The recent decision to shift daily data reported by hospital administrators about their capacity and hospital beds occupied by COVID-19 patients from the Centers for Disease Control and Prevention (CDC) to the Department of Health and Human Services’ (HHS) TeleTracking system has sparked concerns among state officials who are on the pandemic’s frontline, and infectious disease and health care experts.
The change that shifts data reporting from CDC’s National Healthcare Safety Network (NHSN) – the most widely used hospital infection tracking system in the United States – affects data transparency and potentially its use. State and local health departments and health care systems have historically had immediate access to NHSN COVID-19 data for hospitals in their jurisdictions, which included bed occupancy, health care worker staffing, and personal protective equipment (PPE) supply status and availability. States have used this critical information to shape local responses and for planning.
The HHS TeleTracking data is designed to inform federal decisions, including allocation of supplies, treatment, and other resources. However, unlike the NHSN data, the TeleTracking data will not be publicly available.
The Administration raised general concerns about the existing system’s capacity to keep up with the needs of the pandemic when the data shift was announced. Some prior reporting was criticized for aggregating tests for active coronavirus with tests for recovered patients at the state level. Hospitals have also raised concerns about incomplete data and burdensome reporting. Despite these criticisms, experts question the decision to replace the system rather than improve it, citing the lack of a national strategy that continues to hinder efforts to use centralized information to identify areas of greatest need.
State and local health officials concur with the experts and have raised concerns that the change may worsen the response to the pandemic because a critical role of state health departments is aggregating data to identify challenges and recommending policy approaches and solutions. Creating a new system in the midst of a pandemic without involving affected state and local health officials is counter-productive, critics argue. They note that correcting the under-funding for data infrastructure at the federal, state, tribal, and territorial levels would go farther to support improvements.
According to state officials, including Massachusetts’ Gov. Charlie Baker, the lack of access to hospital testing, capacity and utilization, and patient flow data will hinder efforts to understand regional trends. Officials from Idaho’s Department of Health and Welfare raised concerns about the impact of the data-reporting change on the department’s information on the number of people in hospitals, in their intensive care units, and on ventilators.
Maine’s Center for Disease Control and Prevention officials noted their state will continue to collect and publicly report its COVID-19 metrics and will still be able to access data from other states, but raised concerns about new reporting burdens for Maine hospitals and shared concerns about the lack of state input into federal decisions.
The implications of the shift from an established routine, and its impact on relationships between states, the CDC, and hospitals, are not yet clear. According to one state official, “We were working with hospital partners and then all of a sudden a monkey wrench was thrown at them.”
As states battle to control the pandemic, access to quality data on hospital testing, capacity and utilization, and patient flows will continue to be critical to monitor local situations and identify greatest needs.
The President’s budget request for federal fiscal year (FFY) 2021 proposes a 10 percent reduction in the Department of Health and Human Services’ (HHS) budget. A signature piece of the budget features the President’s Health Reform Vision, which includes $844 billion in cuts over 10 years to implement the Administration’s efforts to provide “better care at lower costs.”
While the proposed budget is subject to Congressional review and expected to change, it is important for states to consider how the Administration’s priorities could affect public health programs. The following highlights some of the key budget proposals that impact state health programs.
- Increases oversight of the 340B Program. The proposal gives explicit oversight authority to the Health Resources and Services Administration (HRSA) with the goal of creating enforceable standards for participation and ensuring 340B benefits low-income and uninsured patients. Part of the increased funding for oversight ($34 million) will come from a new user fee on covered entities based on 340B sales.
- Bipartisan drug pricing proposals. The budget includes an allowance of $135 billion in savings for bipartisan Congressional drug pricing proposals. The Administration specifically supports efforts to improve the Medicare Part D benefit by establishing an out-of-pocket maximum and lowering out-of-pocket costs for seniors, as well as reforms to US Food and Drug Administration (FDA) approval and regulatory measures to bring lower-cost generics and biosimilars to market.
Health Insurance Markets
- Encourages expansion of coverage in the small-group market through Multiple Employer Welfare Arrangements (MEWAs). Provides additional funding to the Employee Benefits Security Administration to encourage adoption of policies to boost insurance coverage for small businesses. Specifically, the budget suggests promotion of MEWAs – an arrangement made when multiple employers coordinate to offer benefits to their employees – for example, association health plans are a type of MEWA. State regulation of MEWAs varies, though largely they are exempt from many requirements imposed on other health plans, including consumer protections codified under the Affordable Care Act (ACA). This investment follows prior action taken by this Administration to promote association health plans.
- Reductions in overall program funding. Proposes to cut $920 billion over 10 years from Medicaid.
Eligibility and Enrollment
- Requires work and community engagement initiatives. To receive Medicaid benefits, the budget proposes requiring all able-bodied, working-age, Medicaid-eligible individuals to find employment, participate in job training, or volunteer. It estimates this will generate $152.4 billion in savings over 10 years.
- Gives states the ability to change certain program elements and eligibility determination processes. Proposes to allow states to implement certain changes to Medicaid benefits and cost sharing, including making non-emergency medical transportation optional and allowing states to use state plan authority rather than a waiver to increase copayments for nonemergency use of emergency departments. Proposes to permit states to apply asset tests for individuals who are financially eligible for the program through the Modified Adjusted Gross Income (MAGI) standard. States would also be permitted to conduct eligibility redeterminations for MAGI-eligible individuals more frequently, to align with the soon-to-be released proposed rule on Medicaid eligibility determination processes.
