Legislative Update 2018 Outlook

Transcription

1 Legislative Update 2018 Outlook HFMA February 15, 2018 Jim Ricciuti February 20181

2 Agenda Where Are We Now? Review of 2017 Where Are We Going? Look Ahead at 2018 State Issues Elections 2

3 Where Are We Now? Review of

4 Tax Reform Was Biggest Achievement for President and Congress in 2017 Top 10 priorities for President Trump and Congressional Republicans Repeal and Replace the ACA Only repealed the ACA individual mandate Administration stopped paying CSR subsidies Cut taxes for corps. and middle class Corporate rate cut from 35% to 21% Temporarily cut middle income taxes and also removed some important deductions Repeal Obama-era regulations Passed 16 Congressional Review Act bills which repeal regulations Trump s cabinet stalled or reversed many rules Appoint conservative judges Neil Gorsuch was confirmed to Supreme Court Senate approved many judges for life appointments Pass $1 trillion infrastructure package No legislative proposals for infrastructure Build a wall along the Mexican border Prototypes have been ordered but not funded or approved by Congress Increase fossil fuel production The Dakota and Keystone pipelines were approved The EPA has withdrawn some rules on fossil fuels Institute conservative social policy 20-week abortion ban passed House but not Senate Trump rolled back the ACA birth control mandate, but it is stalled in court Source: National Journal Increase funding for the military Appropriations have stalled in the Senate Prioritize charter over public schools While 2018 appropriations are not finished, the current plan does not include charter school funding 4

5 Congress Passed Significant Corporate and Health Tax Relief: 2017 January 2018 Corporate Tax Reform: Tax Cuts and Jobs Act reduced federal corporate income tax rate from 35% to 21%, effective in 2018 Bill also repealed the individual mandate penalty starting in 2019 Health Insurance Tax (HIT): Congress suspended the HIT for 2019, but left the 2018 HIT in place as part of a January deal to re-open the government Cadillac Tax: Congress further delayed the Cadillac Tax on high-value health insurance plans from 2020 to 2022 as part of a January deal to re-open the government Medical Device Tax: The ACA tax on certain medical devices and equipment was suspended for 2018 and 2019 as part of the January government funding deal 5

6 Congress Failed to Enact Repeal & Replace, But There Have Been Significant Regulatory Changes to ACA in the Last Year Exchanges Administration stopped cost sharing reduction funding Other Exchange regulatory changes: Shortened open enrollment period and cut back on outreach Eliminated standardized plans Gave states more flexibility to regulate their own markets Deferred to state review of premium rates Granted waivers for AK, MN, and OR for reinsurance Mandates and Other Commercial Coverage Executive Order to encourage alternative sources of coverage: Association Health Plans (Proposed rule released) Short-term Policies (Proposed rule forthcoming) Use of HRA/HSA Funds to buy individual coverage (No rule yet) Medicaid Issued guidance to states on acceptable work requirements and approved Kentucky waiver Streamlined process for states to get ACA and Medicaid waivers 6

7 Where Are We Going? Look Ahead at 2018 What s Different Year 2 of Presidency Election Year Democratic Wave? Congressional Health Care Fatigue Emphasis on regulation vs. major health care legislation New HHS Secretary Azar 7

8 Early 2018 Congressional Priorities and Expected Timing for Consideration February March DACA Immigration 2018 Spending Bills Exchange stabilization/cost sharing reduction funding February 8 End of short-term C.R. that keeps government funded March 5 DACA recipients begin losing protected status March 31 Expected 2018 omnibus spending bill after C.R. extensions 8

9 BiPartisan Budget Act of 2018 Long-term funding setting spending caps for fiscal years 2018 and 2019 above sequestration levels. Also, lifts the federal government s debt limit through March 1, Contains a range of important health care provisions for Medicare, as well as additional authorization and funding for the Children s Health Insurance Program (CHIP), and opioid abuse and behavioral health treatment. CHIP: Provides an additional four years of authorization for the Children s Health Insurance Program, which is now authorized through FY 2027, as well as extension of the pediatric quality measures and outreach and enrollment programs. $6 billion in Additional Funding for Opioid Abuse and Behavioral Health: Directs appropriators to allocate a total of $6 billion $3 billion for FY18 and $3 billion for FY19 to combat the substance abuse epidemic, including enhanced state grants (with additional assistance for those states with the highest mortality rates and tribes), public prevention programs, and law enforcement activities related to substance abuse and mental health programs. Medicare Extenders: Funds State Health Insurance Programs (SHIPs), Area Agencies on Aging, and Aging and Disability Resource Centers for 2018 and

