State of the States: Summer 2022

Copay accumulator prohibitions advance in several states.

Maine and Washington signed new laws this quarter that prohibit health plans from pocketing the third-party assistance intended to help consumers pay for annual cost-sharing obligations. They are the first two states to do so in 2022, bringing the overall total to 14 states (in addition to Puerto Rico).

Both the House and Senate unanimously passed comparable legislation in Delaware (S.B. 267) and New York (A. 1741A), which are awaiting signature from their respective governors. Bills remain pending in at least four other states (and the District of Columbia).

Four states that previously passed laws prohibiting copay accumulators also acted this quarter to ensure those protections extended to consumers in high-deductible health plans (HDHPs). See Illinois (H.B. 4433), Louisiana (S.B. 366), Oklahoma (H.B. 3495), and Virginia (S.B. 433/H.B. 1081). These measures were needed after the Internal Revenue Service determined that antiquated guidance from 2004 prevents people enrolled in HDHPs from using copay assistance until they have personally satisfied their annual deductibles (which currently can be as high as $7,050 for individuals or $14,000 for families). The four states' "savings clause" bills will enable HDHP consumers to benefit from copay assistance as soon as they satisfy the minimum statutory deductible for HDHPs ($1,400 for individuals and $2,800 for families, as opposed to the potentially much larger plan deductible).

HFA continues to work through the national All Copays Count Coalition to seek passage of federal legislation (H.R. 5801) that would prohibit copay accumulators for all group and individual plans, including large group and self-funded plans that are exempt from state regulation.

Two more states create Rare Disease Advisory Councils

The governors of Colorado and Georgia signed new laws in May (S.B. 186 and H.B. 918) adding their states to the list of 24 that have created Rare Disease Advisory Councils (RDACs).

North Carolina became the first state in 2017 to create a RDAC, which are diverse groups of patients, caregivers, providers, and researchers that can educate policymakers about rare diseases and make recommendations on policies that best improve access to quality care. Several states quickly followed but the pace of new RDACs has exploded since 2021 when eleven states have been added.

Connecticut, another among the earliest states to create a RDAC, also enacted legislation (H.B. 5500) in May to resurrect its RDAC (which had sunset in 2019) and make it permanent.

States continue to create consumer protections against step therapy protocols

Kentucky (S.B. 140) and Tennessee (H.B. 677) unanimously enacted new laws this year to protect consumers from the use of step therapy or "fail first" protocols by state-regulated health plans.

Step therapy is an increasingly common cost-containment tactic used by insurers that requires a patient to fail on a lower-cost drug therapy before gaining access to the higher-cost therapy prescribed by their physician. It is exceptionally inappropriate for persons with bleeding disorders for whom a treatment failure can be life-threatening or result in permanent joint damage.

The new laws in Kentucky and Tennessee largely follow "model" language used by most states, which require insurers to respond to subscriber requests for an exception to step therapy protocols within 72 hours (or 24 hours in an urgent case). However, a new law in Florida that purports to create a similar exception process (H.B. 459) fails to provide any timeframe for insurers to respond. Because this Florida law essentially does not change existing requirements, it was not supported by HFA or the Florida Hemophilia Association.

Step therapy protections remain pending in several states, including Massachusetts where the House unanimously passed legislation that follows "model" language (H.4929).

Several other states are advancing bills that would strengthen their existing step therapy guardrails including Colorado (enacted S.B. 1370), California (proposed A.B. 1880), and Pennsylvania (proposed S.B. 225).

At least 32 states have now put in place some form of step therapy protections for consumers in state-regulated health plans, although only about two-thirds are considered "comprehensive". Federal legislation that would provide comparable protections for large-group and self-funded plans (S. 464) remains stalled in Congress.

South Dakota and North Carolina debate expanding Medicaid under ACA

Medicaid expansion edged closer this quarter to becoming reality in two of the dozen states that continue to opt-out of the ACA's Medicaid expansion.

Consumer advocates in South Dakota successfully placed two separate voter referendums on the ballot this fall that would automatically enact the Medicaid expansion.

Initiated Measure 28 would expand Medicaid through state law and prohibit either lawmakers or state agencies from imposing any other "additional burdens or restrictions on Medicaid eligibility, enrollment, or benefits."  The latter provision is needed to prevent legislative efforts to weaken voter-mandated Medicaid expansions that occurred in Missouri, Montana, and other states.

South Dakota Constitutional Amendment D would enshrine the Medicaid expansion into the state constitution (as did states like Missouri and Oklahoma). The referendum likewise would prevent the state from imposing "greater or additional burdens or restrictions on eligibility or enrollment standards, methodologies, or practices."

Both measures will require only a simple majority in order to be enacted after voters overwhelmingly defeated Amendment C last month. That measure was an effort by Republican lawmakers to require ballot referendums to receive 60 percent approval in order to pass.

