CMS grants New Hampshire Medicaid funding compliance extension

CMS has clarified that New Hampshire’s Medicaid expansion may end next year, but the current program can continue until the end of 2018. CMS stated that New Hampshire’s use of voluntary donations from health care providers and hospitals in the New Hampshire Health Protection Fund fails to comply with the federal requirements. CMS raised the possibility that federal funds may be withheld which would have resulted in a termination of the program.

The Medicaid statute in Section 1903(w) of the Soc. Sec. Act and implementing regulations at 42 CFR Sec. 433.54 and 433.66 establish a prohibition on provider-related donations, except in very limited circumstances. In a letter to New Hampshire officials, CMS indicated that there is a relationship between the donations and Medicaid payments, because Medicaid expansion is conditioned on the receipt of donations as articulated in New Hampshire legislation. The state’s use of voluntary donations from hospitals to supplement federal Medicaid funding violates federal law. The non-federal share financing of the New Hampshire Health Protection Program or Medicaid expansion through the use of provider-related donations to pay for Medicaid service-related costs violates the requirement that a bona fide provider-relation is a donation that has no direct or indirect relationship to Medicaid payments.

The 50,000 New Hampshire residents participating in the Medicaid expansion will not see any change in their coverage through the current re-authorization which continues until the end of 2018.New Hampshire’s next legislative session will need to address compliance with the federal law for the 2019 budget to bring the state’s non-federal share financing into compliance with the existing federal statute and regulations. Otherwise, Medicaid expansion in the state will lose federal funding. Governor Chris Sununu (R) stated that stripping coverage from Medicaid enrollees would have been “grossly unfair,” and will use the transition period to consider future changes.

Highlight on New Hampshire: Behavioral health services streamlined

New Hampshire plans to streamline its mental health and substance abuse programs for children, including unifying the delivery of mental health and substance disorder services to help during the transition from childhood to adulthood through the newly established Bureau of Children’s Behavioral Health. The Bureau’s establishment followed state lawmakers’ passage last week of a bill (SB 534-FN) directing the state’s Department of Health and Human Services (DHHS), along with other state agencies, to coordinate and integrate children’s mental health services in a system of care. The goal is to transform a straining mental health and substance use delivery system and provide a greater focus on the services and supports of children. The Bureau is part of the DHHS Division of Behavioral Health which itself was created in March. The proposal uses those two departments to create the framework but does not add new services, so no state money is attached to the bill for the first year. An additional $180,000 is included annually for the next three years to pay for more staffing.

Prior to the passage of the bill, proponents had argued that changes over the past 15 years within the DHHS organization structure had an adverse impact in the area of mental health in general, and children’s services in particular. The National Alliance on Mental Illness, in testimony before state lawmakers, had noted that the New Hampshire’s Children’s Mental health Director position had been vacant for seven of the past eight years. State action plans on rebuilding the mental health system were silent about children’s mental health issues. Combined with other factors, New Hampshire had a vacuum regarding strategic planning for children’s mental health.

The state had been studying the approach for the past several years through the New Hampshire Children’s Behavioral Health Collaborative.

Northeast co-op in precarious financial position after offering big salaries

Community Health Options (CHO), a health co-operative that serves customers in Maine and New Hampshire, is the latest co-op under intense scrutiny after experiencing significant financial difficulties. It was the only co-op on the health insurance marketplaces to show a profit in 2014, but its good fortune disappeared last year when CHO experienced a $31 million loss. A number of co-ops shut down in 2015, demonstrating the difficulty of executing the nonprofit health insurance model. CHO, however, may have only itself to blame after offering huge pay bumps to executives.

Why do co-ops fail?

The co-ops, also known as Consumer Oriented and Operated Plans, were supported by the administration as an alternative to private health insurers. They received funding through the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), which Nonprofit Quarterly believed led to many restrictions, such as marketing and advertising, that hampered the organizations’ ability to operate effectively in the market.

Other funding issues compounded the problem. For example, although the Kentucky Health Cooperative outperformed some state exchange competitors and had healthy enrollment, receiving a fraction of the expected risk corridor payment from CMS meant no more business as usual, according to Interim Kentucky Health Cooperative CEO Glenn Jennings. Risk corridor payments were created under the ACA to help insurers handle the costs of new enrollees with long-unmet health needs, who would likely cost more to cover. Insurers were to receive a payment if their operating losses were excessive. Kentucky Health Cooperative sought a $77 million payment, but CMS only covered $9.7 million. The co-op was unable to continue, with the closing announced in October 2015.

Kentucky’s co-op was not the only one hit. As of November 2015, a dozen co-ops had closed or had announced that they would not offer plans in the future. After Kentucky made the announcement, Tennesse’s Community Health Alliance followed suit. ColoradoHealthOp was next decertified from the exchange. In the same month, Oregon’s Health Republic Insurance, South Carolina’s Consumers Choice, Utah’s Arches Health Plan, and Arizona’s Meritus announced that they would cease operations. Consumers Mutual of Michigan held off until November 2 to announce that it was leaving the exchange, and two days later decided to wind down completely.

A big potential blow to Maine, New Hampshire

CHO is an important exchange presence in Maine and New Hampshire. The co-op is the single largest provider of individual health plans in Maine, with 71,500 members. New Hampshire offers a much smaller number of customers, at 12,700, but the co-op is only one of five companies in that state of offer individual ACA plans. It experienced a $31 million loss in December after being the only profitable co-op on the exchanges in 2014. CHO stopped taking new customers in December, and the Maine Bureau of Insurance is going to closely monitor performance on a monthly basis.

