Is the AZ Attorney General Contemplating Legislation to Protect Health Insurance Coverage for Folks with Pre-existing Conditions?

I was surprised to see an article in the AZ Capitol Times this week  reporting that Attorney General Brnovich along with Senator Mesnard abd Rep. Weninger and  are contemplating putting together a bill  that would provide a backstop for folks with pre-existing conditions to continue to be able to buy health insurance in case the Affordable Care is stricken down by the US Supreme Court in 2020 – which by the way is a real possibility. 

Arizona, via Brnovich, has signed on to the lawsuit trying to overturn the ACA in its entirety.

In December 2018 a judge in Texas (O’Connor) ruled that the Affordable Care Act is unconstitutional now that the individual mandate has effectively been eliminated (by the large tax cut bill last year). In July of this year, the 5th US Circuit Court of Appeals heard the Texas v Azar case. That ruling could come out any day now.

Whatever the 5th Circuit rules, the ACA will probably once again be in front of the US Supreme Court- perhaps as early as this spring.

Protections at Risk

At risk if the ACA is overturned are core health insurance coverage provisions like expanded Medicaid eligibility from 100% to 133% of the poverty level, coverage for childless adults under 100% of federal poverty (made possible via the AZ hospital assessment), subsidized Marketplace Plans, and a host of health insurance reforms like protections for folks with pre-existing conditions. 

The idea floated by Brnovich et.al. really focused on one of the insurance regulation measures in the ACA – the pre-existing conditions exclusions- which is one of the consumer protection components in the ACA that prevent insurance companies from: 

1) denying someone health insurance because they have a preexisting condition -called the “guaranteed issue” requirement;

2) refusing to cover individual services that people need to treat a pre-existing condition- called “pre-existing condition exclusions”; and

3) charging a higher premium based on a person’s health status – called the “community rating” provision.

Prior to the ACA, standards to protect people with preexisting conditions were determined at the state level.  Most states including AZ had very limited protections. Before the ACA, many insurers maintained lists of up to 400 different conditions that disqualified applicants from insurance or resulted in higher premiums.  35% of people who tried to buy insurance on their own were either turned down by an insurer, charged a higher premium, or had a benefit excluded from coverage because of their preexisting health problem.

Several states already have their own state laws that incorporate some or all the ACA insurance market protections. Could it be that Senator Mesnard, Rep. Weninger and Attorney General Brnovich want to do the same? 

And if so, what about the other things like expanded Medicaid eligibility from 100% to 133% of the poverty level (FPL), coverage for childless adults under 100% FPL (made possible via the AZ hospital assessment), and subsidized Marketplace Plans? 


Background on the 2012 Ruling Upholding the ACA

In the 2012 Ruling that upheld the ACA, Chief Justice Roberts wrote that: “… the Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax… because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.” 

Roberts rejected the Obama Administration’s argument that the federal government’s authority to regulate interstate commerce provides the authority needed for the ACA to be constitutional (the Court struck down that argument 5-4).  Fortunately, the court held (5-4) that the ACA was constitutional based on the federal government’s taxing authority (and that tax has now been eliminated).

Supreme Court Forecast

Because of the makeup of the 5th Circuit Court of Appeals they will likely uphold O’Connor’s decision to invalidate the ACA…   and the case will probably end up with the US Supreme Court, which has a different cast of characters than it did when the ACA was originally upheld back in 2012 by a 5-4 vote.

Since the 2012 decision upholding the ACA, Gorsuch has replaced Scalia.  Kavanaugh replaced Kennedy.  Both Scalia and Kennedy voted to overturn the ACA- so not much on that score has changed.

Chief Justice Roberts voted with the majority that upheld the law. His argument rested on the ACA’s link to the financial penalties for not having health insurance. But remember, those financial penalties f were removed from the IRS tax codes in last year’s federal tax overhaul, pulling out the structure that Roberts used in his argument.

The bottom line is that the ACA, including its protections for folks with pre-existing conditions, and all of the coverage through Medicaid and the subsidized Marketplace plans are in jeopardy if Roberts views the ACA as fundamentally different now that the financial penalties are gone.

Basically, the fate of the US’ health care system and all the protections that it provides will likely rests with one person, Chief Justice John Roberts.

And while it’s nice that AG Brnovich is contemplating doing something about the pre-existing condition exclusions- it’s really just focusing on a fraction of the chaos that would result from the overturning the ACA.