- Requires documentation of immigration status prior to receipt of Medicaid. Proposes that before they receive Medicaid coverage, individuals must provide evidence of citizenship or satisfactory immigration status. While states will still be allowed to provide coverage during a reasonable opportunity period, they will not be able to receive federal match for these individuals during this time. This is estimated to save $2.6 billion over 10 years.
- Reduces maximum allowable home equity for Medicaid eligibility. Eliminates states’ ability to set a higher home equity limit for individuals seeking long-term care coverage through Medicaid, which is estimated to save $34.3 billion over 10 years.
Payments and Financing
- Changes the ACA’s financing for the expansion population. Indicates that it will end the “…financial bias that currently favors able-bodied working adults over the truly vulnerable.” While no specific details were provided about how precisely this would be accomplished, language in the budget brief references allowing states with expansion populations to elect a block grant or per capita cap to finance their coverage. No details were provided as to whether the existing federal match rate for expansion adults would be reduced, to what base rate that reduction would be, or when this change would be enacted by Congress.
- Reduces the federal match rate for Medicaid-eligible workers. Reduces the federal match rate for Medicaid-eligible workers from 75 percent to 50 percent by FFY 2024.
- Prohibits Medicaid payments to public providers in excess of costs. Proposes to limit Medicaid reimbursement for health care providers operated by a governmental entity to no more than the actual cost of providing services to Medicaid beneficiaries.
- Increases transparency of Medicaid financing and supplemental payments. Supports the finalization of a recently proposed rule that would require more data on states’ financing of Medicaid supplemental payments.
- Gives the Centers for Medicare & Medicaid Services (CMS) increased ability to recoup Medicaid improper payments and recover Medicaid and Children’s Health Insurance Program (CHIP) overpayments. Permits CMS to issue disallowances for payments made due to noncompliance with provider screening and enrollment requirements and collect overpayments made to states for ineligible or misclassified Medicaid beneficiaries.
- Continues Medicaid Disproportionate Share Hospital (DSH) reductions. Current law reduces Medicaid DSH allotments between FFY 2020 and FFY 2025. The budget proposes to continue DSH allotment reductions through FFY 2030 and estimates this will save $32.4 billion over 10 years.
- Modifies Institutions for Mental Diseases (IMD) payment exclusions. Allows states that meet certain criteria and requirements to receive federal Medicaid reimbursement for covered services provided to adults with serious mental illness living in IMDs, which is estimated to cost $5.4 billion over 10 years. Also, if a group foster home is considered a qualified residential treatment program (QRTP) and qualifies as an IMD, these QRTPs would be exempted from the IMD payment exclusion.
Other Proposed Medicaid Changes
- Eliminates Money Follows the Person (MFP) evaluation and reduces financing for the program, which provides funding to states to help transition people to home and community-based settings from institutions.
- Creates new MFP state plan option. Provides states the ability to establish an MFP program with an enhanced federal match for the first five years of services if they spend less than 50 percent of their long-term service and supports funding on home- and community-based services in the previous year.
- Extends Medicaid managed care waivers. Permits states to grandfather managed care authorities in waivers and demonstration programs if a waiver has been renewed once before and there are no substantive changes.
Proposals Affecting Individuals Dually Eligible for Medicare and Medicaid
- Coordinates review of Dual Eligible Special Needs Plans marketing materials. Allows for joint state and CMS review of marketing materials for Dual Eligible Special Needs Plans.
- Revisits Part D special enrollment period for dually eligible individuals. Clarifies the special enrollment period (SEP) for Medicare Part D to allow CMS to apply the same annual election process for all eligible individuals, but maintains the ability for dually eligible beneficiaries to opt into integrated care programs or to change plans following auto-assignment.
Children’s Health Insurance Program
- Creates a shortfall fund to replace Child Enrollment Contingency Fund. Calls for creation of a shortfall fund containing unused annual appropriations that could be distributed to states that need additional CHIP funding. This fund serves to replace the Child Enrollment Contingency Fund as of FFY 2022; the Performance Bonus fund would also be eliminated that year.
- Aligns Medicaid and CHIP policies on suspending and reinstating coverage for enrollees under age 21 who are incarcerated and released from custody. The Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act contains a policy requiring states to suspend coverage for youth under age 21 enrolled in Medicaid who are incarcerated instead of terminating coverage. The budget proposes extending this requirement to CHIP programs with the goal of providing access to health coverage upon release.
- Increase in Maternal and Child Health Services (MCH) Block Grant funding to offset reduction in other HRSA-funded programs to support children. Proposes a $60 million increase over FFY 2020 levels for the Title V MCH Block Grant, however this increase is combined with $97 million in reductions in other HRSA-funded programs for children, including: Sickle Cell Disease Treatment Demonstration, Autism and Other Developmental Disabilities, Heritable Disorders in Newborns and Children, and Emergency Medical Services for Children. This assumes states will fund the types of activities these programs previously funded through their MCH Block Grant programs.
- Continue funding and disseminating research into neonatal abstinence syndrome. Proposes $2.25 million to continue the Centers for Disease Control and Prevention’s (CDC) work to investigate neonatal abstinence syndrome and share findings to improve care and outcomes for children and families.
- Maintains Maternal, Infant, and Early Childhood Home Visiting (MIECHV) program. Maintains MIECHV program at current levels.
- Level funding proposed for Children’s Mental Health Services grants. The budget proposes $150 million to the Substance Abuse and Mental Health Services Administration (SAMHSA) – consistent with FFY2019 funding – for Children’s Mental Health Services for state, tribes, and communities through competitive grant awards that promote collaboration between juvenile justice, child welfare, and education systems. Up to 10 percent of these funds are proposed for a new demonstration initiative that will target those at risk for developing serious mental illnesses.
