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Vorys Health Care Advisors

For health care reformers, the challenge is to improve care quality and expand access to providers and services while controlling costs. It is not a job for the timid. Instead, it requires creativity, experience and leadership. Vorys Health Care Advisors’ strategic solutions and guidance exemplify each of these imperatives. Our health care and Medicaid consultants help providers, business decision makers, state and federal government agencies and professional associations respond to the complex needs of health care consumers by discovering, developing and implementing innovative policies and programs.

The Impact of the ACA on the Health Insurance Market – By the Numbers

Posted in Affordable Care Act, Health Care Reform

On a recent MSNBC segment, Steve Rattner shared the following slides that illustrate ways in which the health insurance market will be impacted as a result of the Affordable Care Act (ACA).

The first reflects how various populations will be affected by the individual mandate to have insurance.
Who will pay more under Obamacare?

The second indicates that most Americans who purchase individual plans — including those plans that the President recently announced may be continued depsite noncompliance with ACA requirements — only stay on those plans for a relatively short period of time before moving on.
Short Stays on Individual Plans

The third shows how coverage is projected to shift as a result of the ACA.
Shift in Coverage Under Obamacare

What does the President’s announcement about continuing canceled health insurance policies really mean?

Posted in Affordable Care Act

Responding to the concerns of many Americans regarding a potential cancellation of some health insurance policies, President Obama announced on Thursday that insurance companies can continue to offer for another year some health plans to individuals, families, and small businesses that do not meet the Essential Health Benefits requirements established under the Affordable Care Act (ACA).

As we reported in a recent blog post, beginning in 2014, Medicaid plans and small group and individual plans sold inside and outside of the Health Insurance Marketplace must cover a package of 10 categories of items and services known as Essential Health Benefits (EHBs).  These categories include:

  1. Ambulatory patient services
  2. Emergency services
  3. Hospitalization
  4. Maternity and newborn care
  5. Mental and/or substance use disorder services, including treatment of behavioral disorders
  6. Prescription drugs
  7. Rehabilitative and habilitative services and devices
  8. Laboratory services
  9. Preventive and wellness services and chronic disease management
  10. Pediatric services, including oral and vision care

The President’s announcement was spurred by some individuals receiving cancellation notices for health insurance policies they currently have.  These are plans that will not meet EHB requirements.

  • The policies at issue are individual and family policies purchased directly from insurers.
  • Consumers covered by Medicaid, Medicare, or large employers are unaffected.
  • The administration is also allowing extension of small-employer plans that do not meet EHB requirements.
  • Qualified health plans sold in the Marketplace must continue to cover EHBs.

The policy change will allow insurers to extend these existing “noncompliant” plans for one more year for current customers.  Policies renewing before the end of this year will last until late 2014 and policies that expire in 2014 can extend into 2015.  If carriers do renew, they must disclose to the policyholder differences between the benefits offered in their existing plan and those EHBs required by the ACA.  In other words, why the policy is “noncompliant” with the EHB requirements.

As reported by The Washington Post:

Individual policies have long been a problematic part of the insurance market, with higher prices than most group plans, fewer benefits and a tendency to cut off people when they get sick. The health-care law tried to address this problem by directing Americans who rely on individual policies to buy coverage through the new insurance marketplaces — and by defining the set of essential benefits.

Despite the policy change, the administration is allowing each state to determine whether its residents can renew a plan that does not comply with the ACA’s EHB requirement.  Some states, including Washington, have already announced that they will not allow noncompliant health insurance policies to be sold to their residents.  Other states, such as Florida, have announced that they will allow noncompliant insurance plans to be renewed for their residents.

Additionally, an insurance company is not required to renew its noncompliant policy.  So although a consumer may want to renew a policy that will not cover EHBs, the state may not allow it and/or the insurance company itself may not continue the policy.  Consumers should check with their state to see if it will allow renewal of noncompliant plans.  They should also check with their insurer to see if it will be renewing canceled policies.

Even if the state and the insurance company will allow the renewal of a noncompliant plan, consumers should evaluate alternatives offered in the Marketplace to see if qualified health plans sold there offer better coverage at equal or better price.

