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Volume 18, Issue 8 June 4, 2018

Currents: AAHAM government affairs e-mail newsletter

In The News Hospital Computer System Crash? Prepare Now, It's Inevitable

Anthem's Imaging Policy Could Cut Into Hospitals’ Profits

2019 Obamacare Increases Based on Volatile Market

Libertarian Groups Eye Off-Label Drug Promotion Laws

Inside CMS New Doctor Pay Model Could Weaken Medicare Networks

Medicaid Payments at Root of Flap Over Trump Proposal

Legislative/Regulatory Lawmaker Eyes Drug Discounts in Bid to Reduce Rx Pricing

GOP Senator Floats Health-Care Price Transparency Ideas

Obamacare Major Target of Trump's Spending Cuts, CBO Finds

Drugmaker Penalties Delay Under White House Review

Right-To-Try Author Says Law's Intent Is to Diminish FDA's Power

Legal Texas AG Settles Medicaid Sham Payment Case for $15.2M

Around the States New Jersey: Enacts Health Insurance Mandate

Utah: Lawmakers Criticize Ballot Move to Expand Medicaid

Virginia: Medicaid Expansion Heads to Governor's Desk

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IN THE NEWS

Hospital Computer System Crash? Prepare Now, It's Inevitable

Hospital computer systems, like airplanes, shouldn't crash, but occasionally they do. The results can be

catastrophic, but there are steps health-care providers can take to avert or minimize the damage. Two

attorneys who counsel hospitals told Bloomberg Law that preparation, training, and practice are the keys to

surviving a systems outage that involves electronic medical records without incurring legal liability or

reputational harm.

Hospitals face potentially “massive” liability, depending on the circumstances that caused the crash, Anne

Murphy, a former in-house hospital counsel now in private practice at Boston's Hinckley Allen & Snyder

LLP, told Bloomberg Law. C. Timothy Gary, of counsel at Nashville's Dickinson Wright and CEO of Crux

Strategies, told Bloomberg Law that there is a real risk of liability exposure if a crash cuts off the clinical

staff's access to patient records. Both attorneys have helped hospitals acquire, implement, and maintain

electronic health-care record systems. Crux Strategies is a global strategy firm that helps organizations and

corporations navigate and avoid crises, bring about legislative changes, and resolve disputes.

Hospitals have two broad responsibilities that will be impacted by a computer system crash, Murphy said.

First, they have a duty under the federal Health Insurance Portability and Accountability Act and its state

analogs to ensure the security and privacy of patient health information. Second, hospitals have a duty to

ensure patient safety. A crash could affect the system's security protocols, thereby exposing patient data to

dissemination outside the hospital. Under HIPAA, there is an expectation that a hospital will have an

effective backup system for storing and accessing that data, so a crash could expose the hospital to liability

under the laws, Murphy said. It is more difficult to quantify a hospital's exposure for patient safety problems

caused by a system crash, but the potential for professional liability exposure is significant, Murphy said.

Health-care providers are very dependent on electronic medical records that contain a patient's treatment

history, including what drugs a patient currently is taking and which ones may cause an adverse reaction,

Gary said. Losing access to that kind of information “adds to the complexity” of practicing medicine, he

said.

System crashes leave providers without easy access to crucial information about their patients, so they have

to find other ways to get the data, Gary said. Mostly this involves doing it the “old-fashioned way,” such as

by asking patients and their families about their medical histories and recording them in paper-based records,

he said. Systems often include checklists for doctors and nurses. Without those lists, they have to go back to

their training and think through the treatment process on their own, Gary said. Before EMRs were a thing,

most doctors did this as a matter of course. It was part of their “muscle memory,” Gary said. Doctors who

have become overly reliant on technology to tell them “if A, then B,” may have difficulty adapting, he said.

An adverse medical event that occurs during a period when a system is down will be examined under a

microscope, but won't necessarily result in liability for the hospital, Gary added. Computer systems are

facilitators of treatment, they don't treat the patient, he said.

Clinicians are the care providers, so the question always will be whether the professional acted reasonably

and in compliance with the standard of care, given the circumstances, Gary said. There normally are several

redundancies built into hospital computer systems in order to prevent a crash. These include recovery

programs and cloud-based storage systems to stop the loss of or quickly restore access to critical

information. If, however, “a perfect storm” occurs, and multiple, successive things go wrong, there could be

a system shutdown, Gary said. There is no such thing as a failure-proof system, he said.

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Hospitals can avoid or limit liability by creating hospital-wide backup systems that are tested and updated

frequently to account for changing realities, Murphy said. Both the legal and compliance departments should

be involved in developing a strategy to reassess the system periodically, she said. An immediately

accessible backup system, usually administered by the system's vendor or another outside source, is one way

to avoid crash-created problems. But a smaller, less sophisticated hospital, may not have an effective crash-

recovery system, David Adams, vice president of business intelligence and revenue cycle management at

Crux Strategies, told Bloomberg Law. Smaller hospitals may have fewer resources they can dedicate to

ensuring their systems aren't vulnerable to a crash, Adams, who specializes in health-care technology, said.

For example, a larger facility may have two or more points of entry for their internet connection, while a

smaller system may have only one, leaving it more vulnerable if that connection goes down. Larger

institutions, on the other hand, generally have bigger systems with multiple interfaces, Murphy said. More

moving parts, however, means there are more things that potentially can go wrong.

Hospitals should develop enterprise-wide response plans that also are part of an integrated cybersecurity

plan, Murphy said. The governing board, the hospital administration, the legal team, the compliance team,

and the clinical staff should be involved in developing that plan, Murphy said. The hospital's administration

first should conduct a “robust” risk analysis, Murphy said. Then, with input from other departments, it

should develop protocols and procedures to outline what will happen inside the hospital in the event of a

system crash. The multi-part contingency plan should include an emergency-mode operational plan. The

hospital staff should be trained and periodically tested on that plan, Murphy said. She suggested hospitals

run practice exercises that account for various scenarios, not unlike active shooter or workplace safety drills.

It is essential that the clinical staff understand how they should continue to operate during a system crash,

Murphy added. The hospital thus should develop protocols for using paper-based records and secure mobile

devices to collect and access clinical information. They also should have a procedure for entering

information into EMRs once the system is back up, as well as for ensuring the information collected is

secure.

A hospital's reaction to a crash will depend on the circumstances, Murphy noted. For example, the response

to a crash expected to be of short duration will be different from one for which no end is in sight. Something

expected to go on for days, for example, might lead the hospital to cancel elective procedures or divert some

cases to another nearby facility. It is hard to know what the precise response to a crash will be, Murphy said.

But, before one happens, it is important to understand and assess the risk, develop a coherent

multidisciplinary response, and deploy sufficient resources for response implementation.

