In 2015 a Slap on the Wrist Can Be the Kiss of Death
It is truth that in the second term of Democratic administrations, scores get settled between Washington regulators and business partners of the Federal government. 2015 will be no different for our favorite agency, the Centers for Medicare & Medicaid Services (CMS). It's already on a pace for 2015 to be the toughest year ever in enforcement actions against Medicare Advantage plans. And generally speaking, the regulatory bar is rising faster than anyone imagined. Consider:
- So far in 2015 CMS has issued significant new Medicare Advantage and Part D regulations, and this year's Advance Notice for 2016 rates and rules for Medicare and Part D health plans is the most anticipated I can remember in more than 20 years.
- 2015 is the toughest year in benchmark payment rates thanks to the approximately $200 billion in cuts from the Affordable Care Act.
- 2015's technical corrections for Star Ratings are almost bewildering in their complexity in raising the clinical bar. Indeed, in 2014, an election year, CMS famously told Medicare Advantage plans below 3 Stars for 3 consecutive years that a stay of execution was granted. In the fall, many of those low performers were quietly shown the door and were non-renewed. In 2015, however, the agency is handing out live ammunition to its firing squad. Now an intermediate sanction freezing marketing and enrollment automatically knocks the plan down to 2.5 Stars, often meaning loss of millions in bonus payments and rebate dollars. In competitive markets now, the first plan sanctioned is the first hunk of roadkill.
- The HHS Office of Inspector General, the guys with the badges and guns in Medicare, have made data validation audits for Medicare Advantage risk adjustment one of its top priorities in its 2015 workplan. And the President's budget includes over a half-billion dollars in recoveries from these RADV audits.
- But nowhere is there better evidence that the paper tiger is growing its claws back than in CMS' track record in enforcement actions against MA plans. In January, the agency levied the highest monthly toll of civil monetary penalties ever -- and if it keeps up the pace, 2015 will be nastiest enforcement environment in Medicare history.
*January 2015
Granted, CMPs don't typically amount to much, usually no more than a couple hundred grand, rarely 7 figures plus. But the damage is actually far greater, when considering damage in the local and national press; the chatter factor among beneficiaries; lost membership, and damage to the Star Rating and the relationship with CMS, which for many plans is or is becoming its biggest customer. A slap on the wrist is now the kiss of death in this environment.
Last week, my colleague conducted a webinar on the "Top 10 Things Killing Your MA Plan." CMS' top infractions, in order, are coverage determinations and grievances, and formulary administration, or performance of your pharmacy benefits management vendor. Those findings are driven by these 10 root causes:
Now is the time to ensure your compliance function and Medicare operations have the right tools, processes and people to be successful in the toughest environment we've ever seen in government health programs. In 2015, Gorman Health Group launched its latest product, CaseIQ™ , providing a new way to ensure your Appeals & Grievance cases come to a timely and compliant resolution. The tool not only captures all the data points needed to categorize, work and report coverage disputes and complaints; it also guides users through the appropriate processing of each case, minimizing the risk of non-compliance due to user error. Built and governed by GHG Medicare compliance subject matter experts, CaseIQ™ aims to keep our clients out of CMS' audit crosshairs. Learn more in our recent press release.
In addition, in the Common Conditions, Improvement Strategies, and Best Practices memo based on 2013 program audit results, CMS outlined areas where plans have been consistently non-compliant and described best practices to address failings. Ongoing monitoring is at the heart of non-compliance. Our solution, the Online Monitoring Tool(OMT™), is a highly flexible oversight tool and dash boarding software that brings together key metrics, documents, and tasks for ongoing monitoring and auditing, which results in the Organization being audit ready. This integrated solution also streamlines vital compliance activities, such as the implementation of new requirements and corrective actions. Read our recent White paper to learn more.
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CaseIQ™, GHG's latest solution, offers built-in reports that allow for tracking of past performance, current backlog as well as trends, and is designed to assist the caseworker to a complete and compliant resolution in Part C (MA) appeals, Part D appeals, and Part C and Part D grievances. Learn more >>
Registration for the Gorman Health Group 2015 Forum is now open! Attendees can expect timely, actionable advice on the trends shaping health care from notable speakers, including Barclay's analyst, Joshua Raskin, and regulatory guidance directly from Jennifer Smith, a Director in the Medicare Parts C and D Enforcement Group at the Centers for Medicare & Medicaid Services (CMS). Register your team for The Gorman Health Group 2015 Forum today!
