Sellers Dorsey Digest

Federal Updates

News

KFF Publishes Annual Medicaid Budget Survey Report for FY2024 and FY2025

• On October 23, the Kaiser Family Foundation (KFF) released its annual Medicaid budget survey report in collaboration with the Health Management Associates (HMA) and the National Association of Medicaid Directors (NAMD). The report provides information gleaned from surveying Medicaid officials in all 50 states and the District of Columbia on policies in place or implemented in FY2024 as well as policy changes that are planned for FY2025. Key themes from the report included increases in provider and managed care rates, enhancements to benefits and prescription drugs, advancing efforts to address social determinants of health and reduce health disparities, and administrative challenges that states face in operating Medicaid programs. Overall, state Medicaid programs saw enrollment and total spending decrease in FY2024 and expect decreases in FY2025. State Medicaid spending growth increased in FY2024 but is expected to slow in FY2025 (KFF, October 23).
• Provider Rates and Taxes
  • Most states reported increases in hospital FFS rates for both inpatient and outpatient services in FY2024, with additional states reporting planned increases for FY2025.
  • 37 out of 41 responding MCO states reported a state directed payment in place for hospital services and a majority reported that these were expected to increase as a percentage of total Medicaid hospital reimbursement in FY2025.
  • The most common FFS rate increases in FY2024 were for HCBS, outpatient BH clinicians, primary care, dentist, and lay professional (doulas, community health workers, peer support specialists) providers.
  • Within the last two years, 30 states have required a comparative rate analysis of FFS Medicaid payment rates to Medicare for at least one provider type.
• Delivery Systems
  • Nearly all managed care delivery system states use contracting requirements to address SDOH
    • Some states tie the minimum MLR requirements to community reinvestments
    • The top four categories of SDOH contracting requirements were:

1. 1. 1. 1. Screening for BH needs
         2. Screening for social needs
         3. Partnering with community-based organizations (CBOs)
         4. Providing enrollees with social services referrals

• • 25 states have already sought or plan to seek capitation rate adjustments. Only 12 have not and will not seek an adjustment, while 4 are undecided.

• Benefits and Pharmacy
  • 41 states reported that they added new or enhanced benefits in FY2024, with many planning enhancements in FY2025.
  • The most common categories of new or expanded benefits in FY2024 were:
    • Mental health and SUD services
    • Preventive services
    • Pregnancy and postpartum services
    • Dental services
    • Community Health Workers
  • Benefits planned for FY2025 include:
    • Mental health and SUD services
    • Pregnancy and postpartum
    • SDOH/Health-related social needs
  • 31 out of 42 states that contract with managed care organizations (MCOs) have pharmacy benefits generally carved in. 8 states have this benefit carved out. Three states – Kentucky, Mississippi, and Louisiana – have a hybrid model.
    • 21 states reported having a targeted carve out for one or more drugs or drug classes.
    • Half of states reported expanding, implementing, or planning value-based purchasing efforts for prescription drugs in FY2024 or FY2025.
  • 12 states cover GLP-1 drugs for obesity treatment
    • 4 states have coverage in place but do not provide coverage for obesity treatment
    • The states that have authorized this coverage reported several utilization controls such as prior authorization, BMI requirements, and step therapy
    • Cost was a major factor in states’ obesity drug coverage decision
• Administrative Challenges and Future Outlook
  • Many states reported challenges with workforce, system updates and maintenance, budgets, and reaching compliance with federal rules.
  • States largely identified mental health, re-entry services, and SUD as areas of top priority or opportunity.
    • More than a third mentioned LTSS and LTSS workforce challenges
  • Medicaid enrollment declined by 7.5% in FY2024 and is expected to decline by 4.4% in FY2025, primarily due to Medicaid unwinding.
  • Total spending growth in Medicaid was at 5.5% in FY2024 and is expected to decrease to 3.9% in FY2025.
    • State Medicaid officials noted the impact of unwinding on total Medicaid spending as well as several policies and situations that put pressure on costs such as continuous eligibility, total Medicaid eligible population growth, and higher health care needs of remaining enrollees.
  • State Medicaid spending growth increased by 19.2% in FY2024 but is expected to slow to 7.0% in FY2025.

