2018 has been a rollercoaster of a year for health plans, beginning with uncertainty over the future of the Affordable Care Act (ACA) and ending in mid-December with a bombshell ruling by a federal judge declaring the entire health care reform law as invalid. The continued assault on the ACA was just one of many stories to hit the industry this year. RISE looks at 10 of the biggest headlines that had implications for health plans in 2018.
Federal judge in Texas rules the ACA is invalid; law remains in effect while case is appealed
The high-profile case, Texas v. United States, centered on whether the ACA is constitutional. It pitted 20 Republican governors and state attorneys general against the federal government, but the Justice Department refused to defend the individual mandate or other provisions contained in the law. A coalition of Democratic state attorneys general stepped in to defend the health care reform law.
The crux of the case: The Republicans argued that the ACA became unconstitutional when Congress enacted President Donald Trump’s tax overhaul and eliminated the tax penalty as part of the law’s individual mandate that required most Americans to purchase health insurance. They claimed that the tax penalty provision isn’t separate from the other parts of the ACA legislation, and if one provision is revoked, the entire piece of legislation is invalidated.
Although U.S. District Judge Reed O’Connor of the Northern District of Texas heard oral arguments from both sides in September, he did not render a decision until Dec. 14, hours before the deadline for Americans to enroll in ACA plans for 2019 in states that use the federal insurance exchange.
His decision led to confusion and criticism among consumers, providers, and insurers and the Democratic coalition immediately vowed to appeal the case. Indeed, three days later California Attorney General Xavier Becerra, who is leading the coalition of states in support of the law, filed a motion to ask O’Connor to issue a new order by Dec. 21 that makes it clear that the law remains in effect while the case is appealed.
Although Seema Verma, administrator of the Centers for Medicare & Medicaid Services, said that the ruling will have no impact on current coverage or coverage in 2019 plans while the case goes through the appeals process, Becerra said in a statement that O’Connor’s opinion has “caused uncertainty in the nation’s healthcare system that could harm people across the country.”
In response, O’Connor on Tuesday filed an order to expedite briefing and asked the Republican and Democratic coalitions to respond to whether a stay of his ruling is warranted, whether the court should enter a partial final judgment on the order, and whether he should certify the order for immediate appeal. Republicans have until Friday, Dec. 21 to respond. Democrats have until Dec. 26 to respond.
The legal drama over the ACA also continues in a separate lawsuit filed in September by the state of Maryland that seeks an injunction that would require the federal government to enforce the law. It also aims to remove Acting Attorney General Matthew Whitaker’s name from the case, questioning the legality of his appointment because he has not been confirmed by the Senate. A hearing on that case was scheduled for Wednesday, Dec. 19.
Outside of the courtroom, the Trump administration chipped away at the ACA regulations and protections
Since Senate Republicans failed to pass a bill in 2017 to repeal the ACA, the Trump administration has taken several actions to undermine the ACA’s insurance markets.
Among the moves: reducing cost-sharing payments to insurance companies, expanding the sale and renewal of short-term health plans, failing to set enrollment targets for the health insurance exchanges, and reducing the funding for advertising and consumer outreach to promote open enrollment and help consumers buy insurance.
In October, a Kaiser Family Foundation (KFF) report found that ACA silver-level plans sold in the marketplace will cost an average of 16 percent more than they otherwise would have due to the combined effects of the loss of ACA cost-sharing reduction payments, the repeal of the ACA’s individual mandate penalty, and the expansion in the availability of more loosely-regulated plans.
While some industry experts believe short-term health plans can co-exist with ACA-compliant plans, Kevin Mowll, executive director of RISE, is doubtful. These inexpensive health plans often don’t cover as many medical services and can deny coverage to consumers with pre-existing conditions. The federal government, he said, has provided states with a lot of leeway as to the types of short-term plans that can be offered, what qualifies as short-term and how they will address pre-existing conditions, one of the most popular provisions of the ACA.
“The result is a mishmash of formulas, many of which consumers will find confusing and perhaps offering a false sense of security of having insurance coverage that is sparser than they understand,” Mowll said.
ACA plans took another hit in October when CMS and the U.S. Department of the Treasury issued new guidance that provided more flexibility for states to get waivers to design health plans that don’t meet the coverage requirements of the ACA. The guidance, according to Larry Leavitt of the KFF, will “likely widen the gap between red states and blue states for access, affordability, regulation, and protections for pre-existing conditions.”
