Advocacy News: May 2024

Word from Washington

Federal Agencies

CMS extends waiver flexibilities, reporting requirements for Medicaid “unwinding” redeterminations

According to the latest KFF Medicaid Unwinding Enrollment Tracker,  nearly 23 million Americans have lost Medicaid coverage since states were allowed to resume eligibility verifications following the COVID-19 public health emergency (PHE). Nearly 70 percent of Medicaid terminations continue to be for procedural reasons (such as not returning forms on time) and could still be otherwise Medicaid-eligible (only five states are below 50 percent). HFA remains focused on mitigating erroneous coverage losses as both figures far exceed initial projections by KFF, the Urban Institute, and the Congressional Budget Office.

The Centers for Medicare and Medicaid Services (CMS) gave states up to 14 months to complete redeterminations for their entire Medicaid population and 27 states met this deadline by the end of May.  However, CMS agreed to extend the deadline for the remaining states that have only completed roughly two-thirds of renewals due to pauses in redeterminations needed to fix system errors that were partly attributed to higher than estimated numbers of procedural coverage losses (see State of the States, Fall 2023).  According to CMS, 15 states still have federal approval to delay procedural disenrollments for at least 30 days to conduct additional beneficiary outreach.

CMS is likewise indefinitely extending requirements that states report certain metrics on their “unwinding” efforts (slated to expire June 30th). This includes monthly data on renewals initiated, disposition of renewals, and number of fair hearing requests pending for more than 90 days. In addition, state waiver flexibilities will be extended a full year through June 30, 2025.  (Florida and Montana were the only states refusing to take advantage of federal flexibilities).

Private plan consumers to receive $1.1 billion in ACA rebates for excess profits

Preliminary data compiled by state insurance regulators reveals that commercial health plans will be required to issue more than $1.1 billion to subscribers for excess profits earned during 2024.

The Affordable Care Act (ACA) has required large group plans to issue these rebates for each year in which they failed to spend at least 85 percent of premium revenue on medical claims and quality improvement instead of overhead and profit (or 80 percent for individual and small group plans).  According to KFF, each individual and small group market subscriber will receive a rebate of roughly $200 (or $104 for large group subscribers).

The $1.1 billion in rebates for 2024 exceeds rebates issued in 2022-23 but is roughly half the record rebate totals issued during the pandemic ($2-2.5 billion in 2020-21).


House and Senate renew focus on increasing oversight for 340B drug discount program

This week, a House Energy and Commerce subcommittee held a hearing on proposed reforms to increase oversight and transparency into the federal 340B drug discount program.

About a third of hospitals (including about 70 percent of hemophilia treatment centers) participate in 340B, which requires manufacturers to discount most drugs administered in the outpatient setting (including clotting factor products).  However, the explosion in the growth of 340B (created in 1992) has generated controversy for over a decade about whether discounts are ultimately being passed on to patients or primarily benefiting participating providers.

Legislation has repeatedly been proposed in Congress that would increase oversight and transparency over the Health Resources and Services Administration management of 340B, including several measures from 2023 that have yet to advance. The latest Republican bill (the 340B ACCESS Act) introduced on May 28th would tighten eligibility and public reporting requirements and is supported by pharmaceutical groups but met with quick opposition from hospitals who insist it will substantially weaken the program (though they agreed to support “equitable and accountable” reforms.)  

A bipartisan Senate working group is expected to shortly introduce similar legislation (the SUSTAIN 340B Act) with the goal of attaching it to appropriations legislation this fall.

State of the States

Nevada becomes first state to enforce federal restriction on copay accumulators

At the urging of the All Copays Count Coalition (ACCC), the Nevada Division of Insurance (DOI) released new guidance this month directing state-regulated health plans (including the Silver State Health Insurance Exchange) to cease pocketing third-party assistance with cost-sharing obligations for prescription drugs that have no FDA-approved generic alternative.

The decision makes Nevada the first state insurance department to enforce a federal court ruling reinstating the federal restrictions on copay accumulator adjuster programs (CAAPs) that were issued by the Centers for Medicare and Medicaid Services (CMS) for 2020 (see Word from Washington, Fall 2023). The court directed CMS to re-write subsequent regulations in 2021 that reversed course and allowed plans to apply CAAPs. However, all other state insurance departments (as well as associations representing health insurers) have refused to enforce the 2020 prohibition unless directed to do so by CMS.

Health insurers have been pushing CMS to promptly comply with the court order as they are currently negotiating rates for the 2025 plan year and need certainty about whether CAAPs will still be allowed.  CMS has yet to indicate its position on CAAPs going forward but is expected soon to issue new rulemaking and/or guidance in response to pressure from insurers.

Prohibiting CAAPs in both federal and state-regulated plans remain a top policy priority for HFA and it will continue to work through the ACCC to encourage other state insurance departments to follow Nevada’s lead.

Vermont becomes 21st state to prohibit copay accumulators

Vermont Governor Phil Scott signed H.233 at the end of May, making Vermont the 21st state (in addition to Puerto Rico and the District of Columbia) to ban harmful copay accumulator adjuster programs (CAAPs) in state-regulated health plans.

The prohibition, which was part of a larger prescription benefit manager (PBM) reform bill, prohibits the plan from applying CAAPs for prescription drugs for which there is no FDA-approved alternative, an exception included in at least a dozen of the 21 states with CAAP bans including Colorado, Georgia, Oregon, and Texas.

Legislation prohibiting CAAPs remains pending but stalled in several states including Michigan, Ohio (H.B. 177 unanimously passed the House), Pennsylvania, New Hampshire (bills passed both chambers but S.B. 354 applies only to charitable assistance), and Rhode Island (S.2720 unanimously passed the Senate).  CAAP bills failed this month in both California (A.B. 2180) and Missouri (H.B. 1628/S.B. 844) but are expected to be re-introduced next year.

