Highlight on Alaska: Alaskan fund reminiscent of high risk pools–Will the country follow suit?

In the summer of 2016, Alaska’s Republican legislature passed, and the independent governor signed into law, a bill that established a state health insurance fund to stabilize rates and cover the medical costs incurred by high-usage insured individuals with insurance companies. The fund is reminiscent of high-risk insurance pools that existed prior to the implementation of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), when individuals could still be denied coverage for pre-existing conditions and had difficulty obtaining insurance. Although the law was a reaction to rising costs among Alaskans and Alaska’s insurers, other states may follow suit, now that President-Elect Donald Trump has indicated that his administration will “work with both Congress and the states to re-establish high-risk pools.”

Alaska’s small population is subject to high health care costs.  Only 23,000 Alaskans enrolled in the non-group market in 2016.  Average monthly marketplace premiums were $863 pre-advance premium tax credit (APTC) in Alaska, according to an April HHS Assistant Secretary for Planning and Evaluation (ASPE) report, compared to $396 in the rest of the nation. Premiums rose by more than 31 percent in 2016 in Alaska, compared to just over 1 percent nationally, and not all marketplace enrollees qualified for premium tax credits. Only one insurer, Premera Blue Cross, will remain in the marketplace in 2017. Notably, Premera insured 8,500 people in 2015, but nearly one-quarter of its monetary claims arose from only 37 cases.

House Bill (HB) 374, which was signed into law in July 2016, earmarks $55 million accrued through an existing 2.7 percent premium tax on all Alaskan insurers–not only health insurers–for a comprehensive health insurance fund. The fund provides insurers with money to cover the costs of claims incurred by high-risk residents. The bill sunsets in two years, but allows the state to apply for a state innovation waiver under section 1332 of the ACA.

The incoming federal administration, however, has stated its plans to repeal the ACA and replace it with new legislation.  Other states may consider following Alaska’s lead in order to continue to provide insurance to those individuals with the greatest need for it.

Highlight on Arkansas: medical marijuana amendment approved

On November 8, 2016, Arkansas voters approved Issue 6, the Arkansas Medical Marijuana Amendment which amended the state’s constitution, by a margin of 53 percent in favor to 47 percent against, and became the first state in the South to legalize medical marijuana. The governor had voiced his opposition to the measure. With the approval, more than half of the states in the U.S. have now legalized medical marijuana.

A “yes” vote supported legalizing medical marijuana for 17 qualifying conditions, creating a Medical Marijuana Commission, and allocating tax revenue to technical institutes, vocational schools, workforce training, and the state’s general fund. A “no” vote opposed the amendment to legalize medical marijuana. The amendment will allow patients with a variety of medical conditions, including cancer, Tourette’s syndrome, Crohn’s disease, fibromyalgia, post-traumatic stress disorder, and HIV/AIDS, along with a doctor’s permission to buy marijuana from dispensaries. Patients, however, won’t be allowed to grow their own marijuana.

The Arkansas Department of Health was given up to 120 days to adopt rules for various provisions of the amendment, including, but not limited to:

  1. applications for and renewals of registry identification cards;
  2. labeling and testing standards for marijuana distributed to patients;
  3. care givers assisting patients who are physically disabled or under the age of 18;
  4. requirements for oversight, recordkeeping, security requirements for dispensaries and cultivation facilities;
  5. the manufacture, processing, packaging, and dispensing of marijuana to patients;
  6. procedures for suspending or terminating the licenses of dispensaries and cultivation facilities that violate the provisions of the amendment;
  7. procedures for inspections and investigations of dispensaries and cultivation facilities; and
  8. advertising restrictions for dispensaries and cultivation facilities;

A separate marijuana question had been approved, but Arkansas’ Supreme Court last month directed that votes not be counted. Justices said the petition lacked enough valid signatures. In 2012, Arkansas voted on the Arkansas Medical Marijuana Question, which failed to garner enough support. Following the approval of Issue 6, opponents vowed to fight the amendment in the Arkansas legislature.


Kusserow on Compliance: CMS continued to pay millions of dollars for incarcerated beneficiaries

A couple years ago the OIG issued a report, followed by a public outcry about Medicare paying claims for incarcerated beneficiaries. The simple fact is that those in custody of a governmental entity are not eligible for Medicare. Last year Congress passed a law mandating CMS to establish policies and implement claims audits to ensure that payments are not made for Medicare services rendered to incarcerated beneficiaries and steps to detect and recoup payments made for instances in which an individual’s incarcerated status is not updated on CMS’s data systems. Under the same law, the OIG was mandated to submit a report to Congress within 18 months of passage, and periodically thereafter, on CMS actions to prevent payments made for incarcerated beneficiaries. The OIG issued an audit report on their evaluation of 2015 CMS policies and procedures and their planned revisions to them. They compared this information against requirements prohibiting payment for Medicare services rendered to incarcerated beneficiaries.

OIG findings

  1. CMS’s is not in full compliance with Medicare requirements.
  2. CMS failed to detect and recoup improper payments on behalf of incarcerated beneficiaries because they turned off its post payment claims edit to identify those claims.
  3. Medicare paid 63,949 claims of 11,786 incarcerated beneficiaries ($34,588,984) CY 2013-2014.
  4. CMS has not taken steps to act on the identified potentially improper payments.
  5. Failure to detect occurred in September 2013 when CMS turned off a post payment claims edit that it had created in April 2013.
  6. CMS planned revisions to its policies and procedures to deny Medicare payments for the same period that SSA suspends its benefits does not comply with the legal mandates.

OIG recommendations

CMS did not concur with the first recommendation listed below but did so for the other two.

