By Marissa Evans, CQ Staff

September 4, 2015 -- Arkansas, one of only 12 Republican-controlled states to expand its Medicaid program under President Barack Obama's health care law, has managed to significantly reduce the number of its residents who are uninsured.

The influential Kaiser Family Foundation found that the state's uninsured rate among non-elderly adults dropped to 15.6 percent in 2014 from 27.5 percent in 2013. In addition, hospitals saw their uncompensated care costs fall 55 percent as more patients received treatment in doctors' offices instead of emergency rooms.

But those accomplishments are now in jeopardy. Thousands have been dropped from the program since June, after delays in a process to re-verify their eligibility. And thousands more are at risk.

The state has blamed the delay on problems in switching to an automated verification system. The state Department of Human Services in June began telling beneficiaries whose income changed 10 percent or more since enrollment that their coverage has ended or will end soon unless they provide proof that they are still qualified for benefits. Some of the letters were mailed just days before a 10-day deadline for filing the information and even beneficiaries whose income declined received the letters.

The predictable result: widespread confusion and outrage among beneficiaries and their advocates.

When Arkansas expanded its Medicaid program, it chose a unique system called Private Option, where the state purchases coverage from private insurance providers for the newly qualified beneficiaries—members of households earning up to 38 percent more than the federal poverty level. The program is scheduled to end on Dec. 31.

Under the usual federal rules, Medicaid enrollees are to be sent annually a prefilled verification form that they can update with any changes. And they must have at least 30 days to return the form before the state can revoke coverage. However, those who reapply within 90 days must be reinstated under a streamlined process, which Arkansas provides.

But Arkansas was given a waiver from the 30-day requirement by the federal Centers for Medicare and Medicaid Services to give the state more time carry out its nontraditional renewal process. Beneficiaries were given just 10 days from the date on the letter to return paperwork, pay stubs or other documents verifying their income. Those who don't make the deadline are booted from the program as fast as the state can process them, usually in about 10 days.

Amy Webb, communications director for the Arkansas Department of Human Services says the state has been identifying recipients of the letters by cross-checking income from applications with state tax records and other data.

CMS later amended the exemption to require a full 30 days to provide the documents, according to Webb. She says the state stopped sending the 10-day warning letters Aug. 21 and is in the process of writing new ones with the 30-day time frame. The state doesn't know when it will be ready to send out the new letters, Webb says.

Even so, more than 339,000 letters with the 10-day deadline have been mailed since June. And some 58,000 Medicaid clients have been dropped from the program, including many for failing to respond in the 10-day time frame that CMS now says was inadequate.

"CMS did not request the state to start the process over for the individuals who already lost coverage and our system currently isn't able to simply turn them back on and start over," Webb says.

Advocates say it's clear that the letters are causing widespread confusion for beneficiaries.

"The state has not been able to break down or parse out how many of those folks [receiving the letters] do still meet the eligibility requirement based on income," says Marquita Little, health policy director for Arkansas Advocates for Children and Families.

Beneficiaries whose coverage has ended now find themselves in the same uninsured boat they thought they escaped when they were enrolled in the plan, Little adds.

Arkansas says that, of the 58,000 beneficiaries whose coverage was halted, 3,200 have been reinstated after providing the data.

Mary Franklin, assistant director for the state's Department of Human Services Division of County Operations, outlined the state's stance on the cutoffs in a July 15 news release: "If people enrolled today get a request for more information and are still eligible and want coverage, it is their responsibility to respond within the time frame allowed."

Built-in Flaws

Little says she had concerns early on about the renewal process. She was worried officials would have difficulties locating beneficiaries due to changing addresses among the low-income population, and would not allow beneficiaries sufficient time to respond. She also says there was insufficient outreach and education about what the renewal process would entail.

The process was made all the more difficult for beneficiaries, she adds, when the Arkansas legislature in February 2014 restricted how the Department of Human Services, Arkansas Insurance Department and Arkansas Department of Health could use funds to promote or advertise Medicaid. The restrictions meant that any kind of education outreach to consumers fell to community organizations.

The Department of Human Services' Webb says that the agency works with insurers and community organizations, and posts information on its website, to get the word out to enrollees.

