Health Policy News June 2016

The Centers for Medicare and Medicaid Services (CMS) announced a new grant opportunity for states last week.  State insurance regulators across the country are eligible to apply for funding to support planning and implementation of health insurance market reform provisions of the Affordable Care Act (ACA). The first article in this edition of Health Policy News explores this breaking grant announcement in more detail, including project ideas and considerations for state regulators interested in pursuing this opportunity.

This edition closes out our three-part series on Medicaid managed care, following the release of CMS’s final revamp of managed care rules. In this edition, we explore innovations in Medicaid managed care: Medicaid expansion demonstration waivers that utilize the managed care delivery system in innovative ways; and provider-led managed care entities.

Lastly, we conclude this edition with a summary of the guidance recently released by CMS to protect the “risk pool” including guidance on the transition to Medicare at age 65, new limitations on “short term” health plans and adjustments to the current risk adjustment methodology to account for drug costs, as well partial year enrollments. We know states are struggling with the increasing impact of risk adjustment on rate filings, and we will be following the implementation of these changes closely.

As always, if you have questions about any of these articles, in particular the new grant funding opportunity, please contact us at Our health policy subject matter experts are available to assist in planning innovative market conduct projects in accordance with CMS priorities for the new funding opportunity.

CMS announces the release of $22 Million in Health Insurance Enforcement and Consumer Protections grant funding

On June 15, 2016, CMS announced the  release of $22 million in grant funding for State planning and implementing of the health insurance market reform provisions of the ACA. The grants are aimed at helping States ensure their laws, regulations and procedures are in line with Federal requirements and that the States are able to effectively monitor and enforce health insurance market reforms and consumer protections under the ACA. States must submit a letter of intent by July 6th. Grant applications are due August 15th at 3:00 pm.

The funding is specifically available for implementing one or more of the following provisions:

  • Section 2707 – Non-discrimination under Comprehensive Health Insurance Coverage (Essential Health Benefits)
  • Section 2713 – Coverage of Preventive Health Services
  • Section 2718 – Bringing down the Cost of Health Care Coverage (Medical Loss Ratio)
  • Section 2719 – Appeals Process
  • Section 2726 – Parity in Mental Health and Substance Use Disorder Benefits

Click here to continue reading about the new funding opportunity, including sample project ideas for states seeking grant funding.

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Innovative approaches to Medicaid expansion within the Medicaid managed care delivery system

Much attention has been paid to innovative approaches to coverage of the Medicaid expansion population that leverage the private commercial insurance market for coverage through “premium assistance” programs.  However, other states have turned to the Medicaid managed care delivery system as the vehicle for implementing innovative coverage designs for the newly eligible population.  As outlined below, these states have received 1115 Medicaid Demonstration waivers to gain flexibility in the coverage offered to this population via managed care plans.


The expansion population in Indianais covered via the state’s Healthy Indiana Plan (HIP), which primarily utilizes a Medicaid managed care delivery system (there is an alternative option for voluntary premium assistance for qualified employer-sponsored insurance).  HIP has two levels (Plus and Basic) of managed care coverage.


While initially structured as a Marketplace premium assistance Demonstration in part, Iowa’s coverage of the Medicaid expansion was revamped due to a lack of choice on the Marketplace.  Coverage is now provided for the entire expansion population via private Medicaid managed care plans.


Michigan’s entire Medicaid expansion population is initially covered through private Medicaid managed care plans and Prepaid Inpatient Health Plans (PIHPs) for behavioral health services. Beginning on April 1, 2018, enrollees with income above 100% Federal Poverty Level (FPL) will have the option of transitioning to premium assistance for Marketplace Qualified Health Plans…Read More

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Alabama’s Regional Care Organization 1115 waiver approval

In May 2013, Act-2013-261, Ala. Code §§ 22-6-150 was passed,
advancing the move from a fee-for-service (FFS) system to a managed care program. According to the Alabama Medicaid Advisory Board report issued in January 2013, based on 2011 data, 22 percent of Alabama’s population was Medicaid eligible for a portion of the year. Additionally, Alabama’s Medicaid program covered 53 percent of births, 47 percent of children, and two-thirds of nursing home residents. In 2009, Medicaid accounted for 16.3 percent of all health care expenditures in Alabama. In order to contain costs associated with the substantial Medicaid population, managed care in the form of regional care organizations (“RCOs”) were established with little guidance other than the Act 2013-261 itself.

On February 9, 2016, CMS approved Alabama’s Section 1115 waiver request, implementing the tenants of Act 2013-261. The waiver enables the transition from fee-for-service to Regional Care Organizations, established as provider led organizations in five regions of the State. The approval…Read More

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CMS announces steps to protect ACA risk pools

On June 8, 2016, CMS announced new steps to protect the integrity of health insurance “risk pools.”  The integrity of those pools directly affects the accuracy and stability of health insurance premiums under the ACA.  CMS has outlined new steps pertaining to: controlling the abuse of “short-term” health plans, improving the accuracy of risk adjustments, reducing abuse of Exchanges’ special enrollment periods, improving Exchanges’ data matches, and transitioning consumers to Medicare as they approach age 65.

More specifically, CMS announced a proposed rule that would limit “short-term” health plans to periods less than three months and prohibit renewals of such plans. Such non-Exchange plans are exempt from many ACA requirements and can offer low premiums for very limited benefits in order to enroll young, healthy persons who present low actuarial risk.  Health insurance issuers may still offer legitimate “short-term” plans under the proposed rule (e.g., as a stop-gap for individuals between jobs offering employer-based coverage), but the proposed rule would close loopholes and deter…Read More

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