Anthem's Imaging Policy Could Cut Into Hospitals’ Profits

Hospitals in states where Anthem Blue Cross Blue Shield operates will likely take a financial hit due to the

plan's decision to pay for outpatient MRIs and CTs only when members get them at freestanding imaging

centers. Health advocates have also said Anthem's policy—which it rolled out in nine states in fall 2017 and

four more states in 2018—will put a worrisome onus on health consumers.

Anthem's policy with respect to imaging takes aim at a service that is priced much higher at hospitals than at

ambulatory care centers, and raises questions as to the repercussions when carriers—faced with ever rising

health-care expenses—steer members toward lower-cost providers for health care. “It's hard to give a sense

of the magnitude, but I do think it's going to be material” in terms of the effect on hospitals’ bottom lines

ultimately, Christopher Stanley, director in the health-care practice at global consulting firm Navigant, told

Bloomberg Law May 31.

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Imaging services are among the more profitable services that hospitals perform, he said. Meanwhile, prices

for imaging services at hospitals is two to three times higher than at freestanding centers. National average

hospital charges before negotiation of discounts for advanced imaging services such as MRIs and CT scans

ranged from 1.7 to 2.49 times higher than prices for such services at freestanding centers, according to data

published in spring 2017 by the Healthcare Financial Management Association. For standard imaging

services, hospital prices were 1.85 percent to 3.08 higher, and for echography/ultrasonagraphy, 2.65 percent

to 2.92 percent higher.

Given those price variations, under the new Anthem policy, unless a doctor enters information into an online

system saying the procedure is “medically necessary” at the hospital, the patient is directed to a freestanding

center, Tony Felts, spokesman for the company in Indianapolis, told Bloomberg Law May 25. The policy

pertains to outpatient imaging services only, he said. Rural areas that don't have free-standing imaging

centers for consumers are exempt, he said. Other exceptions include when the patient is under 10 years old

or when the imaging is preoperative and surgery is occurring in the hospital, he said. Felts said he did not

have information about how much the policy is saving the company or patients.

Hospital's margins could be affected directly and and indirectly, Stanley said. There will be a direct impact

when outpatient imaging services are provided by hospitals but denied by Anthem, he said. An indirect

impact will occur when doctors divert patients to ambulatory centers or patients choose to go to them,

bypassing hospitals, when they might be covered under an exception to the plan's policy, he said. Some

physicians might say, “I don't want to send some of my patients over there and have the rest treated here,” so

they might start sending everybody to freestanding centers, not just those covered by Anthem, he said.

Additionally, if a patient were to receive services at a freestanding center, and then need additional testing,

they are less likely to get those additional tests at a hospital even if the service is covered. “They tend not to

go outside the original facility,” Stanley said. “They tend to remain within the same health system.”

Adam Fox, director of strategic engagement for the Colorado Consumer Health Initiative in Denver, told

Bloomberg Law he's concerned about the Anthem policy from a consumer protection perspective. “There

may be situations where a consumer may feel like they have to leave the hospital to receive those services,”

he told Bloomberg Law May 29. “It puts the consumer in the bad position of having to make a clinical

decision when they don't have the medical knowledge to do that, necessarily.” Felts said freestanding

imaging centers are safe and provide a quality of care comparable to similar services performed in a hospital,

Felts said. They're also more cost-effective, saving consumers nearly $1,000 in out-of-pocket costs

compared to a hospital, he said.

“Consumers and employers are concerned about health-care affordability,” Felts said. The lower cost of

service allows the plan to keep premiums more affordable, he said. Anthem's policy also opens “the door for

their members to be on the hook” when reimbursement for imaging services is denied, Fox said. “An

important question to ask is, if these services are so much more expensive at hospitals, why aren't plans

negotiating for prices that are more competitive?” Fox said. “Hospitals tends to charge more, but what are

insurers doing to combat that? If they are just going to shift costs, that means they're not doing their jobs of

trying to control costs for their members.”

“Balance” or “surprise” billing, the practice of billing patients for the difference between what a hospital

charges for a service and what a plan reimburses for it, is illegal in many states, including Colorado, Vince

Plymell, spokesman for the state Division of Insurance, told Bloomberg Law in an email May 30.

Ultimately, the patient is on the hook for unreimbursed services, but the reality is, few will pay, and

hospitals will end up writing off the bill, Stanley said. Michael Conway, interim commissioner of the

Colorado Division of Insurance, told Bloomberg Law May 25 the plan did not need to secure division

approval before implementing the policy, he said, although if the state felt a policy change rendered a

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network of providers inadequate it would “have a conversation with them,” he said. He said the division had

not heard any complaints from consumers about the change.

Conway said he wasn't aware of other plans in Colorado with an imaging policy similar to Anthem's, but

added he “wouldn't be surprised if other companies tried to control costs in a similar fashion.” Stanley, Felts,

and Fox said they were also unaware of other plans with the imaging policy. Other plans will probably

watch carefully to see what happens with Anthem, Richard Gundling, vice president of HFMA, told

Bloomberg Law May 30. “They'll probably want to see how health plan members react.” More price-

sensitive members, like those in a $2,500 deductible plan who are going in for a diagnostic scan for a sports

injury, are much more likely to turn to a free-standing center now that Anthem has put out its policy,

Gundling said. “Now if I had a chest scan or a scan of my brain, I'd prefer to go to a hospital,” he said.

Large plans tend to be cautious with any kind of change like this, Stanley said, adding it was more likely

smaller carriers would follow Anthem's lead than the other large plans. “It's unlikely this is the start of a

groundswell,” he said, “but more of a reflection of the trend toward multiple tactics plans are using to reduce

costs, such as high deductible plans, pricing transparency, and ways to direct the more price-sensitive

members to lower cost care.”

2019 Obamacare Increases Based on Volatile Market

Health insurers are poised to ask for double-digit premium increases for Obamacare plans for the third year

in a row for 2019, but commonly cited factors such as repeal of the penalty for not having qualified coverage

may not be the primary reason.

The Congressional Budget Office forecasts that premiums for the benchmark plans on which Affordable

Care Act subsidies are based will rise about 15 percent next year, in part because the individual mandate

penalty will be eliminated in 2019. But volatility in the health risk of the people covered by individual

market plans and the possibility that some carriers will have to make large risk adjustment payments to cover

sicker people in other plans may be the larger drivers of the big increases, according to some people in the

health-care industry.

The lack of a penalty for not having qualified coverage and increased availability of alternate plans that don't

meet ACA requirements have been cited as the major reasons that premiums are going up yet again. But the

individual market remains volatile even without those factors adding to the upward pressure. “There's going

to be a slight bump due to the individual mandate and the potential availability of alternative plans,” such as

non-ACA compliant short-term limited-duration plans the Trump administration has proposed enhancing,

Greg Fann, a senior consulting actuary with Temecula, Calif.-based health insurance actuarial consulting

firm Axene Health Partners LLC, told Bloomberg Law May 29. Fann is also a fellow with the Society of

Actuaries, which credentials actuaries.

