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Final Exchange Rules Out/Medicaid Proposals Gain Attention

Final Exchange Rules Out

The final rules for the state exchanges under the Patient Protection and Affordable Care Act (PPACA or health reform) were issued this week by the Department of Health and Human Services (HHS). In general, the final rule grants greater flexibility to states in how the exchange program is fashioned. Earlier, HHS proposed that states have latitude in what benchmark to choose for essential benefits, although all service categories would still have to be covered. We will work toward a comprehensive review of the rules for our Compliance Insider Newsletter in coming weeks.

In a nod to the health insurance industry, exchange boards look like they could be dominated by health insurance representatives (up to half the members), while consumers are guaranteed just one person. In the final rule, eligibility for the exchange can be done by either the state or HHS. Medicaid and SCHIP eligibility would be done by state Medicaid agencies. The rules explicitly bar insurance agents from determining eligibility; however, private health clearinghouses/websites can participate in the overall exchange enrollment process.

As we have noted in the past, the main issue confronting both states and the federal government is the looming January 1, 2014 launch. Depending on interpretation, as few as 12 and as many as 28 states have begun implementing the health reform exchange law. States would need to be qualified by HHS by January 1, 2013 to launch a year later. If not, the states theoretically could step in and run a federal exchange. But HHS specifically did not issue rules on how it would fill the void created by non-compliant states. How HHS would intervene to set up federal exchanges will be tackled in a future rule.

Recognizing its lack of administrative funding and ability to intercede in as many as half of all states, the final rules allow HHS to recognize a state’s readiness to launch if it would be ready by October 1, 2013. That is a bit of a Band-Aid – expect this to be revisited once the Supreme Court weighs in on various aspects of health reform later this year.

Medicaid Proposals

Care integration for dual eligibles and revamping the Medicaid financing structure received major attention over the past few weeks.

The Care Continuum Alliance has developed a strong white paper on best practices to coordinate care for those accessing both the Medicaid and Medicare systems. The white paper can be found here. The alliance says that it is essential to have the following to ensure appropriate care and outcomes for duals:

  • Centralized, comprehensive and interconnected data
  • Health risk assessments and stratification
  • Population-specific and personalized care planning
  • Care coordination and transitions of care
  • Education, training and incentives for patients and providers
  • Program evaluation and outcomes toward improvements

The alliance recommends a number of other important measures centered on making the various Medicaid waiver programs more flexible and streamlining and aligning the two programs’ eligibility and other rules. Without specific allowances in waivers, dual eligibles can only voluntarily opt into Medicaid managed care. The alliance is recommending a passive optout process. Further, to incent buy-in and reform by plans and providers, it wants a shared savings program that taps both Medicaid and Medicare savings.

The recommendations are not necessarily new. Medicaid directors and other parties have championed these types of reform for years. But the alliance paper is one of the best dissertations on the need for reform and how it would work.

And if certain House Republicans ever get their way, they would attack the burgeoning Medicaid bill in a different manner. Their vision, articulated recently by Rep. Bill Cassidy (R-LA) at a recent America’s Health Insurance Plans’ National Policy Conference, would be to replace the current match system with a per capita cap system (risk adjusted) tied to quality outcomes.

In essence, states would be given cost targets to live under. Further, unless quality outcomes were achieved, reimbursement to state coffers would be further limited. Flexibility would be built into the system to take into account demographic and other factors related to Medicaid populations. Medicaid and Medicare funding would also be integrated for dual eligible populations.

What is intriguing about the approach is that states with best practices employ a similar approach to its managed care programs. They are setting PMPM capitations (risk adjusted in many circumstances) and increasingly holding plans and pilots accountable for quality outcomes as well. It also reminds us of the approach taken by the federal government on Medicare Advantage and Accountable Care Organizations.

Such a federal approach could force laggard states to finally abandon costly legacy utilization-based approaches in favor of accountable managed care ones. But it is fair to say that getting buy-in from all parties – Democrats and Republicans, Congress and the President, and states and CMS – is a long way off.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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