10 CHRONIC Care Act o Permanent Authorization of MA Special Needs Plans (SNPs): Permanently authorizes SNPs that meet certain requirements. Increases the integration of Medicare and Medicaid services provided by Dual-Eligible SNPs and requires them to work with State Medicaid programs to provide behavioral health services or long-term services and supports (LTSS). o Expands Value-Based Insurance Design (VBID) Model to All 50 States: Expands the testing of the Centers for Medicare and Medicaid Innovation (CMMI) VBID Model to allow an MA plan in any state to participate in the model by Aetna is currently participating in this pilot in Pennsylvania with a focus on members with chronic heart failure (CHF). This will allow us to consider all of our markets as we move forward in future years. o Expands Supplemental Benefits: Allows an MA plan to offer a wider array of supplemental benefits to chronically ill enrollees beginning in Supplemental benefits would be defined as those that have a reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee and would not be limited to primarily health-related services. This provision will help us better address our members social determinates of health, so where it would be helpful we could provide services such as meals, transportation, home repair, etc. o Provides stand-alone Prescription Drug Plans (PDPs) with Part A and B Claims Data: Provides PDPs with Parts A and B claims data starting in 2020 for the purposes of optimizing therapeutic outcomes through improved medication use and improving care coordination. o Increases the Use of Telehealth Services 10

11 Protecting Seniors Access To Medicare Act o IPAB: Permanently repeals the Independent Payment Advisory Board (IPAB). This is a program created by the Affordable Care Act that threatened to implement across-the-board spending cuts to the Medicare program with very minimal Congressional oversight. o Stars Program: Prevents the artificial inflation of star ratings after the consolidation of MA plans. Directs CMS to calculate a weighted average of star ratings across the consolidated contracts to more accurately reflect quality and mitigate unwarranted quality bonus payments, starting in This will help move the MA program in a direction where consumers will have greater ability to understand the quality of care and the performance of MA plans in their local area. o Biosimilars: Requires manufacturers of biosimilars to provide a discount on drugs purchased by beneficiaries in the coverage gap, reduces the cost-sharing and removes the incentive to use a brand reference biologic over the biosimilar. o Closes Donut Hole: Closes the Part D coverage gap in 2019, instead of 2020, reducing the beneficiary contribution to 25 percent. In addition, it increases the percentage that a drug manufacturer must discount the cost of prescriptions in this phase from 50 percent under current law to 70 percent, with the plan responsible for 5 percent, starting in 2019, thus reducing federal spending. The full manufacturer discount would continue to count toward beneficiary true out of pocket cost as under current law. 11

12 Technical Amendments to MACRA and Social Impact Partnerships to Pay for Results Act Technical Amendments to MACRA: This section modifies the Merit-based Incentive Payment System (MIPS) that was established as part of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) to replace the three existing physician payment linked quality reporting programs in Medicare Part B. o Limits payment adjustments to services and excludes Part B drugs. Currently, Part B drugs are included and may result in drastic payment fluctuations for certain specialties. o Allows CMS to continue to reduce the weight of the cost metrics in the overall performance score through 2021 and prohibits CMS from increasing the weight beyond 30 percent in perpetuity. Provider groups have lobbied for this and other policies that would make it easier to achieve high MIPS scores. Social Impact Partnerships to Pay for Results Act: The Social Impact Partnership Act will support innovative public-private partnerships to address critical social and public health challenges. 12

13 2018 Health Policy Priorities Exchange Stabilization Legislation Association Health Plans and Short Term Limited Duration Plans Medicaid Waivers With mid-term elections making legislation difficult, expect most policymaking to occur through Administration actions Prescription Drug Costs Value Based Care and Implementing MACRA Medicare Advantage Flexibility New HHS Secretary Azar s priorities include drug costs, value based care, and opioids 13 13