The overall budget proposes $116 million for the President’s Improving Maternal Health in America Initiative. The initiative focuses on health outcomes for all women of reproductive age by improving prevention and treatment, healthy pregnancies and births by prioritizing quality improvement, health futures by optimizing post-partum health, and improved data and bolster research to inform interventions.
- Promotes state innovations to improve maternal health outcomes. Expands the State Maternal Health Innovation Grant Programby $30 million, the Alliance for Innovation on Maternal Health (AIM) by $10 million, and the Rural Maternity and Obstetrics Management Strategies (RMOMS) program by $10 million. There is a $50 million increase ($80 million total for FY 2021) to HRSA to improve the overall quality of maternal health services.
- Advances state efforts to combat maternal mortality and morbidity. The proposed budget invests $24 million in the CDC to expand maternal mortality review committees to all 50 states and DC.
- Allows states to provide postpartum coverage for pregnant women with substance use disorders (SUDs). Proposes to make it easier for states to offer pregnant women diagnosed with SUD full Medicaid benefits for one year postpartum, which would cost $205 million over 10 years.
- Maintains funding for family planning and health related services. Provides $286 million for the Title X family planning program but prohibits certain entities that provide abortion services from using the funding.
Prevention and Public Health
Substance use disorder and the opioid epidemic
- Increases grant funds to states for SUD prevention, treatment, and recovery:Adds $85 million over the FY20 budget for State Opioid Response (SOR) grants, bringing the total to $1.6 billion, and includes language to emphasize opportunities to expand activities to address methamphetamine and other stimulants. This increase, however, is coupled with decreases or total elimination of other SUD-related grants, which may lead to states re-aligning their existing activities into this grant.
- Reduces substance use prevention funding to states:Strategic Prevention Framework (SPF) grants to states have been reduced by over $109 million, eliminating all by SPF prescription drug funds, which were maintained at $10 million. This appears to assume that state prevention activities can be picked up in the increased SOR grant funds.
- Eliminates Medication-Assisted Treatment for Prescription Drug and Opioid Addiction (MAT-PDOA) grantsas part of the Targeted Capacity for Expansion (TEC) program that is designed to fill gaps in treatment capacity for communities. This $89 million reduction appears to assume that these treatment activities can be picked up in the increased SOR funding. Other funding within the program for peer-to-peer grants and special projects will be maintained at $11.2 million.
- Eliminates $30 million in federal funding for Screening, Brief Intervention, and Referral to Treatment (SBIRT)program grants, shifting payment for these services to states and third-party payers.
- Maintains funding for the Recovery Community Services Programs (RCSP)that will continue and enhance efforts to develop recovery networks and collaboration with peer organizations.
- Maintains level funding to states through the Substance Abuse Prevention and Treatment Block Grantat a total of $1.9 billion.
- Maintains level funding of $8.7 million for Opioid Treatment Programs (OTP) that provide methadone– funding also supports training and technical assistance for providers.
- Continues grants to nonprofitComprehensive Opioid Recovery Centers: Maintains $2 million in grants to nonprofit SUD treatment organizations as part of a four-year project that provides a continuum of treatment services.
- Supports State and Tribal Youth Implementation grants: Maintains nearly $30 million to fund 11 new grants and continue 35 existing grants that support states and tribes to address gaps in SUD treatment for youth and caregivers.
- Maintains level funding for justice-involved populations with SUD: Provides $89 million for 54 new and 92 existing drug courts and also supports 11 new and five existing Offender Reentry Program grants.
- Maintains Building Communities of Recovery programswith $8 million for 20 new and eight continuing grants that support recovery services.
- Maintains level funding to prevent and reverse overdoses:
- Provides a continued $41 million in funding to the First Responder Training program through $41.0 million in grants to states, localities, and tribes for purchasing and training of overdose-reversal drugs.
- Provides a continued $12 million through grants to states to purchase and distribute naloxone kits and provide overdose reversal training.
- Funding for Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) Act activities
- $5 million to fund hospitals and emergency departments for alternative pain management treatments intended to decrease opioid prescribing;
- $4 million to train emerging prescribers via 117 grants to medical schools and teaching hospitals to develop curricula to educate students on MAT and providing SUD treatment;
- $4 million to implement post-overdose bridges to SUD treatment; and
- $4.5 million project to 15 select states, to provide an enhanced FMAP (80 percent) for five of those states for some SUD services.
- Supports a tool that warns about emerging issues:Adds $10 million for the Drug Abuse Warning Network (DAWN), a surveillance system that can warn about emerging SUD and behavioral health crises.
- Increase of $18 million, for a total of $25 million, for the Assertive Community Treatment for Individuals with Serious Mental Illness program to help 33 communities establish, maintain, or expand efforts to engage patients with serious mental illness through emergency and inpatient settings.
- $25 million for Assisted Outpatient Treatment to expand SAMHSA’s existing grant program. The program has achieved favorable outcomes in reductions in hospitalization, emergency department visits, and substance use, and increases in mental health functioning.
- $35 million increase, including a new 5 percent set-aside, in all states and territories to build crisis systems for individuals in mental health crisis. States will continue to spend at least 10 percent of the funds on early interventions for those experiencing a first episode of psychosis.
- $225 million ($25 million increase) for certified community behavioral healthcenters –clinics certified by SAMHSA and funded through a prospective payment model, similar to federally qualified health centers (FQHC).
