Issue #136

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FTC Data Breach Rules

• On May 18, the FTC proposed amendments to its Health Breach Notification Rule that requires vendors of health applications and direct-to-consumer digital health technologies not covered by HIPAA to report when there are breaches of user health information to the FTC. The proposed updates:
• • • Revise definitions to clarify how they apply to health applications and other technologies not covered by HIPAA.
    • Clarify what a breach of security means.
    • Clarify what qualifies as a personal health record-related entity and how it draws identifiable health information from multiple sources.
    • Expand the use of email and electronic communication to notify consumers of a breach.
    • Expand the content that should be disclosed in a breach notification.
    • Improve the rule’s readability to promote compliance.

These proposed modifications to the rule come after Premom, BetterHelp, and GoodRx violated breach rules by exposing consumers’ social media accounts, device information, geolocation, and Wi-Fi network identifiers. The public has 60 days to comment on the proposed rule changes (Inside Health Policy, May 19).

Medical Loss Ratio Report

• On May 17, the Kaiser Family Foundation (KFF) released a report on 2023 Medical Loss Ratio (MLR) Rebates. In the report, KFF predicts MLR rebate payouts will total $1.1 billion for coverage provided in 2022, which could cause payers to raise premiums to protect margins in 2024. This is the fourth highest total refund amount since the MLR mandate went into effect in 2011 with rebate payments beginning in 2012. According to the report, the average loss ratios in 2022 were 83% in the small group market and 88% in the large group market. “Another year of higher loss ratios in the individual market may foretell further premium increases in 2024, as some insurers will aim for lower loss ratios to regain higher margins,” KFF observed. The report projects individual plans will have to rebate $500 million (small plans will rebate $330 million and large group plans will rebate $250 million) (Health Payer Specialist, May 22).

School-based Services Guidance

• Recently, CMS released guidance on delivering Medicaid services in school-based settings. The guidance provides flexibilities states can pursue to ease the administrative burden of school-based health programs. The guidance provides the following flexibilities when states use a cost-based payment methodology:
  • Billing and payment methodologies
    • Roster billing: States can calculate rates that are representative of multiple services and local education agencies (LEAs) would multiply that rate, on a quarterly or monthly basis, by the number of Medicaid-enrolled students that receive a covered service within the service period. The payments would be reconciled to actual costs at the end of each year.
    • Per Child, Per Month (PCPM) or Per Service, Per Month Rate (PSPM): Instead of roster billing, states can create an interim rate that would be paid monthly on PCPM basis or PSPM basis. The monthly payments would be reconciled to actual costs at the end of each year.
    • Option to not submit bills for each service: States that choose either roster billing or the PCPM methodology would not be required to submit a bill for each service if interim rates are paid and payments are reconciled to actual costs at the end of each year.
  • Billing and payment rates when using Fee-for-Service payment methodology not reconciled to costs: State Medicaid agencies can pay higher rates for services in schools if the agency can show the rate is economic and efficient as required by section 1902(a)(30)(A) of the Social Security Act.
  • General billing requirements, regardless of the State’s Medicaid payment methodology: Bundled payment rates can be used as interim payments if the bundled rates are reconciled to the actual cost of providing Medicaid services.
  • Documentation: LEAs and school-based providers are allowed to provide some deidentified or masked data to support Medicaid Enrollment Ratios (MERs) or other allocation statistics, but documentation requirements must be met.
  • Allocations to Medicaid: Establishes a general allocation ratio that is the number of Medicaid-enrolled students / Total number of students in the LEA.
  • Time Studies: Allows for a 1-step process to develop time study activity codes to capture both allowable Medicaid direct service time and administrative time. States can also increase the error rate of the time study results from +/- 2% to +/-5%. Additionally, states can submit time study implementation plans that include up to a 2-day notification window and up to a 2-day response period for queried moments in their time studies for school-based providers.
  • Provider Qualifications: State Medicaid agencies may establish provider qualifications for school-based providers that are different from the provider qualifications of non-school-based providers only if the qualifications are not unique to Medicaid-covered services.
  • Third Party Liability: States can suspend or terminate actions to request reimbursement from a liable third party if they determine the recovery of funds would not be considered cost-effective (CMS, May 18).