The repeal of the penalty for not having insurance as well as the possibility of increased market share for

noncompliant plans will account for a relatively small share of premium hikes in 2019, Fann said. “Carriers

are still trying to figure out how to price for this market with a population that's in flux and unknown

elements such as risk adjustment,” he said.

Under the ACA's risk adjustment requirement, carriers with healthier populations must make transfer

payments to other carriers in their state that have less-healthy enrollees. The program has hit smaller carriers

hard, in many cases forcing them to make big payments to big, established carriers, such as Blue Cross Blue

Shield plans that are major players in the ACA exchanges. “Risk adjustment is still an unknown element,

particularly for small carriers,” Fann said. Rate proposals are also based on insurers’ previous losses, Fann

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said. Among the rate proposals that have been made public in four states, CareFirst, the dominant health

insurer in Maryland, has requested the highest increase known so far for its preferred provider organization

plan at 91.4 percent above 2018 rates.

CareFirst has lost more than $500 million covering individual ACA members since the exchanges and other

major provisions of the law took effect in 2014 through 2017, company spokesman Michael Sullivan told

Bloomberg Law in an email May 29. CareFirst's filings didn't reflect the impact of passage of market

stabilization legislation that will allow Maryland to apply to the U.S. Department of Health and Human

Services to set up a reinsurance program to cover high-cost claims, Sullivan said. After the program is

finalized, CareFirst will refile its rates, Sullivan said. The reinsurance program, if approved, is expected to

save 20 percent to 30 percent in premiums, Maryland Insurance Commissioner Al Redmer told Bloomberg

Law May 29.

Maryland expects its request to set up a reinsurance program will be approved, Redmer, a Republican, said.

But, he added, a reinsurance program “is a short-term improvement. Nothing gets fixed permanently until

Congress puts aside their partisan differences and fixes the Affordable Care Act.” Health insurers have

stressed the need for Congress and the administration not to take steps that will result in higher premium

increases. America's Health Insurance Plans (AHIP) released a paper May 29 listing factors influencing

2019 premiums, including elimination of the individual mandate penalty and federal regulations that would

expand short-term plans and noncompliant association health plans used by small businesses, both of which

AHIP said would put upward pressure on premiums.

In addition, the underlying cost of medical care, including higher prices for health-care providers and for

pharmaceuticals, is driving premium increases, Greg Gierer, senior vice president of policy and regulatory

affairs for AHIP, told Bloomberg Law May 29. “We're looking at another challenging year for the

individual market with double digit increases overall,” Gierer said. Continued uncertainty in the individual

market “is a factor here,” helping fuel rate increases, Gierer said. Premium increases will vary based on

where people live, their eligibility for ACA subsidies, their age, and the type of coverage they choose, he

said.

But new federal regulations--currently in the proposed stage--expanding short-term plans and association

health plans will have a “detrimental impact on the risk pool overall,” Gierer said. Those plans “have the

potential to siphon off younger, healthy people,” leaving more people who have higher claims in the pool of

compliant plans, he said. “Insurance works best when there's broad participation in the market.”

Insurers will base their 2019 premium filing requests on two things, Deep Banerjee, director of financial

services at S&P Global Ratings, told Bloomberg Law May 29. One of the factors is each insurer's level of

profitability in the individual market coming into 2019, Banerjee said. “Several insurers made profits for the

first time in 2018, but not all of them did.” The other major factor governing rate requests is insurers’ view

of market disruptions, such as the lack of the mandate penalty and noncompliant plans, Banerjee said.

“We think that to a certain extent insurers have been adjusting for a weak mandate for several years now,”

Banerjee said.

Without repeal of the mandate penalty or the expansion of noncompliant plans, S&P Global Ratings had

expected to see 2019 rate hikes of between 6 percent and 8 percent, Banerjee said. With those factors

affecting the market, that will push the overall average rate hike into the double digits, he said. “Because of

the changes, we don't expect this market to grow in terms of people enrolling,” Banerjee said. S&P Global

Ratings expects enrollment for the 2019 exchanges to be slightly less than 12 million and decline over time,

he said. According to the Kaiser Family Foundation, 11.8 million people enrolled in marketplace plans

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in 2018, and 12.2 million people enrolled in 2017. “If there was growth we would have seen lesser rate

hikes because we would have seen a healthier population sign up,” Banerjee said. “We don't expect that to

happen.”

Libertarian Groups Eye Off-Label Drug Promotion Laws

Libertarian groups around the country are pushing state lawmakers to give drugmakers more leeway to

promote their medicines by claiming restrictions on some marketing of drugs violate freedom of speech

laws.

The argument appears to be proving salient: Two states have passed laws permitting drugmakers to advertise

what are known as off-label uses of drugs, and lawmakers in at least three other states are expected to take

up similar bills next year. The ultimate goal, supporters told Bloomberg Law, is to get a bill passed by

Congress, a move that could reshape how the Food and Drug Administration oversees the promotion of

medicine. “The problem we see is federal law is prohibiting medical professionals from getting truthful

information about lawful treatments,” Christina Sandefur, executive vice president of the Goldwater

Institute, a Phoenix-based free-market/libertarian think tank, told Bloomberg Law May 29.

Critics of this movement told Bloomberg Law many off-label uses for drugs have little rigorous scientific

study to support their safety and efficacy and drugmakers already have a lot of leeway to talk to doctors

about off-label uses of their products. There's also concern that Goldwater is trying to significantly lower the

standard for what's considered a safe use of a drug, opening the door for the return to “snake oil” salesmen.

The groups involved in the movement to permit off-label drug promotion are fresh off a win after President

Donald Trump May 30 signed into law a bill to permit the terminally ill to sidestep the FDA in getting

access to experimental drugs, a policy known as right to try. They're hoping to repeat that success and turn

another relatively unknown issue into federal law within a few years.

In seeking to loosen off-label restrictions, Goldwater and other groups are touching on the area between the

FDA's authority over medicine and the practice of medicine, which is largely overseen by state medical

boards. They're also trying to argue the federal government is treading on the pharmaceutical industry's right

to free speech, something critics also dispute has any standing. Off-label prescribing, when doctors give

their patients medication for a use different than what the FDA approved it for, is legal and common. Some

studies estimate nearly a fifth of all prescriptions are off-label. For example, aspirin was used for years to

reduce heart attacks before being approved for such a use. Doctors aren't restricted by FDA rules in giving

approved medicines to patients beyond their approved purposes; however, drugmakers can't freely and

proactively advertise their products for off-label uses. The drug-approval agency does have some safe

harbors in place for drugmakers to discuss off-label uses with doctors, such as through peer-reviewed

literature and responding to unsolicited questions from doctors.

If drugmakers want to advertise their drugs for a new use, they need to get approval from the FDA.

