Although the Trump administration may be slowing down its reviews of insurance market waivers, insurers and other parties continue to urge accelerated decisions.

Oct. 3—In the wake of a healthcare leadership shakeup, the Trump administration is expected to continue a waiver push that has produced mixed results so far.

Tom Price, MD, resigned as secretary of the U.S. Department of Health and Human Services (HHS) on Sept. 29 amid concerns over charter flights he took for business travel. But that leadership change is not expected to affect the ongoing push by the administration to shape healthcare policy through approval of wide-ranging waivers to federal rules on Medicaid programs and health insurance markets.

“That approval is usually set higher up in the White House and agreed to by the secretary,” John McCarthy, founding partner, Speire Healthcare Strategies and former Medicaid director for Ohio and Washington, D.C.

Price and Seema Verma, administrator of the Centers for Medicare & Medicaid Services (CMS), sent letters to state leaders in March encouraging them to submit both 1115 waivers for Medicaid and private insurance and 1332 waivers for Affordable Care Act (ACA) insurance requirements. Price’s departure is not expected to remove the waiver welcome mat.

“Republican administrations are usually about more flexibility for the states—the issue is how you define that,” McCarthy said in an interview.

Varied Outcomes

The administration has given a mixed response on individual-insurance market waivers, with one approved, one partially approved, and one pulled because of delays at the federal level.

Alaska’s 1332 waiver, which was the first reestablishment of an individual-market reinsurance program since a three-year nationwide program expired, was approved on July 11 and will provide the state with $323 million over five years in federal pass-through funding.

On Sept. 22, CMS approved Minnesota’s 1332 waiver, which also aimed to establish a reinsurance program. CMS estimated that Minnesota will receive $139 million in federal pass-through funding for the reinsurance program for 2018, and a total of $1 billion from 2018 through 2022.

However, the federal funding was less than the state had sought because it does not include expected federal savings from reduced insurance subsidies. Those savings were expected to stem from lower premiums for standard plans under Minnesota’s Basic Health Program—a state-run coverage program—as a result of the reinsurance program.

But even the reduced reinsurance funding was credited with sufficing to help limit cost increases in Minnesota’s ACA marketplace, where premium changes for 2018 ranged from a 38 percent decrease to a 3 percent increase, according to a state announcement.

“After two years of large rate increases in the individual market, a new state reinsurance program will help stabilize rates for Minnesotans who buy their own coverage in 2018,” stated an Oct. 2 release from Minnesota Commerce Commissioner Mike Rothman.

But a similar waiver from Oklahoma was withdrawn Sept. 29 after the state concluded that missed deadlines by federal officials left too little time to help insurers hold down 2018 rates.

“Waiver approval would have helped more than 130,000 Oklahomans who today are struggling with dramatic price increases, provided greater than a 30 percent premium reduction and allowed nearly 30,000 individuals to buy insurance in a market many of whom were forced to leave because premiums were unaffordable,” Terry Cline, PhD, secretary of Health and Human Services for Oklahoma, wrote in a Sept. 29 letter to HHS and the Treasury Department.

The failure by federal officials to provide Oklahoma with a timely response to its waiver was particularly troubling because the waiver was so similar to those recently approved for Alaska and Minnesota and because the state was assured of quick review if it followed the same approach, Joel Ario, a managing director at Manatt Health, wrote in a Health Affairs blog post.

It also raised the specter that a similar waiver proposal pending from Oregon—filed Aug. 31—will be “rebuffed,” Ario wrote.

“As a former insurance commissioner in Oregon and Pennsylvania and as the first director of the HHS Office of Insurance Exchanges, I know firsthand how difficult it is to nurture trust between states and the federal government,” Ario wrote. “Yet those bonds of trust are absolutely essential to fixing the Affordable Care Act, especially for Republican proposals that aim to shift major financial and operational risk back to the states.”

McCarthy didn’t see the withdrawal discouraging waivers from other states since the reasons for it were likely technical and stemmed from the tight deadlines involved.

“What we don’t know now was what was going on behind the scenes,” McCarthy said about technical shortcomings CMS usually conceals to avoid embarrassing states. 

Waiver Changes Sought

The waiver approval delays also have drawn the concern of the Council for Affordable Health Coverage (CAHC), which includes insurer, employer, and physician groups and called for shortening the six-month waiver approval window to 90 days or less and dropping the need for state legislative approval.

In contrast to the less-expansive federal reinsurance funding that was included in the Minnesota waiver, CAHC urged a significant federal reinsurance commitment in 2018.

“We believe many more states would initiate 1332-based reforms if a stabilization effort included a grant program that would provide seed money and start-up funding,” Joel White, president of CAHC, wrote to congressional leaders in an Oct. 2 letter. “We suggest the federal funding for the grant program should be as much as $4 billion in 2018, and allocated in part based on the size and risk of the states’ individual insurance markets, so that a relatively higher share of the funding is made available to smaller states with the least stable markets.”

Still Pending

On Sept 19, CMS issued a preliminary declaration that Iowa’s 1332 waiver application was complete, and started 30-day comment period.

“The Iowa waiver is the most radical state innovation waiver proposed to date,” Tim Jost a professor at Washington and Lee School of Law and a prominent ACA supporter, wrote in a Health Affairs blog post.

That waiver would shift cost-sharing reduction payments into larger premium subsidies and expand the availability of subsidies beyond people with incomes below 400 percent of the federal poverty level, which was the threshold set by the ACA. Additionally, the waiver would pull Iowa out of the federal ACA marketplace, allow it to determine premium-subsidy eligibility without federal approval, restrict the market to a single standardized Silver plan, implement a limited lockout for people who do not maintain continuous coverage, and allow for federal pass-through funding for a reinsurance program, according to Jost.

An analysis by the Commonwealth Fund warned that the waiver provisions, such as eliminating cost-sharing assistance for lower-income residents, “raise red flags that suggest the application may not comply with federal protections.”

The federal comment period for the Iowa waiver ends on Oct. 19, with a target starting date of Nov. 1.

Other states pursuing reinsurance waivers include Maine, which has enacted reinsurance waiver legislation and  New Hampshire. McCarthy expects more waivers aimed at the 2019 coverage year to emerge in the coming months.

On Sept. 8, Massachusetts submitted a waiver to create a premium stabilization program that aims to insulate its individual-insurance market from price hikes attributable to federal policy uncertainty.

The Massachusetts 1332 proposal has drawn hospital support, according to the application. In contrast, some Medicaid (1115) waiver proposals have elicited a mixed hospital response.

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

Publication Date: Tuesday, October 03, 2017