An October report from Avalere also revealed the impact of a repeal of the ACA’s pre-existing conditions protections: more than 50 percent of Americans who are enrolled in coverage outside of Medicaid or Medicare could face medical underwriting or be denied access to coverage or care without the ACA’s protections for people with pre-existing conditions.
“Protections for pre-existing conditions are the only reason some Americans are able to afford health insurance,” said Chris Sloan, director at Avalere. “Many of the most common health conditions in the country could lead to individuals being denied access to health insurance if pre-existing condition protections are eliminated.”
The winds shift: Health care is the biggest issue during midterm elections and more people support the idea of Medicare-for-All
A Kaiser Health News poll in October found that health care was the top issue for voters in the mid-term elections. Seventy-one percent of the 1,201 adults questioned indicated that health care was “very important” to their decision of who to vote for in Congress in 2018.
And a special report from Reuters noted that there has been a shift within the Democratic party and greater support for a universal government health care program. Indeed, Reuters found that two-thirds of the Democratic candidates for the open House of Representative positions wanted to expand the government’s role in health care and of those, at least a dozen favored the concept of “Medicare-for-All,” a single-payer system championed by Sen. Bernie Sanders that would largely replace private insurance. It reflects a shift in support from voters, too. The Reuters/Ipsos poll found that of the 2,989 surveyed, 85% of Democrats and 52% of Republicans support Medicare-for-All.
Health plans—and the federal government—take on the social determinants of health
In a major policy shift, Alex Azar, secretary of the Department of Health & Human Services, announced in December that the agency wants to pay for services that address social determinants of health, the root cause of a large portion of U.S. health spending.
Azar believes the federal government could spend less money on healthcare for vulnerable Americans if they did a better job of investing in services they need, such as housing, nutrition, and other social needs.
His comments reflect a growing movement within the health care industry to address social determinants of health when caring for members/patients. Indeed, the topic was of great interest to attendees of this year’s RISE West, an indication that in the upcoming year health plans will pursue models of care that aim to improve the health and quality of life of their members. Speaker Aaron Horsfield, administrative fellow, UPMC Health Plan, predicted that the industry will see rapid change in this area as more plans collaborate with community partners to address the housing and food needs of their patient populations.
CMS proposes big RADV audit changes that could mean hefty penalties for MA plans
In November, CMS issued a proposed rule to overhaul the Medicare Advantage RADV audit process, a change which could result in insurers paying back millions of dollars to the federal government. If it is finalized, the government would extrapolate data in RADV contract-level audits dating back to 2011 and it would not apply a fee-for-service (FFS) adjuster to audit findings.
The federal agency projected the Medicare Trust Fund could save as much as $4.5 billion over the next 10 years if the changes were implemented.
But industry stakeholders pointed out flaws in the plan. For instance, Matt Eyles, president and CEO of America’s Health Insurance Plans (AHIP), said the organization is performing a comprehensive assessment of how CMS’ proposal to modify how it conducts RADV audits without a FFS adjuster would impact beneficiaries and program stability.
In addition to the FFS adjuster change, Kevin Mowll, executive director of RISE, is concerned with the proposed rule in the wake of another CMS announcement that relaxed redocumentation requirements for chronic conditions under Original Medicare. This may mean Medicare Advantage plans will be exposed to thinner documentation practices that present greater challenges under the threat of RADV audits and the extrapolation penalties, Mowll said.
Medicare funding may be healthier than previously believed
Despite dire warnings in the Medicare Trustees annual report that Medicare would run out of funds in 2026, a study by the Center for Retirement Research at Boston College found that the Medicare Hospital Insurance Trust Fund program was in better financial shape than it was 10 years ago.
It’s true that Medicare Part A, which covers inpatient hospital services, skilled nursing facilities, home health care, and hospice care, is in danger of running out early. It is financed by a 2.9 percent payroll tax, shared equally by employers and employees. But the larger Supplementary Medical Insurance program, which includes Medicare Part B physician and outpatient services, and Part D, prescription drugs, has adequate funding, the study found.
The report found that finances are improving, but the program will continue to face financial challenges because it operates within a very expensive health care system, it requires beneficiaries to pay substantial out-of-pocket costs, and has some serious gaps in insurance protection.