ICD-10 Transition — Ready or Not?
It's a New Year and there are 262 days left until the October 1, ICD-10 implementation deadline. The road to ten has been very challenging with respect to "Go or No-go" implementation timelines. Due to several delays, many organizations literally stopped transition efforts and redirected funding budgets to other priority projects.
The big day is coming! Currently, it is a known fact that CMS is operating under the October 1, 2015 scheduled deadline. It is now crunch time and with the compliance deadline set organizations have minimal time to complete the transition. Thoughtful planning, and executing conversion plans, will overall make the difference between a successful transition and missing the deadline.
What happens if your organization is not fully ready?
What is your plan for remediation?
The transition does not have to be painful. Timing is everything. Health plans and organizations, such as providers, clearinghouses and vendors can still benefit by using the time left to focus and implement additional readiness and deployment strategies for the code switchover.
The International Classification of Diseases, Tenth Revision (ICD-10), consists of two new areas, clinical modification (ICD-10 CM) for diseases and procedural coding system (ICD-10 PCS) and will replace ICD-9. The switch in code sets will provide expanded detail for inpatient, ambulatory and managed care organizations to better define medical conditions. The conversion is a significant change to the standard healthcare coding systems.
So what exactly are the differences between ICD-10 and ICD-9?
- ICD-9 codes have three to five numeric digits, while ICD-10 has three to seven alphanumeric digits - the switch in 2012 to HIPAA 5010 transaction standards for electronic claims paved the way for practices and payers to be able to accommodate ICD-10 changes
- CMS will transition all diagnosis codes from 13,000 old codes to approximately 68,000 codes included in the ICD-10 version
- ICD-10 has more specificity with a lot more codes, which provide more detail and granularity than the old codes
- Diagnosis Procedure Codes Systems (PCS) will increase from 3,000 ICD-9 to 87,000 ICD-10 PCS
Based on these changes, transition to ICD-10 requires extensive detailed planning, and comprehensive readiness efforts organizational-wide. It's virtually more than just a coding function. Diagnosis codes affect almost every core functional and operational process, system and reporting. Failure to prepare for the conversion will have dramatic impacts on financials and ultimately the member experience.
By leveraging in-depth regulatory interpretation and guidance with complete operational knowledge base Gorman Health Group provides ICD-10 best practices through financial analysis and impact assessment, which includes people, process and technology. Gorman Health Group will identify gaps between current operational "as is" process flows and recommend future optimal "to be" process flows required for the implementation. The analysis will highlight the impact on margins by line of business and measured through people, process and technology. Additionally, risks and potential return on investments (ROI) for the identified gaps can be provided.
Gorman Health Group ensures end-to-end operational process re-design including but not limited to the following functions:
- Claims
- Benefits & Product
- Configuration
- Codification and mapping
- Contracting
- Division of Financial Responsibility (DOFR)
- Prior Authorization
- Provider Pricing
- Quality Control
- Revenue Cycle
- Reporting and Analytics
- Metrics
- Vendor Alignment
- Vendor Management and Oversight
- All Other Hand-offs "Operational" Areas
If you are behind the eight ball and not exactly on track let us proactively work with you on an expedited readiness plan, contingency plan development, post-production support, post-transition analysis, knowledge transfer, monitoring and reporting. Gorman Health Group includes some of our industry's most experienced and proficient ICD-10 and operational subject matter experts.
Make your New Year's resolution to stay on track with transitioning to ICD-10. Time is running out and October will be here before you know it.
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Rewards and Incentives: Are We There Yet?
Yes, Medicare Advantage is finally catching up to the rest of the health care industry, and we are now permitted to offer enrollees Rewards and Incentives.
On December 4, 2014, CMS released an HPMS memo titled "Rewards and Incentives Program Guidance" which provides additional guidance related to how Organizations must implement Rewards and Incentives Programs, which, as of July 22, 2014, CMS allows for Part C benefits.
Although the implementation of Rewards and Incentives is no easy task, I think the more pertinent question is how could this new guidance impact your Organization and our industry as a whole? Well, some of that, I think, will remain to be seen as these programs are implemented. However, I do think there are a few challenges and strategies that we should consider as we're implementing these programs - here are a few things to mull over as you're ringing in the New Year:
• What is the competitive landscape for Rewards and Incentives, and how will your Organization ensure that it is competitive while still remaining compliant?
