning to Medicaid had 79 percent increase in the number of prescriptions filled, while those going to private payers had about a 27 percent increase. As expected, average spending increased with the larger number of prescriptions filled. Average plan or program spending for prescriptions increased by $341 for those who obtained private coverage, while the spending for new Medicaid enrollees went up by $813. Average out-of-pocket spending decreased by $85 and $205 for private and Medicaid coverage, respectively.