In our last edition of the 2021 calendar year, the Health Policy News team looks back at major health policy-related topics from the last year, as well as discusses the future of these issues. Click a link below to jump directly to any of the topics covered in this month’s edition:

• COVID-19
• Medicaid
• Private Insurance

COVID-19

For the second year in a row, the top health policy story was undoubtedly the COVID-19 pandemic. Although the virus’ impact was less than in the previous year thanks to the expedient development of three different vaccines, case counts have continued to reachhigh levels and the death count in the U.S. continues to climb, hitting 800,000 by mid-December. In response to this, states have instituted varying levels of restrictions and mandates.

Looking Back

State Vaccine Mandates

As the new federal administration took office in January, it faced the challenge of an uncertain future for the COVID-19 pandemic. The prospect of effective vaccines provided optimism, but, if there was a lesson to be learned in 2021, it was that declaring victory too early was a risky proposition. After a summer of easing restrictions, the emergence of the Delta variant led to a spike in COVID-19 cases and a reinstitution of vaccine mandates in some states and cities.

New York City has been at the forefront of vaccine mandates, implementing a requirement that people be vaccinated to utilize entertainment venues and dining facilities. Recently, the city also implemented an aggressive private sector vaccine mandate, which requires all private sector workers to be vaccinated by December 27^th of this year.

Conversely, other states have moved to block vaccine mandates. In November, Florida passed a law banning employers from issuing vaccine mandates unless certain exemptions were offered to employees.

The difference in state and city policy regarding mandates will  continue as the issue of vaccination is addressed by local governments.

COVID-19 Vaccines

One positive development over the last year was the creation and approval of multiple COVID-19 vaccines. The approval of vaccines developed by Pfizer, Moderna and Johnson & Johnson for emergency use last winter was a monumental achievement. The COVID-19 vaccine development shattered the previous record timeline in which a vaccine was created, tested and approved by the FDA. Immediately following the vaccines’ release, the primary challenge of the pandemic shifted from vaccine development to vaccine distribution—which proved to be more difficult than anticipated.

Our January post, “How States Can Improve COVID-19 Vaccine Distribution,” described many of these distribution challenges. Due to the challenges of mass production and distribution of the vaccines, demand outpaced supply for the first few months after the vaccine was authorized, except in states with relatively little demand. However, as time went on, supply grew to meet the vaccination demand, aided by funding from the American Rescue Plan Act (ARPA) that was allocated towards vaccine production, distribution, and tracking. Once supply caught up to demand, the challenge shifted from supplying doses for everyone that wanted them to encouraging more people to get vaccinated—as detailed in our May post, “Analyzing the Effects of Public Health Messaging on Vaccine Hesitancy.” Today, about 61 percent of the population has been fully vaccinated, with an additional 16.5 percent having received a booster shot.

Looking Forward

Vaccination Rates and Hesitancy

In 2022, there will be a multitude of challenges surrounding continued COVID-19 vaccinations. First is convincing “hold out” populations to get vaccinated. The United States is still struggling with many of the same vaccine hesitancy challenges that it faced earlier in 2021, with notable demographic trends. Vaccine Trackers show that most states have a lower share of racial minority populations vaccinated than they have racial minority residents, a trend which has been improving. Additionally, northern states are much more likely than southern states to have a majority of their residents vaccinated.

The stark impact of the COVID-19 virus on vaccinated populations vs. unvaccinated populations makes the need to increase vaccination numbers even more pressing. After Delta became the prevalent COVID-19 variant, vaccinated people were five time less likely to be infected and over ten times less likely to be at risk for hospitalization or dying. With the introduction of booster shots, it will be incumbent upon the federal government to continue to improve public health messaging and distribution tactics to reach these underserved populations.

The global vaccination response is also a point of concern, especially concerning new variants, such as the Omicron variant, that have emerged from other countries. An equitable and international vaccine campaign, such as the one piloted by COVAX, will play a key part in ending the pandemic.

The Omicron Variant

The Omicron variant has begun to spread rapidly throughout the U.S., leading to another set of actions from the federal government to combat the virus through the upcoming winter. On December 2^nd, President Biden issued a plan that described “New Actions to Protect Americans Against the Delta and Omicron Variants as We Battle COVID-⁠19 this Winter.” The plan’s stated measures to meet this goal include:

• Approval of and increased availability of booster shots for all adults
• Public health campaigns to encourage adults to get boosters and educate them on their benefits
• New initiatives to get children aged 5-11 vaccinated
• Expanding free at-home testing for Americans
• Requiring that all returning travelers to the United States get a COVID-19 test, no matter vaccination status
• Deploying rapid response teams throughout the country to help combat rising case numbers
• Continued commitment to global vaccination efforts

We detailed the Biden administration’s COVID policy updates throughout the year in posts in January, July and October. This latest set of policy initiatives shows the urgency with which the administration is taking the latest COVID-19 variant and how it seeks to maintain a functional society while protecting everyone from the virus. In 2022, the Biden administration will likely look to maintain this balance in creating pandemic-related policy.

