By Marissa Evans, CQ Roll Call

June 28, 2016 -- Kentucky officials are preparing to formally ask the Centers for Medicare and Medicaid Services (CMS) later this summer for permission to reimagine the state's Medicaid expansion efforts. But policy experts say parts of the request are nonstarters with the Obama administration.

On Wednesday, the Kentucky Cabinet for Health and Family Services will hold a public hearing on Republican Kentucky Gov. Matt Bevin's request to retool how the state offers coverage for 400,000 low-income residents. After six months of working on the federal waiver application, Bevin revealed it on June 22. An initial hearing was held Monday and the final scheduled hearing will be on July 6.

"We have given the preparation of this proposed waiver the highest priority due to the health challenges confronting the Commonwealth and the unsustainability of the Medicaid program as currently constructed," Bevin said in a news release. "This plan offers common sense strategies to help our citizens gain employment or prepare for employment through community engagement, including volunteer activities and job training programs."

While Bevin has made good on his campaign promise to scrap Kynect, the state's exchange website, he inched back from campaign trail rhetoric last year about getting rid of Medicaid expansion. The waiver proposal has been a long-awaited item for Kentucky advocates and other states watching to see how Bevin would put a more conservative mark on the program.

Under an executive order from former Democratic Kentucky Gov. Steve Beshear, the state expanded eligibility for the program in 2014. The health law allowed states to expand Medicaid eligibility to individuals with incomes up to 138 percent of the poverty level. By 2020, states will have to cover 10 percent of the cost. Thirty-one states and the District of Columbia have taken up the offer.

The Bevin administration proposes to change the program in several ways. The changes include requiring beneficiaries to work or volunteer and pay nominal premiums. The plan also would allow consumers to use health savings accounts and receive dental and vision care if they practice specific healthy habits. Bevin also proposes improved access to substance abuse and mental health treatment.

If beneficiaries do not make payments on time or properly fill out eligibility redetermination paperwork, they would not be able to receive coverage for six months. Consumers who want to get back into the program would have to take a financial or health literacy class and pay back all of their missed payments. Those proposals, along with the work requirement, are unlikely to win support from the Obama administration.

The state made headlines in recent years over its success in implementing the federal health care law (PL 111-148 , PL 111-152). The state saw its uninsured rate drop 8.4 percentage points between 2013 and 2014, according to a Kaiser Family Foundation report. Enrollment in Medicaid and the Children's Health Insurance Program grew by 87 percent.

Kentucky's success with the health law could make it difficult to make changes to the Medicaid expansion, said Adam Searing, an associate professor of practice for the Georgetown University Center for Children and Families in an interview.

"This isn't a big surprise but really Kentucky has a little bit higher bar to clear because they have such a successful expansion already," Searing said. "That doesn't mean a state cannot come and negotiate changes and see how they can do even better, but it's a high bar."

Even though Kentucky seemed to pull ideas for the waiver from states like Indiana, Iowa and Michigan, the state is trying to create a program that works for its residents, said Trish Riley, executive director for the National Academy of State Health Policy. She said while CMS officials have not favored work requirements, Kentucky's approach in requiring beneficiaries to volunteer shows officials are trying new things.

"We're at an ideological crossroads," Riley said. "Many of these governors still connect [Medicaid] to welfare and talk about able-bodied people and try to do more than improve health as a condition of participation whereas other people say this is an entitlement program."

July 1, 2016 -- Nearly all of the remaining health insurance co-ops set up under the health overhaul owe the federal government millions of dollars under the law's risk adjustment program, according to new data released Thursday. Many of those and other small plans have lobbied against the program's rules, calling them unfair.

One co-op, Evergreen Health in Maryland, filed a lawsuit earlier this month seeking to block what it said would be a fee as high as $22 million under the program. Its final tab was $24.2 million. Other co-ops owe more: Health Republic of New Jersey owes $46.3 million. Illinois' Land of Lincoln plan owes $31.8 million. Connecticut's HealthyCT and New Mexico's Health Connections owe nearly $13.4 million and $14.5 million, respectively.