- Provides direct support for rural communities to address SUD needs:Maintains level funding for the Rural Communities Opioid Response Program (RCORP), providing a total of $110 million in grant funds to communities to address prevention, treatment, and recovery while building infrastructure and capacity. Adds new pilot programs to address the unique and emerging needs of rural communities responding to the opioid and SUD crises.
- Supports infectious disease prevention and surveillance in high-risk regions:Increases existing funding by $48 million for activities that reduce the transmission of infectious disease and the incidence of potentially fatal cardiac and skin infections as a consequence of the opioid epidemic.
- Maintains $475 million and builds on existing support for data capacity in states and other jurisdictions: Through Opioid Abuse and Overdose Prevention funding, CDC will continue to support states in tracking both fatal and non-fatal drug overdoses and prescribing patterns.
- Shifts Drug-Free Communities funding to CDC: Moves $100 million from the Office of National Drug Control Policy (ONDCP) that was previously administered by SAMHSA as prevention grants, into the CDC budget.
- Proposes a $350 million block grant program for states to address chronic disease priorities, including tobacco control and prevention, nutrition and physical activity, heart disease and stroke, diabetes, and arthritis.
Chronic disease prevention and management
- Supports training for behavioral health workforce:Maintains $139 million within Behavioral Health Workforce Development (BHWD) Programs that train professionals in under-served communities (including at health centers) and supports an addiction medicine fellowship.
- Expanded support for the Ending the HIV Epidemic initiative:
- $137 million (an increase of $87 million) for HIV prevention services in FQHCs, including pre-exposure prophylaxis (PrEP), outreach efforts, and care coordination in approximately 500 community health centers.
- Additional $95 million allocated for the Ryan White HIV/AIDS program.
- Cuts CDC’s total discretionary budget authority by $1.289 billion, compared to 2020 funding levels.Program-level cuts would be $175 million. Other changes include:
- A cut of $427 million for chronic disease prevention and health;
- An increase of $40 million for influenza monitoring and prevention; and
- The creation of the America’s Health Block Grant as a means of reforming state-based chronic disease programs.
- Proposes a new user fee on e-cigarettes. The budgetcontains $812 million in user fees to support FDA’s anti-tobacco programs, which includes a new $100 million fee to be collected from e-cigarette manufacturers. It also proposes to move the FDA’s Center for Tobacco Products to a newly created agency within HHS.
Programs Addressing Social Determinants of Health
Some components of the HHS and Department of Housing and Urban Development (HUD) budgets could affect states’ abilities to address health through housing and other social determinants of health initiatives.
- Cuts HUD funding by $8.6 billion — a 15.2 percent decrease from the 2020 enacted budget.
- Proposes changes to federal investment in rental assistance.The budget request would increase rental assistance to $41.3 billion, which would maintain services for all currently enrolled HUD-assisted households. Uniform work requirements would be placed on “work-able” households.
- Adds funds to the Rental Assistance Demonstration program, which supports transitioning public housing to housing voucher and project-based rental assistance units.
- Increases funding for lead-safe healthy homesby $69 million to $240 million.
- Supports reductions to existing programs:
- Cuts $80 million from Housing Opportunities for People with AIDS, and
- Would eliminate the Community Development Block Grant.
- Proposes policy and financial changes for safety net programs.The budget cuts $15.3 billion from the Supplemental Nutrition Assistance Program (SNAP) and cuts approximately $1.1 billion from the Temporary Assistance for Needy Families (TANF) block grant. Would apply consistent work requirements for federally funded public assistance programs, including SNAP, Medicaid, and TANF.
Long-term services and support
- Cuts family caregiver services by $35 million, which provides grants to states and territories to fund various supports that help family caregivers care for older adults in their homes.
- Cuts state councils on developmental disabilities by $22 million, which are charged with identifying the most pressing needs of people with developmental disabilities.
- Reduces National Institute on Disability, Independent Living, and Rehabilitation Research by $21.6 million.
- Cuts state health insurance assistance programs by $16 million, which are state programs that receive federal funding to provide free, local health coverage counseling to people with Medicare.
Health Care Infrastructure and IT
- Supports rural health care infrastructure. Authorizes up to $2.5 billion for loans to assist communities with developing or improving public services in rural areas, including rural health clinics. Allows critical access hospitals to voluntarily convert to rural stand-alone emergency hospitals, which would enable those facilities to draw in Medicare payments at emergency department rates without the additional burden of maintaining in-patient beds.
- Promotes price transparency and health IT interoperability. Finances several agencies to enable implementation of policies related to the President’s Executive Order to encourage price transparency. This includes $51 million to the Office of the National Coordinator for Health Information Technology for efforts to advance interoperability, electronic information sharing, and to align patient health and cost information.
- Enforces conscience protection laws. Makes permanent the Weldon Amendment, which prohibits government agencies — including state agencies that receive federal money — from discriminating against entities or individuals who refuse to provide or refer for abortions. Expands the authority of the Office of Civil Rights enforce the Weldon Amendment.
Other proposals addressed in the Administration’s budget include:
- Access to better care at lower costs;
- Personalized care;
- Protection for pre-existing conditions;
- Policies to encourage choice and affordability of coverage; and
- Policies to address surprise medical bills.
Update: March 2, 2020
State Insurance Marketplace Directors Express Concerns Over Potential Changes to Automatic Re-enrollment
Directors representing 15 state-based marketplaces submitted a joint comment to the US Department of Health and Human Services responding to its latest proposed rule governing health insurance markets. Their comments expressed concerns over future changes to automatic re-enrollment policies that may cause considerable consumer confusion and disrupt insurance markets. Their comments are available here.