Tricia Brooks, a senior fellow at the Georgetown University Center for Children and Families, says that it's important for states to verify ongoing Medicaid eligibility annually. However, the state's alternative process to re-verify eligibility, rather than implementing a formal renewal, is adding an administrative burden on both the state and current enrollees.

Brooks says that the state is requiring anyone who had a 10 percent increase or decrease in income to provide additional proof of eligibility. But enrollees who did see a decrease in income would still be eligible for Medicaid, she adds.

"The state would be smart to put resources into complying with renewal requirements than this spin-off process that seems to be poorly executed," Brooks says.

According to Brooks, even though beneficiaries who miss the verification deadline can reapply for the program, "it's going to create a bigger administrative mess from a paperwork sense."

Matt Salo, executive director for the National Association of Medicaid Directors, says all states struggle to figure out how to make sure people on the rolls are supposed to be there.

"You want to make sure the process works for people," Salo says. "You don't want to create unnecessary burdens that create negative perceptions of consumers and you don't want to scare people away from something they're entitled to."

By Melissa Attias, CQ Staff

September 4, 2015 -- House Republicans and Democrats joined this summer to pass a popular medical innovation package, but a slower pace on a similar effort in the Senate will almost certainly postpone any trip to President Barack Obama's desk until 2016.

That means the best prospects for getting health care legislation past the finish line this year may be catching a ride on one of several must-pass items expected to dominate the year-end agenda, from funding bills to a debt-limit increase to highway legislation.

One candidate could be a repeal of the health care law's medical device tax—a perennial GOP target that has some Democratic support but the opposition of President Barack Obama—particularly after a House vote in June suggested that canceling the tax could win enough support to overcome a veto in that chamber.

Attaching the language to a larger package would allow a Republican majority still intent on scrapping the 2010 overhaul to score a win without putting Democrats in the uncomfortable situation of directly rebuking their party leader.

But optimism that repeal would get worked into past negotiations never bore fruit, and this autumn may not be any different.

"Never underestimate the power of the White House to convince their own members that they shouldn't override the president," says Sen. Dan Coats, an Indiana Republican and a vocal opponent of the device tax.

Of course, the loudest shouting over health care will probably be reserved for issues that have no chance of becoming law in the 114th Congress.

Republicans may use the budget reconciliation process to send a repeal of as much of the health care overhaul as possible to Obama's desk, but it would be swiftly met with his veto pen.

Democrats have also shown they have the numbers in the Senate to filibuster any GOP attempts to defund Planned Parenthood—an effort that re-emerged after the family planning organization was targeted in a series of undercover videos and that some Republicans want to insert into the larger government funding debate.

The 21st Century Cures bill (HR 6), which passed the House on July 10 in a 344–77 vote, includes a number of provisions designed to speed development of medical cures and nearly $8.8 billion in extra money for the National Institutes of Health over five years.

Energy and Commerce Chairman Fred Upton, a Michigan Republican, spearheaded the package with Colorado Democrat Diana DeGette and has been pushing for Senate action this year to avoid the messy politics of the 2016 presidential race.

But the Senate Health, Education, Labor and Pensions Committee is working on a later timetable, having spent the summer moving its bipartisan elementary and secondary education package (S 1177) through the full Senate and with higher education also on the agenda.

At a Bipartisan Policy Center event before the summer recess, Chairman Lamar Alexander said his panel's work on a similar bill wouldn't be completed until Thanksgiving or the end of 2015.

"That's no delay, really, because Sen. McConnell wouldn't have time to put it on the floor anyway between now and the end of the year," the Tennessee Republican said, referring to the Senate majority leader.

"But with the kind of support it has now and I expect it to have at the end of the year, I fully expect it to be the kind of legislation that even could be considered by the Congress in an election year, something a lot of people could take pride in," Alexander said.

The Senate legislation, which is expected to be conferenced with the House measure, could include provisions designed to improve the electronic health records system—though Alexander said it would be easier if the fixes that his panel identifies can be accomplished administratively.

Despite a veto threat from the White House, 46 House Democrats joined with Republicans in June to pass Erik Paulsen's bill (HR 160) that would eliminate the health care overhaul's 2.3 percent excise tax on medical devices that took effect in 2013.

The Minnesota Republican says bipartisan support puts repeal in the mix for negotiations over big-ticket items this fall, including tax extenders.