• How will your Organization ensure that your Rewards and Incentives program will have an impact on enrollee behavior?
• How will your Organization track information regarding Rewards and Incentives?
• Last but not least, how will your Organization oversee the implementation of your Rewards and Incentives program to ensure compliance?
So, what is the trend? The fact that Medicare Advantage Organizations are now allowed to provide Rewards and Incentives (for Part C benefits) further indicates that CMS' main focus and main objective is the health of the Medicare population — as it should be, of course. However, we in the industry should take note - along with CMS' continued scrutiny via their program audits (and other mechanisms) of those areas that have the potential to cause beneficiary harm, they are also loosening the reigns in certain key areas such as Rewards and Incentives. The objective here is to ensure that Medicare beneficiaries have access to high-quality health care including any incentives that could in fact have a meaningful change in the way that beneficiaries approach their health care.
For more information or support, contact us today and a team member will be in touch with you shortly.
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Become a member of the Point to receive access to the analysis of all HPMS memos by GHG experts. Already a member? Access the HPMS memo mentioned in this article here >>
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Federal study raises questions about access to care for people gaining Medicaid coverage under the Affordable Care Act
Federal investigators said in a new report that large numbers of doctors who are listed as serving Medicaid patients are in reality, not available to treat them.
Patients select their physicians from a list of providers associated with each Medicaid health plan. The investigators, led by the inspector general, Daniel R. Levinson, called the doctors' offices and found that in many cases the doctors were unavailable or unable to make appointments.
More than one-third of providers could not be found at the location listed by a Medicaid managed-care plan.
This can create a significant obstacle for an enrollee seeking care, impacting access to important benefits and treatment. Imagine being in the middle of a need for important medical care, picking up the provider directory and over half of the doctor's numbers you call are not valid.
If access to care cannot be relied upon, the foundations of the managed care programs are at risk. With the recent growth in Medicaid managed care, this becomes a more significant concern for the government as well as the industry. With the concern comes the potential for more stringent oversight.
New rules and standards to ensure timely access to care for Medicaid patients are under development. The push from the National Association of Medicaid Directors is to avoid overly prescriptive standards given the variances of State Healthcare markets.
CMS and OIG are in concurrence about tightening the standards, oversight and adequacy requirements.
We can help you wind your way through the new rules and the process for improved access to care. Contact us today.
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Gorman Health Group, LLC (GHG), the leading consulting firm and solutions provider in government health care programs, announced its further expansion into Medicaid, and the promotion of one of the nation's leading Medicaid experts, Heidi Arndt, to lead the division. Read more >>
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Hepatitis C virus (HCV) and treatment with Sovaldi® (sofosbuvir)
The medication Sovaldi® has revolutionized the way HCV is treated and at the same time has shocked health insurance payers and particularly Medicaid prescription drug budgets. With an estimated cost of $1000 or more per pill for a twelve (12) week course of treatment, the cost to treat one person can exceed $84,000.
According to the Centers for Disease Control & Prevention (CDC) there were an estimated 16,000 acute HCV infections reported in the US in 2009, the latest year statistics are available (http://www.cdc.gov/hepatitis). An estimated 75-85% of the people infected with acute HCV develop the chronic condition. The CDC estimates that there are 3.2 million persons in the US with chronic infection. Most people do not have symptoms and are unaware they are infected with HCV. HCV also affects those in lower socioeconomic classes and therefore the potential impact to Medicaid programs is even greater.
Sovaldi has a cure rate as high as 95%, with mild side effects during a twelve week course of oral therapy. Compare this with the previous drug of choice to treat HCV, interferon. Interferon is injected for up to a year and can have severe, flu like side effects. The cure rate for the most common strain, genotype 1, is 48-56%, depending on the length of therapy (M. Parikh, April 2011). The cost for the interferon treatment is $15,000 - $20,000. It is easy to see that clinically Sovaldi has the upper hand, but what cost can Medicaid programs, and ultimately taxpayers assume?
Some state's Medicaid programs, such as Oregon, are looking at ways to manage the use of Sovaldi by approving it only for their Medicaid clients who are showing signs of liver cirrhosis and have clean drug tests, for example (COOPER, 2014). In addition, what happens if a patient fails to complete their 12 week course of treatment? Should they be allowed to resume another full course of treatment?