New regulations imposed by the US Department of Health and Human Services (HHS) require a significant change in how insurers bill consumers for health insurance premiums. The technical change:
- Imposes a significant administrative burden on insurers, the health insurance marketplaces, and consumers;
- Raises premium prices; and
- Risks generating confusion among consumers when they pay their monthly premiums.
- Collect no less than $1 per enrollee per month to cover non-Hyde abortion services (if offered);
- Create distinct accounts to collect premium payments and use them to reimburse enrollees’ claims for non-Hyde abortion services; and
- Alert enrollees that the insurer is separately charging for these services by adding a distinct line item on the enrollee’s monthly bill; sending the enrollee a separate bill for non-Hyde services; and/or by sending the enrollee a notice, shortly after the time of enrollment, that their monthly bill will include a separate charge for these services.
Billing and Premium Payments Changes
This new regulation alters the current enrollee billing and notification requirement, mandating that insurers send an entirely separate bill to enrollees for premium charges associated with non-Hyde abortion services. The invoice for the separate premium that would be used to fund non-Hyde abortion services can be included in the same envelope as the health plan’s monthly premium bill. However, the non-Hyde charges must be listed on a distinct piece of paper with separate explanations so that the enrollee “understands the distinction between the two bills.” If an enrollee has opted to receive electronic communications, the non-Hyde premium charges must be sent through separate emails.
Prior to implementation of this rule, insurers were permitted to collect a single premium payment from enrollees, and then split the payment into the separate accounts required by the prior regulation. The rule changes this process to now require that enrollees submit two distinct premium payments — one for premium charges for non-Hyde services, and another for the remainder of the premium. In order to implement this change, insurers will be required to send clear instructions to enrollees to explain the need to pay the two charges through separate transactions, such as two distinct credit card charges. Enrollees who do not pay their full monthly premium (including the separate charge for non-Hyde services) risk having their coverage terminated by their insurer. Insurers are allowed to offer consumers a grace period (usually 90 days) during which consumers can reconcile missed payments before terminating coverage.
Stakeholder comments submitted when the rule was proposed cited concerns that multiple bills and payments could create confusion for enrollees. In an attempt to mitigate these losses, HHS indicated it will not take enforcement action against insurers that do not terminate enrollee coverage because the consumer did not pay the separate bill, at least not until new regulations are put in place to provide additional guidance on these requirements. The rule also suggest that insurers may leverage allowable “premium disregard thresholds” as one tool to aid consumers who may have missed making a separate payment, for example, the insurer will not terminate coverage as long as 99 percent of the premium is paid during a set amount of time.
Finally, the rule provides insurers with a new option to allow enrollees to opt-out of coverage of non-Hyde services by not paying the second premium. This option would fundamentally change the plan consumers were enrolled in for the year, as well as their premium costs, which is a potentially significant change for an insurer to bear in the middle of a plan year. The regulation grants deference to state law and/or health insurance marketplace certification requirements that prohibit such mid-year changes. This option also may not apply in states that mandate coverage of non-Hyde abortion services on private health insurance plans (CA, IL, ME, NY OR, and WA).
Expected to Cost Marketplaces and Insurers Millions
As stated by commenters and reflected in the final rule, implementation of these changes will require insurers or state-based marketplaces that perform premium billing on behalf of insurance (including MA, RI, and VT) to make “changes to nearly every aspect of the enrollment and billing process.” HHS estimates the rule will impose one-time costs of nearly $4.1 million to each insurer or marketplace that must institute these changes, plus an additional cost of nearly $1.1 million annually to maintain operation of the rule.
In total, insurers and marketplaces are estimated to spend more than $550 million to implement this rule between 2020 and 2022. HHS estimates that these additional costs will result in premium increases to consumers. While premiums have already been set for the 2020 plan year, HHS estimates that these changes will result in a 1 percent increase in premiums per year beginning in plan year 2021.
These estimates do not include additional expenditures that might be made by all health insurance marketplaces, brokers, and other agencies to ensure systems are in compliance with the new regulations and to conduct outreach and education to mitigate confusion among consumers who will now receive multiple monthly bills. HHS estimates that the 12 state-based marketplaces alone will spend a total of $24.6 million from 2020 to 2024 to implement these such changes. In the case of marketplaces that do premium billing, these charges are in addition to those outlined above.
Outlook for States’ Insurance Markets
The billing changes made by this rule are slated to go into effect on June 27, 2020, which gives states and insurers limited time to prepare the systems and outreach materials that will be needed to smoothly implement this change. HHS acknowledges that the rule may result in coverage losses, caused in part by confusion and the additional burden put on consumers to understand and follow through on making separate premium payments. Reductions in enrollment could affect a health plan’s risk mix and lead to additional changes in premiums. HHS also acknowledges that insurers may choose to drop coverage options to avoid the burden of implementing the rule, which would reduce the number of choices available to consumers in the marketplaces.
The National Academy for State Health Policy will continue to track this issue as state regulators coordinate with insurers on implementation of these rules and monitor impacts of these changes on markets.
The Trump Administration’s effort to address drug prices surfaced unexpectedly in the Department of Health and Human Services (HHS)’s recently issued proposed annual rule that regulates state health insurance markets, including coverage sold through the Affordable Care Act (ACA) marketplaces. The proposal encourages the use of generic drugs over brand-name drugs by both health plans and enrollees in an effort to “bring down overall health plan costs and perhaps premium increases.”