Bolstered by its June win at the Supreme Court, however, the Obama administration may not see any reason to accept a repeal of one of the financing mechanisms of its signature law lying down—just as Republicans may not feel it is a significant enough concession to sweeten compromise legislation in a fall dominated by other hot-button issues.

The absence of an offset for the estimated $24.4 billion price tag may also give some otherwise supportive Democrats an excuse to balk, depriving device-tax opponents of the support necessary to slip repeal into a year-end package.

Efforts to scrap other health care law provisions with Democratic detractors would face similar complications, including a not-yet-appointed Medicare cost-cutting board and a tax on "Cadillac" employer health plans that begins in 2018.

By Alan K. Ota, CQ Roll Call

September 3, 2015 -- With a shortage of other viable legislative vehicles, Senate Finance Chairman Orrin G. Hatch has his eye on using a potential reconciliation bill later this year or early in 2016 to repeal parts of the health care overhaul, including the 2.3 percent excise tax on medical devices.

The top tax writer has been hunting for a home for a device tax repeal (S 149) he authored that has 39 co-sponsors. The House passed a similar plan (HR 160), 280-140, in June. The Utah Republican also is weighing other health-related add-ons for reconciliation, including incentives for manufacturing so-called orphan drugs that combat rare diseases.

"You can overdo reconciliation. But I would like to get rid of the medical device tax," the Utah Republican said. 

Hatch in July opted not to attach the device tax repeal proposal to the Senate-passed version of a six-year surface transportation reauthorization (HR 22), while House Republicans develop their own version of that legislation. He also has been cool to adding potentially contentious proposals to to a bipartisan two-year package of tax break extensions (S 1946).

But Hatch is open to using reconciliation to gut portions of President Barack Obama's legislative legacy, and to make other health-related tax changes. The budgetary maneuver would only require a simply majority for passage in the Senate and potentially set up a veto showdown with Obama.

One bipartisan proposal (S 1906) by Sen. Robert Menendez, D-N.J., that Hatch is eyeing would broaden the exemption of orphan-drug sales from manufacturers' government-related branded prescription drug sales, which are used to calculate the annual prescription drug fee that companies pay under the health care law. The proposed expansion would apply to companies with annual branded drug sales above $5 million. The fee is paid by drugmakers and importers and is based on their share of the industry's overall sales through government programs such as Medicare, Medicaid and defense and veterans' health care programs.

The exemption currently applies to drugs for which a company has claimed an orphan drug tax credit. Menendez has been working with a GOP ally, Sen. Mike Crapo, R-Idaho, to build bipartisan support for his proposal to expand the exemption to cover any drug or biological product approved by the Food and Drug Administration for treating rare diseases or conditions, regardless whether they are covered by the orphan-drug tax credit. 

Hatch said he had not yet reviewed the Menendez bill, but said that a number of orphan-drug incentives could attract bipartisan support and could be considered as add-ons to a reconciliation bill or as part of other legislation. "I suspect that that will happen," Hatch said.

Democrats regardless are expected to strongly oppose any reconciliation bill aimed at uprooting part of the Affordable Care Act (ACA).

"We want to get this thing fixed. We don't want to gut the ACA to get this fixed," said a Senate Democratic aide, referring to the expanded orphan-drug exemption and the Affordable Care Act moniker for the law.

Senate GOP aides say no final decision has been made on whether to develop a Senate reconciliation bill or to simply take up the House version of the legislation. Both chambers have moved different versions of reconciliation bills in the past, but Democratic majorities in both chambers opted to move in tandem on a 2010 reconciliation measure to help enact the health law.

GOP senators returning from their August recess next week are expected to wait for the House Republicans to settle on an outline for their reconciliation bill before developing a Senate plan of action.

By Melissa Attias, CQ Roll Call

September 3, 2015 -- Doctors and hospitals that treat Medicaid patients and insurance companies participating in health law marketplaces would be banned from discriminating against transgender people under rules proposed Thursday by the Department of Health and Human Services (HHS).

Health plans would be prohibited from issuing a blanket denial of services to help a person transition to another gender, although the insurers still could refuse to cover surgery or other care on a case-by-case basis if the decisions are based on a legitimate rationale.

The proposal, which stems from the Affordable Care Act, would affect providers or programs that receive federal funding and health plans that cover people in the insurance exchanges created by the health law, among others.

