As the Trump administration barrels forward on Medicaid work requirements, new studies show the policy could remove millions from the program if implemented across the country.
In two recent studies highlighted by JAMA Internal Medicine, researchers found that, if implemented nationally, work requirements as written would not save a significant amount of money. But if those requirements throw more people off Medicaid than intended, which researchers find likely, savings could be higher.
Most of the Medicaid population is either already working or would be exempt from work requirements due to disability. Because those groups would retain coverage, one study found that only 2.8% of current enrollees should be at risk for disenrollment—a group that accounted for just 1%, or $3.8 million, of Medicaid spending last year.
Applied nationally, that 2.8% represents 2.1 million Medicaid beneficiaries.
And even that amount of savings could diminish if analysts accounted for the cost of implementing work requirements. Like drug testing requirements for food stamp recipients, the cost of administering such a policy could eat into—or erase—the savings generated by the policy.
“It’s not insignificant and it’s definitely possible that the cost of the implementation might exceed the savings, but that would only be if there’s no spillover effect and there probably will be,” lead author Anna Goldman, M.D., M.P.H., told FierceHealthcare.
That “spillover effect” is the rub. If proponents of work requirements seem more bullish on the idea than its initial outlook suggests, it could be because they are counting on spillover to take more people off Medicaid than are truly ineligible.
According to the letter of the law, people with disabilities are exempt from work requirements and those already working should be able to retain their Medicaid coverage. But at least some enrollees will be unable or fail to comply with documentation requirements in the new policy and will therefore lose Medicaid coverage for which they should have been eligible.
The precise amount of spillover is difficult to estimate, so while researchers noted its existence, they kept it out of their estimates. As a result, states could see increased savings from work requirements if the spillover effects prove large. However, in that case, “these savings would likely come at a substantial cost in terms of human health,” Goldman noted in the study.
“I think that in reality, it will save more money than we estimated, but we sort of wanted to estimate what the requirements would be if they followed the letter of the law,” Goldman told FierceHealthcare. “Either they’re not going to save any money or they’re going to throw a lot of people out that shouldn’t be thrown out. Those are the two possibilities here.”
Of those at risk of disenrollment, the average annual income is $3820, according to Goldman’s study and 42% are Black or Hispanic.
- As Hurricane Florence makes landfall, Charlotte, North Carolina-based Atrium Health and Winston-Salem-based Novant are readying plans to shift resources among their facilities to meet increased demand in areas hit hardest by the storm.
- As with last year’s Hurricanes Harvey and Irma, hospital operators in Florence’s path could take a financial hit. HCA, Tenet, Community Health Systems and LifePoint Health could all see volumes dip as patients and doctors are displaced by the storm and have to reschedule appointments and procedures. CNBC noted that LifePoint is particularly vulnerable with 30% of its beds in the Carolinas.
- As hospitals hunker down and prepare for the worst, American Well, Teladoc and other telehealth providers are offering free access to services to people who can’t access their usual providers due to the storm.
Telehealth companies played a major role during last year’s brutal hurricane season, assessing needs before, during and after each storm and adjusting offerings as needed to meet victims’ needs. The governors of Texas and Florida lifted restrictions on cross-border providers so that out-of-state doctors could provide care to people in the aftermath of Harvey and Irma.
Doctor On Demand said it will provide free medical virtual visits to anyone affected by Hurricane Florence through Sept. 30. The offer covers treatment of common conditions such as sprains, back pain, coughs and congestion, anxiety and depression, but does not cover psychology or psychiatry visits. MDLive also announced free telehealth consultations for storm victims.
Health information exchanges in the affected areas are also working to facilitate patient record sharing and ensure evacuees of Hurricane Florence continue to receive needed care.
“NC HealthConnex has been working for the last two days to allow exchange of health records across state lines to provide additional support to the provider who will be treating evacuees,” Executive Director Christie Burris told Healthcare Dive via email.
Tara Cramer, executive director of the Georgia Regional Academic Community Health Information Exchange (GRAChIE) , said the HIE is “currently taking connections live and … encouraging all partners to share lists of test patients available for exchanging testing and validation.”
On Thursday, CMS announced a slew of actions to help North Carolina and South Carolina respond to the storm. They include temporarily waiving certain Medicare, Medicaid and CHIP requirements, making special enrollment in federal health insurance exchange plans available to hurricane victims and activating an emergency response program for dialysis patients.
Additionally, CMS has made it easier for Medicare beneficiaries to replace medical equipment lost or damaged in the storm and directed Medicare Advantage groups and sponsors of Part D plans to maintain beneficiary access to covered benefits. The agency has also put together a disaster preparedness toolkit for state Medicaid agencies and said it is suspending surveys and enforcement activities for healthcare facilities in the two states.
