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Healthcare Ructions Abound

Healthcare Ructions Abound

The New Administration Takes Shape

As promised, President Trump has come out swinging in the first week of his presidency. Already, he has put the wheels in motion to repeal Obamacare and radically change healthcare programs.

Trump’s first executive order was aimed squarely at the Affordable Care Act (ACA). It instructed agencies to “waive, defer, grant exemptions from or delay” any part of the law that imposes a financial or regulatory burden on those affected by the law.

The practical impact may be small, at least initially; most aspects of the law have been implemented already. But it does send a clear signal that the new administration will attempt to roll back the law. While the order instructs agencies to live within the law, it could result in:

  • Regulations, taxes and penalties being lessened
  • Lack of or lax enforcement of both the individual and corporate mandate (a mandate perhaps only softly enforced already)
  • Centers for Medicare & Medicaid Services (CMS) relooking at the depth and breadth of essential benefits in the Exchange plans
  • Immediately scaling back marketing for the Exchanges
  • Allowing states to gain more flexible waivers for Medicaid expansions (efforts spurned by the Obama administration)

To some degree the order could lessen costs and burdens on plans and businesses. For example, if the order leads to a redefinition of the essential benefits in the Marketplace it could bring some relief to health plans shouldered with a one-size-fits-all rich benefit. On the other hand, the order could lead to fewer Americans enrolling and therefore greater adversity in the risk pool. The first hearings on replacement of Obamacare are slated in the House next week. And some Senate Republicans are beginning to talk of alternatives to Obamacare, including various schemes to fund states for the uninsured either under an ACA scheme or through Medicaid. Some of the costlier mandates in the essential benefits would be eliminated.

At the same time, administration officials are also signaling that Trump will indeed back the concept of block granting the Medicaid program to states. This is clearly a radical change that would move the program from a defined benefit entitlement status at the national level to a discretionary health allocation largely administered by states. To the extent there already is a huge gulf between eligibility and benefits in some progressive states and less generous ones today, the disparity could become even larger. At the same time, some policymakers see the change as potentially freeing up dollars trapped in overly rich benefits and costly regulation and redeploying them to expanded coverage for the uninsured. And this week, Trump’s Health and Human Services Secretary Nominee, Tom Price, strongly voiced his support of Indiana’s Medicaid experiment, where recipients are required to make personal contributions to Health Savings Accounts or lose aspects of Medicaid coverage.

There is even talk by the House GOP to look at Medicare and convert it to a premium-support program from the current defined entitlement. This week, Trump’s pick for White House budget director, Rep. Mick Mulvaney of South Carolina, stated his view that Social Security, Medicare and Medicaid all need an overhaul if they are to be around for future generations.

Now, as we have said in the past, the dialogue is good and needed, but what actually happens over the next few years is very much unknown. Notwithstanding that the GOP appears to be in a strong political position in DC, we know lawmaking and policy is far more nuanced. There are roughly a half dozen moderate GOP senators that control the outcome of any legislation. They already have signaled their apprehension to repeal Obamacare without an adequate and well-thought-out replacement. On the Medicaid transformation, these same senators are known to be skeptical of such a radical change, instead preferring greater flexibility in the existing entitlement and regulatory scheme. To add to the reticence, there are a number of GOP Governors who actually expanded Medicaid with the ACA’s passage and who fear a long-term reduction in overall financial support under block grants. And President Trump and his compatriots, including GOP House leaders, are no political slouches either. They, too, understand the risk of radical moves. Price, himself, told lawmakers this week he did not want to see Americans “fall through the cracks” during a repeal effort.

Mergers Look Dead

Despite our repeated prognostications to the contrary, the two health insurance mega mergers look dead. The federal judge in the Aetna-Humana merger has sided with the Department of Justice (DOJ) and declared that the merger would indeed reduce competitiveness and violate anti-trust provisions.

Long ago, we felt that the Anthem-Cigna merger (still pending but expected to be shot down soon) was likely to be rejected, but were more hopeful about the Aetna-Humana one. We never bought the DOJ’s argument that looking at just the private Medicare Advantage world, as opposed to including the traditional fee-for-service program, made a lot of sense. Also, we find it curious that the federal judge, while ruling based on the competitiveness in the Medicare market, publicly chastised Aetna – more like flogged –for seemingly using its Exchange participation as leverage in the merger. Like most major insurers, Aetna substantially pulled out of Obamacare because it was a risky and unprofitable system, but it remained supportive for far longer than many others.

Aetna and Humana say they may appeal, but if they do, their prospects for success are low.

Provider Directory Travails

As we told you in our October 31, 2016 blog, CMS has now begun to look at the accuracy of provider networks in the Medicare Advantage program. After a lengthy review, CMS found major inaccuracies in plans’ network directories. About half of all providers reviewed had inaccurate information. This month CMS warned 21 plans they could face sanctions (fines or enrollment suspensions) if they do not remediate the issues by February 6. Another 32 companies received less serious letters for their errors. Plans big and small were among those receiving warning letters.

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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