Remember that individuals earning between 100% and 400% of the federal poverty level (FPL) ($23,550 to $94,200 for a family of four) will have access to premium tax credits in order to make purchasing insurance in the Marketplace more affordable.  Additionally, individuals earning between 100% and 250% FPL  ($23,550 and $58,875 for a family of four) will have access to cost-sharing subsidies that will bring down their deductibles, copayments, and coinsurance.  By contrast, noncompliant plans are not eligible for subsidies.

In summary, while you may now be able to keep your plan that does not include EHBs, when you compare plans in the Marketplace, you may find that you will get an equal or better price for a better benefit than what you have now.

Mental Health Parity Requirements and Medicaid

Posted in Behavioral Health, Medicaid

The U. S. Department of Health and Human Services announced on Friday final regulations implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).  The MHPAEA is intended to align insured health care benefits for mental and substance use disorders (M/SUD) with those for medical and surgical care.

The MHPAEA requires certain group health plans to ensure that financial requirements (e.g., copays and deductibles) and treatment limitations that are applicable to M/SUD benefits are no more restrictive than the predominant requirements or limitations applied to substantially all medical and surgical benefits.  The MHPAEA does not mandate that a plan must provide M/SUD benefits.  Rather, it requires that if a plan provides medical, surgical, and M/SUD benefits, it must provide them in an equitable fashion.

The MHPAEA supplements the provisions that were included in the Mental Health Parity Act of 1996 (MHPA), which required parity with respect to aggregate lifetime and annual dollar limits for mental health benefits.  The MHPA did not, however, apply to substance use disorder benefits; MHPAEA continues the MHPA parity rules for mental health benefits and extends them to benefits for substance use disorders.

Importantly, these final regulations apply to group health plans and health insurance issuers, but they do not apply to Medicaid managed care organizations (MCOs), Medicaid alternative benefit plans (ABPs), or the Children’s Health Insurance Program (CHIP).  However, MHPAEA requirements are incorporated by reference into statutory provisions that do apply to those entities.  On January 16, 2013, the Centers for Medicare & Medicaid Services (CMS) released a State Health Official (SHO) letter regarding the application of the MHPAEA requirements to Medicaid MCOs, ABPs, and CHIP.  In this guidance, CMS adopted the basic framework of MHPAEA and applied the statutory principles as appropriate across these Medicaid and CHIP authorities.  The letter essentially says the following –

  • Alternative benefit plans – including those for Medicaid expansion populations – must meet MHPAEA requirements.
  • MHPAEA applies to CHIPs, regardless of whether the CHIPs operate through a managed care or fee-for-service system.  Also, to the extent the CHIP provides full coverage of the early periodic screening, diagnosis, and treatment (EPSDT) Medicaid benefit, it is deemed to have met the parity requirements.
  • Parity requirements apply to MCOs that contract with a state Medicaid program to provide both physical and behavioral health benefits.  The letter specifically indicates the following:

In light of Medicaid regulations that direct states to reimburse MCOs based only on state plan services, CMS will not find MCOs out of compliance with MHPAEA to the extent that the benefits offered by the MCO reflect the financial limitations, quantitative treatment limitations, nonquantitative treatment limitations, and disclosure requirements set forth in the Medicaid state plan and as specified in CMS approved contracts.  However, this does not preclude state use of current Medicaid flexibilities to amend their Medicaid state plans or demonstrations/waiver projects to address financial limitations, quantitative treatment limitations, nonquantitative treatment limitations, and disclosure requirements in ways that promote parity.  Any additional or alternative treatment limitations put in place by the MCO, however, must comply with mental health and substance use disorder parity requirements.

What this all means is that, although the final regulations do not technically apply to ABPs, CHIPs, and MCOs, they essentially do to the extent described in the SHO letter.  The letter also states that CMS intends to issue additional guidance that will assist states in their efforts to implement the MHPAEA requirements in their Medicaid programs.

17 Million Americans to Qualify for Premium Tax Credits; Ohio Has Eighth Most Eligibles

Posted in Affordable Care Act

A new report released by the Kaiser Family Foundation indicates that about 17 million Americans who are currently uninsured or who buy insurance on their own will be eligible for premium tax credits to buy health insurance in the health insurance marketplace beginning in 2014.  As we have discussed in other posts, beginning in 2014, individuals with incomes between 100% and 400% of the federal poverty level ($11,490 to $45,960 for an individual and $23,550 to $94,200 for a family of four) will have access to premium tax credits that will lower the amount of premium they pay for coverage.

