Medicaid programs and managed care companies continue to push care delivery innovations but struggle with excessive ED utilization.

April 3—Kansas state lawmakers Monday fell short of overriding the governor’s veto of a Medicaid eligibility expansion.

Legislators came up three votes short in their attempt to override a recent veto by Gov. Sam Brownback, a Republican, of expanded eligibility for Medicaid under the Affordable Care Act (ACA).

Brownback said his veto stemmed, in part, from concerns about the expansion’s budgetary impact on the state. Most expansion states have seen greater-than-expected enrollment and spending on the state’s share of the expansion cost—which peaks at 10 percent starting in 2020.

“I am vetoing this expansion of Obamacare because it fails to serve the truly vulnerable before the able-bodied, lacks work requirements to help able-bodied Kansans escape poverty and burdens the state budget with unrestrainable entitlement costs,” Brownback said in a written statement.

But some policy watchers view such concerns as unfounded because much of the excessive Medicaid growth stemmed from enrollments by people who were eligible before the ACA and who were spurred to sign up by the publicity around the expansion—the so-called woodwork effect.

“Many states saw the woodwork effect regardless of whether they did the expansion,” said Sandi Hunt, a principal with PwC’s Health Industries Practice. “That’s all behind us now.”

The woodwork effect also was seen in non-expansion states, where enrollment increased by more than 2.5 million beneficiaries, as of December, since the ACA eligibility expansion started, according to a CMS report.

Other Expansion Fronts

Kansas’s rejection of expanded Medicaid eligibility left the number of expansions at 31 states and the District of Columbia.

Medicaid advocates had relaunched an expansion push in the 19 non-expansion states after Republicans in Congress withdrew a healthcare overhaul that would have changed Medicaid from an open entitlement to one with a defined budget. The American Health Care Act (AHCA) also would have ended federal funding for the ACA’s Medicaid expansion and provided extra funding for hospitals in states that did not expand.

“There some interest in some of the states that did not take on expansion to take another look at it,” Hunt said in an interview.

Much of the ACA’s benefit to hospitals is through expanded state Medicaid programs, not the individual-insurance marketplaces, Fitch Ratings recently noted. The expansion has provided coverage to 9 million people nationally.

Virginia Gov. Terry McAuliffe, a Democrat, plans to introduce a budget amendment to implement expansion by October, he said in a tweet. However, McAuliffe previously has been unable to move the proposal past a Republican-led legislature.

A ballot referendum this year in Maine will allow voters to decide the issue after the governor vetoed several expansion bills in recent years.

The Democratic governor of North Carolina is reportedly considering undertaking an expansion push.

Georgia’s Republican governor said he would consider using a waiver to expand Medicaid as long as certain eligibility criteria are included, according to published reports.

Waivers Coming

Such waivers have been encouraged by the Trump administration, which has wide statutory latitude to allow states to take nontraditional approaches to the program. Such approaches could include efforts to harmonize Medicaid with individual-market coverage and employer-sponsored insurance, to minimize disruptions as people move from one to the other, Hunt said.

“What we’re seeing is a lot of interest in part in a continuum moving from Medicaid eligibility to exchange or employer-based eligibility and trying to make the programs as similar as possible,” Hunt said.

Areas of harmonization could include provider networks and out-of-pocket cost sharing using health savings accounts. Other provisions that states are likely to seek through their Medicaid waivers include some of the statutory changes proposed in the AHCA, such as greater use of work requirements for able-bodied adults, according to Kaye Pestaina, a principal at Mercer.

In a March 14 letter to governors, Trump administration healthcare leaders indicated that CMS will use an expedited process to consider Medicaid waivers, which states such as Texas, Florida, and Tennessee are all working on, industry advisers say.

Pestaina said the Trump administration’s emphasis on efforts to boost enrollment in employer-sponsored coverage could signal a trend toward state-level premium assistance programs, in which Medicaid benefits wrap around employer plans.

Innovations Continue

Although not all states have expanded Medicaid eligibility, a recent Commonwealth Fund analysis found that many Medicaid programs have embraced accountable care organizations (ACOs), adopted comprehensive managed care programs or health homes, or introduced some type of payment reform.

Specifically, 21 states have introduced ACOs into their Medicaid programs, 46 rely on comprehensive managed care programs for at least a portion of their population, 20 have developed health homes, and 49 have introduced some type of payment reform.

By 2014, the first year of full ACA implementation, more than 76 percent of Medicaid beneficiaries were enrolled in some form of managed care plan. And Hunt expects that number to climb.

Areas of focus in managed care plans include efforts to move more Medicaid enrollees away from the emergency department (ED) for nonemergency services.

The lack of success of those endeavors nationally was evident in the double-digit ED volume increases seen at for-profit hospitals nationwide since the 2014 start of the ACA’s eligibility expansion, according to data tracked by Hedgeye, a market research company.

Thomas Tobin, head of healthcare research for Hedgeye, noted that enrollment growth in in state Medicaid programs and marketplaces closely correlated with ED volumes across privately traded hospital companies. The surge belied the ACA’s touted potential to help redirect nonemergency cases from costly and overcrowded EDs.

“That doesn’t appear to have worked in this iteration of healthcare reform,” Tobin said.

Hunt said some of the latest ED diversion efforts have focused on so-called super-utilizers by expanding their access to alternative social services and establishing primary care relationships for them.

“What we’ve found is that we’re still seeing that utilization because people don’t yet know how to access their primary care physician,” Hunt said.

Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare


Publication Date: Monday, April 03, 2017