CMS Publishes Modifications to Federal Insurance Exchange Operations for Plan Year 2025, Provides Updates on Eligibility

• On October 24, CMS released updates around how the federal exchange will operate in plan year 2025 and introduced revisions and updates relating to eligibility. The revamp of the healthcare.gov website aims to enhance clarity for enrollees regarding important deadlines and necessary actions for maintaining coverage. The site has been optimized for smartphone use, making it more accessible for users on mobile devices. Additionally, it now offers plans specifically tailored for individuals with chronic conditions and high-cost healthcare needs, featuring lower cost-sharing for certain services. Notably, Deferred Action for Childhood Arrivals (DACA) recipients will have the opportunity to access the exchange for the first time, becoming eligible for advanced premium tax credits and other cost-sharing reductions. Also, payers in both state and federal exchanges are now required to meet new standards regarding wait times for specific services. Insurers must ensure that at least 90% of enrollees can access behavioral health services within 10 business days, primary care appointments within 15 business days, and non-urgent specialty care appointments within 30 business days. Open enrollment for the federal exchange begins on November 1 and will run through January 15, 2025, providing individuals the opportunity to explore and enroll in health plans that best meet their needs (Health Payer Specialist, October 28).

Federal Regulation and Guidance

CMS Releases Respiratory Illness Reporting Guidance

• On October 22, CMS released final guidance for Medicare and Medicaid-participating hospitals to report data for respiratory illnesses. Included within these guidelines is the option to either submit daily data on a weekly basis or provide a “snapshot” that would collect data from one day and weekly totals for new admissions. CMS hopes the “snapshot” reporting model will allow hospitals to both balance the value of this data and mitigate administrative burden. CMS’s goal is to create a streamlined system for data reporting to aid in the tracking of respiratory illnesses and identifying weaknesses within care delivery. Beginning November 1, hospitals must submit weekly reports on not only respiratory illnesses but related data for infections, patient demographics, and hospital bed capacity. CMS will review compliance in 28-day cycles. Hospitals that fail to meet reporting guidelines will receive warning letters and continued failed compliance after 30 days can lead to eventual termination from the Medicare program (Inside Health Policy, October 24).

State Updates

News

Texas Cuts Federal Medicaid Funding for the School Health and Related Services (SHARS) Program by $607 Million

• Texas is set to reduce federal funding for special education services by over $607 million annually, a decision that local school district officials believe will exacerbate budget challenges for students with disabilities. The School Health and Related Services (SHARS) program plays a role in providing funding to school districts for services such as counseling, nursing, therapy, and transportation for Medicaid-eligible children. Currently, over 775,000 students in Texas receive special education services, although the exact number eligible for Medicaid, and therefore funded by SHARS, is unclear. In response to this funding reduction and other newly instituted parameters, some school districts have formally appealed the decision. Additionally, many stakeholders hope that the legislature will increase funding for special education services in light of the SHARS funding reduction (The Texas Tribune, October 28).

State Officials Assess Insurers Requests for Increase to 2024 Payment Rates

• State officials are expressing uncertainty regarding claims from Medicaid managed care companies that payment rates are inadequate this year. A recent report from KFF indicated that 25 out of 41 surveyed states increased Medicaid capitation payments for fiscal years 2024 and 2025 to accommodate rising acuity following mass eligibility redeterminations. However, health insurance companies contend that these increases are insufficient to stabilize their financial situations. Michigan raised its rates in April to help manage growing costs and is exploring whether a supplementary rate increase is required. In addition to Michigan, MCOs in California, Colorado, Minnesota, New Mexico, New York, Pennsylvania, and Virginia maintain that CMS needs to intervene to guarantee states are using current cost trend information to calculate rates (Modern Healthcare, October 29).

Tennessee State Representative Advocates for Utilizing Medicaid Funding Resources to Combat Gun Violence

• In September, the Biden Administration announced that states have the option to use Medicaid to pay healthcare providers for counseling parents and caregivers on firearm safety and injury prevention, as well as for violence intervention programs, drawing the attention of Tennessee State Representative Caleb Hemmer. Hemmer participated in a briefing aimed at leveraging Medicaid resources to address the gun violence epidemic and highlighted the importance of learning from best practices in other states and implementing innovative programs to effectively address gun violence issues. Seven states have enacted laws permitting the use of Medicaid funds for gun violence prevention initiatives. Hemmer aims to explore this further, in part by addressing this topic in the upcoming legislative session in January (MSN, October 29).

