Kelly Brantley Presentation - Read-Only · business, or profession or 2) have a principal place of business in same state or metro area (even if crosses state lines) Anti-Discrimination

Kelly Brantley

Vice PresidentAvalere Health

Health Policy OutlookAvalere Health | An Inovalon CompanyFebruary 8, 2018

Copyright Ó2017. Avalere Health LLC. All Rights Reserved.

3

Agenda

2017 Recap1

2

3

4

5

The Tax Cut and Jobs Act

Individual Market Outlook

Medicaid Waiver Reforms

Copay Optimization Programs

Midterm Elections Outlook 6


TIMELINE OF KEY 2017 REPEAL AND REPLACE ACTIVITIES

Senate Passes Resolution to Repeal the ACA Through Budget Reconciliation

Trump Signs Executive Order on ACA Enforcement

Jan 20Jan 4 May 4

ACA: Affordable Care Act; AHCA: American Health Care Act; BCRA: Better Care Reconciliation Act; HCFA: Health Care Freedom Act; ORRA: Obamacare Repeal Reconciliation Act; GCHJ: Graham Cassidy Heller Johnson ACA repeal bill; HHS: U.S. Department of Health and Human Services

AHCA Passes 217-213

BCRA Fails 43-57

July 26-28

ORRA Fails 45-55

HCFA Fails 49-51

Oct 18

Alexander- Murray Release Market Stabilization Package

Senate Pulls GCHJ Ahead of Potential Vote

Sept 20Aug 31

HHS Announces 90% Cut to 2018 Federal Navigator Funding

White House Announces End to Federal CSR Payments

Oct 13

Last Day to Pass ACA Repeal & Replace Under Reconciliation

Oct 12

Sept 30 Nov 1

Repeal and Replace Efforts Consumed the 2017 Congressional Agenda

Shortened OEP Begins

Trump Signs Executive Order on Healthcare Choice and Competition

Executive Action

House Action

Senate Action

Deadlines

Signed into Law

Individual Mandate Repealed

4

Dec 22

2017 Recap


Individual Mandate

Medical Expense Deduction

Orphan Drug Tax Credit

Charitable Giving

5

The Tax Cut and Jobs Act of 2017 Will Affect theHealthcare of Patients via Several Mechanisms

After December 31, 2018, the ACA’s individual mandate is repealed.

In 2017 and 2018, medical expenses exceeding 7.5% of an individual’s adjusted gross income are tax deductible. Beginning in 2019, the threshold increases to 10%.

As of January 1, 2018, the Orphan Drug tax credit for developers of rare disease drugs was reduced from 50% to 25% of qualified clinical trial costs.

As of January 1, 2018, the percentage limit for charitable cash donations by an individual taxpayer to public charities and certain other organizations increased from 50% to 60%.

H.R. 1, The Tax Cut and Jobs Act. December 18, 2017. Available at: http://docs.house.gov/billsthisweek/20171218/CRPT-115HRPT-466.pdf

Tax Reform

http://docs.house.gov/billsthisweek/20171218/CRPT-115HRPT-466.pdf


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CBO Indicates Repeal of the Individual MandateWill Lower Deficits and Increase Uninsurance

Premiums and Stability /

$338 Billion 4 millionIncrease in Number of Uninsured by 2019

Reduction in Federal Deficits

13 MillionIncrease in Number of Uninsured by 2027

CBO. Repealing the Individual Health Insurance Mandate: An Updated Estimate. November 2017.

Individual Market

CBO estimated the nongroup market would remain stable over the next 10 years, but premiums would increase by about 10 percent “in most years of the decade.”


0.61.5

2.3 2.83.6

4.7

8.7

1

9.69.2

0

1

2

3

4

5

6

7

8

9

10

0 10 20 30 40 50 60 70 80 90 100

Tota

l Enr

ollm

ent (

Mill

ions

)

Percent of OEP Elapsed

2018 (Current) 2016 2017

Exchange Enrollment Rates Declined for 2018, Due in Part to Shortened Open Enrollment Period

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HealthCare.gov Sign-Ups During Open Enrollment, Includes Auto-Reenrollment*

*2016 and 2017 enrollment figures include auto-reenrollment effective December 15.Note: 2018 OEP for the FFE ended on December 15, 2017. Sources: Avalere analyzed HHS’ publicly available biweekly enrollment reports published for the 2016, 2017, and 2018 OEPs.

Individual Market


8

Over Half of Counties Will Have A Single Issuer, a Substantial Jump from 2017

35%

56%

33%

27%

32%17%

2017 2018

Perc

ent o

f Cou

ntie

s

3+ Issuers

2 Issuers

1 Issuer

ISSUER PARTICIPATION BY COUNTY IN FFE STATES, 2017-2018

FFE: Federally Facilitated ExchangeSource: Avalere PlanScape®, a proprietary analysis of exchange plan features, November 2017. Avalere analyzed data from the FFE Individual Landscape File released October 2017.

Individual Market


AHP Proposed Rule Is Administration’s First Step to Introduce New Insurance Options in the Market

9ACA: Affordable Care Act; AHP: Association Health Plan; DOL: Department of Labor; EO: Executive Order; HIPAA: Health Insurance Portability and Accountability Act; Department of Labor. “Definition of “Employer” under Section 3(5) of ERISA -- Association Health Plans.”