“We are coordinating with federal and local officials to make sure that our beneficiaries, many of whom are some of America’s most vulnerable citizens, have access to the healthcare they need,” CMS Administrator Seema Verma said in a statement.
HCA saw its net income drop 31% to $426 million in the wake of last year’s devastating hurricanes, which ravaged southeastern Texas and much of Florida. Kindred Healthcare and Catholic Health Initiatives also suffered losses directly related to the storms.
WellCare completed its $2.5 billion acquisition of Meridian on Tuesday, the latest in an ongoing string of acquisitions by major insurance providers.
The Tampa, Florida-based insurer acquired Meridian Health Plan of Michigan, Meridian Health Plan of Illinois and pharmacy benefit manager MeridianRx.
WellCare will now cover 6,000 people through the individual market in Michigan. With this move, WellCare is re-entering the marketplace: It hasn’t offered exchange plans since 2016.
WellCare CEO Ken Burdick acknowledged the ACA re-entrance in the announcement, adding that it positions the company “for further growth within government-sponsored programs.”
This also increases its Medicaid membership by 40% and expands its presence in Medicare Advantage (MA), he said. About 1.1 million people were enrolled in Meridian’s Medicaid, MA and Marketplace plans.
WellCare financed the deal using more than $2 billion in stocks and bonds, including $4.5 million in common stock to generated the cash necessary to fund the purchase.
The insurer expects to generate $4.8 billion in revenue from this acquisition. It expects accretion to its adjusted earnings of $0.40 to $0.50 per share in 2019, climbing over the next few years to more than $1 per share in 2021.
Burdick said WellCare and Meridian have “a shared commitment to quality,” and they will be “leveraging best practices across the entire company in order to improve quality for all of our members.”
- The percentage of people without health insurance remained relatively steady over the past year despite efforts to repeal the Affordable Care Act and attempts to curb coverage in Washington and at state levels.
- The latest statistics from the CDC show that from January to March of this year 28.3 million people (8.8%) were uninsured. That’s compared to 29.3 million people (9.1%) a year ago. There are 20 million fewer people without insurance compared to 2010, when the ACA was enacted.
- More consumers shifted to high-deductible health plans (HDHPs) in the first quarter. The report found that nearly half (47%) of Americans under age 65 with private health insurance had a high-deductible plan, an upward trend since 2010.
CDC said 12.5% of adults aged 18-64 didn’t have insurance in the first three months of 2018. Nearly 20% had public coverage and 70% were covered by private health insurance. Of the 138.6 million adults with private health insurance, 8.3 million of them (4.2%) received coverage through ACA exchanges.
Nearly 5% of children were uninsured, 42% had public insurance and almost 55% had private health insurance coverage.
A person’s race continues to play a factor in health insurance. Nearly one-quarter of Hispanics lacked coverage in the first quarter. The Hispanic population has seen significant decreases in the percentage of uninsured adults since 2013 when it stood at more than 40%, but the percentage is still higher than other groups. The percentage decreased another three percentage points over the past year from 27.2% to 24.2%. The uninsured rates for other groups remained consistent from last year.
CDC also found that people in Medicaid expansion states were less likely to be uninsured compared to non-expansion states. The percentage of uninsured adults in expansion states decreased from 18.4% in 2013 to 8.7% in 2018. Non-expansion states’ rates fell from 22.7% in 2013 to 17.5% in 2015 before increasing to 19% in 2017. There was a slight percentage drop in 2018 (18.4%), which is still more than double the percentage in expansion states.
Meanwhile, in private insurance, payers and employers increasingly turn to HDHPs, which have higher out-of-pocket costs and usually lower premiums. Payers and employers have moved more people into those plans as a way to contain costs and give consumers “more skin in the game.”
CDC found that of the 47% of people enrolled in an HDHP, only 21.3% were in a consumer-directed health plan with a health savings account. About one-quarter had a plan without an HSA, which lets people save tax-free funds for their healthcare. Employers often contribute to those accounts.
CDC said the number of people in a consumer-directed plan tripled from 7.7% in 2010 to 21.3% in 2018, including a jump from 18.2% in 2017 to 21.3% this year. The percentage of people without an HSA didn’t change significantly over the past year. This shows that employers and payers are increasingly providing tools like HSAs to help people afford care.
Out-of-pocket costs remain a concern for Americans and can result in delaying care.
A recent Commonwealth Fund report found that one-third of American adults aren’t very or somewhat confident they can afford to pay for a serious illness. Only about half of people who earn less than $30,150 are confident they can afford that care.
They have reason to worry. Peterson-Kaiser Health System Tracker recently reported that payments for deductibles and coinsurance increased faster than the total cost for covered costs between 2006 and 2016. The report showed that total out-of-pocket spending increased by 54% in that period from an average of $525 in 2006 to $806 in 2016.