Auditing Collaboration Between Oregon Audits Division (OAD), Washington State Auditor (WSA), and the Health and Human Services Office of the Inspector General (OIG) Uncovers $65 Million in Avoidable Medicaid Payments

• In a noteworthy auditing collaboration, the OAD, WSA, and OIG released a report addressing the costly issue of concurrent Medicaid enrollment between states. The audit reveals the necessity of streamlining Medicaid costs by eliminating redundant payments made across state lines. From 2019 to 2022, Oregon paid out $65 million in Medicaid benefits for individuals who were simultaneously enrolled and receiving benefits in Washington. Oregon’s Secretary of State emphasized that reducing concurrent enrollment does not remove anyone’s Medicaid benefits, but rather eliminates wasteful or duplicative payments. This initiative aims to benefit taxpayers on both sides of the debate by addressing inefficiencies in the Medicaid system. In the recent audit involving Oregon, it was revealed that out of 100 tested Medicaid recipients, 38 were residing in Washington, indicating that Oregon’s payments were unwarranted and resulted in an unnecessary $29 million burden on Oregon’s budget. Overall, Oregon has reportedly spent approximately $445 million on potentially avoidable concurrent Medicaid enrollments (Hoodline Portland, October 28).

Arkansas Looking for Coverage Options for Non-Eligible Postpartum Individuals

• Currently, Arkansas is the only state that has not extended postpartum coverage from 60 days to 12 months after an individual gives birth. Of note, Arkansas currently has the highest maternal mortality rate and third highest infant mortality rate within the U.S. Following the creation of a strategic committee to develop and improve the state’s maternal health outcomes, the committee released a six-month progress report in September recommending higher reimbursement rates for care providers and presumptive eligibility of 60 days for pregnant individuals. The state’s Medicaid director stated that DHS and the Arkansas Insurance Department are looking for ways to connect 1,451 Medicaid ineligible postpartum individuals to coverage within the private marketplace. On October 18, DHS was required to publish postpartum Medicaid data, but the state was reportedly unable to do so given the tight timeframe and the goal to compile and publish the correct data. State legislators hope to utilize this data to draft maternal healthcare legislation during the 2025 legislative session (Arkansas Advocate, October 28).

Oregon to Launch Housing Assistance Initiative for Members Experiencing Health Crises

• Beginning November 1, Oregon Health Plan, the state’s Medicaid program, will offer housing assistance to certain beneficiaries. This may include up to six months in utility and rent assistance and medically necessary home modifications to those at risk of losing their homes due to hospitalization or a chronic health condition. These services are accessible to Oregon Health Plan members with income at or below 30% of the median income and have at least one medical factor, such as repeated ER visits, developmental disabilities or complex health conditions, that inadvertently impact housing stability. The initiative will give priority to individuals released from incarceration, individuals leaving behavioral health facilities and young adults with special health needs. State officials tout the preventative nature of these benefits, which proactively support individuals prior to receiving eviction notices (Oregon Live, October 21).

SPA and Waiver Approvals

Waivers

• 1115
  • Wisconsin
    • On October 29, CMS approved a five-year extension of the state’s 1115 waiver titled, “Wisconsin BadgerCare Reform.” Wisconsin received renewed authority to provide substance use disorder benefits to cover short-term residential services in facilities that qualify as institutions for mental disease (IMDs), provide coverage for out-of-state former foster care youth (FFCY) up to age 26 who were enrolled in Medicaid in another state and turned 18 on or before December 31, 2022, and extend coverage to non-pregnant, non-elderly childless adults with incomes of up to 100% of the Federal Poverty Level. This demonstration is effective from October 29, 2024, through December 31, 2029.