Pharmaceutical companies gather a wealth of data about their products and their use beyond FDA-approved

labeling, according to the Pharmaceutical Research and Manufacturers of America, the drug industry's

lobbying arm. The group advises companies to primarily share information about approved uses of their

drugs. Drug companies have asked the FDA to develop regulations for proactively promoting off-label uses

for doctors at scientific conferences and to allow for the distribution of scientific information directly to

doctors. There's little interest among drugmakers in permitting companies to advertise off-label uses directly

to consumers, PhRMA said.

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Some drug companies have run afoul of FDA off-label rules and faced multimillion-dollar fines, but some

recent court victories have spurred interest in taking up the issue as a First Amendment question. Tennessee

and Arizona passed what Goldwater calls Free Speech in Medicine laws, which permit drugmakers to give

information about off-label uses of their products to doctors. Lawmakers in Colorado considered such

legislation earlier this year.

Lawmakers and conservative groups in Michigan, Ohio, and Pennsylvania have spoken to Goldwater about

potentially introducing off-label bills next year, Sandefur said. Federal lawmakers have introduced bills

(H.R. 1703; H.R. 2026) that would create new safe harbors for drug manufacturers to give data to

doctors about off-label uses and seek to expand insurance coverage of off-label drugs. One prominent case

Goldwater often cites is United States v. Caronia, No. 09-5006-cr (2d Cir. Dec. 3, 2012), in which Alfred

Caronia, a pharmaceutical sales representative for the company Orphan Medical Inc., was charged with

misbranding violations related to the marketing of the drug Xyrem.

In a split ruling, judges overturned a conviction for Caronia because they found what he said was truthful

and protected by free speech laws. This same legal standard of “truthful and non-misleading” speech is what

Goldwater wants all off-label drug promotion to be judged by. “This is an issue that went to the courts

several times and the courts have said ‘yes, this is a free speech issue and a violation of the First

Amendment,’” Sandefur said. This case and others like it were all limited rulings, meaning the judges didn't

say their decision should apply to all other cases, and failed to look widely at FDA's authority, Christopher

Robertson, associate dean for research and innovation at the University of Arizona, told Bloomberg Law.

The FDA itself has also said it doesn't see cases like Caronia's as evidence there's a conflict between off-

label restrictions and free speech laws.

The FDA has strict rules for judging the safety and efficacy of medicine because they're highly technical

questions that should be backed by clinical trials and other rigorous research, Robertson said. Just because a

drug is determined safe for one purpose doesn't mean it's safe for another, he said. “It's not the case that

companies are just sitting on gold standard research and not sending it to the FDA,” Robertson said. “If they

had it they'd seek approval for that use.” Goldwater's proposal would also leave determining what's a

truthful scientific claim by a drugmaker up to jurors or judges in cases against companies accused of

misleading the public by the government, he said. This means lay people, not scientists, would be asked to

refute a complex argument.

INSIDE CMS

New Doctor Pay Model Could Weaken Medicare Networks

A potential new alternative doctor payment model could siphon off health-care providers who might

participate in Medicare's accountable care organization program, a major medical group is warning.

The possible primary care model, called direct provider contracting, would weaken the ACO program

because it would draw from the same group of eligible and willing health-care providers, the Washington-

based AMGA told the Centers for Medicare & Medicaid Services May 25.

The AMGA, which represents multispecialty medical groups, also said it would prefer that the CMS instead

focus on improvements to its ACO, known as the Medicare Shared Savings Program, before it gets

distracted by another doctor alternative payment model.

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The direct provider contracting program, still in development, may compromise the ACO program “by

reducing the number of providers and beneficiaries who participate in a program that is based on the same

goals,” Jerry Penso, AMGA's president and chief executive officer, said in a statement. “The innovations in

care delivery and payment envisioned” in the primary care model could just as easily be tested in the ACO

program, Penso said.

The direct provider contracting model, offered for public comment by the CMS's innovation center in April,

would pay primary care or multispecialty practices a fixed amount per beneficiary each month to cover

primary care services, including office visits and some procedures. The practice would be expected to offer

beneficiaries enhanced access to doctors and would be accountable for the cost and quality of care for its

beneficiary population. Comments were due May 25. The CMS in its request for information on the model

said it's aware of the wide range of payment arrangements in existence, including ACOs, that involve aspects

of the new model. ACOs are groups of doctors and hospitals that have agreed to be held accountable for the

cost and quality of care for a group of beneficiaries and can share savings they achieve.

The CMS acknowledges the new demo “ostensibly would be redundant” because of the number of initiatives

related to primary care, Penso said. The AMGA has heard from numerous members that they already suffer

from demonstration fatigue, he said.

But another physician group said the new model is drastically different from ACOs and would have a unique

place among the CMS's payment models. The direct primary care model differs in various ways from an

ACO, Jay Keese, executive director of the Direct Primary Care Coalition, told Bloomberg Law May 29. His

coalition members have direct primary care practices that allow unrestricted access to their primary care

doctor. Patients receive such amenities as home visits and the doctor's cell phone number in exchange for a

membership fee. The idea behind the model is to move primary care doctors into a system where they can

spend time with patients to properly diagnose and treat, as appropriate, rather than quickly sending them to a

specialist, Keese said.

The ACO model “hasn't moved the needle in a big way on improving care for patients and reducing costs,”

Keese said. ACOs are still shoehorned into a fee-for-service payment methodology that drives care based on

financial incentives. They're “still spending five minutes each with 30 patients a day,” he said. The direct

primary care model is not in the fee-for-service path but bases doctor payments on the local market, he said.

If the new model is approved, ACOs will continue and there will be plenty of willing participants for both

programs, Keese said.

In comments to the CMS, the coalition said the CMS should start its new model with beneficiaries already

in one of the 900 direct primary care practices. “The easiest way is to take beneficiaries who are already in

these relationships and pay them so they can pay their doctor,” Keese said.

Under the group's plan, beneficiaries would receive the per member, per month fee for primary care in a

medical savings account. Medicare would continue to provide pay for services such as specialty care and

hospitalization.

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Medicaid Payments at Root of Flap Over Trump Proposal

Hospitals are balking at a Trump administration plan that would make it easier for states to cut Medicaid

reimbursement without taking into account how that would affect health-care access. The proposed Centers

for Medicare & Medicaid Services rule (RIN:0938-AT41) scraps mandatory access evaluations in the 17

states where most enrollees are in managed care. It also raises the bar for how steep Medicaid payment

decreases can be before data analysis requirements kick in, allowing states to forgo the assessments when the

decrease is less than 4 percent in one year or 6 percent over two. The Trump administration has touted the

proposal as part of a large-scale push away from red tape and toward state flexibility.

