Heroes Act Includes Medicaid Increase, MA Risk Protection

May 26, 2020
Heroes Act Includes Medicaid Increase, MA Risk Protection

Heroes Act Includes Medicaid Increase, MA Risk Protection

Reprinted with AIS Health permission from the May 21, 2020, issue of RADAR on Medicare Advantage

House Democrats’ latest pandemic-relief package, the Heroes Act (H.R. 6800), has been noted in the mainstream media for its $3 trillion price tag, the uphill battle it faces in the Senate, and a string of items it contains that appear to be unrelated to the COVID-19 outbreak. But it also includes some key provisions aimed at strengthening the Medicare and Medicaid programs that could impact insurers.

Introduced by House Democrats on May 12 and passed largely along party lines by a vote of 208-199 on May 15, the Heroes Act seeks another temporary increase to the Federal Medical Assistance Percentages (FMAP) and support for home- and community-based services (HCBS) that are often the target of Medicaid budget cuts. The Families First Coronavirus Response Act enacted in March already raised the FMAP by 6.2% for non-expansion beneficiaries for the duration of the public health emergency, and the Heroes Act seeks to raise that by another 7.8% for a combined 14% increase for each quarter through June 2021.

The proposed legislation also calls for a 10% increase in the federal share of HCBS that would apply to waiver services such as adult day care and assisted living, home health and personal care. According to a summary of the provisions from the Georgetown University McCourt School of Public Policy, those additional funds “could be used by states to support financially stressed HCBS providers through ‘retainer’ payments and higher reimbursement rates (including for self-directed care and family providers).” They could also be used to “address HCBS providers’ higher COVID-19 related costs such as hazard and overtime pay, emergency supplies and equipment, training, education and recruitment“ and to “make other HCBS improvements,” the summary stated.

Given the urgency of the pandemic, infections within nursing homes and the increased demand for home care, more support for HCBS is needed “to really put the regulatory framework in place to make sure that people are safe and protected,” remarks Jerry Vitti, founder and CEO of Healthcare Financial, Inc., a company that connects low-income, elderly and disabled populations with public benefit programs. “One of the most important things is the funding, so that the funding is aligned with the increased acuity of folks and the payment structure is aligned with incentives for quality care and cost-effective care and for self-determination.” And while Senate Republicans have already criticized the bill, the case for supporting HCBS at this time may be strong enough to get that provision into what would be the fourth legislative package addressing the new coronavirus.

“We really need the federal government to recognize the fact that long-term care services and supports, post-acute care and home care is an integral part of the emergency response. And they need to be considered essential on top of essential,” weighs in Hany Abdelaal, D.O., president of VNSNY CHOICE Health Plans, which coordinates many home-based services for vulnerable Medicare-Medicaid beneficiaries in New York. “The services that we provide are not services that can be easily stopped at a moment’s notice.” Moreover, keeping home health care workers safe and securing adequate pay for them should be a legislative priority, he adds.

Meanwhile, state budgets are under duress, and with some anticipating “a COVID-related recession on top of some real fundamental hits to their particular industries,” there could be bipartisan support for enhanced Medicaid funding, suggests Vitti.

A new survey of state Medicaid directors conducted by the Kaiser Family Foundation (KFF) and Health Management Associates indicated that nearly all states anticipating higher Medicaid enrollment are expecting fiscal year 2020 increases that go beyond pre-pandemic enrollment projections, and more than half are bracing for FY 2020 spending growth that exceeds pre-pandemic estimates. “Some states with managed care noted that without adjustments in capitation rates, reductions in utilization will not reduce overall costs while increases in enrollment will continue to drive expenditures up,” added the May 15 report.

An early AIS Health analysis of available state enrollment data is showing increased enrollment so far. Of the 17 states that at press time had reported April membership totals, every state has seen an increase in Medicaid sign-ups — averaging a 3.9% enrollment boost from the first quarter — and five have experienced gains exceeding 50,000 lives. Some of the biggest enrollment jumps have occurred in historically red states that have not expanded Medicaid (like North Carolina) or that have sought to scale back their Medicaid expansion with work requirements (like Kentucky).

On the Medicare side, the Heroes Act also would establish a special enrollment period for impacted beneficiaries and a risk corridor program that would protect Medicare Advantage and other insurers from significant losses whereby the federal government would bear 75% of costs above a certain threshold. Matt Kazan, a principal with Avalere Health, points out that a similar risk corridor provision appeared in an early version of the $2.2 trillion CARES Act that was signed into law in late March, but that it’s hard to say what will pass in this legislation given the many factors at play.

“There could be a scenario where COVID-related costs are higher than expected or risk scores are not as expected, so plans would see some protection on the backend, similar to how plans in Part D receive some of those protections from unexpected costs,” explains Kazan. That may be helpful as MA plans prepare bids for the 2021 plan year without a full picture of their beneficiaries’ health status as the pandemic drives members to defer services. MA plans may also have to shoulder additional costs as Congress adds new requirements in terms of treatment and testing, he adds. The Heroes Act would also require MA plans to provide COVID-19 treatment (including prescription drugs) and testing without any cost-sharing obligations.

View a text of H.R. 6800 at https://bit.ly/2WKZ7QB and the KFF report at https://bit.ly/2ZhEDk2. Contact Abdelaal via Caren Browning at caren.browning@kingcompr.com, Kazan via Anna Thomas at anna.thomas@finnpartners.com, and Vitti via Joe Reblando at joe@joereblando.com.

By Lauren Flynn Kelly