SPAs

• Payment SPAs
  • Georgia (GA-24-0008, effective July 1, 2024): Modifies reimbursement rates for community behavioral health services, updates accreditation language, and adds community health workers to the list of acceptable practitioners.
  • Northern Mariana Islands (MP-24-0003, effective July 1, 2024): Increases reimbursement rates for durable medical equipment (DME) under home health services.
  • North Carolina (NC-24-0031, effective July 1, 2024): Updates per member/per month management fees for Carolina ACCESS and Advanced Medical Home (AMH) programs.
  • South Dakota (SD-24-0014, effective July 1, 2024): Implements an inflationary rate increase and updates certain coverage and services.
• Services SPAs
  • California (CA-24-0037, effective October 1, 2024): Adds pharmacies as supervisors for Community Health Workers (CHWs) services.
  • Nevada (NV-24-0023, effective July 31, 2024): Defines residential services for SUD treatment and expands eligible providers for these services.
  • Oregon (OR-24-0023, effective January 1, 2025): Expands the Nurse Home Visiting Targeted Case Management (TCM) program to Polk and Yamhill counties.
  • Washington (WA-24-0035, effective January 1, 2025): Updates Physician Assistant Services, Screening, Brief Intervention, Referral and Treatment Services Providers, and Collaborative Care Services Providers.
• Eligibility
  • Hawaii (HI-24-0012, effective October 1, 2024): Increases monthly needs allowance for those living in long-term care facilities to $75 for individuals and $150 for couples.

Private Sector Updates

News

NationsBenefits Partners with Uber Health to Expand Access to Ancillary Benefits

• Uber Health and NationsBenefits have partnered to integrate and streamline ancillary benefits like transportation and grocery delivery into health plans. As a result of the partnership, NationsBenefits members can use their flex cards for Uber rides and grocery delivery through Uber Eats. The companies aim to simplify access to benefits and improve health outcomes, especially for older adults. Future plans include enabling members to shop for groceries directly through the Uber Eats app via the Nations Marketplace as well as showing the flex card balance directly in the Uber app (Fierce Healthcare, October 21).

Blue Shield of California and Salesforce to Streamline Prior Authorization Process with New Software

• Blue Shield of California is partnering with Salesforce to roll out a new prior authorization (PA) process. Using Salesforce Health Cloud, the companies aim to reduce the time for PA to seconds instead of days. The new software uses patients’ electronic health data and prepopulates the PA form for submission to Blue Shield. According to the company, any request that is flagged for denial or insufficient information would be reviewed by a trained professional. For more complex cases, physicians will have the option to start a peer-to-peer clinical consultation more quickly and with increased transparency for the patient. Blue Shield and Salesforce plan to test the new PA product in January with a general availability roll out slated for 2026 (Healthcare Dive, October 22; Blue Shield, October 21).

CVS’ MinuteClinic to Provide Primary Care Services for Commercial, Individual, and Family Plan Aetna Members

• CVS Health’s MinuteClinic is now an in-network primary care provider for select Aetna members in San Antonio, Houston, Atlanta, and south Florida, with North Carolina to follow. Dr. Creagh Milford, President of Retail Health at CVS Health, noted that the company has been working to enhance staffing, technology, and training at MinuteClinic locations to expand primary care services in areas with high patient density and specific demographics. This move aims to improve access to primary care for Aetna’s commercial, individual, and family health plan members. Currently, MinuteClinic provides services to more than five million patients at 1,000 locations and on their telehealth platform (Modern Healthcare, October 29).

Zoom Forms New Partnership with Leading AI Company, Suki

• Zoom is teaming up with Suki, an AI-powered healthcare company, to augment a platform that gives healthcare institutions the capability to generate AI-based clinical notes during telehealth and in-person visits. With approximately 140,000 healthcare organizations utilizing Zoom worldwide, experts in the field believe this tool can be used to mitigate burnout and has the potential to reduce the time and effort required for clinical administrative work (Suki, October 22; Healthcare Dive, October 24).

Sellers Dorsey Updates

NEW CASE STUDY: Developing Data Dashboards to Reduce Traffic-Related Incidents and Enhance Traffic Safety in New Jersey

• HealthDataViz (HDV), a Sellers Dorsey Solution, worked with Children’s Hospital of Philadelphia’s NJ Safety and Health Outcomes (NJ-SHO) Center for Integrated Data and Center for Injury Research and Prevention to develop data dashboards that provide unparalleled access to crucial traffic safety information. This information empower communities and policymakers with the necessary insights to reduce traffic-related injuries and fatalities. HDV’s partnership with the NJ-SHO Center for Integrated Data and Center for Injury Research and Prevention has revolutionized how traffic safety data is, analyzed, visualized, and shared throughout the state.
  Click here to explore the case study.