This medication is a perfect candidate for coordinated medical and pharmacy management. Adherence is crucial to ensure completion of the twelve week course of therapy. If Medicaid programs are going to invest in paying for these types of expensive therapies it is vitally important that the medications are taken appropriately for the required length of time.
To learn more about how plans are investing in programs to help patients achieve better outcomes with the new Hepatitis C treatments, contact us >>
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Gorman Health Group can work with your organization on blending medical and pharmacy to improve care coordination, outreach and utilization management to meet the complex needs of your membership. Visit our website to learn more >>
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Republican Congress to Use "Inside Baseball" and Courts to Maim ObamaCare
Blowing in like a flu outbreak as year-end approaches, ObamaCare Derangement Syndrome has enveloped the Capital. Republican leaders in Congress are plotting to use arcane parliamentary procedures and the courts to do further violence to ObamaCare, and by extension, to the millions who have gained insurance through it. While it's red meat for the conservative base, the strategy presents a huge political problem for the GOP: they have nothing to replace it with.
Since the midterms last month, Republican Congressional leaders have been locked in a furious, behind-closed-doors planning effort to gut ObamaCare once and for all. While the GOP has finally awakened to the fact that repealing the Affordable Care Act ain't gonna happen on Obama's watch, Republicans are licking their chops to use an obscure fast-track budget process called reconciliation to deal it a mortal wound with only a simple majority. It's a longshot with many difficult parliamentary steps, but if successful, could deal a fatal blow to the marketplace subsidies, the Medicaid expansion, and/or the individual mandate. But I've consistently underestimated the effects of ObamaCare Derangement Syndrome, so I'm making no bets this time around.
Barring that, plans are also being laid to craft a bipartisan bill that would strip out more minor provisions like the device tax, the Independent Payment Advisory Board (IPAB), and restoring a 40-hour workweek. That seems to have a better shot, assuming the reconciliation effort doesn't poison the already toxic well on the Hill.
The second prong of the Republican attack is through the courts, with a goal of "repeal by Justices." GOP leaders are convinced that where repeal may fail legislatively because the President won't kill his signature domestic achievement, the Supreme Court just might do the dirty work for them.
The first test, of course, is King v. Burwell, the challenge to the Federal marketplace subsidies the Court accepted in a surprise move last month. The case hinges on payment of Federal subsidies to people who enroll in insurance marketplaces run by CMS, and not by states. It was basically a drafting error that now threatens to put ObamaCare into a death spiral if the plaintiffs win.
The Court has acted to hear the case early in its session in March, but we won't know their ruling until June 2015. I put it at 50/50, because four Justices don't vote to hear a case unless they're confident they can get a fifth for a majority ruling. That fifth vote, of course, is Chief Justice John Roberts, and he's a total wild card. He has voted for both sides of the Court, and is very mindful of his legacy and the institution's legitimacy. He said recently that the partisanship shouldn't penetrate the walls of SCOTUS, and that's encouraging for ObamaCare supporters.
Most Constitutional scholars here in DC seem to think the merits of the case favor the Administration, but there's a whole lot of liberal hand-wringing going on here. A win for the plaintiffs and the end of Federal subsidies to 4.5-7 million Americans would of course be lethal to the marketplaces, and there's little activity underway at the state level for that contingency. It would effectively wipe ObamaCare off the map entirely in Red States with no exchange and no Medicaid expansion. If it fails and the ACA's subsidies are upheld, Republicans are lining up multiple other challenges to the Affordable Care Act, all with a goal of getting them to SCOTUS.
I think a win for Republicans in King creates a huge political problem: they will tear health insurance away from millions of Americans, with no alternative or replacement in sight. Not even Medicaid expansion. And that would take some "splainin'" to do in 2016, when Hillary gets her second act on health reform.
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Registration for the Gorman Health Group 2015 Forum is now open! Register your team for The Gorman Health Group 2015 Forum by December 31, 2014 and SAVE 30% off your ticket using promo code: EarlyBird30 at checkout.