Proposed AHP Changes

AHP Eligibility • Ensures sole proprietors who are actively engaged in a legitimate trade or business have access to AHP coverage

AHP “Large Group” Status

• Requires AHP members to either: 1) be in the same trade, industry, line of business, or profession or 2) have a principal place of business in same state or metro area (even if crosses state lines)

Anti-Discrimination

• Prohibits exclusion of any employee or group, prohibits premiums based on health risk, and applies nondiscrimination provisions of the ACA and HIPAA

• On January 4, the DOL issued a proposed rule to expand access to AHPs and make it easier for AHPs to avoid some state and federal coverage and benefit mandates

Individual Market


While Entitlement Reform Is Unlikely in 2018, Changes to Medicaid Will Occur via Waiver Activity

EligibilityReduce expansion eligibility

EnrollmentTime limits

Lockout periods

Program IncentivesWork requirements

Wellness programs

Cost SharingHigher premiums / cost sharing

Drug CoverageExclude / cover fewer drugs

Plan DesignAlter benefit package

Restrict networks

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Medicaid Waivers


The Trump Administration Is Reconsidering

Flexibilities Previously Denied

11FPL: Federal Poverty Level

Note: Mississippi’s waiver has not been submitted to CMS yet. The state intended to submit in December.

Category Waiver Component Denied Pending Approved

Eligibility Reduce expansion eligibility to 100%

FPL; maintain enhanced match – AR, MA

Enrollment

Indefinite disenrollment until all

Medicaid debts are paidOH WI

Time limits on Medicaid enrollment

(e.g., 4-5 years)– AZ, UT, WI, KS, ME

Work Requirement

Work requirement as a condition of

eligibilityNH, PA AR, AZ, KS, ME, MS, NC,

NH, UT, WI KY, IN

Premiums / Cost Sharing

Premiums may be greater than 2% of

incomeIN IN

Mandatory premiums for individuals

with incomes <100% FPL OH ME, NC, WI KY

Total cost sharing up to 7% of income MI –

Prescription Drug

Coverage

Closed formulary; exclude drugs with

inadequate evidence of clinical efficacy– MA, AZ

Medicaid

Waivers


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State Waiver Changes May Reduce Access butOffers Opportunities to Engage with States

• Greater required cost sharing

• Higher premiums• Health savings

accounts (HSAs)

• Decreased eligibility• Work requirements• Lockout periods /

disenrollment

• Allow coverage of fewer drugs

• More strict use of utilization management

Lower Enrollment

Patient Affordability

Less Generous Drug Coverage

Decreased Patient Access

Opportunity for State-Level

Engagement

KEY WAIVER IMPLICATIONS PATIENT COMMUNITY CONSIDERATIONS

Medicaid Waivers


Copay Optimization Programs Limit the Effect of Manufacturer Copay Assistance

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Manufacturer copay assistance has traditionally applied towards a member’s deductible and/or OOP maximums

To limit their payer/employer customers’ liability for costs above a member’s deductible/OOP maximum, PBMs increasingly are implementing Copay Optimization Programs

Model A (More Common): Accumulator Adjustment Program● PBMs will track copay assistance

and adjust the accumulator (deductible and OOP max) to apply the amount the member (versus the third party) is paying OOP

Model B: Maximum Copay Allowance Program● PBMs will adjust a member’s copay

for select specialty drugs up to the maximum manufacturer copay allowance

OOP: Out-of-Pocket costs are expenses not reimbursed by insurer and can include deductibles, coinsurance, and copayments

As Copay Optimization Programs are expected to grow in 2018, the patient community will need to develop a strategic approach to address and counteract their impact.

Copay Assistance


Early Legislative Deadlines and NovemberElections Will Likely Shape 2018 Environment

14CHIP: Children’s Health Insurance Program; VBC: Value Based Contracting

*Expected to pass by midnight on February 8

TIMELINE OF 2017/2018 KEY DATES AND EVENTS

Dec 20: Congress Passes Tax

Reform

Dec 15: 2018 Exchange

Open Enrollment

Period Ends

Dec 21: Congress Passes Stop-gap Government

Funding PackageJan 16: Comments

Due on Medicare Part C/D Proposed Rule

Jan 22: Congress Passes Stop-gap Government Funding

Package with 6-yearCHIP Reauthorization

Early Feb: President’s FY2019 Budget

Request

Early March: Expected Debt

Limit

Jan 29: Alex Azar Sworn in as HHS

Secretary

Mid/Late 2018: Potential Action on Market Stabilization

Mid/Late 2018: Potential Administrative Action on VBC, Pass Through Rebates

Nov 6: Midterm Elections

Nov 1: 2019 Exchange Open Enrollment

Period Begins

Exchange Market Activity

Administrative Activity

Legislative Deadline / Action

Feb 7: Senate Unveils 2-Year Budget

Agreement* March:

Expected Omnibus Bill

Midterm Outlook


The 2018 Midterm Elections Will Dictate Future Activity on Numerous Healthcare Policies

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Status QuoRepublicans retain control of Congress

• Renewed efforts to repeal/replace the ACA

• Potential movement on entitlement reform

Partially Divided GovernmentDemocrats control one of the two houses of Congress

• No legislative options for repeal/replace activities

• Current Congressional oversight efforts curtailed

Divided GovernmentDemocrats sweep both houses of Congress

• Congress broadly changes priorities on healthcare policy

• Opportunity to compromise in certain areas (e.g., drug pricing)

Down Ballot Changes: State-level election results could influence current activity on drug pricing policies and Medicaid waivers.

Midterm Outlook

Documents

Kelly Brantley Presentation - Read-Only · business, or profession or 2) have a principal place of business in same state or metro area (even if crosses state lines) Anti-Discrimination