State officials need to consider whether the proposed changes will result in cost shifting from health plan premiums, which are subsidized for many individuals through advance premium tax credits, to consumers’ unsubsidized, out-of-pocket cost responsibilities. If this cost shifting occurs, how would it affect overall individual and small group market affordability? Or, are there ways to implement the proposed changes to minimize cost shifting onto consumers and truly reduce overall health expenditures? Below are some key policy issues that state officials should consider when reviewing the proposed rule.
The proposal allows health plans to eliminate brand-name drugs from essential health benefit (EHB) coverage requirements if a generic equivalent is available.
Under the proposed rule, if a health plan covers both a brand-name prescription drug and its generic equivalent, the plan could specify that only the generic drug would qualify as EHB, and the brand-name drug would no longer be considered part of EHB coverage. If a plan takes this option, premium tax credits and advanced premium tax credits (APTC) could not be applied to any portion of the premium attributable to coverage of brand-name drugs that are not considered EHB. Issuers would have to calculate that portion of the plan’s premiums and report it to the appropriate health insurance exchange for accurate APTC calculation.
It is also important to remember that lifetime and annual out-of-pocket limits only apply to cost sharing for benefits classified as EHB. Therefore, HHS is seeking comments on whether any portion of enrollees’ out-of-pocket expenditures for brand-name drugs not considered EHB should be counted toward out-of-pocket limits. One HHS proposed strategy would apply the cost of the generic toward the individual’s out-of-pocket limit and the other would not apply any portion of the brand-name drug cost toward an individual’s cost-sharing limit. Issuers pursuing this option would need to establish an appeals process for enrollees to petition for EHB coverage of brand-name drugs.
HHS notes these proposals will provide “additional flexibility for health plans in individual and small group markets that must provide coverage of the EHB to consumers to use more cost-effective generic drugs.” State officials may consider the following questions:
- Would it be possible for a state to carve out brand-name drugs from EHB, and would this rule preempt state laws, particularly in states that have already adopted their own list of essential health benefits in response to ACA challenges?
- Can issuers currently calculate the portion of a qualified health plan’s premiums spent on brand-name drugs excluded from EHB? If not, what would it cost to perform that calculation?
- How would this change be explained to enrollees? Would enrollees receive an advance notice that certain brand-name drugs would not be covered, along with information explaining how to pursue an exception process? Would enrollees be informed at the point of sale? Would enrollees purchasing brand-name drugs receive a summary of benefits that show which costs are attributed to lifetime and annual limits?
The proposal allows health plans to limit prescription drug coupons.
In another effort to encourage generic drug use, HHS proposes that amounts paid toward cost sharing using any manufacturer coupons for a brand-name drugs that have a generic equivalent not be counted toward enrollees’ annual limits on cost sharing. According to HHS, “the proliferation of drug coupons supports higher cost brand drugs when generic drugs are available, which in turn supports higher drug prices and increased costs to all Americans.”
This proposal addresses a concern that coupons can distort the true cost of drugs by offering limited-time cost reductions for enrollees’ out-of-pocket expenses, and manufacturer coupons may inflate drug prices that insurers pay. Limiting the use of coupons for brand-name drugs may steer consumers toward less-costly generic medications with lower cost-sharing responsibilities. Additionally, HHS suggests that not counting coupon amounts toward the annual cost-sharing limit would “promote prudent prescribing and purchasing choices by physicians and patients based on the true costs of drugs [as well as] price competition in the pharmaceutical market.”
HHS seeks comments on whether states should be able to decide how coupons are treated. This proposal reflects state legislative action on coupons. In 2017, California banned the use of manufacturer coupons when a generic equivalent is available. Since the 2019 legislative session began, both New Jersey and New Hampshire have proposed similar measures. State officials may want to consider:
- How difficult would it be for insurers to carve out manufacturer assistance from their pharmacy benefit and the annual limitation on cost sharing (as well as exceptions)?
- Would it be difficult for issuers to differentiate between manufacturer coupons and other types of assistance?
- What consumer education would be required?
The proposal explores implementing reference pricing for prescription drugs.
HHS is also exploring the possibility of implementing reference-based pricing for prescription drugs. Reference-based pricing, as described in the proposed rule, would allow an issuer covering a group of similar drugs (perhaps a therapeutic class of drugs) to set the price that its health plans would pay for those drugs. Enrollees would be responsible for paying the difference between the cost of a drug and the reference price that the health plan sets if enrollees desire a drug that exceeds the reference price. HHS notes that while reference-based pricing could “bring down overall health plan costs, and perhaps premium increases,” it could also increase consumer out-of-pocket costs if an enrollee opts for a drug priced above the reference price. When submitting comments, state officials might consider:
- How would issuers determine the reference prices? Would there be a standard process for selecting reference prices? What role would the states or HHS play in that process?
- Would enrollees’ entire out-of-pocket spending on drugs that exceeds the reference prices go toward their annual cost-sharing limit?
Under the proposed rule, HHS seeks to encourage use of generics over brand-name drugs to decrease overall spending on pharmaceuticals and reduce health plan premium price increases. The proposed rule would likely benefit plans by reducing spending on brand-name drugs, which could in turn lower premiums if savings are passed to enrollees. However, in the short-term, consumers could face increased out-of-pocket spending for brand-name drugs. Are there ways to minimize cost shifting and pursue such proposals to reduce overall costs?
For more information, read this summary of all of the provisions in the federal proposed rule. HHS is accepting comments on the rule until Tuesday, Feb. 19, 2019.
