HFI in the News

Medicaid MCOs Hope for Expanded Access, Care Opportunities

Reprinted with AIS Health permission from the January 7, 2019, issue of RADAR on Medicare Advantage

Despite a recent federal court ruling creating some uncertainty about the future of Medicaid expansion, industry experts interviewed for AIS Health’s annual Outlook Survey express optimism about several recent developments that they believe will give way to better patient care going forward.

For one, November’s midterm election results may spell more Medicaid expansion, particularly in historically Republican-controlled states. Voters in three states approved measures to extend Medicaid coverage, and three Democratic governors unseated Republicans who did not support expansion, including newly sworn-in Maine Gov. Janet Mills (D) who just signed an executive order to expand Medicaid. At the same time, Democrats winning control of the House lessens the chance of Republicans making another stab at repealing and replacing the Affordable Care Act (ACA), which despite last month’s ruling by a federal judge in Texas remains the law of the land.

From a policy perspective, given that Congress is “fairly neutered in the split in the House and the Senate, then the bigger macro level, seismic changes like per capita caps are probably off the table vs. more under-the-radar, yet significant impacts you see from a regulatory and even judicial perspective,” predicts Alex Shekhdar, vice president of federal and state policy, Medicaid Health Plans of America (MHPA).

“In terms of patient engagement, payment reforms and so forth, the biggest tool that the administrator and the secretary have to effectuate the Medicaid programs is the 1115 waiver,” he says, referring to the demonstration waiver that states can use to make broad changes to their Medicaid programs or modifications that focus on a specific population or service over a five-year period. “And [CMS] has indicated that there is no stop and believes they have the legal authority to continue to push forward on the waivers.”

Moreover, with new waiver opportunities unveiled in November 2018 for states to address serious mental illness and serious emotional disturbance in adults, “that de facto implicates Medicaid managed care arrangements that exist [in states that seek waiver approval], whether it involves tweaking or securing new network providers, or in terms of making certain operational changes to existing contracts,” Shekhdar predicts.

“I think the tide has turned and the red states realize that Medicaid is an important part of the continuum of health care in the U.S.,” weighs in Jerry Vitti, CEO of Healthcare Financial, Inc., a Boston-based firm that specializes in enrolling the uninsured into health programs. “But I also see the potential for more work requirements, lockout periods and premiums, copayments, deductibles — all those conservative consumer-oriented elements — and I think there will be a continued push to get those approved” via 1115 waivers. As a result, Medicaid managed care organizations may see a “burst of enrollment” from expansion, followed by churn due to various requirements that make it difficult for people to maintain coverage, he predicts.

Meanwhile, states and plans are hoping for more leeway to address social determinants of health, adds Vitti. “I think there’s just more and more recognition and acceptance that social determinants of health play an outsized role in the health care of folks, especially in a high-risk population and the disabled,” he observes. “And so with more recognition, there’s more creativity in the marketplace now around how to address these. You’ve seen this from the Trump administration [in Medicare Advantage; see story, p. 1], so I would say more momentum toward funding housing, nutritious food and other social factors is where we’ll see further development.”

CMS Is Considering Social Determinants

While Medicaid doesn’t directly pay for housing and other social needs, HHS Sec. Alex Azar in public comments last fall hinted at a possible demonstration addressing social determinants through the Center for Medicare and Medicaid Innovation (CMMI). Given some of the work already being done by organizations like Intermountain Healthcare and UPMC Health Plan to address housing and other non-medical factors through local partnerships, CipherHealth’s Friso van Reesema says he is optimistic that CMS will “follow suit” and start reimbursing for those types of services.

“Housing, transportation, meals…those are the ones that have been more at the forefront, but [with growing adoption of] work requirements, beneficiaries could probably be working more and better if they had a childcare benefit,” adds van Reesema, who is vice president of business development with the New York-based patient engagement and care coordination health care IT company. “You can’t ask people to work without being able to support what’s happening at home.”

He continues, “It’s all about options. There are so many different pieces of this puzzle, like social isolation and behavioral health….I think it’s a sign of the times when we’re paying a certain amount for our taxes and we’re seeing that it’s not necessarily working. We have to put a little bit more toward engaging people in social services and working with community-based organizations to connect the dots that much better, to provide the right type of services to the people who need it the most, and be able to show the impact through data.”

Plans Follow Medicaid Buy-in Talks

On a more micro level, Shekhdar adds that MHPA is very interested in “seeing what happens with regards to the interface between 1332 waiver approvals and Medicaid and any kind of effect that might have, as well as conversations about Medicaid buy-in, which are being led by New Mexico.” Also known as State Innovation Waivers, states over a five-year period can use section 1332 waivers to pursue creative strategies for providing their residents with access to high quality, affordable health insurance while retaining the basic protections of the ACA, such as the “public option” New Mexico is exploring in addition to other policies.

“So those types of conversations are intriguing because Medicaid buy-in portends new opportunities for Medicaid managed care plans going forward as well as the insurers that play across both low-income products and Medicaid products. But the problem is it means different things to different people and takes different iterations, and what it looks like depends on what the state architecture is,” observes Shekhdar.