Some highlights from the report include the following:

  • Three states (Texas, California, and Florida) each have more than 1 million tax-credit-eligible residents
  • Another seven states have more than 500,000 tax credit-eligible residents.
  • Ohio has the eighth most tax credit-eligible residents, at 544,000 individuals.
  • At the lower end, seven states have fewer than 50,000 tax credit-eligible residents, with the District of Columbia (9,500) and Vermont (27,000) having the fewest.
  • The five states with the most tax credit-eligible individuals account for about 40% of all such individuals nationally.

To conduct the analysis, Kaiser used data from the 2012 and 2013 Current Population Survey (CPS) Annual Social and Economic Supplement (ASEC).  They started with a pool of individuals who have no insurance or who purchase insurance on their own.  Kaiser then looked at these individuals’ family incomes under Affordable Care Act rules and the premiums they would face to determine whether they would qualify for a premium tax credit.  Lastly, Kaiser removed approximately 16% of potential eligibles because research shows that some people who are uninsured or purchase insurance themselves have access to employer-based coverage, either through an offer from their own employer or through an offer through a spouse or parent.  Those that remain represent Kaiser’s estimate of tax-credit eligible individuals.  A more complete description of the analysis may be found in the report.


Recent Study Concludes That Poverty Affects Childhood Brain Development

Posted in Behavioral Health

A study recently published in JAMA Pediatrics indicates that exposure to poverty in early childhood materially impacts brain development.  The study also found that “some of the negative effects on the brain…can be mediated by the level of support or hostility of the children’s caregivers, as well as the level of stressful events in life.”

Additional media commentary on the study can be found on these various sites: Bloomberg, CBS NewsU. S. News & World Report, MedPage Today, and Reuters.

Scrutton Named Vice-Chair of AHLA Behavioral Health Task Force

Posted in Behavioral Health

Vorys, Sater, Seymour and Pease is pleased to announce that Suzanne Scrutton, a partner in the Columbus office and a member of the health care group, has been named a vice-chair of the American Health Lawyers Association (AHLA) Behavioral Health Task Force. The newly formed Task Force will advance the understanding of laws impacting behavioral health, including the delivery of services to those living with mental illness, certain neurological conditions, substance use disorders, or developmental disabilities, and reimbursement for such services.

Read this press release for additional details about Ms. Scrutton’s responsibilities and the role of the Task Force.

Ohio Clears Path to Medicaid Expansion

Posted in Medicaid

The Controlling Board today approved a measure that will allow the State of Ohio to spend federal-only funds to extend Medicaid coverage in Ohio beginning January 1, 2014.  As we reported in earlier posts, the Centers for Medicare & Medicaid Services recently approved the state’s request to amend its Medicaid State Plan to cover an additional 275,000 Ohioans under an expansion of the Medicaid program.  Today’s 5-2 Controlling Board vote makes Ohio the 25th state plus the District of Columbis to approve a Medicaid expansion.

However, it does not appear as though the issue is completely settled, as some opponents of expansion are planning to sue, challenging the authority and constitutionality of the Controlling Board.  Continue to watch this space for updates.

The Hydraulics of Ohio’s Medicaid Expansion

Posted in Affordable Care Act, Medicaid

By Daphne Saneholtz and Sylvia Brown

Caution: this is a technical post – not for the faint of heart!

In our last post, we discussed Governor Kasich’s plan to seek approval from the Controlling Board to appropriate funds to enable roughly 275,000 Ohioans to gain health insurance coverage under Medicaid.  But how will this really work?

Authority to Seek An Amendment to Ohio’s Medicaid State Plan and to Implement Expansion

On September 26, 2013, the director of the Ohio Department of Medicaid submitted a State Plan Amendment (SPA) seeking to extend Medicaid coverage to additional populations.  The State Plan is Ohio’s contract with the federal government that specifies all of the eligibility groups (mandatory and optional) that the state covers, the services it offers under Medicaid, and other structural components of the state’s Medicaid program.  Changes to the State Plan must receive approval from the federal government.  The Centers for Medicare & Medicaid Services (CMS) approved the amendment on October 10, 2013.  As a result, federal funds are available to extend Medicaid coverage starting January 1, 2014, to certain individuals. 