Just one co-op will receive payments under the program: Montana Health Cooperative, which will get about $6.1 million. Massachusetts conducts its own state-wide risk adjustment plan. Its co-op also will owe money.

"It's an outrageous sum. But if you look at the other co-ops and other new entrants like the Oscars of the world, almost all of them got hit fairly significantly to very significantly," said Peter Beilenson, president and CEO of Evergreen Health.

Most of the funds Evergreen pays in would go to CareFirst, the co-op's biggest competitor in Maryland, which is set to get about $29 million back from the government under the program. The sum will account for about 28 percent of Evergreen's revenue, but only a fraction of a percent of CareFirst's, he said.

Beilenson said he plans to expand his lawsuit to block the charge later on Thursday. He said more than 20 other companies, some of which are co-ops, have asked for more information about Evergreen's lawsuit. Many of those are also being charged significant sums.

The charges could also lead to more closures for the co-ops. In the past two years, more than a dozen of the law's 24 original co-ops have shuttered. The risk adjustment program reallocates funds from insurers with healthier customers to those with sicker customers and was set up as a way to stabilize the fledgling insurance markets created under the health law (PL 111-148, PL 111-152).

Larger insurers and those who saw profits in the program's first year have said the formula was laid out far in advance and that changes would increase uncertainty in an already uncertain market.

One plan, Blue Cross Blue Shield of Florida, will get a payout of more than $350 million. Several others, including Blues plans in Michigan, North Carolina and Pennsylvania, will get more than $80 million each.

Federal officials have said they plan to adjust the program in later years, through future rulemaking. They emphasize that an insurer's size does not predict their risk adjustment results; rather, their claims experience is more predictive.

"We continue to work with companies and states to refine the program so that risk adjustment works for both insurance companies and consumers shopping for affordable coverage," said Centers for Medicare and Medicaid Services spokesman Aaron Albright in a statement.

The report also detailed insurers' payments under a reinsurance program of the 2010 law. Nearly 500 insurers will receive about $7.8 billion in payments for 2015. That program, unlike risk adjustment, is set to expire after 2016.

By Erin Mershon, CQ Roll Call

June 29, 2016 -- The Obama administration will outline for insurance companies how much they will owe or be owed under two programs designed to help stabilize the fledgling insurance marketplaces set up in the health law. The results will help determine whether and how the companies participate in those marketplaces.

Insurance companies will be watching to see how they fared in relation to other insurers in each market, which factors into the payment adjustments they get or owe under the so-called risk adjustment and reinsurance programs. For small insurers, unexpectedly large payouts could mean bankruptcy. Large insurers, too, will use the new information to determine whether to enter or exit certain markets or whether to raise premiums to cover unexpected costs, two industry sources said.

Stabilizing the insurance marketplace is a huge priority for the administration as it looks to improve the consumer experience on the exchanges set up under the federal health overhaul (PL 111-148, PL 111-152). Thursday's report will shed new light on the early results of ongoing efforts to improve the risk pool and to encourage insurers to continue participating in the exchanges, which is aimed at increasing enrollment and keeping premium increases to a minimum.

"These risk adjustment numbers are key to insurers' financial results," said Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation. "Insurers don't know how well they're doing financially until they find out how much they owe into risk adjustment or get back. It's a big wild card."

The risk adjustment and reinsurance programs are two of three programs aimed at stabilizing premiums and are somewhat less controversial than the third, the law's risk corridor program. Under risk adjustment, the only program that won't expire after this year, money is reallocated from insurers with healthier customers to those who wound up with sicker customers. It aims to reduce incentives for insurers to avoid unhealthy customers.

