Featured Health Business Daily Story, Dec. 6, 2016

Trump Victory Raises Big Questions For Medicaid Expansion, MA Insurers

Reprinted from MEDICARE ADVANTAGE NEWS, biweekly news and business strategies about Medicare Advantage plans, product design, marketing, enrollment, market expansions, CMS audits, and countless federal initiatives in MA and Medicaid managed care. Sign up for an $87 two-month trial subscription today.

By Lauren Flynn Kelly, Managing Editor
November 17, 2016Volume 22Issue 22

Donald Trump’s shocking victory on Nov. 8 will spell big changes for all facets of the health care industry, as the president-elect and congressional Republicans — which retained control of both the House and Senate — are expected to repeal much of the Affordable Care Act (ACA). And though many aspects of health reform remain up in the air, industry observers agree that the likely transition to block-granting in Medicaid will give states the flexibility they’ve long desired, while changes to the Medicare Advantage program — which could include payment reform and a shift to “premium support” — may take longer to materialize.

Trump’s health care reform proposal centered largely on “repeal and replace” of Obamacare, but in the days following his election to the presidency, public statements and interviews indicated a more piecemeal reform, with plans to keep certain provisions intact, such as banning pre-existing condition exclusions and allowing young adults to stay on their parents’ insurance coverage until age 26. And even if a full-repeal piece of legislation passes the House of Representatives on the first day of Trump’s presidency, the Senate’s a different question, points out Bruce Fried, a partner in Dentons’ health care practice.

Medicare Advantage News

Trump Victory Creates Unknowns

“The Republican majority is not sufficient to overcome a filibuster and I think we should assume that Democrats will mount a full and complete effort to thwart a repeal,” he tells MAN. “And if that is in fact what happens, the majority can still use the reconciliation process [whereby only 51 votes are needed instead of a straight-line vote when 60 are necessary], in which case there’s not an opportunity for a filibuster. But that will take some time.” Moreover, Republicans have reportedly not agreed on an Obamacare alternative.

One Trump campaign promise that has long been supported by Republicans is moving Medicaid from an entitlement program to a block-grant program, where states would receive a set amount of money from the federal government rather than have their funding matched. While this theoretically could replace Medicaid expansion by giving states more flexibility and allowing them to determine eligibility, sources interviewed by MAN declined to speculate on a plan about which very little is known.

“Because there is no detail and we’re a week into [Trump] positioning himself as president-elect, it’s hard for me to say what it means for Medicaid plans, or what it means for states,” remarks Jeff Myers, president and CEO of the Medicaid Health Plans of America (MHPA) trade group. “But MHPA has always been supportive of a Medicaid program that allows states to have flexibility to provide access and care to their most disadvantaged. States are different, they have different patient populations and the health systems in those states are different, so trying to make a nationalized system in Medicaid doesn’t make a lot of sense. And in this type of block-grant scenario, the states would have a significant amount of control over the program that many state governors believe they do not have today.”

Fate of Medicaid Expansion Is Unclear

“We don’t know what this means for the fate of Medicaid expansion,” weighs in Fried. “If anything, I expect Medicaid [managed care organizations] to have a significant growth opportunity here. The decision to contract with MCOs has been largely a state decision and if the states have additional control of the federal monies and in particular if those funds don’t have some of the standards for performance that the feds have required, I would very much expect the states to turn toward the health plans.”

And while states might be left to run their Medicaid programs as they see fit, block granting does raise some questions about accountability, he points out. “Will there be requirements that the grants that are made must be spent specifically for the provision of health care services to poor people?” he asks. “Will there be any standards set at the federal level to specify the eligibility, to specify benefits, to specify accountability and oversight?”

Michael Strazzella, practice group leader for federal government relations and co-head of the Washington, D.C., law office of Buchanan, Ingersoll & Rooney, points out that Trump is big on promoting “economic drivers in empowering consumers” and his intent is to grow the job market so that people “move off the Medicaid rolls.” As for Medicaid MCOs, “they’re going to have to work with their state Medicaid departments to ensure that there’s appropriate reimbursement for the services that they’re going to provide and to ensure that the services are there for the patients,” he suggests.

In a research note posted the day after the election, Stifel Co. securities analyst Tom Carroll questioned the long-term impact of ACA repeal on some publicly traded carriers with large Medicaid units. “A core component of ACA provided profitable growth to all MCOs but disproportionately to Medicaid-focused Molina [Healthcare, Inc.], Centene [Corp.] and WellCare [Health Plans, Inc.]. While plenty of high-acuity growth not tied to ACA is planned and will occur — the potential ACA ‘repeal’ likely overhangs these names for some time,” he wrote.

GOP Pushes Premium Support in MA

While Medicare reform wasn’t a focus of Trump during the campaign, House Speaker Paul Ryan (R) may be able to realize his vision for the Medicare program that was outlined in the “A Better Way” proposal released by Ryan and the GOP in June, suggested John Gorman, founder and executive chairman of Gorman Health Group, in a Nov. 10 blog post. The GOP health policy action plan included transforming the Medicare program to a “fully competitive market-based model” in which private plans and traditional fee-for-service Medicare plans would receive a Medicare premium-support payment and compete for enrollees via a newly created “Medicare Exchange” in 2024. But the GOP proposal “leaves up in the air what type of cuts Medicare benefits could face,” Gorman pointed out.

The GOP plan also included removing CMS’s Center for Medicare & Medicaid Innovation by 2020 and promoting more value-based insurance design in MA (see story, p. 3), which Fried suggests is “likely to get some traction.” And while there may not be immediate action on MA risk adjustment, policymakers might carefully consider altering the methodology in a way that recognizes the different “risk realities” for every beneficiary, he predicts.

“The plans have in recent years been fairly vocal that the risk adjustment methodology as applied by the Obama administration has had a consequence of penalizing plans in a way that they would argue is inappropriate,” says Fried. “Not always — many plans have done very well properly applying the risk adjustment methodology. The downside risk here is what plans have been quite concerned about, and I would expect that to be something the incoming administration and Congress will attend to.” The GOP proposal included freezing the administration’s ability to negatively adjust MA payments based on accurate coding.

Since the ACA introduced quality bonus payments for MA plans with strong star ratings, full repeal would mean elimination of the quality-based revenues which have been an important driver of quality improvement within MA, adds Melissa Smith, vice president of star ratings with Gorman Health Group. Nevertheless, the star-related bonuses would likely be reinstated in the event of full repeal, and if Trump repeals only portions of the ACA, quality bonuses would be one of the components left intact, she predicts.

View the Gorman post at http://tinyurl.com/zstebcb.

© 2016 by Atlantic Information Services, Inc. All Rights Reserved.

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