News

• On May 24, CMS released the “2023-2024 Medicaid Managed Care Rate Development Guide.” The guide provides states with information related to capitation rate setting in Medicaid managed care programs for the July 1, 2023 to June 30, 2024 rate period. The guide is divided into three sections: Information that applies to all Medicaid managed care capitation rates; information for developing rates that include long-term services and supports (LTSS); and, issues specific to new adult group capitation rates. Some key changes from last year’s guide include adding dual eligible special needs plans (D-SNPs) to the list of Medicaid managed care program types which the guide applies to, inclusion of language to document and evaluate the impact of the end of the COVID-19 continuous coverage requirement on each rate certification, and  guidance on rate certification for in lieu of services (ILOSs) beyond IMD (CMS, May 24).
• Health insurance brokers and independent agents are increasing their marketing efforts as states begin to redetermine Medicaid eligibility and reduce their Medicaid programs for the first time in more than two-and-a-half years. Brokers and agents will play a significant role in helping formerly eligible Medicaid enrollees to transition their Medicaid coverage to alternate coverage from the health care exchanges or employer-sponsored coverage. Brokers and independent agents have been hosting events at a variety of community-based organizations, like churches and physician offices, as well as advertising on Facebook and in public spaces. While navigator organizations (which provide advice on all alternate coverage options available) are still important during the period of Medicaid disenrollments, they may be unable to handle the large population of individuals who are no longer eligible for Medicaid, which is another place agents and brokers can step in to assist (Modern Healthcare, May 22).
• CMS is receiving intense criticism for not covering immunotherapy drugs, like Aduhelm, that target early-stage Alzheimer’s disease even though the FDA has approved them. CMS has determined those drugs and any future drugs in that class to be “not reasonable and necessary” which permits the agency to refuse payment for them. CMS noted that it would only cover the drugs for patients enrolled in approved federal studies, however, advocates say that those studies are generally unaccessible for most individuals. CMS’ decision has received bipartisan backlash from both House members and Senators (Yahoo, May 19).
• Senator Bill Cassidy (R-LA), ranking member of the Senate Health committee, is requesting feedback on draft legislation intended to improve care for dual-eligible Medicare and Medicaid beneficiaries by requiring states to enroll dual eligible beneficiaries in an integrated care plan to receive federal Medicaid funding. The legislation includes provisions on integrated care models, an expansion of the Program for All-Inclusive Care for the Elderly (PACE) to Medicare beneficiaries under the age of 55, and a new risk adjustment model for dual-eligible integrated care plans (Inside Health Policy, May 18).