The Trump Administration announced a series of initiatives earlier this month to reduce prescription drug prices and patient drug costs. Its American Patients First provides an outline of ideas for future action and reprises initiatives the Administration recently began. The Administration is now seeking public input on many of these proposed policies.
The Administration’s Request for Information (RFI) — entitled HHS Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs — seeks responses to questions about a great variety of policy ideas described in the Patients First document.
While there are many ideas on the table, the National Academy for State Health Policy (NASHP) is examining proposals to expand US Department of Health and Human Services (HHS) data collection and transparency. If expanded and made current, this data could bolster drug price transparency initiatives, which are of great interest to states and have been recently approved by several state legislatures.
As part of its initiative, the Administration took a significant step last week by rolling out its revised Medicare and Medicaid drug spending dashboards. To date, the dashboards provided information about past program spending, but now they include specific drug prices with annual price changes dating back to 2012. This is a great new transparency tool for states and researchers. In its RFI, the Administration asks how this drug price-tracking effort can be improved.
How to Improve Drug Cost Data
The current dashboards use insurance claims information. While offering a great tool for price transparency tracking, years-old information will not help states that are trying to develop strategies to lower drug prices in real time, as new state transparency efforts do. HHS should take additional steps to provide more current list prices and price changes on its website, which would create efficiencies for states. If that information was readily available, states would not have to recreate systems to track price increases and could instead focus their resources on collecting manufacturer price increase justifications as new state transparency laws now require.
The RFI also asks for input on improving other HHS data about prescription drug costs. For example, the RFI asks if it would more informative to publish information on national gross (before rebates) and net (after rebates) spending. Providing gross and net prescription drug spending would certainly assist the industry in demonstrating that their net prices are lower than the public understands. However, it will be even more helpful for the public to understand how prescription drug costs impact health care coverage and spending. Currently, the Centers for Medicare & Medicaid Services’ Office of the Actuary presents prescription drug spending as a portion of total national health expenditures (NHE).
NHE includes spending on health and medical research, long-term services and supports, and other important health expenditure categories. In the context of all national health spending, spending on drugs may not appear as significant as it does when examined in the context of personal medical service spending or health care coverage.
A separate, annual analysis of prescription drug spending as a percentage of federal, federal/state, and commercial health coverage spending would give policymakers an informative representation of the significance of prescription drug spending and spending increases where it counts most.
NASHP’s Pharmacy Costs Working Group will be responding to the HHS RFI about these and other ideas, and will feature the responses on its Center for State Rx Drug Pricing website.
Vermont is the first state in the nation to approve a wholesale program to import lower-cost prescription drugs from Canada, following Gov. Phil Scott’s signing of the landmark law last week. Vermont now begins the task of winning approval from the secretary of the US Department of Health and Human Services (HHS) and implementing its program.
|What federal requirements must Vermont’s importation law meet to win approval?
Vermont carefully crafted its importation law to meet federal requirements. HHS allows programs of wholesale importation of drug from Canada, as long as consumers benefit from lower drug costs, drug safety is assured, and opioids are not among the drugs imported.
The new law establishes checks and balances to guarantee it meets the federally-mandated cost savings and drug safety requirements by:
Guaranteeing safety: Vermont can only purchase drugs only from Canadian government-regulated suppliers.
Achieving savings: Vermont will only import drugs that are expected to generate substantial savings for its consumers. The imported drugs cannot be sold outside Vermont.
Sustainable funding: Vermont will charge a nominal fee on each prescription, or establish another financing mechanism, to ensure that the program is funded in a way that does not jeopardize consumer savings.
Careful oversight: The law requires a “robust” audit and oversight process to guarantee cost savings. The state attorney general will monitor the program for “anticompetitive behavior” by industries that are affected by a wholesale prescription drug importation program.
Vermont’s Agency for Human Services is responsible for applying to HHS for approvals needed to initiate the program, and it will begin implementation within six months of getting state funding and federal approval. Its implementation plan includes the following steps:
Step 1: The state will either become licensed as a drug wholesaler itself or it will contract with a Vermont-licensed wholesaler. Next, it will contract with one or more Vermont-licensed drug distributors who will use existing drug supply chains to provide proper distribution of drugs throughout the state.
Step 2: Vermont will create a registration process for health insurance plans, pharmacies, and health care providers that want to participate in the program.
Step 3: The state will work with payers and others to identify which high-cost drugs are expected to yield the greatest cost-savings to consumers if they’re imported from Canada. It then arranges to import those drugs in bulk from licensed Canadian suppliers.
Step 4: To guarantee pricing transparency and accountability, Vermont will publicize the prices of imported prescription drugs widely, create a marketing and outreach plan, and set up a hotline to answer questions and address the needs of consumers, employers, health insurance plans, pharmacies, health care providers, and others.
Step 5: Vermont will audit the program and report annually to the House Committee on Health Care and the Senate Health and Welfare and Finance committees about which drugs are imported and the number of participating pharmacies, health care providers, and insurance plans. The law also requires detailed reporting from insurance plans about their drug costs and the savings achieved through importation.
NASHP will work with Vermont officials and continue to report on Vermont’s application to HHS and its implementation of the landmark importation initiative.
Read NASHP’s model drug importation legislation, on which Vermont’s new law is based.
View an easy-to-read infographic on the steps required to implement wholesale importation.
The US Department of Health and Human Services (HHS) recently released proposed changes in its annual the rule that governs standards for issuers and the health insurance marketplaces. The annual notice is one of the most significant tools the Administration wields in shaping the health insurance markets and this proposed notice carries significant implications for markets and states.
