Word from Washington
Federal Agencies
CMS prevails in lawsuit over partial Medicaid expansion in Georgia
A federal judge has ruled in favor of the Centers for Medicare and Medicaid Services (CMS) in Georgia’s lawsuit over whether the agency can discontinue the state’s partial Medicaid expansion before its five-year approval expires.
The Georgia Pathways to Coverage demonstration waiver was initially approved under the Trump Administration in 2020 as only a partial expansion for adults earning up to 100 percent of the federal approval instead of the full expansion up to 138 percent that previously was required in order for states to receive the federal matching funds authorized under the Affordable Care Act (ACA). However, the Biden Administration rescinded the approval because the partial expansion covers only about 15 percent of the more than 250,000 Georgians caught in the “coverage gap” (between the state’s current eligibility levels and ACA expansion threshold). In addition, the waiver imposes premiums for the expansion population, as well as onerous work reporting requirements that had previously been blocked by federal courts.
A federal court in Georgia subsequently reinstated the Trump Administration’s approval of the waiver in 2022, making it the only state with an approved work reporting requirement for Medicaid expansion enrollees (see State of the States, Summer 2023). Although the Biden Administration did not appeal that decision, it refused Georgia’s request to extend the approval beyond its 2025 expiration, resulting in the lawsuit by Georgia.
Judge Lisa Godbey Wood (appointed by President George W. Bush) agreed with Georgia that CMS’s initial recission of the expansion waiver was “unlawful” but concluded that the state did not follow proper procedures in requesting an extension. As a result, Georgia must either terminate their partial expansion in 2025 or file a new request with the modifications sought by CMS (including elimination of the work reporting requirement and premiums).
The Pathways to Coverage expansion has enrolled less than 4,500 Georgians since starting in July 2023, only a fraction of the 90,000 that the state predicted would enroll in the first year.
CMS provides ACA Marketplace navigators with record funding
The Centers for Medicare and Medicaid Services (CMS) announced the availability last month of $500 million over the next five years to navigator programs in Affordable Care Act (ACA) Marketplaces that are facilitated by the federal government.
Community-based navigators play a critical role in enrollment assistance and outreach for the record 21.3 million consumers who get coverage through ACA Marketplaces, especially for hard-to-reach vulnerable populations. The $500 million grant is the largest funding allocation CMS has ever made for navigators. In 2021, the agency restored more than $80 million in navigator funding that was eliminated under the Trump Administration.
Medicaid “unwinding” complete for most states but huge backlogs remain
According to the latest KFF Medicaid Unwinding Enrollment Tracker, more than 24.5 million Americans have now lost Medicaid coverage since states were allowed to resume eligibility verifications following the COVID-19 public health emergency.
The Centers for Medicaid and Medicaid Services recently gave states extra time to conclude “unwinding” eligibility verifications (see Word from Washington, May 2024). However, initial redeterminations have largely concluded in all but five states (Alaska, Hawaii, New York, North Carolina, South Carolina) and the District of Columbia.
Despite this progress, states have seen a dramatic increase in backlogs of applications and seven states (Alaska, Georgia, Missouri, Montana, New Mexico, and Texas) along with DC have more than 40 percent of Medicaid or CHIP applications taking more than the required 45 days to process. (Inadequacies in state agency staffing has been identified a factor in these delays).
CMS has sent letters to several states experiencing chronic problems with application timeliness asking them to respond with corrective action within 30 days. In the cases of Missouri and Texas, they noted that backlogs have persisted since 2022, with delays reaching nearly 60 percent of applications in Missouri and 45 percent in Texas (see Word from Washington, June 2024).
In California nearly 1.6 million Medi-Cal enrollees still await renewal decisions even though the “unwinding” period ended in May. Nearly three-quarters of delays are attributed to procedural terminations (i.e. not returning forms on time, failing to update contact information). However, as is the case in many states, minority populations are disproportionately impacted by these procedural terminations with Latinos making up half of the terminated enrollees.