Contact van Reesema and Shekhdar via Joe Reblando at joe@joereblando.com or Vitti at gvitti@hfihealthcare.com.

by Lauren Flynn Kelly

HFI Featured in AIS Health

@Election Results May Mean Growth for MA, Medicaid Insurers

Reprinted with AIS Health’s permission from the November 15, 2018, issue of Radar on Medicare Advantage

Health care was a pivotal issue during the recent midterm elections, and with the Democrats on Nov. 6 winning back control of the House, the GOP’s plan to repeal and replace the Affordable Care Act is presumably off the table. And given some key outcomes on a state level, there’s now potential upside for Medicaid managed care organizations as six states may pursue Medicaid expansion. As for Medicare Advantage plans that are in the middle of the 2019 Annual Election Period (AEP), they’ll be happy to cut the noise and get back to business, industry experts tell AIS Health.

“The election was a pretty big distraction for market share growth for the AEP,” says Jeff Fox, president of Gorman Health Group, who heard from health plan clients that enrollment slowed down. With mixed messages in the media about the Affordable Care Act, pre-existing conditions and “Medicare for All,” “seniors were confused about what’s real and tend to assume a lot of these things pertain to them, so agents were out there trying to explain what’s going on and it was tough from a sales perspective.”

Fox adds, “We knew the elections were going to impact the early sales in MA, but now that the noise is off the TV, off the radio, out of the mailboxes, plans can get back to focusing on their market share opportunities for 2019. And seeing how crazy this election was made them realize how crazy it’s going to be in two years, so I think plans will really dial in on market share opportunities in 2019 and 2020, because who knows what’s going to happen in two years?”

“I see companies putting in a much bigger stake and effort around Medicare, and I think MA will just continue on an upward trajectory. It’s a stable market on an uptick,” weighs in Lindsay Resnick, executive vice president at Wunderman Health, which provides data analytics and technology-enabled marketing to national and regional MA plans.

And as discussions around Medicare for All — and what it means — continue, Resnick says he sees that bringing even more attention to MA as a model of public-private partnership. “Although I don’t expect any action around Medicare for All, it’ll be a policy debate in the 2020 elections. The problem right now is Medicare for All isn’t really defined consistently,” he adds.

Meanwhile, experts agree that Medicaid expansion was the big winner in the elections. Had Republicans maintained full control of Congress, “there would have been a very robust [Affordable Care Act] repeal attempt, but I think overall it was a very good night for Medicaid because of [the outcome in the House] and because of the expansion potential in red states,” suggests Jerry Vitti, president and CEO of Healthcare Financial, Inc., a Boston-based firm that specializes in enrolling the uninsured into health programs.

Voters in Idaho, Nebraska and Utah on Nov. 6 approved measures to extend Medicaid coverage to an estimated 62,000, 90,000 and 150,000 residents, respectively (see infographic, p. 7). And with Democratic governors elected in Kansas, Maine and Wisconsin, those states may seek out or revisit earlier expansion efforts. Kansas, for one, elected consistent Medicaid expansion supporter Laura Kelly (D), after expansion in 2017 was passed by state lawmakers but vetoed by then-Gov. Sam Brownback (R).

Expansion Is a ‘Win’ for Plans, Enrollees

Expansion in states with a managed Medicaid structure is a “win for plans” as well as beneficiaries, “because managed care plans have robust systems and incentives to keep people out of hospitals and out of expensive treatment centers by providing care and coverage in the community,” remarks Vitti. Insuring more people and getting them into managed care will also help states deal with the opioid crisis, he suggests.

While plans in expansion states will gain additional members, Vitti points out that the childless adult expansion population is made up of very high-cost patients who often have unmet mental health, substance use disorder or other complex medical needs. Newly expanding states will “see a spike in emergency room use and other services at first as the unmet demand gets met,” he predicts. “While it’s all a function of the rates, my sense is that plans do not pick up a financial benefit at least early on in the enrollment and care that they have to pay for for these folks.”

Another potential issue is churn. “There’ll be some folks that are new to the plans, so the churn rates I think are going to be higher in this new population because they’ll just have these complex issues and they’ll be the least able to advocate for themselves and to comply with paperwork, work requirements and other kind of conservative principles of reform,” adds Vitti. “To me, the programmatic and financial implications [of expansion] are pretty clear and the benefits out there to folks are clear, as long as the states have robust administrative systems.”

If all six states expanded, it would lead to about $3 billion in incremental spend and an earnings per share impact (EPS) of about 1% or less for each MCO in the near term, estimated Barclays Capital securities analyst Steve Valiquette in a Nov. 12 research note.

Should all remaining 14 states adopt Medicaid expansion, an estimated 7 million people would gain coverage, resulting in $35 billion in incremental spend, he added. “Among these states, the MCO opportunity is highly concentrated in Florida, Georgia, and Texas, collectively accounting for more than 50% of the total opportunity,” he wrote. “The Governorship in all three states will remain under Republican control [barring any recounts in Florida and Georgia], leaving current political resistance to expansion largely intact.” Nevertheless, Barclays estimated that if all remaining states expanded, the EPS potential for key MCOs like Centene Corp., Molina Healthcare, Inc. and WellCare Health Plans, Inc. would be in the low-to-mid double-digit percent range.

Contact Fox at jfox@gormanhealthgroup.com, Resnick at lindsay.resnick@wunderman.com, Valiquette at steve.valiquette@barclays.com or Vitti at gvitti@hfihealthcare.com.

by Lauren Flynn Kelly

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