CHO had higher enrollment as well as higher claims costs than expected, ostensibly due to the many policyholders that were previously uninsured and had unmet medical needs. Maine customers are projected to see a large increase in premiums in the future to offset these costs. However, claims are not the only reason that the company’s financials were off in last year. Top executives saw their salaries more than doubled in the co-op’s first two years. For example, the combined incomes of the Chief Executive Officer (CEO) and Chief Operating Officer (COO) went from $311,642 to $715,819 between 2012 and 2014. Officials claimed that the CEO initiated a 10 percent reduction in his own salary and that the co-op has cut administrative expenses by $11 million. The CEO has expressed concern that publicizing pay cuts for executives will cause him to lose employees.

Although the company is setting aside $43 million to cover potential losses in 2016, this may not be enough. If the state of Maine determines that the co-op will be unable to properly serve its customers and forces CHO’s closure, consumers will be able to select new coverage under a special enrollment period.

Thirteen States, Including IL, FL, CA, See Opportunity to Make Medicaid Cuts

Amid the Obama Administration’s encouragement for states to expand their Medicaid rolls per the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148), 13 states have implemented cuts to the program or are preparing to implement reductions in provider payments and benefits offered to Medicaid recipients. Some states may have seen June’s Supreme Court decision, requiring that states be allowed to opt-out of PPACA’s Medicaid expansion scheme, as an opportunity to scale back their Medicaid programs.

Eligibility Requirements

While the decision did not specifically state so, some state level officials have interpreted the lifting of the Medicaid expansion requirement as the lifting of the PPACA-imposed prohibition from altering their Medicaid eligibility requirements. Wisconsin has already changed its policy to deny Medicaid coverage to non-pregnant adults who are both offered affordable employer-sponsored coverage and have an income that exceeds 133 percent of the federal poverty level (FPL). Some adult recipients must also be responsible for paying new or increased monthly premiums. Wisconsin officials estimate these changes will save the state around $28.1 million.

Other states that have made changes to their eligibility requirements since the PPACA decision or are preparing to do so include the following:

  • Hawaii–Non-pregnant adults will no longer be eligible for Medicaid if their income exceeds 133 percent of the FPL (the limit was formerly 200 percent of FPL).
  • Illinois–Parents’ income must not exceed 133 percent of FPL (formerly 185 percent of FPL).
  • Connecticut–Plans to limit adult coverage to those with less than $10,000 in assets, not including one car and a home, and to calculate income for adult children aged 19 – 25 living at home by including their parents’ assets and income.
  • Maine–Plans to reduce parental eligibility to 100 percent of the FPL (currently 200 percent of FPL) and to do away with coverage for 19 and 20-year olds.

Drug Benefits

Currently, 16 states limit the monthly amount of drugs that recipients can obtain through their Medicaid programs. Four states have increased prescription drug copays and/or imposed monthly caps since the PPACA decision was issued:

  • Alabama–With the exception of long-term care patients and HIV and psychiatric drugs, Medicaid beneficiaries were limited to one brand name drug through July 31. Now, beneficiaries are limited to four brand-name drugs monthly.
  • California–Implemented $1 and $3 copays for specific drugs.
  • Illinois–Program recipients are now limited to four prescriptions monthly, in addition to being subject to increased copays. Recipients may seek state approval to receive more than four drugs.
  • South Dakota–Beneficiaries must now pay copays of $1 for generic drugs and $3.30 for brand name drugs.

Other Cuts

In addition to budget-saving measures surrounding prescription drug benefits and program eligibility, states have implemented a variety of other cost reductions since the June decision, including provider payment cuts, emergency room copays, and reductions in coverage. Among those cuts are the following:

    • Alabama–Physician and dentist reimbursement has been reduced by 10 percent. The frequency of routine eye exams has been reduced to one every three years, and eyeglass coverage has been completely eliminated.
    • California–Payment rates have been frozen for nursing facilities while private hospital reimbursement has been reduced by $150 million. Clinical laboratory reimbursement has been lowered by 10 percent.
    • Colorado–Copays and enrollment fees, to be determined by family income, have been added to the Children’s Health Insurance Program. Nursing home reimbursement rates have been reduced by 1.5 percent, and orthodontics coverage has been limited.
    • Florida–Reimbursement rates have been lowered by 1.3 percent for nursing facilities and 5.6 percent for hospitals. Florida is planning to reduce the allowable number of home health visits for non-pregnant adults to three per day maximum, emergency room visits to six per year maximum, and primary care visits to a maximum of two monthly, pending federal approval.
    • Illinois–Reduced reimbursement to non-safety net hospitals by 3.5 percent and to non-physician, non-dentist providers by 2.7 percent. Routine dental care and chiropractic services are no longer covered. Beneficiaries who visit an emergency room for non-emergency purposes now incur a $3.65 copay.
    • Louisiana–Payments have been reduced by 3.7 percent to dialysis centers and dentists, 3.4 percent to non-primary care physicians, and 1.9 percent to mental health providers.
    • Maine–Services obtained at ambulatory surgery centers and sexually transmitted disease clinics will no longer be covered. With the exception of pregnant women, smoking cessation products will also not be covered.
    • Maryland–Payments to hospitals have been lowered by 1 percent and by 2 percent for nursing facilities.
    • New Hampshire–Hospital reimbursement has been reduced by $160 million.
    • South Dakota–Coverage for non-emergency adult dental services has been limited to $1,000 per year.