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Medicaid 

One of the issues Medicaid policy makers and state leaders had to tackle in 2021 was the best way to designate funding allocations—seemingly a nice problem to have in a policy sphere usually “robbing Peter to pay Paul” when it comes to program budget allocations.

As a result of the passage of the ARPA in March 2021 (specifically Section 9817 of the Act), Medicaid agencies were allocated unprecedented amounts of relief funding for home and community-based services (HCBS) programs. Additionally, Medicaid expansion was implemented in a few states, with provisions included in ARPA that further incentivize expansion in states that have yet to do.

Looking Back

Enhanced Federal Funding

Over the last year, we dedicated most of our coverage of Medicaid policy to the funds included in ARPA, and how states were planning to allocate them. States spent much of this past summer and fall working though spending plans tied to the enhanced federal funding for Medicaid Home and Community-Based Services (HCBS) and certain behavioral health services—funding provided through a one-year, 10 percent increase to the share of state HCBS Medicaid spending that is paid for by the federal government. Health Policy News (HPN) covered some specific state approaches this past fall, as well as including a deep dive in our annual white paper. These increased Federal Medicaid Assistance Percentages (FMAPs) will be in place from April 1, 2021, through March 31, 2022, and states must spend the enhanced FMAP funding by March 31, 2024. States have begun to receive full and/or partial approvals to spending plans.

Incentives for Medicaid Expansion

Action was taken via ARPA to provide greater access to Medicaid by incentivizing the 12 states that have not yet adopted the Medicaid expansion to do so. In an interesting twist, the ARPA incentive is tied to funding for the non-expansion population; if a state decides to newly implement expansion, they will receive a temporary increase of five percentage points in federal match funding for their non-expansion populations. Like all other expansion states, they will also receive a 90 percent FMAP for the expansion population. By tying the FMAP funding increase to states’ non-expansion populations—which account for the majority of state Medicaid costs—the incentive is more valuable than if it were tied to the expansion population.

Gradually, “holdout” states have continued to adopt expansion, which seems to have already had some measurable effect in states like Missouri and Oklahoma (where expansion was approved via ballot initiative and went into place this past summer/early fall).

For example:

• In just one month, from when the state started taking applications on June 1, 2021, to the benefit period beginning on July 1, 2021, 120,000 Oklahomans applied and were determined eligible for Medicaid. It is estimated that the additional funding from ARPA will provide the state with $500 million over two years.
• In two months (August-October 2021), Missouri received 17,000 applications for Medicaid. It is estimated that the ARPA funding will result in an estimated $968 million in additional federal funding over the next two years.

Looking Forward

HCBS Planning

As states continue the spending plan approval and discussion process with the Centers for Medicare and Medicaid Services (CMS) for enhanced HCBS and behavioral health funding, implementation of initial approvals will begin to move forward. This social experiment of unprecedented funding support for HCBS will be interesting to follow for years to come—particularly to see how much the direct financial support to HCBS workers and recipients makes a measurable impact on the quality of care received. Stay tuned to HPN for updates on the specific programmatic investments being made across the country as HPN continues to track the progress in states from spending plan to program implementation for Section 9817 funded HCBS programs.

Addressing the Coverage Gap

HPN will also continue to cover any action related to Medicaid expansion in the twelve states that have yet to adopt expansion. The federal match increase will be available for two years from the date a state expands coverage, which may be enough to incentivize the remaining twelve states (or the voters of those states) to expand Medicaid. A number of states that have yet to expand Medicaid had action in 2021 that could bring expansion up for debate or review in 2022, including the following:

• Florida: An initiative to put Medicaid expansion on the 2020 ballot was delayed by its organizing committee to the 2022 ballot.
• Kansas: Governor Kelly included Medicaid expansion in her State Fiscal 2022 budget, but it was not approved in the final budget, nor did expansion legislation filed by the Governor (which included work requirements and premiums for Medicaid enrollees) move during this year’s legislative cycle. It is likely this topic will continue to be under debate in 2022.
• Mississippi: An interesting Medicaid expansion roadblock emerged in the state this past year, when the state Supreme Court ruled that the ballot initiative process was “inoperable due to procedural errors regarding ballot initiative language” in the state constitution. Given the current political makeup on the state, it is unlikely, unless it is a ballot initiative, that we will see movement in the state in 2022 on Medicaid expansion.
• South Dakota: This past November, advocates in the state submitted signatures for a constitutional amendment for Medicaid expansion to appear on the November 2022 ballot. If passed by voters, this would implement expansion in July 2023. A separate group is also working to gather signatures for a state statute to expand Medicaid, which would also appear before voters on a November 2022 ballot. This will be a particularly interesting state to follow this year leading up to the next voting cycle.