14 However, the Opioid Crisis Overshadows Other Health Priorities for Federal and State Policymakers 63,600 people died from a drug overdose in 2016 up 21% from 2015 and 3 times the rate in If downward trend in life expectancy continues in 2017, it would be first 3-year fall since outbreak of Spanish flu 100 years ago 14

15 Individual Exchange Enrollment Relatively Stable over Last Several Years 14,000 TOTAL QHP ENROLLMENT FOR 2016, 2017, AND 2018, IN THOUSANDS 12,000 10,000 8,000 11,100 2,700 10,330 2,630 11,612 2,868 State-Based Exchanges 6,000 4,000 8,400 7,700 8,744 2,000 0 March 2016 Effectuated Enrollment March 2017 Effectuated Enrollment Total 2018 OEP Enrollment Note: 2018 effectuated enrollment will be less than the total shown. Updated: Avalere State Reform 360, January 18, Note: 2018 OEP for the FFE ended on December 15, 2017, but many SBEs have later end dates. FFE figures are based on the CMS Final Weekly Enrollment Snapshot for 2018 Open Enrollment Period, December 28, SBE figures based on the latest information available from state press releases and news articles Effectuated Enrollment based on CMS, 2017 Effectuated Enrollment Snapshot, June 12, Effectuated Enrollment based on CMS, 2016 Effectuated Enrollment Snapshot June 30, QHP: Qualified Health Plan; SBE: State-Based Exchange; FFE: Federally-Facilitated Exchange; OEP: Open Enrollment Period 15

16 AHP Proposed Regulation Proposed Rule with comments due 3/5/18. Potential impact on small group, individual and PEO lines of business. The rule: Expands the commonality of interest rule to make it easier for small firms to form AHPs o Allows national associations of firms in the same industry o Allows local associations of firms in the same state or metropolitan area Includes consumer non-discrimination rules that require plans to rate the whole group together Allows self-employed individuals to join an AHP States can continue to regulate self-funded AHPs Request for Information for self-funded AHPs These improvements stand to open health insurance coverage for millions of Americans and their families by making it more affordable for thousands of small businesses and sole proprietors. By joining together, employers may reduce administrative costs through economies of scale, strengthen their bargaining position to obtain more favorable deals, enhance their ability to self-insure, and offer a wider array of insurance options. Department of Labor Press Release 1/4/

17 Additional Expected Regulations Implementing Executive Order Short-Term Limited Duration Insurance (STLDI) regulation expected from HHS Not subject to ACA requirements, but must be filed and approved at the state level Neither guaranteed issue nor guaranteed renewable Obama Administration severely limited to avoid undermining the ACA-compliant individual market Executive Order directs agencies to extend policies potentially from current 3-month limit to 12 months and allow renewals Health Reimbursement Accounts regulation expected from Treasury/IRS Executive Order directs agencies to expand to large employers the provision in recent legislation that allows small employers to use pre-tax employer dollars to be used to buy health insurance in the individual market 17

18 State Issues 18

19 Taxes & Assessments State fiscal (budget and tax) health issues lead. State reaction to Congressional Tax reform (TCJA) requires states to modify corporate income tax/policies and incent states impacted by the federal SALT cap to offset the impact. Revised guarantee association assessments addressing long-term care solvency issues present both opportunity and threat as do any MMC financing reforms. Assessments to fund market stabilization efforts (high risk pool assessment). 1919

20 Financing Consumer Market Stabilization; STLDI & AHP In the absence of comprehensive Congressional reform states exploring state based stabilization through federal waivers, with reinsurance programs being the primary focus. Additional regulatory guidance on President Trump s Executive Order will create additional state legislative reactions impacting market entry product design, especially with regard to short term limited duration plans and small group protections to counter Association Health Plans. Democratic controlled states will continue to protect the ACA at a state level while also embracing stabilization waivers. Some insurance plans remaining on exchange seeking financial assistance through rating flexibility or reinsurance pool market assessments given the changes to CSR payments and their continued exposure in the marketplaces.. Patterns and uniformity in successful waivers will likely lead to increased legislative activity regardless of party control Aetna Inc. 20

21 Network and Consumer Focus Issues Network and Balance Billing Several states continue to debate network adequacy. Some focus on mental health provider adequacy in particular. Other states continue to debate balance billing or introduce new prohibitions on provider surprise billing. Several states continue to hold hearings or investigate air ambulance balance billing and related OON ambulatory charges. Consumer Focused Issues Prior authorization, step therapy and other management tools continue to be debated in the states Aetna Inc. 21