The department’s pursuit of the SPA is authorized under Ohio law.  Section 5162.07 of the Ohio Revised Code (ORC) gives the Medicaid director express authority to seek a State Plan Amendment without requiring additional legislation.  Likewise, ORC section 5163.03 permits the state to implement expansion without requiring the department to seek additional legislative authority. This section specifies that “the Medicaid program shall cover all mandatory eligibility groups” and “may cover any of the optional eligibility groups.”  Ohio Medicaid may not cover an optional group that state statute prohibits, but no such prohibition exists for the group that would be added to under the expansion.

A Little (Recent) History About the Medicaid Expansion Group

The Affordable Care Act amended the Social Security Act (“the Act”) to add a new mandatory Medicaid eligibility group.  Specifically, the ACA added section 1902(a)(10)(A)(i)(viii) to the Act.  Section 1902(a)(10)(A)(i) is the section of the federal law that lists the Medicaid eligibility categories that states must cover.  They can, at their election, agree to cover additional, optional Medicaid eligibility categories as well.

Section 1902(a)(10)(A)(i)(viii) expands Medicaid eligibility to so-called “group eight” adults (derived from the section of the Act that governs them).  These are people who are under 65 years of age, are not pregnant, are not entitled to or enrolled in Medicare, are not otherwise eligible for Medicaid, and whose income does not exceed 138% of the poverty level.

Under the ACA’s Medicaid expansion, each state is required to expand Medicaid eligibility to “group eight” adults.  As specified in the ACA, states that choose not to expand Medicaid eligibility to this group will lose all of their federal Medicaid funding.  (The percentage of federal contribution varies by state, but averages 57%.)

The U. S. Supreme Court’s ruling on the constitutionality of the ACA itself effectively makes the expansion optional.  In short, the Supreme Court upheld the constitutionality of the Medicaid expansion and indicated that the federal government can offer enhanced federal funding to those states that want to expand Medicaid, but it cannot penalize a state that chooses not to participate in the expansion by taking away all of its federal funding for Medicaid.

Once the Court ruled on the ACA, states began to decide whether to participate in the (effectively optional) expansion.  In Ohio, the Governor expressed support early on for participating in the expansion.  In fact, the executive proposal for the state fiscal year (SFY) 2014-2015 operating budget included a provision to expand Medicaid to “group eight” adults.

During the budget process, however, the legislature removed language that authorized the Medicaid expansion.  The legislature continues to introduce various pieces of legislation that seek to reform and/or expand Medicaid.  Subsequently, a group of advocates initiated proceedings to place the expansion provision on the November 2014 ballot.

Recently, the Governor also sought to move forward on another track – working with the federal government to implement the expansion and simultaneously working through the state Controlling Board to appropriate federal funds to pay for the expansion.

What Ohio Law Seems to Say About Covering “Group Eight” Adults

As discussed above, under ORC section 5163.03, Ohio law acknowledges that the state is required to cover Medicaid eligibility groups deemed mandatory by federal law.  This section also acknowledges that the state may cover any Medicaid eligibility group deemed optional by federal law.  Thus, whether “group eight” adults are perceived to be a mandatory eligibility group (as codified in federal law) or an optional eligibility group (as specified by the U. S. Supreme Court), the Ohio Revised Code already provides the authority to cover these individuals.

What does the Controlling Board have to do with all this?

Under the ACA’s Medicaid expansion, the federal government will pay 100% of the cost of the expansion population at first and eventually reduce the funding to cover 90% of the costs of this population in later years.  Ohio Revised Code section 131.35 authorizes a state agency to spend federal funds pursuant to an appropriation of the General Assembly or authorization by the Controlling Board.  The department has determined that the state needs Controlling Board approval to authorize it to spend additional funding –the enhanced federal Medicaid reimbursement that the state will receive beginning January 1, 2014 – above levels currently set by the legislature as part of the SFY 2014-2015 operating budget.

On October 11, 2013, the Ohio Medicaid director submitted a Controlling Board request seeking authorization to spend federal-only funds to extend Medicaid coverage in Ohio beginning January 1, 2014. To receive Controlling Board approval, four of the Board’s seven members must vote in favor of authorizing the spending of the federal money.

