From AIS Health: Moves to Block Medicaid Expansion May Spell Trouble for MCOs

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Moves to Block Medicaid Expansion May Spell Trouble for MCOs

Reprinted with AIS Health permission from the May 21, 2021 issue of Health Plan Weekly

Across the country, conservative state officials are going further than ever to thwart Medicaid expansion, taking steps to reverse successful ballot initiatives, reforming processes to block ballot measures before they reach voters — and erecting barriers to Medicaid enrollment for some residents who are already eligible. That’s all potentially bad news for Medicaid-focused insurers, experts say.

In Missouri, voters in August 2020 approved an amendment to the state constitution that expands Medicaid. However, the Republican-controlled state legislature refused to fund the new program. Though Republican Gov. Mike Parson had promised to implement the expansion program as recently as January, on May 13 he reversed his position and sent a letter to CMS withdrawing the State Plan Amendments required to launch the program. In response, a Missouri legal aid group filed a lawsuit against the state.

Meanwhile, in South Dakota, Idaho and Mississippi, conservatives are working to make the ballot-initiative process much more difficult, if not impossible, to use. South Dakota Republicans have put a constitutional amendment up for vote in the June 22 primary that would require initiatives to win 60% approval to pass. Idaho’s Republican legislature and governor passed a law making the signature gathering process more onerous, which has been challenged by the activist group that successfully campaigned to pass a Medicaid expansion ballot initiative in the state. And a Republican mayor in Mississippi won a suit against the Mississippi secretary of state to overturn a successful ballot initiative that legalized medical cannabis — a ruling that has rendered the initiative process inoperative ahead of a planned Medicaid expansion vote.

Experts say that conservative hostility to Medicaid isn’t limited to Medicaid expansion. Republican-led states have made even traditional Medicaid harder to access in recent years by increasing the frequency of eligibility verification that potential and enrolled beneficiaries have to clear — a policy that also generally increases the administrative burden for Medicaid managed care plans.

Gary Rosenfield, senior vice president at ConsejoSano and a former Kaiser Permanente Medicaid executive, says the state-level conservative hostility to Medicaid is part of a trend that started under the Trump administration.

“The previous administration did whatever they could to try to undermine Medicaid, whether it was work requirements, block grants, making it harder for people to enroll or reducing the amount of money that goes into it,” Rosenfield tells AIS Health, a division of MMIT. “This is just further going down that path.”

“They’re going against what people voted on,” he adds. “But then their legislators decided, ‘We don’t care what the people say, we don’t want to do this.’ I mean, it is kind of a function, I believe, of structural racism. I think it’s an assault on people who don’t have means.”

In a press release, Parson framed his reversal as a pragmatic decision, insisting that the conservative legislature forced his hand.

“Although I was never in support of MO HealthNet expansion, I always said that I would uphold the ballot amendment if it passed. The majority of Missouri voters supported it, and we included funds for the expansion in our budget proposal,” Parson said. “However, without a revenue source or funding authority from the General Assembly, we are unable to proceed with the expansion at this time and must withdraw our State Plan Amendments to ensure Missouri’s existing MO HealthNet program remains solvent.”

Michael Neidorff, the CEO of Centene Corp., denounced Parson’s decision in comments made to the publication Health Payer Specialist.

“As the largest provider of Medicaid in the United States and a Fortune 42 company I have to ask myself, ‘Why am I in this state?’” Neidorff said. “This is a state that frowns on this business — what am I doing here? It’s an embarrassment.”

Legal Services of Eastern Missouri agrees with Neidorff. The legal aid group filed suit in Cole County Circuit Court on May 20 against the state government seeking an injunction, arguing in a filing that the state’s “decision to refuse to extend benefits under the MO HealthNet program to the newly eligible population is unlawful because there is an authorizing constitutional amendment and an appropriation for this program.”

Jane Perkins, legal director of the National Health Law Program, tells AIS Health in an emailed statement that “Medicaid expansion is probably the most heavily studied event in the history of the Medicaid program. The evidence from these studies is consistent: Medicaid expansion saves lives, addresses racial disparities in health, and brings financial stability to health care providers and  jobs to communities (among other things). Hopefully, this litigation will provide an impetus for Missouri’s state leaders to re-think their position.”

In a sign that Missouri could be starting a trend, conservatives in Idaho’s legislature also mounted a serious effort to undermine that state’s Medicaid expansion, which voters approved by ballot initiative in 2018. Though the program will be fully funded in the next fiscal year, it only passed by a 36-34 vote.

“I think all of us are probably frustrated with out-of-control spending related to Medicaid, and that primarily is based upon enrollment growth and policies that have been adopted by the state and by the federal government related to Medicaid,” said Republican state Rep. Paul Amador, according to Spokane Public Radio.

Trump Admin Backed More MOE Checks

Some states have also sought to make enrolling in traditional Medicaid — or staying enrolled — more difficult for beneficiaries. The Trump administration encouraged states to make maintenance of eligibility (MOE) checks more frequent, claiming that doing so could help the Medicaid program save money. KFF research indicates that stepping up MOE checks depresses enrollment in Medicaid among eligible people, with a 2019 KFF report observing that “complex enrollment and renewal processes were barriers to Medicaid coverage.” Robin Rudowitz, a vice president at the KFF, says the Biden administration can take an opposite approach to Medicaid eligibility barriers, and seems likely to do so given its stated policy of reducing barriers to enrollment.

“We’re definitely going to be watching to see if the administration puts out additional guidance and guardrails for states and how they manage the process about restarting renewals and determinations after this period,” Rudowitz says. “We know that those things make a big difference in terms of ensuring that people who are eligible maintain their coverage.”

Rudowitz explains that, for the moment, states are blocked from erecting these sorts of barriers to coverage by strings attached to federal pandemic relief funds. The 2020 Families First Coronavirus Response Act prevents states from disenrolling Medicaid beneficiaries while states receive enhanced Medicaid funding during the public health emergency.

States Await End of Health Emergency

“They’re still bound by the maintenance of eligibility requirements that were part of the public health emergency and access to the enhanced match funds,” she says. So states like Montana, where the legislature cut funding for a continuous eligibility program that allows beneficiaries to stay enrolled for the full calendar year even if their income increases, won’t be able to put any enrollment-depressing policy into action quite yet — though they may be preparing to do so.

“There are some things that states can be doing now, like checking addresses,” Rudowitz explains. “They can’t disenroll people, but they can be collecting information.”

Rosenfield adds that MOE checks are particularly difficult for people who don’t “have stable housing, or they don’t have access to the internet routinely, or they don’t have transportation to get to the local department of social services where they might have to fill out the application or prove things out in terms of income. All of those things will definitely impact the populations that we’re trying to serve.”

He adds that such policies make operations more difficult for Medicaid managed care plans: The increased administrative burden increases per member expenses, and actuarial calculations are much more difficult.

“Plans want more people enrolled, whatever the product is,” Rosenfield explains. “With Medicaid, they get a capitated rate per member per month. If people are starting to be cut from the rolls because the state is making them have to prove their income every three months instead of once a year, then all of a sudden, you get your new enrollment file and you lose all these members. This could be a big hit to their revenue. In Montana, where they’re doing these more regular income checks, it makes it hard for the plans to actually do their budgeting and financing and forecasting, because they don’t know which of their members are going to be dropped from month to month.”

Contact Perkins via Andrew DiAntonio at diantonio@healthlaw.org, Rosenfield via Joe Reblando at joe@joereblando.com and Rudowitz at robinr@kff.org.

by Peter Johnson