CMS paid $434 million in improper premium assistance payments in 2014, according to the Office of Inspector General (OIG). And the true total of improper payments could approach $1 billion.
At least 461,127 financial assistance policies that CMS authorized that year were not in accordance with federal requirements, the OIG estimated in a recent report. Another 183,983 policies were “potentially improper,” the office found, amounting to an additional $504.9 million.
At issue is a substitute authorization system CMS employed in 2014, which OIG says failed to accurately authorize at least 19% of a sample of premium assistance policies the office analyzed. But the multimillion-dollar loss is also representative of a premium assistance model gone awry—one that sets up incentives for providers to push patients toward private insurance.
“CMS did not have an effective system in place to ensure that financial assistance payments were made only for confirmed enrollees and in the correct amounts for the 2014 benefit year. Instead, CMS relied on [qualified health plan] issuers to verify that their enrollees were confirmed and to attest that the financial assistance payment information they reported on their templates was accurate,” OIG wrote in its report (PDF).
Lacking that verification, it’s possible some of the policyholders were not, in fact, paying their full premium balance but were instead being supplemented by predatory providers through controversial patient-steering practices. Some providers—dialysis centers in particular—have been accused of inappropriately meddling in patients’ coverage decisions.
Because Medicare and Medicaid have much lower reimbursement rates than private insurers, providers have a structural incentive to prefer patients with private insurance. And through premium assistance programs, they have a functional, though inappropriate, mechanism to “steer” patients out of public programs and onto the higher-paying ACA marketplaces: They can make some premium payments on behalf of patients and still come out ahead on the reimbursement side.
OIG does not consider this a “proper” use of patient assistance programs.
To correct for the improper payments, OIG recommended that CMS work with the Treasury Department and QHP issuers to recoup the $434.4 million. However, while CMS partially concurred with the agency’s recommendations, it stated it would not return payments in which issuers “acted in good faith,” nor would it go after issuers that had gone out of business since 2014. It did not provide an estimated figure it hoped to recover.
In its report, OIG also noted that the deficiency that enabled these improper payments has since been solved.
“As of May 2016, CMS had fully transitioned QHP issuers operating through the Federal marketplace to an automated payment system that makes financial assistance payments to QHP issuers on an individual policy-level basis. CMS plans to fully transition most QHP issuers operating through State marketplaces to the automated system in 2018,” it wrote.
- Health insurance companies continue inching away from employer-sponsored plans to government-sponsored business. Medicaid managed care and Medicare Advantage plans now make up more than half of health plans’ premiums combined, A.M. Best said in a new report.
- Employer plans once dominated the private market, but they dropped to just 38% of total net premiums written (NPW) in 2017.
- Medicaid’s NPW grew the most of any health insurance sector over the past 10 years. The Affordable Care Act’s Medicaid expansion pushed Medicaid managed care’s NPW from $43.1 billion in 2007 to $224 billion last year, A.M. Best said.
Despite payers’ finding success in government plans, the move generally means lower margins with private insurers relying more on state and federal funding. That’s a potential downside.
A.M. Best said greater reliance on government payments “could lead to short-term liquidity pressure because of the timing of the receipt of funds and possible delays related to budgetary issues.”
Regulations and legislation could lead to unpredictability, especially in the ACA exchanges. “With healthcare remaining a controversial political issue, the regulatory regime is likely to remain volatile over the near to medium term, especially as it relates to the individual exchange segment,” A.M. Best said.
Nevertheless, private payers are increasingly embracing offering public plans. Medicaid’s NPW share increased from 10.2% in 2007 to 27.1% in 2017. Most of that growth came in 2014 and 2015 after states could expand Medicaid to 138% of the federal poverty line. Medicaid expansion added more than 14 million Medicaid recipients.
Medicare Advantage has grown from $69.9 billion in 2007 to $202.7 billion in 2017. It represented 24.5% of overall industry premiums in 2017. Both Medicaid and Medicare Advantage have seen flat business over the past few years, A.M. Best said.
However, more payers are interested in testing the Medicare Advantage market. One reason is that aging Baby Boomers are a fresh market for MA payers.
UnitedHealthcare and Humana still make up the two largest Medicare Advantage payers, but Aetna, Anthem, WellCare and Centene have all grown MA membership this year. Oscar Health also announced this week that it’s expecting to expand to MA in 2020.
Commercial premiums still make up the largest percentage of single sector premiums. That’s dropped from 58% in 2007 to 38% in 2017.
Things aren’t all negative in the commercial market, though. In fact, insurance companies’ cost-containing policies and benefit design have brought stability. Payers have been able to maintain low single-digit annual premium increases in the employer market this decade. Mercer’s recent National Survey of Employer-sponsored Health Plans said those plans’ premiums have increased about 3% yearly since 2012.