22 Medicaid, Opioids/BH and Pharmacy Issues Medicaid Several states, eager to reform Medicaid, taking up legislation to amend eligibility, provider incentives, managed care programs and the use of data (APCD and HIE) to enhance their programs. Budget pressures on rates, pharmacy carve outs and transparency legislation related to Medicaid managed care. Opioid and Behavioral Healthcare States continue to introduce and debate legislation aimed at the opioid crisis and mental health and behavioral health access. More than 500 bills related to opioids were introduced in states last year. Issues ranging from PDMP, Naloxone, prescribing limits, pain clinics, and training and education. Pharmacy The high costs of pharmacy benefits continue to be debated in several states Transparency, PBM focused bills, generic pricing and formulary management bills will carried over into 2018 with new introductions Aetna Inc. 22

23 Key Illinois Legislation SB 1773 Rep. Harris / Rep. Feingenholtz Hospital Assessment HB Rep. Harris Imposes a 1% assessment on health claims HB # - TBD Insurance Guaranty fund assessment HB Rep. Halpin Call center penalties and restrictions SB President Cullerton Network adequacy (shell bill) 23

24 Key Illinois Legislation MANDATES HB Rep. Fine Frozen Formulary HB Rep. Gabel Infertility coverage HB 68- Leader Lang Mental Health parity 24

25 Elections 25

26 2018 House Election Likely to Be Referendum on Trump Administration House of Representatives Democrats need to win at least 24 Republican seats to gain back control of the House in 2018 The President s party has lost House seats in 35 out of the past 38 (92%) midterm elections since the end of the Civil War. Average loss of seats is around 32, 36 if President has less than a 50% approval rating Current party control of the 115 th Congress ( ) House makeup by Cook Partisan Vote Index Democratic (D+5 or greater) Swing (D+5 to R+5) Republican (R+5 or greater) Republicans Democrats Vacancies* Sources: The Cook Political Report, * PA-18, MI-13, and AZ Only 72 swing districts 92 fewer than in

27 Senate Democrats are Over-exposed Compared to Republicans in 2018 Senate Elections U.S. Senate Democrats need to win all of their incumbent seats and pick up 2 Republican Senate seats to gain control of the chamber Since the 17th Amendment on direct election of senators went into effect in 1913, the president s party has lost Senate seats in 19 out of 26 (73%) of midterm elections. In 2018, 10 out of the 26 Democrats facing reelection are in states that Trump won in 2016 (FL, IN, MI, MO,MT, ND, PA, OH, WI, WV he also won one congressional district in ME) Senate control vs. seats facing an election in 2018 Democrats Republicans Independents Control of the 115 th Senate ( ) Seats facing an election in * * 8 Sources: The Cook Political Report, *Two independents caucus with Democrats Republican Senate Majority *Two independents that caucus with Democrats will be up for re-election in

28 36 Gubernatorial Elections 2018 Republicans Defending More Territory WA 2018 gubernatorial races by incumbent and status Democrat Open (4) Democrat Incumbent (5) GOP Open (16) GOP Incumbent (10) Independent Incumbent (1) No Election (14) CA AK OR NV ID AZ UT MT WY NM CO ND SD NE TX KS OK MN IA MO AR LA WI IL MS IN TN MI AL KY VT and NH have two-year terms OH GA WV SC NC PA VA MD NY DE VT NJ NH MA ME RI CT Democrats had a simple objective in 2017 to keep them on track for gains in 2018: --Sweep the two gubernatorial contests being held. They did so, holding Virginia by a bigger-than-expected margin and capturing New Jersey from Republicans saw no net change to the number of governorships controlled by the two parties: --While Democrats picked up New Jersey, Gov. Jim Justice of West Virginia switched parties and is now a Republican. So the Republicans continue to control 33 of the 50 governorships, while Democrats hold 16 and an independent, Gov. Bill Walker of Alaska, holds one. Sources: The Cook Political Report, FL 2018 gubernatorial elections will be very important because elected governors will be in office through 2020 redistricting 28

29 Aetna on the Issues 29