CMS Files Hospital Price Transparency Rule (But Penalties for Noncompliance are Negligible) 

Last Friday CMS filed final rules requiring hospitals to make public their gross charges, payer (health plan) specific negotiated charges, minimum and maximum negotiated charges, and their discounted prices. The data is supposed to be displayed in electronic format. The rule will apply to all US hospitals.  The rules kick in on January 1, 2021. 

Hospitals will be required to make public standard charges for at least 300 “shoppable services” (including 70 CMS-specified and 230 hospital-selected) the hospital provides in a “consumer‑friendly” manner.  

A sweeping rule indeed, until you look at the penalty for noncompliance.  If CMS thinks a hospital is noncompliant they can fine the hospital up to $300/day (total). That’s about $110K per year.

This fact sheet discusses the provisions of the final rule (CMS-1717-F2), which can be downloaded from the Federal Register at: https://www.hhs.gov/sites/default/files/cms-1717-f2.pdf.

Transparency in Coverage Proposed (Rule CMS 9915 P)

HHS proposed a “Transparency in Coverage” this week.  It’s just a proposed (not a final rule by any means). The proposed rule would require group and individual health insurance plans to disclose  personalized out-of-pocket cost information for all covered health care items on line. Plans would also be required to disclose in-network negotiated rates with their network providers.  The proposed rule is at here: https://www.hhs.gov/sites/default/files/cms-9915-p.pdf.

Help the Maricopa County Department of Public Health with their Community Needs Assessment

Every three years, the Maricopa County Department of Public Health conducts a community health needs assessment that includes a survey of our community partners on the effectiveness of the Local Public Health System.

Here’s a link to their survey asking about the functioning of our public health system.  This is not an assessment about the department, but of the greater public health system in Maricopa County.  All responses are anonymous.

Please complete the survey by November 30th. You can start the survey and come back to it- your responses will be saved.  The findings will be published with the 2020 Maricopa County Coordinated Community Health Needs Assessment next year.  Please help with the Local Public Health System Assessment Maricopa County 2019

Steward Health Care to be Bought by Blue Cross Blue Shield

Steward Health Care System announced this week they they’re selling their Medicaid and Dual Special Needs Medicare Health Plans to Blue Cross Blue Shield of Arizona. The sale won’t be final until approved by AHCCCS.  They expect to complete the sale in early 2020.  Steward’s Medicaid health plan serves the northern part of the state and covers about 200,000 AHCCCS members.  Their network includes about 17,000 healthcare providers.

Blue Cross Blue Shield is currently not in Arizona’s Medicaid program, so this will be a new entry into the Medicaid market for them in Arizona.  The press release said that providers won’t need a new agreement with BCBSAZ Health Choice Arizona and Medicaid members can keep their current providers as well.  Members will be getting new ID cards after the transition.

What’s Up with the ADHS Sunset Review?

Every 10 years AZ state agencies come up for what’s called a Sunset Review. It’s a process by which the legislature reviews agency performance and their mission. The legislature generally reauthorizes the agency for a 10 year period after the review. We’re currently in the fiscal year in which the ADHS is up for review.

There are several pieces to the process including some agency Auditor General reports, a review of that report by a selected legislative committee, and finally a bill that will re-authorize the agency (usually but not always for 10 years).   

ADHS Auditor General Reports

The sunset review starts with a report written by the Arizona Auditor General.  They pick a few areas of the agency to examine and put forward their findings. The Arizona Auditor General is in the legislative branch is supposed to serve as an “independent source of impartial information concerning state and local governmental entities and provides specific recommendations to improve [their] operations”.

A few weeks ago, the Auditor General published some findings on the ADHS as part of the sunset review.  The reports are published on the Auditor General’s website which include their findings and also recommendations for improvements in areas that are found deficiencies.

They published 2 reports about the agency last month.  One of the reports found that the ADHS licensing division “failed to investigate or timely investigate some long-term care facility complaints, didn’t  comply with some conflict-of-interest requirements, and has some gaps in IT security.” 

A 2nd report focused on the Arizona State Hospital (which is part of ADHS) and found that they hadn’t fully “evaluated assault-reduction strategies but has established processes for patient admission, ensuring patients receive prescribed treatment, and reporting incidents.”

The Auditor General’s website posts the reports and the agency responses to the report.  Those responses state whether the agency leadership agrees with the findings or not and whether and how they intend to change practices to improve on the report findings. 