The American Hospital Association is pressing the CMS to reverse course, though, saying the change

would jeopardize access “by removing an important oversight function.” Medicaid reimbursement falls well

below other payers, paying doctors 72 percent of Medicare rates in 2016, according to a report from the

Urban Institute—and it varies widely by state The low payments can be a barrier to Medicaid participation,

affecting where patients can be seen: At least one state (California) is facing a lawsuit over whether they

amount to discrimination. Obamacare gave a temporary two-year cash infusion to boost the program's

primary care payments, causing upticks across states, but the Trump administration's push to lift red tape for

state decreases may reverse that tide. “Some in the hospital industry are not satisfied with those review

requirements as they currently exist, so the concept of weakening them... just doesn't make sense,” Barbara

Eyman, a health-care attorney with Eyman Associates in Washington, told Bloomberg Law. Eyman has also

counseled safety-net hospitals. “It leaves a really big hole in the statutory framework,” she said.

The National Health Law Program is also opposing the CMS proposal. Abbi Coursolle, a senior attorney at

NHeLP, told Bloomberg Law the organization is continuing to watch Medicaid reimbursement rates and

access and is concerned both will decrease if the plan is finalized. States already don't raise their Medicaid

rates often enough to keep up with inflation: The program should be doubling down on its efforts in this area

instead of rolling back transparency requirements, she said. But it will be hard to know how any changes

play out in a world with this proposal, because there will be less monitoring and less scrutiny, she said.

Coursolle added that the group, which is suing Kentucky over Medicaid work requirements, is also looking

closely at the legality behind the proposal. “We and many others do have serious concerns about this

proposal and whether it's faithful to the statute,” she said.

Nearly three-quarters of Medicaid beneficiaries (75 million people) are covered through managed care,

according to PricewaterhouseCoopers. And about $236 billion of the safety-net health insurance program's

spending goes to the plans, Kaiser Family Foundation figures show. That high saturation has hospitals

concerned, Eyman said. Medicaid managed care plans are buoyed by the CMS decision to lift impact

evaluations for rate changes in places with the highest numbers of managed care enrollees.

“While this provision makes sense in Medicaid fee-for-service, it is wholly unnecessary for states with high

managed care penetration since Medicaid enrollees are already assured to get the care they need via

Medicaid plans’ provider networks,” Medicaid Health Plans of America told Bloomberg Law in a statement.

“The exception relieving the burden in managed care states will have a huge effect in terms of improving

streamlining and efficiency given that the overwhelming majority of the Medicaid population is covered

under managed care,” MHPA President and CEO Jeff Myers said.

But the hospitals don't see it that way: “While the AHA shares CMS's goal of reducing the regulatory burden

on the health care system, we must selectively target burden that is duplicative, provides no value, or does

harm,” the AHA said in its comment letter. The requirements being lifted under the CMS proposal don't

meet that threshold, it said.

AAHAM 11

States that primarily use managed care for their Medicaid population often have carve-outs still for their

most vulnerable patients. Just 11 states have moved long-term services and supports (such as for the

disabled or elderly) into managed plans, and most only started those programs within the last six years,

according to Kaiser. Equal access standards under fee-for-service are less comprehensive than in managed

care, according to Eyman. And their rate changes often carry over to help set managed care capitation rates,

raising the stakes, she said. That means already-low fee-for-service rates could be decreased under the

proposal without “paying any attention” to impact on patients, and then that could translate into managed

care. “There's no enforcement, no oversight of it, and no recourse to the courts—so you're really left

hanging,” she said.

The Supreme Court ruled in Armstrong v. Exceptional Child Center in 2015 to block providers and

consumers from challenging state Medicaid payments in federal court. So the CMS has purview over

ensuring that Medicaid reimbursement is sufficient to keep hospitals serving the poor.

LEGISLATIVE/REGULATORY

Lawmaker Eyes Drug Discounts in Bid to Reduce Rx Pricing

A House health panel this summer will turn its attention to drug rebates and how the discounts negotiated by

pharmaceutical industry middlemen and others affect what Americans pay at the pharmacy, the panel's

chairman told Bloomberg Law.

When President Donald Trump unveiled his drug pricing plan earlier in May, he was signaling that Congress

needs “get off the talking points” and act to lower the cost of medicine, Rep. Michael Burgess (R-Texas),

chairman of the House Energy and Commerce health subcommittee and a vocal Trump supporter in

Congress, said in a May 24 interview.

Burgess, the most-senior medical doctor in Congress, said he's still unpacking the president's proposals to

find ideas for new legislation. He said he's moving forward cautiously out of fear of unintended

consequences, such as creating drug shortages. But, he said he's interested in exploring how to bring

transparency to the confidential discounts that drugmakers negotiate with insurers and benefit managers.

Burgess hopes shining a light on these discounts could help consumers get a larger share in the savings.

“To me one of the really frustrating things on drug pricing is that it's hard to understand because it's not just

the list price and the price to the consumer,” Burgess said. “The whole rebate system I find difficult to

comprehend.”

Prescription drug spending per capita is far higher in the U.S. than most other developed countries,

according to an analysis by the Commonwealth Fund. Discounts and rebates for drugs now amount to

more than $150 billion a year, up 100 percent since 2012, according to the Pharmaceutical Research and

Manufacturer's Association, the drug industry's lobbying arm that has blamed the rebates for inflating the

cost of some prescription drugs.

Republican leaders in Congress are moving slowly in response to the president's drug-pricing plan, which

doesn't explicitly endorse any pending legislation. One of the Senate's main health panels, the Health,

Education, Labor and Pensions Committee, will host Health and Human Services Secretary Alex Azar June

12 for a discussion of the plan. Some HELP Committee members, including Sen. Susan Collins (R-Maine),

are pushing to advance a bill (S. 2554) to prohibit contracts that stop pharmacists from telling patients

about cheaper medicines.

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The House Energy and Commerce Committee is readying more than 60 opioid bills for a floor vote in June,

and then Burgess expects to turn his attention back to possible reforms for the drug discount program known

as 340B. Critics of the drug discount program, which allows some safety-net hospitals to buy medicines at

reduced cost, say it has grown too much in recent years and that drugmakers are increasing their list prices to

account for the billions of dollars in lost profits.

While lawmakers consider legislation related to drug discounts for hospitals, they may also look broadly at

ways to see where the savings from other drug rebates are used, Burgess said.

Under Medicare, senior citizens don't share in the rebates directly and often have to pay a copay based on a

percentage of a drug's list price. It's also hard to know how much of a rebate insurers and benefit managers

are receiving, because they're not publicized. Burgess has praise for Trump's drug pricing plan, specifically

proposals to force foreign governments to pay more for prescription drugs and requiring drugmakers to list

the cost of their medicines on direct-to-consumer advertising. He also wants to look more broadly at the cost

of innovative drugs and treatments to see how they reduce other health costs.