Federal Regulation

• On May 23, CMS released a notice on proposed rulemaking (NPRM) that includes steps to further drive down prescription drug costs in Medicaid, building on President Biden’s executive order to decrease prescription drug costs. CMS proposes to verify certain drug prices reported by prescription drug manufacturers through an annual Medicaid Drug Price Verification Survey and proposes to address the lack of transparency in drug pricing that occurs with payment arrangements between pharmacy benefit managers (PBMs) and managed care organizations (MCOs). The survey would have no effect on the coverage of drugs for Medicaid beneficiaries and aims to increase transparency into why certain drug prices are so high while helping states better negotiate what its Medicaid program pays for high-cost prescription drugs. CMS also proposes that MCOs structure contracts with PBMs to require PBMs to report the cost of the covered outpatient drug and dispensing or administration fees separately from any administrative costs, fees, and expenses of the PBM to enhance transparency into the actual drug price paid. This will also assist in the accurate calculation of the MCOs medical loss ratio (MLR). The following is a breakdown of how the annual survey would work:
  • Step 1: CMS would look at objective measures of drug spending in Medicaid using both CMS and publicly available data to develop an initial list of high-price CODs (~160 drug products or 200 national drug codes (NDCs)). This list would include drugs that have the highest Medicaid drug spending per claim, the highest total Medicaid drug spending, the highest 1-year price increase among single source CODs, and the highest launch price (estimated to be in the top 5th percentile of Medicaid spending per claim).
  • Step 2: CMS would pare down the initial list to 3-10 NDCs by excluding CODs of manufacturers who: participated in any CMS drug pricing program or initiative where participating manufacturers directly negotiate a COD’s price with CMS; or, negotiated supplemental rebates with at least 50% of states where, when combined with federal rebates, the total rebate for the COD is greater than the average rebate for all CODs nationally.
  • Step 3: If, after application of the steps above, more than 10 CODs remain on the list, CMS would consider paring down the list further based on one or more of the following factors: state-specific Medicaid program input; or, highest cost CODs using factors from Step 1 and then Step 2.

Once the final list of CODs is determined, CMS would send the survey to select prescription drug makers for price verification. The survey responses would then be published on Medicaid.gov. In addition to the survey, the NPRM addresses proposed changes to MCO contracts with PBMs to assist with drug price transparency concerns based on the following:

• Spread pricing occurs when a PBM contracts with a Medicaid managed care plan to administer the plan’s drug benefit and the PBM retains the amount between what it is paid by the MCO and what the PBM pays a provider for the cost and dispensing of a drug.
• If the PBM is not transparent with the MCO about the actual cost to buy and dispense the drug, the MCO could be overpaying for drug benefits.
• The NPRM proposes MCO contracts with PBMs require PBMs to report the cost of the covered outpatient drug and dispensing fee separately from any other fees charged to the plan by the PBM.
• Any payments for costs over the cost of the drug and dispensing fee would be separately identified by the plan and could not be included in the numerator of the MLR, resulting in the MLR not being inflated inappropriately.

For additional information, see the Medicaid Drug Policy page on Medicaid.gov (CMS, May 23).

• On Wednesday, CMS released a CMCS Informational Bulletin (CIB) that provides guidance related to state compliance with regulatory requirements for Medicaid Enterprise System (MES) modules and solutions for states claiming the 75% federal match for ongoing operational costs. The CIB outlines CMS’ reapproval process for MES modules, state development of corrective action plans for non-compliant systems, penalties for ongoing non-compliance, and state submission of a reapproval request following resolution of outstanding MES issues as follows:
  • CMS periodically reviews and reapproves each state’s entire MES, particular modules, or solutions, or examines other specific, discrete components of a system. CMS is looking to validate the system to determine whether it is aligned with all related federal requirements.
  • States must submit operational reports to CMS containing metric data, verification of compliance with the conditions for enhanced federal matching rates, and other evidence to show successful operation of its MES. The operational reporting requirement is further described in SMD-22-001 and the Certification Guidance document.
  • Following submission of a reapproval, CMS will determine if a state’s MES module or solution is compliant with the conditions of enhanced matching. If not compliant, CMS will notify the state to submit a corrective action plan within 30 days of the date of notification.
    • The state’s corrective action plan must identify the issue(s) preventing compliance with applicable federal requirements and the state’s plan and timeline for meeting the conditions of reapproval.
  • At the end of the corrective action plan schedule, if the state remains noncompliant, CMS will issue a letter reducing federal match from 75% percent to 50%. The letter will include the following:
    • The decision to decrease federal match beginning the first day of the first calendar quarter after CMS issues the written notice to the state.
    • The determination findings.
    • A statement that any state claims in excess of the reduced federal match rate will lead to a deferral and/or disallowance action.
    • A description of the process the state can request reapproval of the MES module once the noncompliant issues have been resolved.
  • Once the system deficiencies have been corrected, the state may submit a reapproval request and provide the following information to the CMS State Officer and to MES@cms.hhs.gov:
    • The date the state remediated outstanding issues and that the system once again meets the conditions for reapproval.
    • An operational report and any other applicable data demonstrating system compliance with the reapproval conditions for enhanced federal matching.
    • A proposed timeframe for the reapproval review.