Four states create guardrails to protect health plan consumers from step therapy protocols

Illinois, Mississippi, New York, and Vermont enacted or are on the verge of enacting new guardrails against harmful step therapy protocols in state-regulated health plans.

Nearly 40 states now provide some level of consumer protection against step therapy, which is a cost-containment tactic where health plans require patients to “fail first” on lower-cost and often inferior drug treatments before receiving the product prescribed by their physician.

Governor Phil Scott (R) signed H.766 to protect consumers in Vermont, while Governor Tate Reeves (R) signed H.B. 1143 last month to do the same for Mississippi.

In Illinois, Governor J.B. Pritzker (D) is expected to sign legislation he initially proposed in his State of the State address that not only strengthens that state’s guardrails against step therapy (H.B. 5395), but also prohibits prior authorization for FDA-approved treatments of hereditary bleeding disorders (H.B. 4055), bans short-term “junk” health plans (H.B. 2499) 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 (H.B. 5395).

The New York Assembly and Senate re-passed amended versions of A.901A/S.1267A this month. If signed by Governor Kathy Hochul (D), this legislation will strengthen the more limited step therapy guardrails put in place in 2016.

Three states advance bills to create Rare Disease Advisory Councils

Two bills were introduced in the New York legislature this month to create a permanent Rare Disease Advisory Council (RDAC).

This state initially created the RDAC in 2019 as a temporary working group slated to sunset after two years.  It was subsequently extended through budget authorizations through 2023 as the COVID-19 pandemic prevented it from holding any meetings until earlier that year.  S.9742/A.10902 are identical bills that would restore the RDAC and make it permanent.

Mississippi became the 28th state to create an RDAC earlier this year (see State of the States, April 2024) but authorizing legislation continues to advance in Arizona (H.B. 2758 passed House) and California, where A.B. 2613 unanimously passed the Assembly although it remains unclear whether it will be signed by Governor Gavin Newsom (D) given that he vetoed similar legislation in 2021.

Bills to create RDACs failed to advance this year in both Oklahoma and Vermont.

Mississippi to transition to state control over ACA Marketplace in 2025

Legislation authorizing the Mississippi Insurance Commissioner to establish and operate a state-based health insurance Marketplace under the Affordable Care Act became law last month in Mississippi.

Governor Tate Reeves (R) refused to sign the measure, citing his continued opposition to “Obamacare”.  However, he did not veto H.B. 1647 as it passed with veto-proof margins in both chambers after tax credits and other financial incentives for insurers to participate in the Marketplace were removed.

Insurance Commissioner Mike Chaney (R) backed the measure, which he predicted would save Mississippi $137-$196 million over five years and lead to lower consumer premiums through increased competition (only two insurers currently participate in Mississippi’s federally facilitated ACA Marketplace). He also announced that Kentucky will provide its ACA Marketplace software for free, which has been deemed by the Centers for Medicare and Medicaid Services to be a model for other states to follow.

Mississippi joins 19 other states that currently operate their own ACA Marketplace.

Federal judge blocks Florida effort to invalidate nationwide coverage protections for children

A federal court in Florida dismissed the state’s lawsuit challenging the federal government’s implementation of the Congressional mandate guaranteeing 12 months of continuous eligibility for children under age 19 who are enrolled in either Medicaid or the Children’s Health Insurance Program (CHIP).

The continuous coverage mandate in the Consolidated Appropriations Act took effect on January 1st.  Florida’s Agency for Health Care Administration (that administers Medicaid and KidCare CHIP) insisted that any non-payment of premiums should void this mandate and despite October 2023 federal guidance to the contrary the agency terminated coverage for thousands of children whose families failed to pay premiums for even one month.  Florida is the only state that has taken this position.

The decision by federal judge William Jung (appointed by President Trump) denied the state’s request for a nationwide injunction and dismissed the case for lack of ripeness as the state had not first appealed the federal guidance through administrative processes established under the federal Administrative Procedures Act.  His ruling allows Florida to seek relief in the appellate courts if its administrative appeal is denied as expected by the Centers for Medicare and Medicaid Services (CMS), which has refused to approve Florida’s 2021 expansion of KidCare eligibility because it allows for termination of coverage if a premium payment is missed.

Consumer groups hailed the decision and insisted that AHCA immediately restore coverage to thousands of wrongly terminated children.

HIV drug removed from consideration by Maryland Drug Affordability Board

The Maryland Prescription Drug Affordability Board (PDAB) voted on May 20th to move forward with its proposed cost review studies for six drugs, including blockbuster treatments for diabetes and obesity.

The board had initially included Biktarvy (the best-selling HIV treatment in 2023) for review. However, it was removed due to concerns that “federal assistance programs to help low-income patients afford Biktarvy could complicate the board’s ability to collect data on whether the drug is affordable.”

Maryland became the first in the nation to create a PDAB in 2019. It was followed by nine other states but only four of those (Colorado, Maryland, Minnesota, Washington) were authorized to set upper payment limits for specific drug products. Earlier this year, Colorado became the first to exercise that authority (see State of the States, April 2024).

Under state law, Maryland’s PDAB also differs from others in that its review is primarily limited to the impact of high drug costs upon public payers (like Medicaid). The PDAB can set an upper payment limit if it determines that current pricing has (or will) lead to an “affordability challenge” for payers, but the limit must ultimately be approved by either the Legislative Policy Committee of the General Assembly or a combination of the governor and attorney general. It can only be applied to state-regulated plans. (Drugs deemed to be in “shortage” by the Food and Drug Administration are also exempt.)