Six states have successfully expanded Medicaid through the ballot; however only one (Idaho) did so with a 60 percent majority (Maine's initiative was approved by 59 percent of voters).

Medicaid expansion has the support of more than 65 percent of surveyed voters in South Dakota, according to AARP. Polls show similar support in other holdout states that still have not expanded their Medicaid programs, including Alabama, Florida, Georgia, North Carolina, and Texas.

In North Carolina, where Medicaid expansion efforts by Governor Roy Cooper (D) had long been at a stalemate with the Republican-controlled legislature, the Senate surprisingly modified a House bill (H.B. 149) to include Medicaid expansion and passed it with only two dissenting votes. However, approval by the full House remains very uncertain as the chamber adjourned until late July with only an agreement to authorize the legislative study sought by the Speaker. If successful, the expansion would add more than 600,000 residents to the Medicaid rolls.

States that previously expanded Medicaid under the ACA also continued to make progress this quarter on using state-only funds to include undocumented populations that otherwise would be largely ineligible for medical care.

In Connecticut, lawmakers approved a budget that expands Medicaid to all otherwise eligible children under age 13, regardless of immigration status (who can then remain on Medicaid until age 19). The legislature had already expanded Medicaid last year allowing undocumented children under age eight to enroll if they come from households earning up to 201% of the federal poverty level (nearly $56,000 for a family of four). Children from households earning 201-325% of poverty also qualify, subject to an asset test. (The expansion is expected to cost $400,000 in state-only funds.)

California lawmakers also finalized a budget that made the state the only one to cover undocumented residents of any age. Medi-Cal started enrolling eligible undocumented residents over age 49 on May 1st, pursuant to legislation passed last year. The fiscal year 2022-23 budget will further expand Medicaid to cover an estimated 700,000 undocumented residents aged 26-49, starting in 2024.

California was the first state in 2016 to expand Medicaid for undocumented children and extended full Medicaid benefits to all eligible undocumented residents under age 26 in 2020. Illinois, New York, Oregon, and Washington have all subsequently expanded Medicaid for income-eligible children, regardless of immigration status (New Jersey is planning to do so in 2023, while Connecticut, Maine, and Vermont will provide more limited coverage).

The state of Washington is also trying to expand coverage to include undocumented residents. However, it is instead seeking federal approval to do so via the ACA Marketplace, which is currently limited to lawfully-present individuals. The waiver is needed to let undocumented residents earning up to 250% of FPL access state-funded premium subsidies for Marketplace plans (through the Cascade Care public option program). The waiver, which would run through 2033, would provide coverage to roughly 23% of the currently uninsured population–although they will remain ineligible for federal premium subsidies under the ACA.

Oklahoma governor receives approval to transition to Medicaid managed care

Governor Kevin Stitt (R) signed two measures in May (S.B. 1337 and S.B. 1396) that achieved his long-sought goal to transition most Medicaid enrollees into capitated managed care plans.

The legislation directs the Oklahoma Health Care Authority (OHCA) to contract with at least three managed care organizations (MCOs) to provide medical services to the Medicaid population (apart from those who are aged, blind, or disabled). OHCA will be issuing a request for proposal for public comment in fall 2022 and the transition is slated to start on October 1, 2023, subject to approval from the federal Centers for Medicare and Medicaid Services (CMS).

The Oklahoma Supreme Court initially blocked the transition last year, ruling that the governor could not proceed without specific legislative authority. HFA had joined with the Oklahoma Hemophilia Foundation and National Hemophilia Foundation in opposing the transition based on the state's failed Medicaid managed care experiment in 1995 that forced many Medicaid providers to withdraw from the program and resulted in severe access problems for rural enrollees.

Colorado receives federal approval to offer "public option" in ACA Marketplace

The U.S. Department of Health and Human Services approved Colorado’s 1332 State Innovation Waiver last month to fully implement the Colorado Option, which will create a state-funded health insurance option for Coloradans who purchase individual or small group coverage in the ACA Marketplace.

The first-in-the-nation approval was permitted through Section 1332 of the ACA, which lets states experiment with innovative coverage options that expand coverage at lower costs. Through lower premiums, the Colorado Option is expected to cover at least 32,000 Coloradans over the next five years (including 10,000 in 2021). In combination with extending the state's current waiver for a reinsurance program (compensating insurers for exceptional claims), Colorado projects that the new waiver will lower 2023 premiums by an average of 22.3% statewide.

Consumers who enroll in the Colorado Option will receive all essential health benefits currently mandated by the ACA for qualified health plans.

Washington is the only other state currently offering "public-option-style" coverage in the individual marketplace through its Cascade Care program (that expands to every county in 2023). Nevada plans to do so starting in 2026. All three states require "public option-style" plans to contain costs through either caps on aggregate payments to providers or by reducing premiums to state-set thresholds.