Burgess pointed to the price of Sovaldi, once priced at $1,000 per pill, which drove up the cost for some

insurance plans and Medicaid programs but effectively cured people of hepatitis C, a costly disorder to treat.

Burgess has been advocating for legislation that would require the Congressional Budget Office to look

beyond the standard 10 years to see if measures meant to prevent health spending would reduce federal

spending.

He concedes the issue of addressing the rise of drug prices is complicated, often so much so it makes it

difficult to find solutions. “It's a cop-out, I know, to say it's multifactorial, but it really is,” Burgess said.

GOP Senator Floats Health-Care Price Transparency Ideas

One of the architects of Republicans’ Obamacare repeal legislation May 29 floated a series of ideas for

lowering health costs, including requiring price transparency for elective medical procedures.

Sen. Bill Cassidy (R-La.), one of the few lawmakers who serves on both Senate health committees,

released a paper outlining his ideas for lowering health-care costs. The plan calls for passing an

Obamacare stabilization effort, installing price transparency measures, and allowing states to bar insurers

from re-entering some markets.

“I'm focused on lowering health-care costs, because we have to make health care affordable again,” Cassidy

said. “That's what these ideas I'm outlining are intended to do.”

Cassidy was at the center of the Republican effort to overhaul the Affordable Care Act, but has since turned

his attention to other health policy issues. He plans to introduce legislation aimed at improving price

transparency in health-care institutions later this year.

In his plan, Cassidy said patients should have pricing and quality data before receiving some elective

procedures, but he doesn't specify how to make that a reality.

Hospitals have come under fire for years for not showcasing the cost of their procedures, which can differ

widely based on whether the patient has insurance or what kind of insurance coverage they hold.

AAHAM 13

Obamacare Major Target of Trump's Spending Cuts, CBO Finds

The Trump administration's proposed overhaul of Obamacare would yield most of the health-care spending

reduction called for in the president's most recent budget, a new analysis found. The Congressional Budget

Office looked at President Donald Trump's fiscal 2019 budget proposal, saying it would cut federal spending

for health care by $1.3 trillion, or 8 percent, over the coming decade.

Trump's budget proposal, like that of most presidents in recent years, is widely viewed as not likely to pass.

However, it lays down policy positions that will probably be taken up by Republicans in the 2018

congressional mid-term elections, and GOP lawmakers could take up the fight to overhaul the Affordable

Care Act before the elections.

The CBO said the largest savings—$954 billion between 2019 and 2028—would come from the

administration's proposal to modify provisions of the ACA to replace Obamacare subsidies with block grants

to states to establish new health-care programs. The provision was modeled after the Graham-Cassidy bill

that Senate Republicans failed to take up in 2017. The CBO's analysis, released May 24, is based on its own

estimates with the Joint Committee on Taxation rather than on the administration's. Overall, the CBO

estimated that the president's budget would reduce the federal deficit by $2.9 trillion during the 2019-2028

period, in contrast to the administration's estimate that the deficit would be $5.2 trillion smaller.

The two largest changes over the 2019-2028 period would be a $2.1 trillion reduction in nondefense

discretionary spending, and a $1.3 trillion reduction in mandatory spending for health care, the CBO said.

LIke Graham-Cassidy, the administration's health-care proposal would repeal subsidies for coverage bought

through the ACA exchanges, repeal the ACA's Medicaid expansion, cap Medicaid spending on a per-

enrollee basis, and provide $120 billion for block grants to states for fiscal 2020, the CBO said. The

administration also proposed changing the medical liability system, including capping damages awarded to

successful plaintiffs, which the CBO said would lower federal spending, particularly in Medicare and

Medicaid, by $63 billion over the coming decade by reducing health-care costs.

The Committee for a Responsible Federal Budget (CRFB), a budget watchdog group, published its own

analysis as well May 24, comparing the CBO's estimates with the administration's. According to the

CRFB, CBO's overall estimate for health reforms would reduce the federal deficit by $1.04 trillion through

2028, relatively close to the White House Office of Management and Budget estimate that the health reforms

would save $1.075 trillion during that time period. The Department of Health and Human Services budget

in brief lists repealing and replacing Obamacare as the top priority.

Conservative legislators are attempting again to put together another package similar to the Graham-Cassidy

legislation. “In a sense the president's budget and this outside activity is really pointing to giving

Republicans something to say about their health policy,” Joe Antos, a health-care scholar at the conservative

American Enterprise Institute, told Bloomberg Law May 25.

With the president's budget in hand, Republicans can campaign saying, “We have a proposal that would

repeal and replace Obamacare,” Antos said. “That's going to be the campaign statement that they're going to

need to say in the midterms.” Shawn Bishop, vice president for controlling health care costs and advancing

Medicare for the Commonwealth Fund, a liberal research organization based in New York that has been

critical of Trump's health-care policies, commented to Bloomberg Law May 25 that the CBO report lists

some programs that would help Medicare beneficiaries. One of the proposals in the budget would establish

an out-of-pocket maximum on what beneficiaries must pay in the Medicare Part D drug program. Currently

beneficiaries in the plans may have to spend up to $5,000 for medications, after which they would have to

pay 5 percent of a drug's cost, Bishop said.

AAHAM 14

Under the proposal, once the out-of-pocket limit is reached, beneficiaries wouldn't have to pay anything for

their drugs. “The plans are going to be at risk for that spending,” Bishop said. “They're going to manage the

costs better,” she said. The provision would save $1.5 billion over the 10-year period, according to the CBO.

In addition, Bishop said, Trump's drug price reduction plan to move pharmaceuticals from Medicare's Part B

physician coverage program to Part D would save beneficiaries money. Drugs in Part B are administered by

physicians, and are typically treatments for serious diseases such as cancer. Patients may currently have to

pay a 20 percent coinsurance fee for Part B drugs, and “those drugs are expensive,” Bishop said. Moving the

drugs to Part D would save patients money and reduce the federal deficit by $1.5 billion, she said.

Drugmaker Penalties Delay Under White House Review

The White House is set to review a rule that delays when drugmakers can be penalized for overcharging

hospitals that get discounts on drugs for treating needy patients.

The Health and Human Services Department sent the rule to the White House Office of Management and

Budget for review May 24. This is the last step of the review process before the delay is published and

becomes effective.

The rule (RIN:0906-AB18) is under the 340B drug pricing program, a once relatively unknown, wonky

discount program. The program requires drugmakers to give discounts to hospitals that serve predominantly

low-income patients. The Obama administration wanted to fine drug companies that overcharged those

hospitals, but the Trump administration has pushed back the fines’ effective date five times.

Health officials first announced this latest delay May 4, but sending the rule to the OMB is a necessary step

in the regulation process.

The 340B program has been criticized recently by pharmaceutical makers and some lawmakers for its rapid

expansion that critics say hasn't been properly regulated by the government.