Don't miss GHG Founder & Executive Chairman, John Gorman, at the ICE 2014 Annual Conference, delivering the keynote address titled "Evolve or Die: A Darwinian Moment in Government-Sponsored Health Programs. To find out what other events GHG experts will be speaking at, visit our website >>
Medicare Advantage Rates for 2016: Chanel No. 5 or Another Unicorn Fart?
This week CMS issued a surprise announcement on payment rates for Medicare Advantage in 2016. The 2.02% increase is in line with projections we have been using for 2016, and is also consistent with other projections for Medicare FFS per capita cost growth. But there should be no confusion: this is NOT the final rate, and this will either end up smelling like Chanel No.5 or another "unicorn farting rainbows" like 2015.
First, as CMS says in their release, they reserve the right to change this trend, both in the February advance notice, and in the April final rate notice. So we're nowhere near done with the 2016 rate development process. In fact, we're pretty convinced this announcement was done to avoid the market-twisting "business intelligence" mess of 2014's process and keep it more transparent.
Second, the 2016 benchmarks to be announced in April will also reflect corrections to the 2015 benchmarks. The CMS release indicates that they may have underestimated the 2015 trend, and that 2015 benchmarks may be too low as a result. If this calculation holds through next April, it will increase the 2016 benchmarks by another 0.7%. However, this may change as well. For 2015, corrections to the prior year estimate served to lower the effective trend.
Some counties will receive a blended benchmark in 2016, with the new Affordable Care Act (ACA) benchmark representing 5/6 of the total, and the old pre-ACA benchmark representing the remaining 1/6. The pre-ACA benchmarks are corrected for cumulative forecasting errors over several years. If the current calculations remain unchanged, this will increase the pre-ACA benchmark by another 2.2%, of which 1/6 will find its way into the blended benchmark. This will add about 3/10 to 4/10 of a percent to the blended benchmarks in these counties. But, again, this is subject to change between now and next April.
Presumably CMS will continue to phase in the new risk adjustment scoring system. CMS has estimated that the average impact of the changes will reduce risk scores by 2.6% when fully phased in. The changed scores were phased in at 1/3 for 2015. If CMS continues this three-year phase-in, the second year's 1/3 will reduce average risk scores by 0.87%. This is an average, and plans will see some variation on how the change affects them individually. CMS may decide that they want to phase in the whole thing in 2016, when there is a positive trend to offset the impact. So the net reduction in payments could easily be doubled to a negative 1.7%, on average.
Another hit to payment is the continued increase in the amount that CMS deducts from plan payments to compensate for the impact of improved diagnosis coding by plans. These deductions increase by 0.25% per year, through 2018. So the effective rate, whatever it turns out to be, will then be reduced by 0.25%. There is also the "wild card" of the fee-for-service normalization factor, which adjusts risk scores for changes in the statistical database used to calculate risk scores. This may be a positive or negative adjustment. And we can expect CMS to revisit the matter of risk scores that are documented in home visits, as they have the last two years, and that in 2016 they may actually do something about it. This would obviously have a negative effect on payments.
Finally, unless the new Congress makes an unexpected change, sequestration will continue to slice off 2% of the amount that plans are actually being paid. This is current law, so it's not a change, just an ongoing challenge. There is always the possibility that a Republican Congress may find a way to rescind the Medicare 2% sequestration and allow plans to receive their full payment, but in this environment, seems very unlikely.
It is encouraging to see that CMS is currently expecting an increase rather than a decrease in the per capita cost for fee-for-service Medicare, since this is the trend that drives the Medicare Advantage benchmarks. However, there are many moving parts, some of which are still unknown, and all of which are subject to change until next April.
It's all very reminiscent of former Defense Secretary Donald Rumsfeld: "There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know." So keep your nose in the air. I'm betting on a scent closer to magical horse flatulence come April.
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GHG can help you streamline the execution of your risk adjustment approach, and build a roadmap to ensure you're keeping pace with CMS expectations in both compliance and health care outcomes. Visit out website to learn more >>
Registration for the Gorman Health Group 2015 Forum is now open! Register your team for The Gorman Health Group 2015 Forum by December 31, 2014 and SAVE 30% off your ticket using promo code: EarlyBird30 at checkout.