The formula has been controversial, especially among some small and new insurers who had to pay more than they expected under its rules.  Some small insurers and some co-ops established by the law, including Evergreen Health in Maryland, argued that the rules unfairly penalize small and new insurance companies who have less experience with similar risk adjustment programs, like those used in the Medicare Advantage program.

The Centers for Medicare and Medicaid Services (CMS) has said it isn't fair to adjust the formula in the middle of the program, but released a white paper in March detailing some potential changes to explore in the future.

The report also will detail requests and payments under the law's reinsurance program, which helps offset especially high medical costs and which is entirely funded by the insurance companies themselves. Actuaries have calculated that the program is responsible for about 4 to 6 percent of premium costs. Its expiration in 2017 could drive increased premiums.

CMS said earlier this month it will pay 55 percent of reinsurance claims, rather than the 50 percent required by the health law, thanks in part to leftover funds from last year's reinsurance program.

The program has become a hot-button issue on Capitol Hill. Republicans on the Energy and Commerce Committee have threatened to subpoena the administration as part of an ongoing investigation into the program. Republicans allege the administration unlawfully diverted payments meant for the U.S. Treasury to insurance companies. The health law requires some of the funds for the program go to the Treasury, but the administration announced in 2014 it would prioritize payments to insurers and only allocate funds to the Treasury once insurers were paid in full.

The administration will release more information on risk corridor payments for the 2015 plan year later this summer, the industry sources said.

By Kerry Young, CQ Roll Call

June 28, 2016 -- Senate Democrats on Tuesday called for a broader look at how to address rising drug costs, while agreeing with GOP colleagues on concerns about a pending Medicare test of alternative payment for medicines administered in doctors' offices.

Members of both parties questioned the nearly nationwide scope of the proposed Part B drug model at a Senate Finance hearing, at which Patrick Conway, the chief medical officer for the Centers for Medicare and Medicaid Services (CMS), was the only witness. The lawmakers also expressed concerns that people living in rural areas might lose access to medicines, with doctors finding it difficult to afford to provide certain drugs under the plan.

Sen. Debbie Stabenow, D-Mich., asked whether these efforts should be focused more on what she termed "the elephant in the room," Medicare's $90 billion in annual expenses in the Part D pharmacy program. Medicare's proposed test focuses instead on the $22 billion in drugs infused and otherwise administered in doctors' offices annually that are covered by Medicare's Part B program. Lawmakers should schedule a hearing to analyze the costs of the insurer-run Part D program, Stabenow said.

Ron Wyden of Oregon, the ranking Democrat on the Senate Finance Committee, pointed out that even with Medicare paying much of the tab, many of the nation's senior citizens struggle to pay for their medicines. Some newer drugs can leave senior citizens and people with disabilities enrolled in Medicare on the hook for annual costs of $9,000 or more, according to a 2015 Government Accountability Office report.

"The fact is, seniors are getting pounded by drug costs," Wyden said.  "And in my view, there is an enormous amount of work that has to be done to guarantee that seniors have affordable access to the medications they need."

At the hearing, Republicans stuck to the topic at hand, the details of the proposed Medicare Part B test. Senate Finance Chairman Orrin G. Hatch, R-Utah, noted that there is significant opposition to the test, including from many medical groups and lawmakers. Sen. Pat Roberts, R-Kan., repeated a common GOP request and asked Conway at the hearing to withdraw the proposal.

In the CMS project, some doctors would continue with the current reimbursement of an about 4.3 percent premium to the reported average sales price for drugs. Others would get a premium of less than 1 percent along with a new add-on payment of $16.53, according to the American Society of Clinical Oncology's estimate of the sequester's effect on the new payment. Maryland would be exempted from this Part B test due to other work that the state already is doing with Medicare on alternative forms of payment.

Sen. Richard M. Burr, R-N.C., pressed Conway about whether CMS intended to proceed with this model, asking him to answer "yes or no."

"We are evaluating the public comments now and intend to take those comments into account in the finalized rule," Conway replied.