CVS/Aetna close deal, but federal judge says not so fast
CVS Health completed its government-approved $70 billion acquisition of Aetna in late November, but a federal judge threw a monkey wrench into the deal less than a week later, suggesting that CVS hold Aetna’s assets separately while he reviews anti-trust issues to decide whether the deal should proceed. The Department of Justice approved the merger in October.
During a hearing in mid-December, U.S. District Judge Richard Leon seemed open to CVS’ voluntary offer to keep operations of the two companies separate while he conducts his review. Modern Healthcare reported that CVS offered Leon four measures to help facilitate the review, promising that Aetna would control pricing of insurance products and services and that the two companies wouldn’t exchange sensitive information.
But when Leon suggested the review could take several months, CVS said it would agree to the voluntary measures for six months but may reconsider if the case isn’t resolved by then, according to The Wall Street Journal.
In a joint statement after completing the merger, the two companies said the deal will “transform the consumer health experience and build healthier communities through a new innovative health care model that is local, easier to use, less expensive and puts consumers at the center of their care.”
OIG releases an unflattering report that MA plans may deny claims to boost profits
An October report by the Office of Inspector General (OIG) at the Department of Health and Human Services finds that MA plans may have an incentive to deny claims to increase their profits. The OIG found that when beneficiaries and providers appealed preauthorization and payment denials, Medicare Advantage Organizations (MAO) overturned 75 percent of their own denials during 2014-2016, overturning an estimated 216,000 each year.
The OIG decided to take a closer look at the capitated payment model used in MA because it offers a potential incentive for MAOs to inappropriately deny access to services and payments to maximize their profits. The investigation revealed that CMS audits showed widespread and persistent MAO problems related to denials of care and payment.
CMS agreed to enhance its oversight of MAO contracts, address persistent problems related to inappropriate denials and insufficient denial letters, and will provide beneficiaries with clear, easily accessible information about serious violations by MAOs.
HHS risk adjustment program moves forward despite legal troubles
The HHS risk adjustment program had more than its share of legal drama this year. The program is meant to compensate insurers in the individual and small group markets who have sicker enrollees and therefore have higher medical costs. The program is considered crucial to level the playing field in the market and reduce incentives for insurers to avoid enrolling sicker members with chronic conditions and pre-existing conditions.
But in 2016 New Mexico Health Connections, a consumer operated and oriented (cooperative) health plan, claimed in a lawsuit that the way the federal government implemented the risk adjustment program “brutally penalizes new, innovative, low-cost insurance companies and flouts Congress’ intent in enacting the ACA."
In February the U.S. District Court of the District of New Mexico vacated the use of the statewide average premium in the federal-operated risk adjustment methodology for the 2014-2018 benefit years. The government then asked the court to reconsider the decision and in July, suspended more than $10 billion in payments for the 2017 benefit year to insurers, a move they claimed was necessary due to the pending litigation. The freeze of payments didn’t last long. Under pressure, CMS reinstated the payments and the same formula in an emergency rule few weeks later and then proposed a rule that would allow the program to continue for the 2018 benefit year.
Although New Mexico Health Connections has filed a second lawsuit that challenges CMS’ move to issue an emergency regulation for the risk adjustment program for 2017, the agency moved forward in December to finalize the risk adjustment program for 2018. CMS Administrator Seema Verma said the rule will allow the government to continue normal operations of the risk adjustment program for 2018 and give insurers confidence to continue participating in the markets.
DaVita Medical pays $270M to settle allegations of improper MA risk adjustment payments
The Department of Justice announced in October that DaVita Medical Group agreed to pay $270 million to CMS to settle False Claim Act allegations over questionable billing practices that led Medicare Advantage plans to receive inflated Medicare Part C risk adjustment payments.
But the settlement had broader implications for the health care industry, according to health care attorney, Jason E. Christ, a member of Epstein Becker Green’s health care and life sciences practice in Washington, as it illustrates the government’s aggressive and increasing focus on risk adjustment enforcement.
Because of the settlement, he told RISE that he expects more organizations will prioritize work to review their own processes around coding guidance, in-home assessments, retrospective reviews, and their code retraction processes.
Editor’s note: Do you agree with our list? If not, what stories did we miss? Send your thoughts to Editor Ilene MacDonald.