Don't miss GHG Founder & Executive Chairman, John Gorman, at the ICE 2014 Annual Conference, delivering the keynote address titled "Evolve or Die: A Darwinian Moment in Government-Sponsored Health Programs. To find out what other events GHG experts will be speaking at, visit our website >>
Exchanges - Risk Adjustment - Ladies and Gentlemen, Start Your Engines
Seriously, the first question is, "what do you have under the hood for risk adjustment in your health plan?" If you're running a stock claims engine that merely matches up with your enrollment file for CMS Edge Server processing, and you don't have a risk adjustment operation, you may be breathing fumes from your competitors. Now, for health plans accustomed to competing against each other, we have a new type of competition. Further, it's not just plans on the Exchanges, it's all health plans on or off the Exchanges. Up to now, health plans have been competing for market share on the basis of premiums, benefits or brand; but with Exchange risk adjustment, competition takes on new meaning. You can gain or lose dollars. Some plans will transfer dollars to competitors on the market share they painstakingly managed to enroll. Ouch!
The process is very much underway at CMS with Edge Server testing. Plans are calibrating their systems. This means passing CMS testing for submission of test files, as well as understanding processing for acceptance and rejection of individual claims. Health plans must submit their first production by December 5, 2014. Beginning in mid-December, CMS will provide the first estimate reports to health plans for their review and feedback. After that, CMS will process files monthly until the final processing that occurs in May 2015, when risk scores are finalized for 2014. By July 2015, CMS expects to notify plans of any payments due when their risk scores indicate lower risk. For those receiving dollars, getting risk score payments will be no accident. So, while appeals can be filed, the process is upon us and, it will be too quick for any plan giving up dollars.
Right now, most plans' IT staffs are clarifying processing details. However, it is clear that some IT staffs are struggling with the basics, indicating few supports and a lack of horsepower in their risk adjustment engines. Most likely, these are plans that are not offering products on the exchange, and have limited familiarity with CMS requirements. To say they are back of the pack in this new form of competition, and have failed to understand this threat, is an understatement. Being caught unaware of their unknown risk score values relative to competitors' scores should be significantly unnerving to their leadership.
These leaders need to gauge their understanding and determine how quickly and sophisticated they can get. This includes ensuring that leaders develop the processes needed to identify proper risk scores, develop coding necessary to support diagnoses, and initiate analytics needed to identify gaps that require further investigation. So, the right time is now to lift the hood. Getting a risk adjustment engine to run over the next six months will be crucial to getting the most optimal risk score that properly reflects the health status of the members they have enrolled.
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Gorman Health Group supports our clients in evaluating the efficiency, compliance, and strategic value of their risk adjustment programs from start to finish, and helps ensure that the procedures for capturing, processing and submitting risk adjustment data to CMS are accurate, timely, and complete. Visit our website to learn more >>
Listen as Janet Fina, GHG's Vice President of Risk Adjustment, together with colleague, Carol Olson, GHG's Director of Risk Adjustment, addressed areas for documentation improvement that will allow for accurate reimbursement and disease and case management opportunities. Become a member of the Point to access the recording >>
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A Bad Couple Weeks for ObamaCare
It's been a bad couple weeks for ObamaCare. It started with a Republican gorilla-stomp in the midterms, a rout that included several Governors' mansions and state legislatures that essentially froze in place the Medicaid expansion map. Then, in a shocker, the Supreme Court decided to consider King v. Burwell, the case that could undo ObamaCare's marketplace subsidies and threaten the coverage of more than 4 million Americans. It's enough to give weekend bedspins.
Ice Age for Medicaid Expansion
In many states with rampant uninsurance, Republican candidates won critical Governors' races and in others the GOP solidified seats in their legislatures. The net effect: it's a new Ice Age for the Medicaid expansion map, with states taking the Affordable Care Act's (ACA) 100% Federal match for uninsured adults essentially now frozen in place. We may even see some backsliding.
Some 24 states have accepted the ACA deal and expanded their Medicaid programs in the wake of the last big SCOTUS ruling on ObamaCare. In fact, more Americans have gained coverage from Medicaid expansion than ObamaCare's subsidies in the new insurance marketplaces. But despite the fact that holdout states continue to pay their share for Medicaid expansion through Federal taxes, over two dozen mostly Red State governors continue to throw the middle finger at the guy in White House. Most notably, reelection of Rick Scott in Florida, Scott Walker in Wisconsin, Sam Brownback in Kansas, Nathan Deal in Georgia, and Rod LePage in Maine stuck a fork in coverage for the uninsured there.