Congress
Lawmakers, FTC increase scrutiny over whether PBM practices increase prescription drug costs
Reps. Jake Auchincloss (D-MA) and Diana Harshbarger (R-TN) unveiled new bipartisan legislation ahead of a House Oversight and Accountability Committee hearing this month seeking to increase federal scrutiny over the role pharmacy benefit managers (PBMs) play in inflating prescription drug prices.
According to Rep. Auchincloss, the Pharmacists Fight Back Act would create a transparent pharmacy reimbursement model using market-based pricing benchmarked to the national average drug acquisition cost. It also removes the ability of PBMs to restrict patient choice via network exclusions and protects community pharmacists serving federal health care programs (like Medicare and Medicaid) by prohibiting PBMs from steering patients to PBM-affiliated pharmacies
The bill follows dozens of other bipartisan efforts on the federal and state level to reform PBMs, including a PBM reform package that overwhelmingly passed the House last winter. The Federal Trade Commission (FTC) also ramped up scrutiny over PBMs this month releasing a critical report this month showing that six major PBMs control 95 percent of all prescriptions filed in this United States and directly blaming such consolidation for driving drug costs higher.
The FTC also announced that they shortly plan to sue the three biggest PBMs (UnitedHealth Group’s Optum Rx, CVS Health’s Caremark and Cigna’s Express Scripts) over their business practices related to rebates they negotiate with drug manufacturers. Several states have filed similar lawsuits, including Vermont, Hawaii, California, Ohio and Kentucky.
New bill would protect ACA Marketplace consumers from unauthorized plan switches
Senate Finance Committee Chair Ron Wyden (D-OR) and five other Senate Democrats introduced legislation this month that would apply criminal penalties to insurance brokers who switch consumers to different plans in federally-facilitated Affordable Care Act (ACA) Marketplaces without their knowledge or consent.
The Insurance Fraud Accountability Act would also impose many of the safeguards that the Centers for Medicare and Medicaid Services (CMS) agreed to implement in its July letter to Chairman Wyden, including a “consent verification process” ensuring that consumers first agree to any enrollment and coverage changes.
CMS acknowledged reports of unauthorized plan switches this spring and initiated both short and long-term system changes to block and penalize such fraudulent practices. The agency says that 97 percent of the 40,000 complaints of unauthorized plan switches during the first three months of 2024 have already been resolved.
CMS also states that it is working with state insurance commissioners and health plan associations to “investigate and resolve unauthorized activity” and is sharing information with states and the Inspector General for the Department of Health and Human Services as soon as brokers are suspended for “reasonable suspicion of fraud”.
New bill creates federal alternative to Medicaid expansion under the ACA
Senator Raphael Warnock (D-GA) and four other Senate Democrats introduced The Bridge to Medicaid Act last month, which provides a federal pathway to affordable health insurance coverage for 1.6 million uninsured Americans living in the ten states that continue to refuse to participate in the Medicaid expansion under the Affordable Care Act (ACA).
Non-expansion states have created a “coverage gap” between low Medicaid eligibility thresholds (typically limited to the aged, disabled, or women with infant children) and the minimum income to be eligible for the premium subsidies in ACA Marketplaces (100 percent of the federal poverty level).
The legislation, which Senator Warnock aims to include as part of larger spending bills this fall, would provide premium subsidies to those caught in this “coverage gap” for three years starting in 2026 (after the enhanced subsidies under the American Rescue Plan Act are slated to expire). Individuals in non-expansion states making between 100-138 percent of the federal poverty level would also qualify for these subsidies.
State of the States
Colorado PDAB to cap prices of additional drugs, debates consumer representation
Colorado’s prescription drug affordability board (PDAB) voted unanimously this month to proceed with setting upper payment limits for two additional drugs (Cosentyx and Stelara) that it previously found to be “essential and unaffordable”.
