Four healthcare policy changes to watch in 2018

December 14, 2017

Insiders unmask what policy actions will continue and what will develop in the next year.

Despite multiple efforts of the Trump Administration and many Republicans in the House and Senate to repeal and replace the ACA in 2017, the ACA is still the law of the land. Nonetheless, healthcare experts predict that repeal efforts will continue and other healthcare-related policy changes will develop in the new year.

Fisher“There will be many opportunities for the GOP to continue pursuing repeal efforts; changes can almost always be tacked onto or incorporated into another bill,” says Matthew Fisher, Esq., partner and chair of the health law group at Mirick O’Connell, a full-service law firm.

Those efforts will continue to be challenged, however, perhaps even more strongly than ever, by Democrats, who saw promise from the November 2017 elections. They might be emboldened to further fight efforts to repeal any portion of the ACA, Fisher says. “While it is hard to fathom that the Democrats have not been utilizing every tool to fight GOP efforts on the repeal front, if Democrats believe that the electorate is behind their efforts, then Democrats will continue using every tactic at their disposal.”

But the November election results could also push the GOP to fight harder to make changes to the ACA, as the GOP might interpret the results as a sign of voters being unhappy with a lack of action, Fisher says. “While controlling both chambers of Congress and the presidency, no major legislation was enacted. As such, the GOP may feel even more pressure to do something. Ultimately, the outcome from the election likely means that stalemate will continue to rule in Washington.”

Past experiences with failed efforts may also impact strategy going forward. “Republicans might use reconciliation to remove the practical 60-vote threshold in the Senate and try to cut deals that make provisions palatable to secure at least 50 votes,” Fisher says.

Here are four other policy developments to watch in 2018.

1. Reinsurance payments to insurers

Trump eliminated cost sharing reduction (CSR) payments on October 12. “When these payments to insurers are cut, insurers typically increase premiums to cover this loss,” says Rosemarie Day, president, Day Health Strategies, a healthcare strategy and transformation consultancy. “For 2018, insurers have mostly loaded these premium increases onto silver plans. As the silver plans’ premiums increase, the individual Advance Premium Tax Credit (APTC) from the federal government will also increase because APTCs are based on the second-lowest cost Silver level plan. Since the APTCs increase as rates increase, individuals that receive subsidies are unaffected by the rate increases.”

Interestingly, Day says, while the federal government will not have to spend money on CSR payments to insurers anymore, it will actually end up spending equal or more money because APTCs increase. “In the end, the insurer is made whole by increasing rates, the subsidized are buffered by federal government subsides, and the unsubsidized get hammered by rate increases,” she concludes.

However, a new bill could change all this. Introduced on October 17 by Senators Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.), the Alexander-Murray bill would reinstate CSR payments. “CSR payments would go to insurers and then they could lower rates, which would lower costs of premiums for the 2019 plan year,” Day says.

Next: Payment changes

 

 

2.      Payment and service delivery models

Another area to watch in 2018 is the direction of the Center for Medicare & Medicaid Innovation, which is tasked with supporting the development and testing of innovative healthcare payment and service delivery models. In September, CMS Administrator Seema Verma released a statement that reinforced CMS’ previous priority, which was a focus on the shift to value-based care. However, she also said a goal was to increase flexibility and make more programs voluntary.

Verma said that the goal of flexibility could be achieved through more state innovation waivers through Section 1332 of the ACA. These waivers allow states to pursue innovative strategies for providing their residents with access to high quality, affordable health insurance while retaining basic protections of the ACA. “While the federal government has approved a few such waivers that create reinsurance programs, the extent of their acceptance of wider ranging and inventive waivers is yet to be fully seen,” Day says. A number of states are in various stages of the process of developing 1332 waivers. Under a state reinsurance program, insurers are typically reimbursed for claims incurred by covered individuals for specified conditions or those that exceed a predetermined threshold, e.g., $50,000 to $250,000, as a way to allow individuals with pre-existing conditions to enroll in the same plans, receive the same coverage, and pay the same premiums as individuals without pre-existing conditions while reducing the adverse financial impact on insurers.

By approving 1332 waivers in Alaska, Oregon, and Minnesota, CMS has signaled that it will accept state reinsurance programs. “These reinsurance programs could lower rates in the individual marketplace and help mitigate the negative effects of discontinuing CSR payments because these states will have an additional pool of money to offset high-cost consumers,” Day says.

Other states looking at submitting 1332 waivers could see effects sooner if the Alexander-Murray bill passes. “One of the bill’s provisions is to shorten the timeline that the federal government has to review a waiver from 180 days to 90 days,” Day says. “Waivers that propose programs that have been approved for other states will have an even further expedited review process.”

Next: Medicaid expansion changes

 

 

3. Medicaid expansion efforts

Another state-level topic to watch in 2018 is Medicaid expansion efforts. “The 2017 election proved that a ballot initiative to expand Medicaid in a red state can be successful,” Day says. Maine passed such a ballot initiative by a sizable margin. Additionally, other Republican states have expanded Medicaid. Some states such as Utah and Idaho are looking into ballot initiatives for the next election.

Currently, 18 states have not expanded Medicaid. If these states did so, 4.5 million uninsured adults would be eligible for Medicaid, Day says. This would allow more people to benefit from the ACA, which could make it harder to repeal.

4. Easing Stark Law restrictions

McCanlessThe introduction of bipartisan legislation on November 1 in the House and Senate designed to expand eligibility for waivers to allow providers to better coordinate care in ways currently prohibited by Medicare’s Stark Law, which restricts a provider from referring patients to an entity that the provider has a financial relationship with, is another possible area of legislative action. Cate McCanless, policy director, Brownstein Hyatt Farber Schreck, a law and lobbying firm, reports that CMS, along with the House Ways and Means and Senate Finance committees, has indicated interest in more permanent relief from the restrictions of the Stark Law.

“The legislation would open the door for providers to better align financial incentives to coordinate care along the care episode that achieves both positive patient outcomes and financial savings in a value-based payment model,” McCanless says. “Its introduction signals interest by the Hill to provide CMS with the regulatory flexibility needed to expand exceptions to the Stark Law that have precluded care coordination efforts in the Medicare program.”

With healthcare reform hitting lots of hurdles this year, it will be interesting to see how legislation in 2018 unfolds.