This week we update you on a few topics we have written about before.
PPACA Supreme Court Ruling
Healthcare stakeholders are anxiously awaiting the Supreme Court’s decision on the Patient Protection and Affordable Care Act (PPACA). The announcement was expected already and now means that the decision will either come Monday (June 25) or Thursday (June 28).
The court has been tight lipped on the already written decision. It is a bit of folly to predict the outcome, but we have engaged in the exercise right along with many others. The swing votes are Chief Justice Roberts and Justice Kennedy. Opponents need both of these Justices’ votes to win the day in some form. Because of this, some – including us – lean toward only a partial strikedown of the law, likely to include only the individual mandate and perhaps inextricably linked provisions.
CMS duals project
As we told you before, the CMS dual demonstration projects are moving quickly with a majority of states ready to work to integrate the nation’s two major public healthcare programs. But since our last writing, advocates appear to have won a major victory. The Centers for Medicare and Medicaid Services (CMS) has indicated at least privately that it will stick to its earlier guidance not to allow states to have so-called “lock in” periods for these beneficiaries eligible for both Medicare and Medicaid.
Whether this decision is entirely accurate or not is unknown. CMS has a number of options: (1) allow the passive enrollment/opt out and bar “lock in” altogether; (2) allow shorter than one year periods; or (3) allow the one year lock-in that many were hoping for.
Barring “lock-in” altogether would be a bit short-sighted. States and plans argue that they need sufficient tenure in a plan to case manage members and save dollars. Allowing beneficiaries to jump from plan to plan means little or no coordination or management of chronic conditions. Linking limited “lock in” in some form with the passive enrollment would derive better information as to how best to manage dual eligibles’ care.
PPACA Medicaid funding for states
If PPACA is upheld, CMS seems like it will take a reasonable approach toward how it will count citizens eligible for the Medicaid subsidy. CMS has told New Jersey that it will allow adults funded under the state’s Children’s Health Insurance Program (SCHIP) to count as “newly eligible” Medicaid recipients for the purposes of the PPACA Medicaid expansion. Therefore, the state will receive 100% funding for these citizens at least temporarily. CMS will likely have to apply this liberal definition nationwide. In the past, including when SCHIP was signed into law, CMS roiled states by having overly restrictive eligibility definitions, thereby denying states the ability to maximize matching fund opportunities.
PPACA Risk adjustment methodology
Again assuming PPACA is upheld, the Department of Health and Human Services (HHS) is giving more insight into what the premium risk adjustment methodology would look like. To ensure proper recognition of risk across all plans when sicker individuals are guaranteed coverage, PPACA contemplates a series of temporary and permanent risk adjustment programs to essentially transfer revenue from plans with healthier populations to those with sicker ones.
HHS is far from having a final approach, but it indicated that it will use Medicare Advantage’s hierarchical condition category (HCC) classification system as a basis for the PPACA system that will apply to small group, individual, and exchange products. As such, it would likely stick with medical claims and not use drug data initially. Also, the model would calculate risk scores on a concurrent basis rather than a prospective one.
While the approach has its limitations, including morphing the model from an elderly one to a broad demographic one, CMS has done a reasonably good job ensuing that the HCC model adequately captures risk of plans in the Medicare sector.