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Progress slows on state legislation to prohibit harmful copay accumulators

After unprecedented success over the past two sessions, legislation to protect people who rely on copay assistance has struggled to gain traction in state legislatures so far this year.

A dozen states (and Puerto Rico) already prohibit harmful “copay accumulator adjusters” – an insurer strategy that prevents copay assistance from counting toward patient deductibles and out-of-pocket maximums. Most of those state laws (including seven enacted in 2021 alone) passed by nearly unanimous margins (see State of the States, Fall 2021).

Similar bills were introduced (or planned) in at least 20 new states this year. However, stiff pushback from insurers has already blocked accumulator legislation in at least Florida, Mississippi, and Utah, while bills were postponed until next year in Alabama, California, New Mexico, and Oregon. (Nevada and Texas did not have legislative sessions in 2022 but are expected to consider accumulator bills next year).

Insurers continue to inaccurately claim that cost-sharing assistance inflates drug prices by incentivizing consumers to purchase higher-cost drugs. This ignores the fact that most specialty drugs (including bleeding disorder products) lack any lower-cost generic alternatives. Insurers also misrepresent accumulator prohibitions as a politically-toxic “mandate” dictating how insurers can contain costs, instead of a measure to protect the highest-cost consumers from insurer discrimination—practices that many states have previously acted to prohibit.

Copay accumulator bills do remain pending in about a dozen states including Michigan, New York, Ohio, Maine, and Pennsylvania. However, only the Washington bill (S.B. 5610) appears on the verge of being enacted (awaiting the expected signature of the governor). It follows the model enacted in five of the 12 states with existing accumulator laws (Arizona, Arkansas, Georgia, Kentucky, and North Carolina) that allow plans to apply accumulators only to drug therapies that have FDA-approved generic equivalents.

Several states with existing copay accumulator laws have successfully advanced bills this session to add a “savings clause” that protect consumers in high-deductible health plans (HDHPs). Outdated Internal Revenue Service (IRS) guidance from 2004 is being used by some state insurance commissioners to prevent consumers in HDHPs from benefiting from third-party cost-sharing assistance until their high deductibles were satisfied. Bills in states like Illinois, Kentucky, Oklahoma, and Virginia typically seek to limit application of this guidance to the minimum deductible set by the IRS for HDHPs (or $1,400).

The AIDS Institute released their annual report last month on the use of accumulators by health plans participating in the Affordable Care Act (ACA) Marketplaces. It shows that Marketplaces in 35 states still have at least one plan applying accumulators. Indeed, in 30 states, at least half of all Marketplace plans apply accumulators. However, the number of states where every Marketplace plan applies copay accumulators dropped over the past year from 14 to eight (Alabama, Alaska, Delaware, Idaho, Indiana, Iowa, Montana and South Carolina.)  Only two of these eight states (Iowa and South Carolina) have pending legislation to limit accumulators.

According to the report, Hawaii, Maryland, and New Jersey are the only three states (plus the District of Columbia) where accumulators are currently not being applied by Marketplace plans.

Despite progress at the state level, federal legislation is still needed to prohibit the use of accumulators by large employer and self-funded plans (representing 80 percent of insured consumers).  As a result, HFA actively supports the HELP Copays Act pending in Congress, as it would apply to all individual and group plans nationwide.

New Mexico becomes latest state to enact “easy enrollment” program

Governor Michelle Lujan Grisham (D) signed H.B. 95 in March, making New Mexico at least the fifth state to create a pathway to health insurance coverage for uninsured residents through the state tax filing process.

Under the Easy Enrollment Act, residents can check a box on their 2022 tax returns indicating that they are uninsured and interested in a determination whether they qualify for free or low-cost coverage through Medicaid or the ACA Marketplace. Checking the box will also trigger a special enrollment period allowing them to sign-up for coverage outside of the annual open enrollment period.

The program mirrors the Easy Enrollment Program first enacted in Maryland in 2019.  Colorado, Pennsylvania, and Virginia have since followed while the New Jersey legislature is working on a similar legislation following a veto last fall by Governor Phil Murphy (D) (who demanded a longer implementation period).

Oregon withdraws request to waive EPSDT, impose closed drug formulary for Medicaid

The Oregon Health Authority (OHA) was forced last month to withdraw its request for federal approval of two controversial provisions of its landmark Section 1115 demonstration waiver creating the Oregon Health Plan (OHP).