  1. Develop and implement a system that allows CMS to collect the information necessary to fully comply with Medicare requirements that prohibit payment for Medicare services rendered to incarcerated beneficiaries and, if necessary, seek the appropriate legislation and funding;
  2. Review the $34.6 million in claims to determine which portion, if any, was not claimed in accordance with Medicare requirements and direct the Medicare contractors to recoup any ensuing improper payments; and
  3. Identify improper payments made on behalf of incarcerated beneficiaries after our audit period and ensure that Medicare contractors recoup those payments.

CMS officials stated that CMS is planning to obtain the dates that SSA uses to suspend benefits and plans to deny Medicare payments for incarcerated beneficiaries for the same periods that SSA suspends its own benefits for the same individuals.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2016 Strategic Management Services, LLC. Published with permission.

Highlight on Colorado: 2016 report on effects of marijuana legalization

On November 8, 2016, nine states will have legalization of marijuana for either medical or recreational use on the ballot. Five of those states will consider the recreational use of marijuana, including California, Massachusetts, Maine, Arizona, and Nevada. Before these states “go to pot,” perhaps they should consider the results of a 2016 study by the Colorado Department of Public Safety.

The study was mandated by the Colorado General Assembly. It required the Division of Criminal Justice in the Colorado Department of Public Safety to conduct a study of the impacts of Colorado’s 2013 legalization, particularly as they relate to law enforcement activities.

Public Safety

The study found that the total number of marijuana arrests decreased by 46 percent between 2012 and 2014, from 12,894 to 7,004. As a share of all arrests in Colorado, marijuana was responsible for 6 percent of all arrests in 2012 and 3 percent in 2014. The number of marijuana arrests decreased by 51 percent for Whites, 33 percent for Hispanics, and 25 percent for African-Americans.

In terms of court filings, the study found that the total number of marijuana-related filings declined 81 percent between 2012 and 2015, from 10,340 to 1,954. The filings fell 69 percent for juveniles 10 to 17 years old, 78 percent for young adults 18 to 20 years old, and 86 percent for adults 21 or older. In terms of organized crime, between 2012 and 2015, there were 88 filings that were related to some marijuana charge. The most common marijuana industry-related crime in Denver was burglary, accounting for 63 percent of marijuana crime related to the industry in 2015.

Traffic safety data was limited, but the study noted that the number of summons issued by the Colorado State Patrol for Driving Under the Influence in which marijuana or marijuana-in-combination with other drugs was involved decreased 1 percent between 2014 and 2015 (674 to 665).

In terms of assessing diversion of marijuana to other states, from January 1, 2014, to August 30, 2015, the study found that there were 261 drug-related interdiction submission in which Colorado was the initiating state. Of those 261 submissions, 169 (65 percent) were for marijuana/hashish.

Public Health

According to the National Survey on Drug Use and Health, administered by the Substance Abuse and Mental Health Services Administration, the current prevalence rates for marijuana usage in the past 30 days have increased significantly for young adults (18 to 25 years old), from 21 percent in 2006 to 31 percent in 2014. Marijuana use by adults (26 years or older) also increased significantly, from 5 percent in 2006 to 12 percent in 2014. In comparison, the study cited a 2014 telephone survey in Colorado that found 14 percent of adults reported marijuana use in the past 30 days and 33 percent of current users reported using daily.

According to the study, hospitalizations with possible marijuana exposures, diagnoses, or billing codes per 100,000 hospitalizations increased from 803 per 100,000 before commercialization (2001-2009) to 2,413 per 100,000 after commercialization to 2,413 per 100,00 after commercialization (2014- June 2015).  The number of calls to poison control mentioning marijuana exposure increased from 44 calls in 2006 to 227 calls in 2015.

Youth Impact

The study noted that in 2013, a Healthy Kids Colorado Survey (HKCS) found that 80 percent of high school students did not use marijuana in the past 30 days. The HKCS showed, however, that marijuana use increased by grade level and that Colorado youth use marijuana at a higher rate then the national average. The perception of health risk of using marijuana is also declining among Colorado youth, according to the HKCS.

The number of juvenile marijuana arrests increased 5 percent, from 3,234 in 2012 to 3,400 in 2014, according to the study. The number of White juvenile arrests decreased from 2,198 in 2012 to 2,016 in 2014 (-8 percent). The number of Hispanic juvenile arrests increased from 778 in 2012 to 1,006 in 2014 (+29 percent). The number of African-Amercian juvenile arrests increased from 205 in 2012 to 324 in 2014 (+58 percent).

The study noted that data on drug tests from the Division of Probation Services showed that the percent of the 10- to 14-year-old group testing positive for tetrahydrocannabinol (THC — the chemical responsible for most of marijuana’s psychological effects) one or two times increased from 19 percent in 2012 to 23 percent in 2014, while the percentage testing positive three or more times went from 18 to 25 percent.

Colorado Department of Education data showed that the drug suspension rates increased from 391 (per 100,00 students) in the 2008-09 school year to 506 in 2009-10. In addition, the drug expulsion rate was 65 in 2008-09, increasing to 90 in 2009-10, and decreasing to 50 in 2014-15.

Revenue Data

The study also noted that in December 2015 there were 2,538 licensed marijuana businesses in Colorado, with 70 percent located in Denver, El Paso, Pueblo, and Boulder. The total tax revenue, licenses, and fees from these businesses increased from $76,152,468 in 2014 to $135,100,465 in 2015 (+77 percent). The excise tax revenue dedicated to school capital construction assistance totaled $35,060,590 in 2015.


The study found that because data was only available through 2014, it was too soon to draw any definite conclusions about the potential effects of marijuana legalization or commercialization on public safety, public health, or youth outcomes. In addition, the study noted that the lack of pre-commercialization data, the decreasing social stigma, and challenges to law enforcement combine to make it difficult to translate the early findings into definitive statements of outcomes.