The test proposal has angered medical groups, as doctors would get paid less in some cases for the drugs they administer in their offices, particularly for costly cancer medicines and treatments for rheumatoid arthritis. But CMS also has support from the senior advocacy group AARP and some labor unions, including the AFL-CIO and the United Auto Workers, also known as the UAW. In a Monday letter, they joined with about two dozen groups to ask Senate Finance to allow the test to move forward, while making sure steps are taken to preserve people's access to medications, particularly in rural areas. The groups described the test as a way to aid both in efforts to tie Medicare payments to higher-quality care and to help people now struggling to pay for drugs.

"Prohibiting the Part B Drug Payment Model from moving forward would halt progress in transforming how the Medicare program pays for care and perpetuate a system that allows those with less to go without needed medicines," the groups said in their letter to the Senate Finance Committee.

Congress likely will face continued demands for actions to rein in the rising costs of drugs, regardless of what happens with the Part B drug model.

New Orleans-based Ochsner Health System called this proposal "a very rough and blunt approach to changing physician prescribing behavior that is not well designed for broad application across individual patients, particularly for the treatment of cancer." In its comment to CMS on the model, though, Ochsner also said it "certainly agrees that the rising cost of drugs is a major problem affecting Part B spending and increased expenditures across the entire Medicare program and health care system."

Mark Beckstrom, Ochsner's director of government relations, suggested in the comment "that CMS adopt an array of strategies designed to increase transparency and competition in drug pricing, foster demonstration of value in drug approval, coverage, and pricing decisions, and seek enhanced authority provided by Congress for additional tools to address the rising cost of drugs."

By Kerry Young, CQ Roll Call

June 27, 2016 -- A November deadline for creating a new Medicare payment system for doctors may leave federal officials little time to significantly change a draft proposal, predicted an Association of American Medical Colleges (AAMC) official.

The Centers for Medicare and Medicaid Services (CMS) might ease some of the proposed reporting requirements for doctors, but may leave much of its initial proposal intact, said Gayle Lee, director of physician payment policy for the AAMC, in an interview. The agency is required by law to finalize the rules by November if officials intend to implement them when the new payment year begins in January.

CMS unveiled the proposed rules in April. More than 3,000 responses were submitted before a Monday deadline, according to CMS.

"I think there will be tinkering, but the basics of what we've seen will be what they are finalizing," Lee speculated.

Many physicians appealed to the agency to shorten the reporting period for doctors who will be covered by the most common reimbursement approach, the new merit-based incentive payment system. Instead of looking at a full year of data from doctors, a six-month period could be used, she said.

"It's possible CMS may be open to that, although there are concerns with the reliability of quality measures when you reduce the length of the performance period to a shorter period of time," she said.

The rule will carry out the mandate set in last year's overhaul of physician pay (PL 114-10), known as the Medicare Access and CHIP Reauthorization Act. A key concern with MACRA has been helping doctors in small practices adapt to the new reporting requirements. Groups representing doctors have sought to persuade CMS to reconsider the standards for qualifying for alternative payment models, which may prove more profitable in the long term for doctors.

The American College of Rheumatology on Friday told CMS that few of the current alternative payment models work for their members, who treat severe cases of arthritis.

"Workable alternatives should be developed with attention to facilitating participation of small and solo practices," Joan M. Von Feldt, president of the ACR, wrote in the comment to CMS. "As currently written, the requirements for qualifying participation in APMs are formidable, and establish too high of an administrative burden."

The rheumatology association also asked that CMS delay the effective date of the first year for the new MACRA rules to 2018 rather than next year. Doctors do not have time to prepare to prepare for the new system, the group argued.

"One of the largest fundamental changes in Medicare reimbursement must be implemented in a way that allows everyone to evaluate, prepare, and implement these changes to their practice so that reimbursement accurately reflects performance," Von Feldt wrote.

July 1, 2016 -- A range of new state laws affecting abortion, drug abuse, and Medicaid took effect last week, when most states' fiscal year began.