A final item of note: the Build Back Better legislation (that as of publication has passed the House but has stalled in the Senate) seeks to build on ARPA efforts to address the coverage gap in non-expansion states. Under the bill, in states that maintain the coverage gap, individuals in that gap would be eligible for subsidized coverage through the Exchanges for 2022 through 2025. These individuals would also be newly and temporarily eligible for both premium tax credits and cost-sharing reductions. The Medicaid coverage gap has long been a priority area for Patient Protection and Affordable Care Act (ACA) supporters, and it is likely that the administration will continue to seek ways to address it permanently regardless of the outcome of the Build Back Better Act.

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Private Insurance

Health policy related to private insurance in 2021 included efforts to address the impact of the COVID-19 pandemic. At the same time, 2021 also brought broader policy resets in this area of health policy as the new administration took office and sought to advance its policy goals.

Looking Back

Policy Resets

HPN covered the evolving Exchange guidance that was released throughout the first nine months of 2021, starting with the initial final Notice of Benefit and Payment Parameters for 2022 (NBPP) that the former administration issued as it left office. Among the changes that this final act instituted were significant policy overhauls in the areas of direct enrollment through insurers and web-based brokers, as well as Section 1332 Waivers—which the new administration would ultimately rescind in the third final NBPP, released in September 2021. While the initial final NBPP allowed states to rely solely on insurers and web-based brokers for enrollment in Qualified Health Plans (QHPs), the third final NBPP reaffirmed the requirement for each state to have an Exchange. Additionally, the third final NBPP amended the more lenient Section 1332 rules put into place in the initial final NBPP, reinstituting a more stringent interpretation of the Section 1332 guardrails. The third final NBPP also extended the annual Open Enrollment Period and increased Exchange user fees in order to enhance funding for Navigators.

Because the initial final NBPP did not address all necessary payment parameters and other policies included in the proposed NBPP, the new administration issued the second final NBPP and the final Letter to Issuers in the Federally-facilitated Exchanges in May, addressing cost-sharing limits, Essential Health Benefit (EHB) reporting and pre-payments of Medical Loss Ratios.

American Rescue Plan Act

Specific to the impact of the COVID-19 pandemic, the private insurance-targeted provisions of the ARPA, outlined in our March coverage of the Act, sought to make inroads toward ensuring Americans have health coverage and access to affordable health care. In addition to creating a COVID-19 Special Enrollment Period, ARPA made a significant investment in making private insurance more accessible to a number of key populations. The temporary enhancement and expansion of Premium Tax Credits (PTCs), outlined in detail in our article, especially benefit:

• Low-income populations who are not eligible for public programs and struggle with paying any amount toward premiums;
• older individuals who, under the ACA, earn enough money to make them ineligible for PTCs but not enough money to afford their age-rated premiums; and
• the unemployed.

Additionally, as a result of the enhanced and expanded PTCs, there is more money on the table for states with Section 1332 Waivers that are funded through the federal savings in PTCs for the years ARPA is in effect. In fact, federal pass-through funding across the Section 1332 Waiver states increased by $452 million in 2021 alone as a result of ARPA.

No Surprises Act

Implementation of the No Surprises Act (NSA), which seeks to end unexpected medical debt, also began this year, with the release of two interim final rules (IFRs) and FAQ guidance. The first IFR:

• enumerated standards that apply to emergency services,
• addressed the application of the NSA to post-stabilization services,
• outlined the process for determining the rate to be paid for services to which the NSA applies, and
• addressed provider notices.

The second IFR outlined the two dispute resolution processes provided for under the law and addressed requirements for good faith estimates and the applicability of the ACA external review process to any adverse determinations related to the NSA.

Looking Forward

Exchange Guidance

While we are still awaiting the first glimpse of Exchange guidance for the 2023 plan year, there is no doubt that it will contain changes from the current guidance. The new administration used the Exchange rules it issued this year to preview additional changes that are forthcoming.

In its guidance for the 2023 plan year, CMS is expected to reintroduce standardized plans for the Exchange, as required by a recent court ruling, in addition to adjusting HealthCare.gov and requiring the adjustment of direct enrollment platforms to allow for differential display of those plans. While once an option for insurers designing QHPs, standardized plans were eliminated in recent years. Making it possible for all issuers on the Exchange to offer plans with the same plan design—whether this is mandatory or, in the case of the Federally-facilitated Exchanges, optional—promotes more meaningful choice by consumers by isolating plan variation and allowing shoppers to compare “apples-to-apples” plans and select the one that best suits their needs. These standard designs can also be used to promote best practices in plan design, allowing for quality-driven designs and designs that address health disparities—for example, by eliminating cost-sharing requirements for conditions that disproportionately effect underprivileged groups.