The discount program is at the center of a national debate as drug prices and the opaque payment structure of

the drug supply chain have come under fire from President Donald Trump and Congress.

Right-To-Try Author Says Law's Intent Is to Diminish FDA's Power

Senator Ron Johnson, the chief sponsor of a new law giving terminally ill patients easier access to

experimental drugs, said the aim of the measure is to weaken the U.S. Food and Drug Administration.

In a letter to FDA Commissioner Scott Gottlieb on Thursday, the Wisconsin Republican said the goal is to

“diminish the FDA's power over people's lives, not increase it.”

The blunt message came a day after President Donald Trump signed the so-called right-to-try bill into

law. It was in response to previous comments Gottlieb had made detailing how the agency plans to

implement the law.

Gottlieb told the news outlet Stat this month that the FDA may need to propose new regulations to ensure

that patients are protected. The agency has a program to approve patient requests for access to experimental

drugs if they aren't eligible for a clinical trial. The “right-to-try” law allows patients to get the unproven

medications without FDA permission.

AAHAM 15

“This legislation is fundamentally about empowering patients to make decisions in cooperation with their

doctors and the developers of potentially life-saving therapies,” Johnson wrote. “It is not meant to grant

FDA more power or enable the FDA to write new guidance, rules or regulations that would limit the ability

of an individual facing a life-threatening disease from accessing treatments.”

Johnson also stressed that the law aims to help those with a terminal illness, specifically a deadly form of

childhood muscular dystrophy, not just those with immediately life-threatening diseases, as the FDA

originally suggested. He also emphasized that the FDA cannot use adverse outcomes patients may

experience taking the experimental treatments when the agency reviews the drug for approval, unless it is

critical to determining safety.

“This language is not intended to enable the FDA to expand the scope of existing safety determinations

about investigational drugs,” Johnson wrote.

The law was backed by the Goldwater Institute, a libertarian think tank, and Americans for Prosperity, which

is affiliated with the conservative Koch brothers.

LEGAL

Texas AG Settles Medicaid Sham Payment Case for $15.2M

Texas Attorney General Ken Paxton May 30 announced four Medicaid fraud settlements worth $15.2

million involving a group of Dallas-Fort Worth rehabilitation therapy providers.

The providers were accused of conspiring to avoid repaying $2.7 million to Texas’ Medicaid system for

overpayments to Advanced Therapy Services of Fort Worth and Advanced Therapy Services of Dallas.

According to the attorney general's press release, the investigation was initiated after an anonymous tip to

the Medicaid Fraud Hotline.

As part of the settlements, the parties—Dr. Abraham Armani; Progressive Pediatric Therapy; Shahriar

Raoufpour, Armani's brother and the named president of Progressive Pediatric Therapy; and David Mitchell,

a consultant for Advanced Therapy Services—agreed to be permanently banned from participating in the

Texas Medicaid program. Cynthia Kidd and Joanie Powell are prohibited from owning, managing, or

controlling any entity that serves Texas Medicaid patients. They, along with Advanced Therapy Services of

Forth Worth and Advanced Therapy Services of Dallas agreed to pay the state over $4.3 million.

The state also released a 2016 settlement with Grzegorz “Greg” Matusiak, who agreed to pay Texas

$275,000, testify at trial, and cooperate with the investigation. In return, Texas agreed not to prosecute or

engage in any action against him connected to the fraud case. “This case sends a clear message to providers

that it doesn't pay to cheat Medicaid,” Paxton said in the press release. “We will hold violators accountable

with personal liability and exclusion from the program as provided by Texas law.”

The state alleged that Mitchell, Kidd, Powell, and Armani created sham contracts and misrepresented facts

to defraud Medicaid. Armani was a medical director at Advanced Therapy Services of Fort Worth, but was

co-owner of the Dallas branch with Powell, Kidd, and Matusiak. Powell, Kidd, and Matusiak owned the Fort

Worth branch.

The complaint alleges that Advanced Therapy Services made sham consulting payments to Mitchell and that

Armani, Kidd, Powell, and Matusiak agreed to form Progressive Pediatric Therapy to protect and preserve

AAHAM 16

their Medicaid overpayments. Dr. Armani's brother, Raoufpour, allegedly was named “president” of the

company.

This case is Texas v. DSM Healthcare Ventures, LLC, Tex. Dist. Ct., Travis Cty, No. D-1-GN-15-

5227, settlement announced 5/30/18.

AROUND THE STATES

NEW JERSEY

Enacts Health Insurance Mandate

New Jersey will impose an Obamacare-like insurance mandate and take steps to buttress its health insurance

marketplace under legislation signed May 30 by Gov. Phil Murphy (D).

The laws are the most recent example of a state taking action to preserve health-care benefits under the

Affordable Care Act, which has been partly dismantled during President Donald Trump's administration.

The new federal tax law repealed the ACA's individual mandate, which required that individuals obtain

health insurance or pay a fee.

New Jersey will join Massachusetts as one of two states to impose an individual mandate. The law will take

effect Jan. 1, 2019, the same day that the current federal fee associated with the individual mandate expires.

Under the New Jersey Health Insurance Market Preservation Act (A-3380), a “shared responsibility tax”

requires every New Jersey resident to obtain health insurance coverage or pay a fee. The fee will be assessed

and collected in the same manner as the state's income tax. And under the New Jersey Health Insurance

Premium Security Act (S-1878), the state will establish a reinsurance program to help stabilize New

Jersey's health insurance marketplace. The legislation directs the commissioner of banking and insurance to

apply for a federal innovation waiver under Section 1332 of the ACA.

The new legislation marks a change for New Jersey after eight years under the previous governor,

Republican Chris Christie. Murphy's health transition team recommended consideration of the ACA

mandate and reinsurance bills to stabilize the state's individual insurance market. The bill's sponsors,

Assembly Members John McKeon, Carol Murphy and Pamela Lampitt and Sens. Joe Vitale and Troy

Singleton, all Democrats, said the legislation was needed to maintain Obamacare's health-care benefits and

avoid cost increases. “New Jersey has benefited from the health care law and we want to see that those

benefits continue,” Vitale said in a statement. “It has made health care more affordable and more accessible,

especially for those in need.”

Uninsured rates dropped from 13.2 percent before the ACA took full effect in 2014 to 8.7 percent, the lowest

in three decades, according to the bill's sponsors. “President Trump's efforts to destabilize the health

insurance market will only lead to higher costs for New Jersey residents unless we take common sense

action,” McKeon said in a statement May 30.

