Word from Washington
Federal Agencies
Uninsured rate spikes as Medicaid “unwinding” disenrollments break 25 million
According to the most recent data from the KFF Medicaid Unwinding Enrollment Tracker, more than 25 million Medicaid enrollees have been disenrolled since states were allowed in April 2023 to resume eligibility verifications following the COVID-19 public health emergency (PHE).
Since the start of the “unwinding”, Medicaid enrollment has dropped by 13.2 million (or nearly 14 percent) nationwide. Enrollment declines ranged from 31.8 percent in Utah to only 2.4 percent in Hawaii. North Carolina is the only state to experience increased Medicaid enrollment because the state implemented its ACA Medicaid expansion last year.
Total disenrollment from the “unwinding” far exceeds initial projections (the Urban Institute predicted up to 18 million Medicaid enrollees would lose coverage) and will rise even higher as Alaska, Hawaii, New York, North Carolina, South Carolina (and the District of Columbia) continue processing Medicaid redeterminations. The Centers for Medicare and Medicaid Services (CMS) released guidance in late August agreeing to further extend the “unwinding” deadline until December 31, 2025 for any remaining states with “unusual circumstances”.
HFA and coalition partners remain focused on mitigating against wrongful terminations of Medicaid coverage, particularly those terminated for procedural reasons (such as not returning Medicaid forms on time) who may still be eligible for Medicaid. KFF data confirms the rate of procedural terminations has improved slightly during the “unwinding” (from 74 to 66 percent of all terminations). KFF attributes much of this improvement to states’ significantly increasing the use of ex parte data (or existing state databases) instead of relying on enrollees’ to return income verification forms.
Despite these improvements, the Centers for Disease Prevention (CDC) confirmed this month that the Medicaid “unwinding” has already contributed to an 8.2 percent uptick in the number of Americans without health insurance during the first quarter of 2024. The United States had hit a record low uninsured rate of only 7.2 percent prior to the start of the “unwinding” following the decade-long expansion in coverage under the Affordable Care Act (ACA).
According to recent CBO projections, the uninsured rate could reach nearly nine percent over the next decade because of Medicaid “unwinding” and expiration of enhanced premium tax credits under the ACA (which were authorized by the American Rescue Plan Act of 2021). However, that remains well below the 10.3 percent of Americans that were uninsured in 2019 before the COVID-19 pandemic.
CMS creates demonstration to mitigate premium spikes from new Part D out-of-pocket cap
The Centers for Medicare and Medicaid Services (CMS) has postponed its release of preliminary 2025 premium data for Medicare Part D enrollees until September amid evidence that the new cap annual out-of-pocket (OOP) costs under Part D are causing a substantial spike in premium bids by insurers.
Starting in 2025, Part D enrollees will pay no more than $2,000 per year in OOP costs for prescription drugs thanks to the Inflation Reduction Act (IRA) passed by Congress in 2022. Since Part D enrollees typically had to pay five percent of drug costs, a CMS fact sheet predicted the new cap would reduce OOP costs by an average of 30 percent. A report released last month by AARP similarly estimated that the 40 percent of Part D enrollees expected to hit the cap over the next four years can expect to save an average of 56 percent per year in OOP drug costs (or roughly $1,100).
However, Part D insurers responded to the new caps by increasing 2024 Part D premiums 21 percent and more than doubling their premium bids for 2025 to over $179 per month. In an effort to mitigate these premium spikes during an election year, CMS announced a voluntary “premium stabilization demonstration program” for stand-alone Part D plans (which could enhance money they receive from the ACA’s “risk corridor” protections against exceptionally high claims).
The premium spikes have already caused Republicans in Congress to direct the Government Accountability Office and Congressional Budget Office to investigate the legality of the new demonstration program and determine the “projected payout” that Part D plans may receive from CMS to limit 2025 increases.
Congress
Senate appropriators seek HHS response on copay accumulator regulations
The Senate Appropriations Committee advanced a Labor-HHS-Education fiscal year 2025 spending bill this month that would direct the Department of Health and Human Services (HHS) to brief Congress on how the agency will enforce its 2020 regulation prohibiting copay accumulator adjuster programs (CAAPs) for drugs with no generic alternative.
A federal court reinstated the 2020 rule after striking down the 2021 Notice of Benefit and Payment Parameters regulation that reversed course and permitted health insurers to use CAAPs (see Word from Washington, January 2024). However, HHS has yet to respond to how it will comply with the court’s directive to rewrite the rule.
If agreed to by House appropriators, the measure would require HHS to respond to Congress within 180 days after the legislation is enacted. However, spending bills for federal fiscal year 2025 (which starts October 1st) are widely expected to be postponed until after the November elections.
HFA will advocate for passage of S.4942 as part of its Capitol Hill Advocacy Retreat next month, as well as the House and Senate versions of the HELP Copays Act (H.R 830, S.1375), all of which continue to receive strong bipartisan support.
State of the States
New report confirms health plans are ignoring copay accumulator bans in ten states
The AIDS Institute released a report this month identifying at least ten states where health insurers are failing to comply with state laws prohibiting the use of copay accumulator adjuster programs (CAAPs) in state-regulated health plans.
Laws banning CAAPs have been enacted in 21 states (see State of the States, May 2024) and are currently effective in 18 states (as well as the District of Columbia and Puerto Rico). However, TAI’s analysis of plans offered in ACA Marketplaces found that insurers are in full compliance for only eight of those 18 states (AZ, AR, CT, DE, KY, ME, NY, and WV).