The Governor’s Big Play: Pushing Ahead on Medicaid Expansion

Posted in Affordable Care Act, Behavioral Health, Health Care, Health Care Reform, Medicaid

By Sylvia Brown and Former State Senate President Tom Niehaus

Anticipation is building as the battle over Medicaid expansion moves to the unlikely arena of the state Controlling Board. On Monday, October 21 at 1:30 p.m., Governor John Kasich will try to make good on his promise to take whatever action within his power to expand Medicaid in Ohio – with or without the approval of the Ohio Senate or House.

At that meeting, the Controlling Board will hear a request from the Ohio Department of Medicaid for authorization to appropriate federal funds to make an estimated 275,000 additional people eligible for the Ohio Medicaid program.

Medicaid is a state and federal program that provides health care coverage for eligible families and individuals with low income. The department has requested an additional appropriation of federal funds of nearly $562 million in fiscal year 2014 and almost $2 billion in fiscal year 2015 to fund this expansion. The request expressly states that if the federal government reduces its funding, state funds will not be used to supplant federal funds.

The controversial move has been rumored for weeks and elicited strong reactions from proponents and opponents. While the success of this attempt by Governor Kasich to expand Medicaid is not guaranteed, it is unlikely the request would have been made without some indication that the appropriation would be approved.

The request puts the seven members of the Controlling Board at the center of the political firestorm about Medicaid expansion. The board consists of six legislators: two Republicans and one Democrat from the Senate and two Republicans and one Democrat from the House. The seventh member is the director of the Office of Budget and Management, an appointee of the governor.

Approval requires an affirmative vote of at least four members. As if the issue were not complicated enough, two Controlling Board members, Representatives Amstutz (R-Wooster) and Rosenberger (R-Clarksville), are seeking to replace William G. Batchelder as Speaker of the House in the next General Assembly. An affirmative vote on Medicaid expansion would likely not sit well with many Republicans in the House where the measure stalled earlier this year.

Statehouse observers are watching to see where the fourth vote will come from, since it is certain the governor’s appointee will vote in favor and both Democrats also are expected to vote in favor of the request. There is a possibility that one or more of the members of the Controlling Board could be replaced by the Speaker of the House or President of the Senate. Such a move would likely not be known until the morning of the vote. If the administration determines that there are not enough favorable votes, the item can be pulled from the agenda.

The department’s request is not a novel one, but it may test the bounds of the Controlling Board’s authority. The Controlling Board has the authority to handle transfers of appropriations. Some argue that unlike past proposals involving only federal funding, the department’s proposal calls on the Controlling Board to appropriate funding that would create an additional function for the state’s Medicaid program. The same individuals say that there is a question as to whether approval could obligate the state into fiscal years beyond 2015.

Therefore, even if the Controlling Board approves the request for funds to expand Medicaid, the action could be challenged in court. If granted, an action for equitable relief, such as an injunction, could delay expansion past the intended start date of January 1, 2014. Likewise, a suit on constitutional grounds could keep the expansion in legal limbo.

Alternatively, if the Controlling Board rejects the request, the defeat would likely be enough to stop any further discussion of the issue in the legislature – at least for now.

Separate from the Controlling Board effort, proponents of the Medicaid expansion issue have indicated they will offer a citizen-proposed statute to the legislature, if enough Ohioans sign their petitions. If successful, the entire debate regarding Medicaid expansion would resume in early 2014.

All this uncertainty is not new for those who have worked with the Controlling Board and executive agencies. Successful passage requires one thing: Having at least four votes before you enter the hearing room. In the next couple of days, we expect to see a lot of discussion by the administration to secure four votes for Medicaid expansion.

VHCA, Vorys to Present on Health Care Reform at OPRA Fall Conference

Posted in Health Care Reform

Vorys Health Care Advisors’ Maureen Corcoran and Daphne Saneholtz and Vorys partner Suzanne Scrutton will be presenting at the Ohio Provider Resource Association Annual Fall Conference on October 8, 2013.  The presentation is titled Health Care Reform Update: The Home Stretch and will discuss provider implementation issues associated with the Affordable Care Act, policy and regulatory changes, and how providers can prepare for the significant changes.