"The Department of Health and Human Service's proposed rules have the potential to be life-saving for transgender people," Mara Keisling, executive director of the National Center for Transgender Equality, an advocacy group, said in a statement. "These rules will help finally make the promise of the Affordable Care Act real for transgender people—that they can find affordable health insurance that covers the essential care they need and doesn't exclude care simply because of who they are."

Some insurers already cover these services, Keisling said, "because it is the right thing to do from a medical perspective, from a fairness perspective, and because it can save them money."

The proposal follows actions announced by the Defense Department earlier this summer to reassess its treatment of transgender individuals, including a study of the implications of allowing transgender individuals to serve openly in the military.

The HHS plan lays out the standards that the department would use as it implements the health law, the first federal law to bar gender-based discrimination in health care, according to HHS. The law also bans discrimination based on race, color, national origin, age or disability. While those protections have been enforced by the HHS' Office for Civil Rights since enactment, the proposal clarifies that individuals can pursue legal action under the law.

The proposal also would strengthen anti-discrimination protections for women, people with disabilities and others.

"This proposed rule is an important step to strengthen protections for people who have often been subject to discrimination in our health care system," HHS Secretary Sylvia Mathews Burwell said in a statement.

The proposal clarifies that no one can be denied care or coverage based on his or her gender identity, and that care tied to a specific sex cannot be limited because an individual identifies with another gender, according to a fact sheet. HHS officials said a provider cannot deny someone treatment for ovarian cancer because the individual identifies as a transgender man, for example.

The department is requesting feedback on whether the nondiscrimination provision should incorporate an exemption for religious groups, and if so, what its scope should be. The proposed rule will be open for public comment until Nov. 6.

Other issues addressed in the proposal focus on access to care for individuals with limited English proficiency and those with disabilities. One requirement would be for insurers and providers covered by the rule to post taglines in the 15 most common non-English languages spoken nationally to inform patients that translation services may be available.

The American Cancer Society Cancer Action Network (ACS CAN) praised the proposal as "an important first step" and expressed hope that the final rule "will specifically address types of benefit design that have the potential to be discriminatory, including designs with coverage exclusions, service limitations, cost sharing, waiting periods, and limited provider networks."

The group is concerned that insurers are charging sick patients more or limiting coverage in ways that the group believes is discriminatory. Anna Howard, policy principal at ACS CAN, said in a statement that the group will urge the administration to spell out in the final version of the rules specific examples of insurance plan coverage that would be deemed discriminatory "so that cancer patients, survivors and their loved ones have peace of mind that coverage for life-saving treatments will be available when they need them most."

By Kerry Young, CQ Roll Call

August 31, 2015 -- A plan to require a medical signoff before moving nursing home residents to hospitals for routine care has been heavily criticized, making it one of the most controversial items in a proposed sweeping overhaul of federal rules for long-term care organizations.

The Centers for Medicare and Medicaid Services (CMS) intends to mandate an in-person visit by doctors or other specified staff before people residing in nursing homes and similar centers are sent to hospitals, with emergency cases to be exempted from the requirement. Critics say medical evaluations would be costly and impractical.

Many executives and staff workers from nursing homes argue that they will not be able to find doctors and other qualified medical personnel to carry out the requirement due to staffing shortages. They also noted that the required review could prevent staff at nursing homes from honoring the wishes of residents and their families regarding hospital transfers. Veronnica Smith, executive director of a skilled-nursing facility in rural South Dakota, said the CMS plan was not realistic in her region.

"We do not have the luxury of a physician in our community 24/7, let alone physicians that would be willing to come to the facility to assess a resident before a transfer," Smith wrote. "Further, in the event of an emergent need, the time it would take a physician to get to the facility to approve the transfer would be too late."

Stephen Hamlin, a New York-based nursing home administrator, called the proposal "impracticable and likely counterproductive."

"I do not believe that it is appropriate for a resident experiencing an acute episode to have to wait for the arrival of a physician or physician extender before receiving emergency hospital care nor it is reasonable to expect a caregiver to determine whether a resident is at risk or not," he told CMS in a comment.

CMS is accepting public feedback on the long-term care regulation through Sept. 14. CMS has received dozens of comments addressing the mandate, with more than 30 of them referring specifically to the section of a proposed long-term care rule that would create the requirement. Dozens of other people raised objections without citing the provision specifically.