Many state legislators concentrated less this year on measures addressing the effects of the 2010 health care law. While the legislatures acted on an array of targeted measures, many lawmakers seemed to focus more on evaluating previous changes and waiting for this year's election results rather than significantly overhauling the current system, said Dick Cauchi, a health program director for the National Conference of State Legislatures.

"For this year, there's to some extent an approach of wait and see," Cauchi said. "There is a moment when there is more examination of where health policy may be going in the coming years rather than dramatic changes this calendar year."

Anger over Abortion

Republican-led state legislatures were still fuming over undercover sting videos that emerged last summer purporting to show Planned Parenthood profited from the sales of fetal body parts. Democrats said the organization did not break any laws and the videos were heavily edited to sensationalize the issue.

Elizabeth Nash, state issues director for the pro-abortion rights Guttmacher Institute, said in an interview that legislatures have refocused efforts on adding regulations for abortion providers and finding ways to siphon funds from them.

"It really is a case where the thrust of the sessions was a lot more intense around abortion restrictions than you might normally expect," Nash said. "We've seen an uptick in the number of restrictions...By the beginning of June. we saw 38 abortion restrictions enacted. That is a bit higher than you would expect in a major election year."

Florida and Idaho have laws going into effect that disallow providers from selling fetal tissue or organs. Idaho's new law requires patient consent for the fetus to be used for research if a woman experiences miscarriage or stillbirth.

South Dakota has three different abortion restrictions going into effect July 1. One law bans abortions after 20 weeks, another forces providers to tell women about how abortion medication can be reversed and a third implements more clinical requirements for abortion providers.

Opioid Overdoses

While Congress continues talks about combating opioid abuse, a number of state legislatures passed laws going into effect July 1 that aim to put more onus on providers to participate in and check prescription drug monitoring systems.

Heather Gray, senior legislative attorney for the National Alliance on Model State Drug Laws, said in an interview that states are pushing for pharmacists and other providers to scrutinize and report their findings sooner to get people help.

"One of the things I try to stress is prescription drug monitoring programs by themselves are not the only answers," Gray said. "It's a concerted effort. It's part of the package of tools that practitioners and others have in order to fight opioid abuse...There is no one solution to the opioid crisis. A lot of things have to work together to fix the problem."

Connecticut has a law taking effect that requires providers report more frequently from the prescription drug monitoring systems. The state is requiring daily reports.

Georgia enacted a law that includes provisions that force drug monitoring programs to maintain data for two years and allows law enforcement officers to use search warrants to access the data. The state also allows dispensers to report to agencies any concerns about potential substance abuse issues for specific patients.

Idaho has a new law that limits the number of professionals a pharmacist can delegate to check and report data to a drug monitoring program but at the same time allows nurses and registered pharmacy technicians to access the system on a pharmacist's behalf.

Medicaid Changes

While Medicaid expansion talks have died down as the Obama administration approaches its end, states have been focusing on ways to save money in the joint federal-state health insurance program for the poor and disabled.

Andrea Maresca, federal policy director for the National Association of Medicaid Directors, said in an interview that state lawmakers have focused efforts on issues like managed care and implementing so-called value-based payments. Some states also have laws going into effect on Friday that provide more services for beneficiaries.

After a long legislative battle over funding, Arkansas' renewed Medicaid expansion program takes effect July 1. If the Centers for Medicare and Medicaid Services approves the state's federal waiver application, Arkansas will be able to create a voluntary work and job training referral system for unemployed beneficiaries. The state also is seeking to stop providing retroactive coverage for beneficiaries dating back to the day they applied.

Florida children in the Medicaid program will now have access to dental care under a new law.

Washington is extending Medicaid services for young adults who have aged out of foster care. Adults 18 years or older who were in the Medicaid program as foster kids, will be able to stay in the program provided they are actively seeking employment or continuing their education.