Since 1993, Oregon has been the only state in the nation not required to comply with the federal Early Periodic Screening Treatment and Diagnosis (EPSDT) mandate to cover all medically necessary care for children under age 21 enrolled in its Medicaid program. The three-decades-old Oregon waiver was first approved by the Clinton Administration as part of the novel prioritized list of health services created by OHP, which based coverage decisions on clinical and cost-effectiveness data, as well as societal preferences.  Annual funding determines how many of these 660 services are covered by OHP (the cut-off is currently at line 472).

OHA not only sought to continue this controversial EPSDT waiver as part of its latest five-year renewal of the OHP demonstration but also proposed a “closed” drug formulary that would allow the state to restrict coverage of drugs whenever it believed clinical or cost-effectiveness data to be lacking. Although closed formularies are routinely used by commercial health plans, state Medicaid programs have traditionally been required to cover all FDA-approved drugs.

However, public comments received by OHA were overwhelmingly opposed to both provisions. Provider and consumer groups (including Pacific Northwest Bleeding Disorders and Hemophilia Federation of America) emphasized the harmful impacts on access to care.  In response to the opposition, Governor Kate Brown (D) pushed for OHA to withdraw both the request to extend the EPSDT waiver and the closed formulary proposal (although OHA is still seeking federal approval to exclude “accelerated approval” drugs.)

Final ACA Marketplace totals confirm record enrollment surge

The Centers for Medicare and Medicaid Services (CMS) announced last month that a record 14.5 million consumers signed up for ACA Marketplace coverage during the 2022 open enrollment period—a 21 percent increase from 2021.

As usual, enrollment figures varied widely by state. Three states (Massachusetts, Kentucky, Hawaii, and Rhode Island) actually experienced a decrease (or nominal increase) in enrollment.  However, 20 states saw enrollment spike by more than 20 percent.  Texas had the greatest surge (42 percent), enrolling a record 1.8 million consumers, a figure surpassed only by Florida where enrollment increased 25 percent (to a record 2.7 million). California (with a record 1.7 million sign-ups), Colorado, Georgia, and North Carolina also experienced sizeable gains.

CMS continues to credit expanded premium subsidies for 2021 and 2022 that were enacted as part of the American Rescue Plan Act (ARPA) for much of the spike in enrollment.  A new Covered California analysis confirmed that, unless Congress acts to extend those subsidies,  premiums will dramatically increase in 2023, causing more than 1.7 million Marketplace consumers nationwide to lose coverage.

Separately, CMS created a new year-round special enrollment period (SEP) for low-income consumers earning 100-150 percent of the federal poverty level (about $13,600 to $20,400 per year). The SEP will be available for all federally facilitated Marketplaces by “late March 2022”. The 18 states operating their own Marketplaces are not required to create this SEP but at least four have already done so (Colorado, Maine, Pennsylvania, New Jersey, California, and Rhode Island) and most are expected to follow by 2023 if ARPA subsidies are extended.

States get extra time to complete Medicaid eligibility redeterminations after PHE expires

New guidance released this month by CMS grants state Medicaid agencies up to 14 months following the expiration of the COVID-19 public health emergency (PHE) to complete all eligibility redeterminations, renewals and/or terminations, even though states must still start the process within the 12-month grace period initially provided by the agency (see State of the States, Fall 2021).

The PHE is currently slated to expire on April 15 but because the Biden Administration has pledged to give states at least 60 days advanced notice before it expires, observers expect that the Administration will renew the PHE into mid-summer. (Past PHE declarations have been for 90-day periods, but the Administration could choose to extend the PHE for a shorter period and still comply with its promised 60-day notice).

The federal Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March 2020 halted all eligibility redetermination for the duration of the PHE and prevented states from removing any Medicaid or Children’s Health Insurance Program (CHIP) enrollees who become ineligible during that time. Since then, Medicaid/CHIP enrollment has surged by nearly 20 percent to a record 85 million Americans.  As a result, this “maintenance of effort” requirement created a massive number of eligibility determinations for states to make in a short period of time once the PHE expires.

According to the Urban Institute, up to 15 million Americans under age 65 are likely to lose Medicaid coverage during this redetermination process. The Georgetown University Center on Children and Families warns that 6.7million of these will be children who have either aged out of coverage (in non-expansion states), live in households whose income now exceeds Medicaid limits, or have relocated during the pandemic and not updated their information with state agencies.

CMS’ guidance cautions that even with needed technology upgrades and training of new staff, state Medicaid agencies will only be able to process about one-ninth of needed eligibility determinations each month. The 14-month window is intended to give them sufficient time to do so and spread out the impact of mass numbers of coverage terminations. HFA and allied patient groups have called on both CMS and state Medicaid directors to take proactive steps to minimize disruption to patient access to care and ensure those who lose Medicaid coverage are informed of and transitioned to alternative pathways to coverage (such as the ACA Marketplace).


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