Utah Gov. Gary Herbert will outline a formal Medicaid expansion plan this month. Republican governors in Tennessee, Wyoming, South Dakota and North Carolina have also flirted with Medicaid expansion plans in 2015. And a late recount win in Alaska for left-leaning Bill Walker may open prospects for coverage for 43,000 residents in 2015.
But we could see real retreat on Medicaid expansion in GOP states that were already moving forward. New Republican governors in Arizona, Arkansas, and Illinois have the power to threaten health coverage for hundreds of thousands who have enrolled in expanded Medicaid, and have done so during the campaign. Indiana Governor Mike Pence was negotiating a plan with the Obama administration pre-election, but now appears to have his own Presidential aspirations in mind and may put the plan on ice. Arkansas' controversial Medicaid expansion waiver to use Federal dollars to buy private coverage was already approved, but its new governor, former US Rep. Asa Hutchinson, is no fan of the plan, which requires annual approval by the legislature and is now very much in doubt.
It was a bad midterm election for the uninsured, especially childless adults. What remains to be seen is how hard a line the Obama Administration takes to force holdout Red States to take the money, using existing Medicaid funds as leverage. My guess is that hard line will be pretty limp. As George Burns said, "like shooting pool with a rope."
The SCOTUS Subsidy Surprise
The day after the election the Supreme Court made a surprise decision to hear arguments in King v. Burwell, what many thought to be a sideshow case in the lower courts around the Constitutionality of ObamaCare subsidies in the 36 states using the Federal exchange. It was basically a case challenging a drafting error in the law, which didn't make clear enough distinction between state-based and Federal marketplaces, and ACA opponents saw their opening.
Even being "strict constructionists" in their jurisprudence, one has to believe the conservative activist Court didn't take this case to rubber-stamp ObamaCare's subsidies. If the justices find for King, some 4-4.5 million Americans will see their martketplace subsidies at risk. Without subsidies, the vast majority of those insured will drop coverage like a hot rock, leaving only the sickest in the pool — what economists call a "death spiral" for insurers operating in the marketplaces. It would essentially lay a mushroom cloud on all private coverage options in those states, leaving ObamaCare a smoking wreck of mostly Blue State Medicaid expansions.
There's no ignoring this point: in Republican territory, the ACA and its marketplaces and Medicaid expansion are more vigorously opposed than in states that elect Democrats. If SCOTUS upholds King, then coverage and politics will truly converge in Red States. A win for King means Red States can effectively purge themselves of all vestiges of ObamaCare, by not expanding Medicaid and not establishing an exchange.
I think this would be a huge problem for Republicans, forcing them to come up with solutions that are politically palatable to them. All these new GOP Members of Congress, and Red State holdout governors, need to start thinking, now, about what to do if SCOTUS announces a decision in June 2015 denying tax credits to millions of their citizens, while they in turn continue to deny Medicaid coverage.
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CMS Validation Process: The Silver Lining
We've seen quite a few changes over the past few years in the way that the Centers for Medicare & Medicaid Services (CMS) is approaching the program audit and audit validation process. The most notable trend this year is continued push back of responsibility onto the Organization. In recent sanction reports, CMS states that it will require the Organization "to hire an independent auditor to conduct validation in all operation areas cited in this notice and to provide a validation report to CMS." In addition, CMS presenters at the CMS Fall Conference, which took place on September 11, 2014, stated that "The onus of correction overall is on the sponsor. Therefore, CMS this year will not request universes to conduct sample testing unless the sponsor is unable to demonstrate through its presentation and from the responses to CMS questions, that it has not corrected the findings."
CMS is sending a clear message here. They expect the Organization, and not CMS, to do the work in the validation process. So, is there a silver lining? Why of course there is.
While it's clear that CMS is tightening the reins, they are also providing an opportunity - the opportunity to get it right the first time, and not go through the full CMS validation audit process. If you don't know the best way to proceed, in order to avoid a validation re-audit, we have the roadmap. Contact us today to get started.
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While it may be difficult (too much so, for our tastes) for many compliance officers to effectuate the necessary change in the business units, it is not impossible. Let us help you create a culture of compliance. Visit our website to learn more >>
Save the Date for the Gorman Health Group 2015 Forum. Join us April 7-9, 2015 at the Gaylord National Resort and Convention Center in National Harbor, MD. Learn more about the event >>