Any questions, should be directed to Edward L. Dolly, Director of the Division of State Systems (CMS, May 24).

Federal Legislation

• House Energy & Commerce Health subcommittee Chair Brett Guthrie (R-KY) and Representative Lisa Blunt Rochester (D-DE) are working on legislation that would establish a national nursing workforce center and state-based nursing workforce centers. Nursing shortages increased during the pandemic, and the Bureau of Labor Statistics projected 203,200 openings for registered nurses each year through 2031. The American Association of Colleges for Nursing has said that nursing school enrollment is not growing fast enough to meet the projected demands. The pending legislation would establish a national nursing workforce center under the Health Resources and Services Administration and establish a two-year pilot program to support state-based nursing workforce centers that conduct research (Inside Health Policy, May 19).

Waivers

• 1915(c) Appendix K
  • West Virginia
    • Adds rate increases for specific services provided under the Intellectual/Developmental Disability (I/DD), Aged and Disabled (AD), Traumatic Brain Injury (TBI), and Children with Serious Emotional Disorder (CSED) waivers.

SPAs

• Eligibility SPAs
  • Iowa (IA-23-0004, effective January 1, 2023): Adopts the changes to the eligibility rules for the Former Foster Care Children eligibility group, as enacted by the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act, Pub. L. No. 115-217, section 1002.
  • Kansas (KS-23-0015, effective May 1, 2023): Aligns premium rates for the Working Healthy program with recent changes to the protected income level for Kansas Home- and Community-Based Services waivers, which eliminates premiums for most beneficiaries.
  • South Carolina (SC-23-0002, effective January 1, 2023): Adopts the changes to the eligibility rules for the Former Foster Care Children eligibility group, as enacted by the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act, Pub. L. No. 115-217, section 1002.
  • Utah (UT-23-0007, effective January 1, 2023): Adopts the changes to the eligibility rules for the Former Foster Care Children eligibility group, as enacted by the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act, Pub. L. No. 115-217, section 1002.
  • Wyoming (WY-23-0003, effective January 1, 2023): Adopts the changes to the eligibility rules for the Former Foster Care Children eligibility group, as enacted by the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act, Pub. L. No. 115-217, section 1002.
• Payment SPAs
  • Connecticut (CT-22-0030, effective July 1, 2022): Provides rate increases for privately owned and operated intermediate care facility for individuals with intellectual disabled (ICF/IID) services as follows: fair rent increases, and a rate increase of 4.5% to support wage and benefit enhancements. The amendment also establishes a $501.00 per day minimum rate for eligible providers.
  • Connecticut (CT-23-0002, effective January 1, 2023): Updates the reimbursement methodology for physician services, laboratory services, medical Equipment, devices and supplies (MEDS), dental services, and independent radiology services.
  • Connecticut (CT-23-0003, effective January 1, 2023): Updates the reimbursement methodology for clinic services and provides a rate increase for Children’s Behavioral Health Home-Based Rehabilitation services.
  • Kentucky (KY-23-0006, effective July 1, 2023): Extends the age limit for residents in dually licensed pediatric nursing facilities.
  • Massachusetts (MA-22-0002, effective January 1, 2022): Updates the rate methodology for community health centers.
  • Montana (MT-21-0012, effective July 1, 2021): Updates the distribution for add-on payments for Direct Care Wages and Health Insurance for Health Care Workers and also updates the reimbursement section and reference to the fee schedule.
  • Nevada (NV-23-0005, effective July 1, 2023): Updates the reimbursement methodology for physician administered drugs (PAD) to include the state’s PAD fee schedule.
  • North Dakota (ND-23-0001, effective January 1, 2023): Provides for an inflationary increase of 3.75% for nursing facility services and implements a new payment methodology for property costs.