Below, the National Academy for State Health Policy (NASHP) reviews the changes that will have the greatest impact on state policymakers and consumers. Comments responding to the notice are due to HHS by Nov. 27, 2017.
What states need to know about proposed changes to insurance plan design and oversight:
- Grants greater flexibility to states to set benchmarks for their essential health benefits (EHB).
- It allows states to adopt EHB benchmarks of another state, either in their entirety or for any of the 10 EHB categories defined in the Affordable Care Act (ACA).
- It also redefines the definition of “typical employer plan” by which benchmarks are set, as a small group, large group, or self-insured group plan that has an enrollment of at least 5,000 enrollees.
- Additionally, it mandates that a state’s benchmark must provide an “appropriate balance of coverage” across the EHB categories and allows issuers to substitute benefits between and within benefit categories.
- The notice suggests HHS may establish a federal default definition for EHB in the future.
- Increases a state’s responsibility to perform plan certification and oversight.
- In states that use the federally-facilitated marketplace (FFM), the proposed plan would continue to allow states to conduct network adequacy review and data review for QHP certification.
- It would allow states to maintain oversight over accreditation, compliance reviews, compliance with geographic area standards, and reporting on quality improvement strategies. States operating state-based marketplaces (SBMs) already maintain this authority.
- Facilitates ability to change the medical-loss ratio (MLR) in states.
- Streamlines the processes that enable states and HHS to reduce the MLR from the current threshold that requires that 80 percent of premium dollars get spent on medical services or quality improvement efforts.
- Sets an automatic calculation that 8 percent of spending be counted toward quality improvement for the purposes of MLR calculation.
- Eliminates certain plan standards.
- It eliminates actuarial value requirements in place for stand-alone dental plans offered on the exchanges.
- It eliminates the requirement that an issuer’s offerings must be “meaningfully different” from each other in order to be offered through a marketplace.
- It eliminates standard plan design (also known as simple choice options) on the FFM.
- Redefines certain Children’s Health Insurance Program (CHIP) coverage.
- It proposes to include CHIP buy-in coverage as minimum essential coverage.
- It would allow mothers who lose CHIP coverage obtained during pregnancy to qualify for a special enrollment period (SEP). (CHIP coverage is considered to cover the child, so would not normally qualify the mother for a SEP triggered by loss of coverage)
Proposed changes to rate review and filing standards:
- It increases the rate review threshold, and streamlines the rate review process. The proposal would raise the threshold at which a reasonable increase review is triggered from 10 percent to a 15 percent, limiting the plans that would require submission of justification for rate increases. States may submit a proposal to increase the threshold. It continues to allow states to evaluate rate increase outliers and may eliminate CMS rate review that is duplicative of states’ processes. It also eliminates requirement to publish state thresholds publicly, and exempts student health plans from rate review.
- It increases state flexibility on rate filing and posting deadlines. The proposal reduces advance notice states must provide to CMS prior to posting rates from 30 to 5 days, and permits states with effective rate review programs to post rates on a rolling bases and to set different rate submission deadlines for QHP and non-QHP products.
Proposed changes to eligibility and verification processes:
- It eliminates self-attestation of income for individuals. It would require a data match for any consumer between 100 to 400 percent of the federal poverty level (FPL) who reports a higher income level than federal data may indicate. Currently, marketplaces can accept self-attestation for any individual who reports a higher income than is indicated by federal data.
- It enables denial of tax credits due to failure to reconcile. It eliminates noticing requirements that prohibited marketplaces from issuing tax credit denials to consumers that may not have reconciled discrepancies in their tax information filed during previous years.
Proposed changes to enrollment programs:
- It streamlines requirements for Navigator programs. It eliminates the requirement that marketplaces include at least two Navigator entities, and that at least one of these includes a community and consumer-focused nonprofit group. It also mandates that Navigators maintain a physical presence in the exchange service area it serve, and seeks comment on accessibility requirements currently in effect for Navigators and assisters.
Proposed changes to the Small-Business Health Options Program (SHOP)
- It eliminates operational requirements for SHOP. It would no longer require SHOPs to perform premium aggregation, online enrollment, and employee-specific eligibility functions. Participating employers would be responsible for collecting relevant information and premiums from employees to send to issuers. Changes will be implemented on the federal SHOP as soon as Jan. 1, 2018. States operating their own SHOP may maintain currently mandated operations.
- It imposes new requirements and grants new flexibility on SHOP issuers. Issuers would be required to maintain greater responsibility to facilitate enrollment in SHOP plans. It allows issuers to base premiums based on enrollee averages, and permits issuers to restrict SHOP annual enrollment periods. Issuers would have broadened ability to apply group participation rules to SHOP plans such as rating standards, and notification and termination requirements.
Beyond these proposed programmatic changes, the notice also invites state officials to comment on several areas where the Administration may provide greater flexibility or guidance in the future. These include:
- How HHS can support the ability of SBMs to leverage commercial platforms;
- How HHS can make the SBM-FP model, by which states operate as an SBM but leverage technology from healthcare.gov, more attractive to states; and
- How HHS can foster insurance innovation and reform including value-based coverage, cost-effective drug tiering (pricing by drug category), innovative network design, person-centered coverage, high-deductible health plans paired with health savings accounts, and policies that promote use of preventive care and wellness.
In the coming weeks, NASHP will continue to analyze how the proposals may impact states and their insurance markets and track state responses to the rule as they rapidly approach the comment deadline on Nov. 27, 2017.