The PDAB already faces a federal lawsuit from Amgen after becoming the first state PDAB to set an upper payment limit earlier this year (when it capped the price of Enbrel). All three drugs treat chronic autoimmune disorders. Although 11 states have created PDABs, only four of them (Colorado, Maryland, Minnesota, and Washington) have authority to set upper payment limits and Colorado remains the only state to do so.
The PDAB’s mandated annual report to the governor and general assembly calls for a pathway patients can use to submit drugs for consideration and other methods to “strengthen consumer input”. However, the report acknowledges that the PDAB was unable to reach agreement on whether to include a consumer representative in their review process as most members insisted that drug reviews require a “high level of medical expertise”.
The board also recommends reducing the eligibility threshold from a price of at least $30,000 a year for a drug and focusing on products that impact the largest number of patients per indication. It also wants to increase the amount of data on manufacturer rebates it can collect.
Colorado Governor Jared Polis (D) signed a bill into law last month that at least requires the PDAB to consider input from the Colorado rare disease advisory council in determining which drugs are unaffordable for patients (see State of the States, June 2024).
Five states get federal approval to provide coverage for people transitioning out of incarceration
The Centers for Medicare and Medicaid Services (CMS) approved five “groundbreaking” demonstration waivers to allow five new states (Illinois, Kentucky, Oregon, Utah, and Vermont) to start providing Medicaid coverage to inmates up to 90 days before their release in order to avoid major gaps in coverage and treatment disruptions that can occur in the transition from prison health care coverage to Medicaid.
California was the first state in the nation to receive federal approval for this type of reentry waiver early in 2023. They were soon joined by Massachusetts, Montana, and Washington.
Medicaid and Children’s Health Insurance Program coverage is typically not available to post-conviction prisoners. However, these waivers enable states to not only provide critical support services as prisoners prepare to be released (including treatment for mental health and substance use disorders) but help them connect prisoners to community-based providers following their release in order to ensure continuity of care.
Illinois governor signs bill banning step therapy, junk plans, and certain prior authorizations
Governor J.B. Pritzker (D) signed the Healthcare Protection Act (H.B. 5395) into law this month that includes a series of health reforms he initially proposed in his State of the State Address earlier this year.
The comprehensive bill not only strengthens that state’s guardrails against step therapy but also prohibits prior authorization for mental health and substance abuse disorders, bans short-term “junk” health plans consistent with recent federal regulations (see Word from Washington, March 2024), and grants the Illinois Department of Insurance long-sought authority to modify rate hikes sought by large employer plans (see State of the States, May 2024).
States continue to expand Medicaid and Marketplace coverage to undocumented immigrants
Coverage in Apple Health (Washington’s Medicaid program) became available July 1st to undocumented immigrant adults earning up to 138 percent of the federal poverty level (FPL) or $20,784 per year for an individual. However, limited state funding required an enrollment cap of 13,000 for this population allocated (federal funding is not available for this). The enrollment cap was reached in just two days.
Starting in November, Washington will become the third state (after California and Minnesota) as well as the District of Columbia to open ACA Marketplace enrollment to undocumented immigrants (see State of the States, Summer 2023). However, the federal Section 1332 waiver allowing this coverage prohibits undocumented immigrants from receiving ACA tax credits for Marketplace coverage. As a result, Washington is providing up to $250 per month in state-funded subsidies for those earning up to 250 percent of FPL ($36,450 for an individual). Though this funding is also limited, the state has not set an enrollment cap.
Colorado’s Omni Salud program similarly subsidizes premiums for undocumented immigrants that have been allowed for the past two open enrollment periods to purchase coverage through Colorado Connect, a state-run shopping platform separate from the ACA Marketplace. Accompanying state-funded subsidies significantly reduce the cost of coverage, but availability is limited. In 2023, these subsidies allowed a maximum of 10,000 undocumented Coloradans earning up to to 150 percent of FPL ($28,215 for an individual) to enroll in a plan with no monthly premium and substantial cost-sharing assistance. The cap increased in 2024 to 11,000 Coloradans. However, it was reached in only two days of open enrollment.
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