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Federal Officials Seek Input From States on Health Reform

WASHINGTON – State legislators and health policy stakeholders, looking for insight into how national health reform will unfold in their states, got two messages loud and clear last week at the National Conference of State Legislators Spring Forum: Federal leaders aren’t exactly sure yet how everything’s going to work, and they welcome all the help they can get.

“There are enormous opportunities ahead but this will work only if we work closely in collaboration,” said Cindy Mann, director of CMS’ Center for Medicaid and State Operations.

“You’re all facing a lot of decisions about how to organize on the state level, and a lot of those decisions will depend on some of the decisions we’re making at CMS. This is not just business as usual, it’s more business. This is truly a new paradigm, a new way of doing things,” Mann said.

Jay Angoff, former insurance commissioner for Missouri who now advises HHS Secretary Kathleen Sebelius on health insurance issues in the new law, said federal regulators welcome input.

“This is not a magic pill that will cure all the ills of our system, but it is the law of the land, and we want to implement it in the best way possible. When it comes to specifics, we know people on the ground know best. We want to hear from those people,” Angoff said.

‘Working on What it Means’

Joy Wilson, health policy director for NCSL, said the new law is complex and far-reaching and “it’s going to take a while for it all to shake out.”

“It’s like a really long math problem. We in Washington are working through all this, and we’re still getting different answers,” Wilson said. Because the reform bill was passed in the reconciliation process and required a manager’s amendment, it comes with extra layers of bureaucracy and procedural steps, Wilson said.

“We’re getting pretty close to agreeing on what they did. Now we have to start working on what it means,” Wilson said.

An example of extra bureaucratic hurdles: Because the final reform package is essentially the Senate version from last fall, it includes the possibility of retroactive payments and deadlines. For instance, the minimum rebate level for most brand-name drugs was to increase on Jan. 1 this year from 15.1% to 23.1%. At the same time, minimum rebate levels for generics were to increase from 11% to 13%.

CMS is expected to issue guidance on retroactive drug rebates this week and “will continue providing guidance on other issues in a timely manner,” Mann said.

Also, by March 1, HHS was to have established a federal Coordinated Health Care Office to integrate Medicare and Medicaid.

Dissenting States Create ‘Awkwardness’

Nearly 20 states are now challenging the national health reform law in court, contending it is unconstitutional to require individuals to buy insurance.

Other states have different complaints. A legislator from Oklahoma at the NCSL Spring Forum said his Legislature is working to nullify the law “because our state can’t afford it.”

Angoff said legal and legislative challenges to health reform “create an awkwardness in certain states,” but federal health officials are paying them little mind.

“We at CMS have to move forward. Those challenges and the questions they raise are out of our hands,” Angoff said.

 Money on Their Minds

Seminars and work sessions dealing with health care reform were among the best attended at this year’s NCSL Spring Forum and generated as many questions as answers. Many of the questions centered on the recurring theme of new expenses for cash-strapped states.

In response to a question about new costs in implementing new eligibility standards for Medicaid, Wilson suggested that stimulus money associated with health IT might be used to help states deal with new eligibility rules.

Asked about the threat of increased insurance premiums as a result of reform, Angoff said “according to our actuarial predictions, rate increases will not be substantial — nothing into double figures.”

Asked if there would be federal flexibility in approving insurance exchanges, Angoff said “We’re looking for ways to say yes, not ways to say no.”

Three-Pronged Approach

Mann — in her presentation, “Putting Reform into Medicaid and Medicaid into Reform: A Two-Way Street” — used a three-legged stool to illustrate new, ambitious plans to provide health insurance for almost everyone. The three legs of her stool are employer-supported insurance, new insurance exchanges created in the reform law and expansions of Medicaid and CHIP.

“The more you think about these three as a system working together in your state, the more you’ll keep people from falling through the holes,” Mann said. “Different states have different answers for creating systems, but the goal should be to get all three of these pieces working together as seamlessly as possible,” Mann said.

The goal should be to allow people to move relatively quickly and without too much red tape or change in cost to the individual from one system to another as circumstances change, Mann said.

Although many of the reforms don’t kick in for years, federal and state officials agree there is some urgency in getting started.

“We have to pass the baton to states, and we have to do it quickly,” Mann said. Federal officials said they realize most states are struggling through dire economic straits, but they urged states to get health reform machinery started. Mann said new federal support and resources are available now, and states should take advantage as quickly as possible.

“2014 begins today. There really is no time to waste,” Mann said, referring to the deadline for many key provisions of the health reform law, including state insurance exchanges for individuals and exchanges for small businesses, individual mandates for maintaining health coverage, guaranteed issue when insurers will be required to accept all comers and streamlined Medicaid enrollment

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism about health issues. Together with Policy Analysis and Polling, KHN is one of the three major operating programs at KFF (Kaiser Family Foundation). KFF is an endowed nonprofit organization providing information on health issues to the nation.

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