Unveiled in July, CMS' long-term care proposal marks the first attempt at a comprehensive update of the regulations since 1991, the agency said. Many organizations already have said that the expenses for carrying out the new regulations for long-term care would be burdensome. By CMS' estimate, the national cost for implementation of the proposal could be $729 million in the first year, or about $46,491 for each site providing long-term or specialized nursing care. In the second year, the estimated cost would drop to about $40,685.

CMS has worked for some time to prevent unnecessary transfers of residents of nursing homes, which can be "expensive, disruptive, and disorienting for seniors and people with disabilities," the agency says on its website. People transferred from nursing homes may be especially vulnerable to risks of hospital stays, including errors with medication and infections.

Current rules already require doctors to document the cause for a transfer when a nursing home or other long-term care center can't meet a person's needs, CMS said in the proposal. Requiring an evaluation by a doctor, physicians assistant, nurse practitioner, or nursing specialist before such a transfer may prevent some unneeded moves from occurring and give information to hospitals in cases when patients are moved, according to the agency.

"The idea is that this would be an opportunity to identify options that would allow the resident to be treated in house, if appropriate," said Sheila Blackstock, a CMS official who is helping create the new regulation, on an Aug. 11 call with nursing home officials. "There is an emergency exemption, and it is intended to prevent this provision from delaying a necessary transfer or putting the resident at increased risk."

By Melanie Zanona, CQ Roll Call

September 1, 2015 -- Democratic presidential candidate Bernard Sanders moved on Tuesday to elevate rising prescription drug costs as a campaign issue, introducing a plan that would allow the government to negotiate directly with pharmaceutical companies on behalf of Medicare.

The Vermont Independent is backing legislation that would allow the Health and Human Services Department (HHS) to directly cut deals for the federal health insurance program for the elderly and disabled, a policy supported by 83 percent of respondents to a recent Kaiser Family Foundation poll. Currently, private insurers negotiate drug purchases for Medicare's Part D prescription drug benefit.

"We should use our buying power to get better deals for the American people," Sanders said in a press release. "Other countries do it. Why don't we?"

The measure would also allow drugs to be imported from licensed Canadian pharmacies, whose prices are lower because the government controls them. A Sanders press release said he was the first U.S. lawmaker to take Americans across the border to Canada in order to purchase a cheaper prescription breast cancer medication.

Sanders' bill also would require drugmakers to report to HHS on how they set their prices and how much they spend on research and development. The measure would terminate patent exclusivity periods for companies that commit fraud and prohibit "pay for delay" deals, which allow brand-name drugmakers to pay other manufacturers to keep cheaper generic versions of their products off the market.

About one in four Americans have difficulty paying for their prescription medications, Sanders has said. U.S. drug prices rose 12.6 percent last year, according to the Centers for Medicare and Medicaid Services.

But the pharmaceutical industry has maintained that spending on prescription drugs is funneled into R&D used to develop new cures. Drugmakers also argue that prices fall over time as brand-name drugs lose their patent protections and face competition from generics.

"Ensuring patients have access to the health care they need is critical, but short-sighted policies that would hinder access and slow the development of innovative medicines to help patients live longer, healthier lives is not the answer," a spokeswoman for the Pharmaceutical Research and Manufacturers of America said. "Too often, discussions about costs focus on the 10 percent of health care spending that goes toward innovative, life-saving medicines rather than looking at the big picture and ways that medicines can help avoid other unnecessary care–while ignoring how the marketplace for medicines works to hold down costs."

Sanders has advocated for a single-payer health care system and long championed lower drug prices as a critical piece of overhauling the health care system. He introduced another measure (S 1364) this year that would require generic drug manufacturers to pay a rebate to Medicaid when prices rise faster than inflation, which the non-partisan Congressional Budget Office estimates would save $1 billion over 10 years. Similar language was included in the bill Sanders introduced Tuesday.

Soaring drug prices could emerge as a prominent issue as Sanders presses forward with his campaign. Hillary Rodham Clinton has already vowed to fight rising prescription drug costs. An August Kaiser poll suggests that 72 percent of Americans feel that drug costs are unreasonable and 74 percent believe drug companies put profits before people.