The individual mandate legislation was approved 50-23 by the Assembly and 22-13 by the Senate. The

reinsurance legislation was approved 46-22 by the Assembly, and 22-14 by the Senate. The ACA added

more than 800,000 New Jersey residents to health insurance rolls, including 500,000 from expanded

Medicaid coverage and 300,000 from the individual insurance market, supporters of the bills said. New

Jersey Policy Perspective, a left-leaning advocacy group, estimated that without the mandate, the number of

AAHAM 17

uninsured in New Jersey would increase by up to 300,000 over the next decade and premiums would rise

about 10 percent. “Restoring the individual mandate is essential to keeping healthcare affordable, as it will

ensure younger and healthier people obtain insurance and spread the risk in the health insurance pool,”

Raymond Castro, director of health policy at New Jersey Policy Perspective, said in a statement May 31.

The new law will help approximately 150,000 middle class New Jersey residents who are not eligible for

subsidies under the ACA and buy their insurance directly from insurers, NJPP said. The group estimated that

without the mandate, insurance premiums would have gone up about $76 million next year, or an $1,800

increase for a family of four. The New Jersey Business and Industry Association took a neutral position on

the individual mandate legislation, and backed off of its opposition to the reinsurance bill after amendments

were made, the group said in a blog post May 31.

In related news, the governor said May 31 that he would form a task force to stem the rising cost of health

benefits for state employees. The state spends $3.4 billion on state health-care plans, about 9.1 percent of the

overall state budget, the governor's office said. The task force will meet monthly to identify cost-saving

opportunities for the plans, which cover 499,508 active employees and 311,080 retired members.

UTAH

Lawmakers Criticize Ballot Move to Expand Medicaid

Republican legislators in Utah say they are concerned a proposed ballot measure that would expand

Medicaid to 138 percent of the federal poverty level will force a mandate the state might not be able to pay

for.

“It puts Utah in a difficult situation,” Rep. Brad Daw (R), a member of the Legislature's Health Reform Task

Force, told Bloomberg Law May 29. “It's an obligation without any way to manage how many Utah

taxpayer dollars will be needed to meet the obligation.”

The citizens’ initiative, Utah Decides Healthcare, would expand Medicaid coverage in the state to an

additional 171,000 people, according to an analysis the state's Office of the Legislative Fiscal Analyst

presented to the Health Reform Task Force May 24. It would draw an estimated $77 million from the state's

general fund, and offset that by increasing the state's sales and use tax from 4.7 to 4.85 percent.

RyLee Curtis, spokeswoman for Utah Decides Healthcare, told the task force May 24 proponents of the

initiative grew frustrated with lawmakers’ failure to enact proposed Medicaid expansion bills. She said

expansion backers advocated for bills that were “amenable to legislators,” but “[they] never passed.” “So

now we're taking it to voters,” she said. The campaign has collected more than 200,000 signatures in support

of placing the measure on the ballot, and she expects the initiative to be certified by the Office of the

Lieutenant Governor this week, she said. “Over 60 percent of voters support this,” she said.

Daw said it's not clear the ballot measure's proposed tax increase provision will fully fund the expansion.

“And there's no guarantee Congress is going to stay at the 90/10 match,” he said, referring to the federal

cost-sharing formula provided for in the Affordable Care Act for states that expand their Medicaid program.

If voters approve the ballot measure in November, it could interfere with—if not obviate—a partial

Medicaid expansion (H.B. 472) approved by the Utah Legislature during its 2018 session which ended in

March, lawmakers said. That bill will expand Medicaid coverage to 100 percent of the FPL without raising

taxes, Rep. Jim Dunnigan (R) told Bloomberg Law.

AAHAM 18

The legislation directs the state to seek a Section 1115 waiver for the partial expansion with the Centers for

Medicare & Medicaid Services, but since H.B. 472 includes a work requirement for most Medicaid

enrollees, it's unclear whether Utah's request will be approved. Until recently, the CMS has denied state

requests to tie work or job search requirements to Medicaid eligibility, but in January, the CMS announced a

new policy to promote work requirements, and approved such a waiver request by Kentucky.

Dunnigan said the Utah approach per H.B. 472 provides for Medicaid enrollment for about 104,000 people

under 100 percent of the federal poverty level, while some 36,000 earning from 100 percent to 138 percent

would receive subsidies for private insurance acquired on the state's Obamacare health exchange. If the full

expansion ballot measure is approved, he said, “the people receiving coverage on the exchange will be

forced to give up their private sector commercial coverage and be rolled into Medicaid.”

He said some of those receiving subsidies on the exchange are paying only $25 a month to “get platinum

coverage.” Under the full expansion, “they'll be forced to give up those plans where the federal government

is paying for all that subsidy,” he said. Roughly 50 percent of hospitals in Utah don't accept Medicaid

coverage “because we reimburse them at such a low amount—50 cents on the dollar,” he said. That means

many of those now on the federal exchange could lose access to care, he said. Finally, members of the task

force were concerned that “there's no cap on enrollment and no cap on costs for the state,” he said. “Many of

the states that have expanded Medicaid are oversubscribed,” he said.

“Let's say instead of enrolling 171,000 we wind up with 271,000, and the state liability is $125 million,” he

said. “The funding will still only bring in $77 million. The ballot measure doesn't say it's a new tax to cover

whatever it costs, it just says it's a 0.15 percent tax increase.”

VIRGINIA

Medicaid Expansion Heads to Governor's Desk

Two bills to expand Medicaid to an additional estimated 300,000 to 400,000 low-income residents are

headed to Virginia Gov. Ralph Northam's (D) desk, and he is expected to sign both bills.

The Virginia Senate and House of Delegates approved, on a bipartisan basis, two budget bills May 30 with

provisions to expand Medicaid.

“This budget is the culmination of five years of effort to bring our taxpayer dollars home from Washington

and expand Medicaid,” Northam said in a press release May 30. “As a doctor, I'm so proud of the significant

step we've taken together to help Virginians get quality, affordable care.”

Northam also said he would review the budget and “act upon it as quickly as possible.”

The Senate approved a budget bill (H.B. 5001) that included provisions to expand Medicaid with certain

work and job training requirements and the companion spending plan (H.B. 5002) by a 23-17 vote. Four

Republicans joined the 19 Senate Democrats to approve those two bills.

The House of Delegates approved the budget bill 68-30 and the companion spending plan by 67-31. Twenty

Republicans joined 48 House Democrats to approve the budget bill and 19 Republicans joined to approve

the companion spending plan.

AAHAM 19

The expansion is expected to take effect Jan. 1.

Even though activists are overwhelmingly positive about the expansion, some are still concerned with the

work requirements for some individuals. “States asking for work requirements in Medicaid claim their

programs will help people find jobs and improve their financial security—and that, in turn, will improve

their health. There is no evidence to support such claims,” Families USA said in a fact sheet. “Work

requirements that have been added to the measure may keep people with disabilities and serious illnesses

from getting access to health care,” Virginia Organizing Chairperson Del McWhorter said in a press release.

“It doesn't make sense to add an unnecessary new layer of bureaucracy to health care funding.” The group is

dedicated to challenging injustice by empowering people in local communities to address issues that affect

the quality of their lives, according to its website.