The re-introduction of standardized plans at the federal level could, over time, provide more motivation and/or direction for State-based Exchanges to do the same. For 2022, only eight states and the District of Columbia have adopted standardized plans, with Colorado set to do so for 2023. Time will tell whether states will follow the direction forthcoming at the federal level.

Another policy change required by the recent court decision and expected for the 2023 plan year is the re-introduction of federal network adequacy reviews of the QHPs. The federal review of QHP network adequacy was eliminated via the NBPP for 2019, which deferred to state review. Strong network adequacy standards are critical to ensuring insured individuals have access to healthcare providers via their insurance coverage. Additionally, strong standards ensure that insured individuals have meaningful access to care, including the ACA-mandated Essential Health Benefits that all QHPs must offer. Setting such standards at the federal level is an important step toward guaranteeing adequate standards across the nation.

Finally, CMS has said that it intends to clarify requirements related to the grace period for non-payment of Exchange premiums via the NBPP for 2023. The grace period provides enrollees receiving APTCs extra time to catch up on missed premium payments before losing coverage. Specifically, the administration has expressed concern that the application of the three-month grace period to those appealing APTC eligibility is unclear and it intends to clarify it.

Build Back Better Act

Late 2021 or 2022 may also bring an extension of the ARPA changes to PTCs via the Build Back Better Act. Under the ARPA, those changes are currently temporary, with most in effect for 2021 and 2022. The framework that was released by the White House and the legislation that passed the House both include an extension of the increase in subsidy levels and the extended eligibility for PTCs through 2025. The Build Back Better Act would also align the affordability standards for what is considered affordable employer-sponsored insurance (making those individuals ineligible for PTCs) with the ARPA cutoff for PTC personal contributions (8.5 percent).

As with the changes currently in place under ARPA, this extension and expansion would impact states more broadly via the opportunity for increased pass-through funding for Section 1332 Waivers noted above. The timeline of the waiver process meant that states without an existing 1332 Waiver did not realistically have enough time to design, apply for, and receive approval of a waiver to reap the benefits of the increased funding available through 2022 under ARPA. However, if the Build Back Better Act passes, extending those changes and the aligned enhanced funding through 2025, states may consider pursuing waivers that previously seemed unattainable with fewer federal dollars available. The Build Back Better Act also includes additional funding for Section 1332 Waiver planning and implementation and state-based reinsurance programs, making it even more likely states will reconsider Section 1332 reinsurance program waivers.

Section 1332 Waiver Renewals and Approvals

As far as existing Section 1332 Waivers, the earliest ones approved are coming up on the end of their initial terms. Hawaii, which has the most unique waiver—tied to its pre-existing employer coverage system—has already received approval of a waiver extension, which goes into effect in 2022. Other states, including Alaska, Minnesota and Oregon, whose waivers expire at the end of 2022, will be seeking approvals of extensions this year. All three states have submitted letters stating their intent to seek renewals of their waivers—Alaska and Oregon without any substantive changes, and Minnesota seeking a reanalysis of the intersection between its waiver reinsurance program and the state’s Basic Health Plan.

At the same time, 2022 will also bring a reconsideration of Georgia’s recently-approved Section 1332 Waiver. In addition to creating a state-based reinsurance program, the waiver—which faces legal challenges—has a second phase that would eliminate the state Exchange, similar to the initial planned for state Exchanges under the initial final NBPP for 2022. Under the Georgia Access Model, residents would instead search for and enroll in coverage using a decentralized system relying on web-brokers and insurers, which could display only select QHPs and/or also sell non-ACA-compliant plans, such as short-term limited duration insurance. After taking a second look at all Section 1332 Waivers in light of the changes created by ARPA, the Departments of Health and Human Services and Treasury flagged concerns related to Georgia’s waiver, which was approved based on the more flexible interpretations of the Section 1332 Waiver guardrails established by the last administration.

The Departments requested additional information about Georgia’s waiver last June, with the goal of ensuring the waiver continues to satisfy the Section 1332 guardrails in light of the increases in Exchange enrollment and expected impact of ARPA. With no response from the state, the Departments opened a 60-day public comment period on the waiver on November 9, 2021, which will close on January 9, 2022. Following their review of comments, the Departments will determine whether the waiver continues to meet federal requirements. If the Departments find the waiver does not meet federal requirements, they could seek to terminate it. Notably, the review may be impacted by a unique term in Georgia’s waiver. While all Section 1332 Waivers include a provision granting the federal government authority to suspend or terminate a waiver, only Georgia’s included language that limits such actions to if the state “materially failed to comply” with the STCs or failed to meet the waiver guardrails.