Texas (whose CAAP ban only went into effect for the 2024 plan year) was the worst offender, with six out of the 15 insurers in the ACA Marketplace including CAAP language in plan documents. Three of eight Marketplace insurers in Georgia also included CAAP language. The analysis also found that CAAP language remains in place for United Healthcare plans offered in Marketplace plans for seven states that currently ban CAAPs, while Molina, Blue Cross and Blue Shield, and Oscar were other insurers found to frequently violate state law on CAAPs.
Protecting consumers from all forms of CAAPs (where insurers divert third-party copay assistance to their bottom line) remains a top priority for HFA and coalition partners. HFA continues to support the passage and enforcement of state-level protections as well as a federal “fix” that would protect consumers in all types of plans nationwide. The All Copays Count Coalition announced this month that the Minnesota Department of Commerce has agreed to enforce the 2020 federal regulation prohibiting CAAPs for drugs with no generic alternative, which was reinstated last year by the U.S District Court for the District of Columbia. Minnesota becomes only the second state besides Nevada where state insurance regulators agree to take enforcement action while awaiting the revised federal regulations ordered by the court (see State of the States, May 2024).
California legislature passes RDAC legislation but ultimate fate uncertain
The Assembly and Senate in California have unanimously passed legislation that would create a Rare Disease Advisory Council (RDAC) to Governor Gavin Newsom (D).
If signed, A.B. 2613 would make California the 29th state to create an RDAC. However, Governor Newsom vetoed similar legislation in 2021 due to cost at a time when the state had a massive budget surplus. It remains very unclear whether he will reverse course shortly after enacting more than $16 billion in spending cuts to close a nearly $47 billion budget deficit.
New Jersey becomes latest state to eliminate medical debt for consumers
Nearly 50,000 people in New Jersey will have $100 million in medical debt erased under a new plan released this month by Governor Phil Murphy (D).
To execute the one-time medical debt abolishment, the governor will use $550,000 allocated by Congress under the American Rescue Plan Act of 2021 and partner with Undue Medical Debt (a non-profit that buys unpaid medical bills from hospitals at a discount.) Eligible residents must earn less than 400 percent of the federal poverty level ($60,240/year for individuals in 2024) or have medical debt equal to at least five percent of their annual income.
New Jersey is one of a dozen states that have enacted medical debt legislation over the past year. The legislature passed the Louisa Carman Medical Debt Relief Act (A.3861) last month that prevented creditors from reporting medical debt to consumer reporting agencies and pursuing collections for 120 days, as well as capped interest rates on medical debt to no more than three percent per year.
The California governor is considering whether to sign comparable legislation that cleared the Assembly in late August (S.B.1061). The North Carolina governor received federal approval last month for an alternative approach that offer hospitals higher Medicaid reimbursement if they agree to eliminate roughly $4 billion in medical debt for two million low-to-middle income state residents (whether or not they are enrolled in Medicaid).
State actions have largely followed the Biden Administration’s announcement last fall that they would propose regulations to ban medical debt from credit reports nationwide. Those proposed regulations were released in June (see State of the States, June 2024).
Pennsylvania delays state subsidy program until 2025
The board of directors for Pennsylvania’s ACA Marketplace (known as Pennie) announced this month that its plan state-funded subsidy program for households earning 150-300 percent of the federal poverty level has been postponed until 2025 after authorizing legislation stalled in the Senate (despite being passed in the House in June).
Nine other states already offer state-funded subsidies in addition to the ACA’s federal subsidies. California and New Mexico are expanding their subsidy programs for 2025, Colorado is reducing the income threshold for subsidies (though making them available to undocumented immigrants), and Maryland extended their subsidy program for adults 18-37 through 2025. (New York’s proposed state subsidy program for 2025 is still awaiting federal approval).
South Dakota weighs adding work reporting requirements to Medicaid expansion
Voters in South Dakota will decide this fall whether to add work reporting requirements to the Medicaid expansion that was approved via ballot referendum in 2022. If voters pass Amendment F, it would still need approval from the federal Centers for Medicare and Medicaid Services (CMS) to be enacted.
Under the Biden Administration, Georgia is the only state allowed to impose work reporting requirements for the Medicaid expansion population. However, enrollment in that state’s partial Medicaid expansion has been only a small fraction of initial projections (see State of the States, July 2024).
Court finds Tennessee illegally terminated Medicaid coverage for thousands of families
The U.S. District Court for the Middle District of Tennessee ruled this month that the TennCare program violated the Due Process Clause under the U.S. Constitution, federal Medicaid law, and the Americans with Disabilities Act in wrongly terminating coverage for thousands of Tennessee families.
The decision criticized TennCare for being “lethargic” in addressing an unreliable paper-based eligibility determination system that for decades has put Medicaid enrollees at risk of erroneous terminations. It also found that even when TennCare identified errors, the agency “intentionally withheld information those families needed to have their coverage reinstated.”
The class action lawsuit was brought prior to the federal pause in Medicaid redeterminations during the COVID-19 pandemic by 35 children and adults but could impact an estimated 250,000 of the 1.5 million Tennesseans enrolled in TennCare. The court has yet to rule on the plaintiffs’ request for an injunction that would immediately reinstate coverage for those wrongly terminated.
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