  • Oregon (OR-23-0002, effective January 1, 2023): Pays participating programs at enhanced rates for approved services as follows: Credentialed providers receive a 10% increase over the fee-for-service fee schedule; providers with a credential of master’s level or above receive a 20% increase; and, residential providers receive a 15% increase.
  • Pennsylvania (PA-23-0009, effective January 1, 2023): Amends the fee schedule for ambulance services and updates the link to the fee schedule.
  • Virginia (VA-23-0010, effective April 1, 2023): Updates the average commercial rate calculation for supplemental payments to physicians affiliated with Type One Hospitals.
  • Washington (WA-23-0011, effective January 7, 2023): Increases the hourly rate for agency providers by 1.6%, decreased the hourly rate of Consumer Directed Employers by 0.1%, and increased the mileage reimbursement to the Internal Revenue Service (IRS) rate of $0.655.
  • Wisconsin (WI-23-0006, effective January 1, 2023): Increases the hourly rate for personal care services to $5.86 per 15-minute interval.
  • Wisconsin (WI-23-0009, effective February 1, 2023): Provides an increase to the ground ambulance transport services fee-schedule rates, which include advanced life support levels one and two, advanced life support level one emergency, basic life support, basic life support emergency, and specialty care transport.
• Services SPAs
  • Mississippi (MS-23-0012, effective January 1, 2023): Allows the Division of Medicaid to clarify the categories of emergency ground ambulance services.
  • New Mexico (NM-22-0004, effective July 1, 2022): Expands school-based health services (SBHS) under the Rehabilitation benefit to include the following services: 1) school health aide service; 2) developmental rehabilitative therapy (enhances existing service); and, 3) specialized transportation. The SPA also introduces a new reimbursement methodology for SBHS.
  • Oregon (OR-19-0011, effective October 1, 2019): Expands school-based health services (SBHS) under the Rehabilitation benefit by: 1) adding specialized transportation to school-based rehabilitative services; and, 2) increasing reimbursement for students covered under the Individuals with Disabilities Education Act (IDEA). The SPA also introduces a new reimbursement methodology for SBHS.
  • Virginia (VA-23-0006, effective April 1, 2023): Updates coverage for selective non-legend drugs and removes language related to home infusion therapy from the pharmacy state plan pages.

News

• Rhode Island Governor Daniel McKee signed the Equality in Abortion Coverage Act into law on May 18, which will permit state funds to cover abortions for state employees and Medicaid beneficiaries. The act eliminates sections of law that prohibited Rhode Island’s Medicaid programs and health insurance plans for state employees from covering abortions under specified circumstances. Rhode Island is now one of the 16 states in the country where Medicaid programs cover abortion services (UPI News, May 19).
• Texas is close to giving new moms a full year of health insurance coverage after the Senate unanimously passed a bill extending Medicaid coverage. The bill had already passed the House, but due to a last minute anti-abortion amendment, it will return to the House for reconciliation. A similar version of this bill was passed last legislative session but was deemed “not approvable” by CMS. The language in question states that Medicaid coverage begins on the last day of pregnancy, with anti-abortion groups and conservative lawmakers claiming that since it does not specify how the pregnancy must end, the bill encourages abortion (MSN, May 22).
• Minnesota is in the process of enacting legislation that will establish a nursing home standards board which will set minimum wages and benefits for nursing home workers in the state. The state will be the first in the country to establish this provision. Minnesota has a shortage of 18,000 nursing home workers. The average hourly wage for nursing home staff in the state ranges from $19/hr for nursing assistants to $35.8/hr for RNs. The bill permitting the board was passed by the state legislature last week and is now headed to the Governor for his signature (Modern Healthcare, May 22).