ADHS leadership disputed many of the findings about the nursing home complaints- but nevertheless agreed to partially implement some of the auditor recommendations. Their leadership also stated that additional funding will be needed to timely follow up on nursing home complaints.

On page 6 of their response, ADHS leadership states that will need an additional 44 staff and $3.3M to do timely follow on the 2,500 nursing home complaints that they get each year. 

Legislative Review of the Auditor General Report

Once the Auditor General Reports are completed, a committee of the state legislature meets (before the legislative session starts) and has a hearing about the findings and votes whether to recommend to the full legislature that the agency be re-authorized for another 10 years.

The Senate Health & Human Services Committee met last week to talk about the findings and vote on the recommendation to reauthorize the agency. 

You can read more about what happened in this article from Stephanie Innes at the Arizona Republic …  but basically 3 of the Senators on the committee voted “no” on the motion to recommend reauthorizing the ADHS for another 10 years because they wanted to learn more about how the agency intends to change their processes and timely follow up on nursing home complaints.  The vote was still 4-3 to reauthorize…  but it’s kind unusual to have “no” votes like that.

There still needs to be a successful bill next legislative session in order to reauthorize the agency. 

Licensing Division Funding

Before the recession, the ADHS received state general fund appropriations to perform their licensing functions (hospitals, skilled nursing, assisted living, childcare, residential behavioral health facilities, outpatient treatment clinics etc.). 

As part of the budget cuts in 2009, all of the general fund dollars were discontinued and the agency was given rulemaking authority to charge a fee to licensed facilities to satisfy their regulatory responsibilities.  The licensing fees were authorized to go into a new ADHS Licensing Fund.  

We estimated the resources that we’d need to do our work and published the final fee structure in 2009. However, we forgot to add in overhead (called Indirect in state government speak) to the fees, and the final fees that we ended up charging (and therefore our revenue) was about 20% lower than they should have been – and we basically had to live with that.  My bad.  And remember- those fees were set in 2009 – and no adjustment for inflation is in the fee structure.

I don’t know is how much money is in the Licensing Fund right now… but there are a couple of possibilities when it comes to getting the additional $3.3M that the agency says they need to timely follow up on nursing home complaints. 

If there’s enough money in the Licensing Fund, they could ask the legislature to appropriate that money to hire the staff they need to adequately follow up on nursing home complaints (and other functions).  If the funds aren’t available in the Licensing Fund, then they could ask permission to raise the licensing fees and raise the needed revenue that way.

I suspect that when the Executive Budget is released in January it’ll propose an appropriation from the Licensing Fund to cover the need (although this was not included in the agency’s budget request). 

If the funds aren’t available in the Licensing Fund, then I suspect there may be a proposal to raise licensing fees. It’s just hard for me to believe that if it’s really true that $3.3M more is needed to do the job right that the money won’t be found.

After all, inspecting and following up on complaints in nursing homes is a core government function that’s necessary to ensure the health and safety of some of the most vulnerable folks in Arizona.

Abuse & Neglect Prevention Task Force Report Released

A few months ago (after the discoveries at Hacienda Healthcare) the governor issued an executive order directing AHCCCS, ADES and ADES to convene a working group and make recommendations to better protect vulnerable adults (including folks with disabilities) from abuse and neglect.

A task force was put together and did some pretty diligent work. Last week the task force published their report which included 30 detailed and fairly measurable recommendations.  Each recommendation has a lead agency and many provide well-defined implementation deadlines.

The recommendations include sensible reforms, practices, resources, policies, and some commitments that would, if implemented, improve and sustain safety and security for vulnerable individuals. The report (w/o appendices) is 19 pages long- and is quite readable.  I encourage you to take a look. It really is some impressive work.

Of course- the key is really implementing the recommendations.  Some are contractual changes that AHCCCS can make within their managed care contracts.  Some are agency and inter-agency process recommendations. Others involve implementing modifications to computer systems. Some will require changes to state law (like modifying the definition of abuse).  All have a lead agency (almost all are AHCCCS and ADES) and most have an implementation date goal.

Some of the recommendations will require additional funding.  For example, Recommendation #21 states that…  “The State should also provide a level of funding for the APS (Adult Protective Services) program that takes into account annual growth in the number of reports, fair market wages for investigators, outdated technology across the program, and lack of available service referrals in certain areas of the state.”

This is an important report that clearly involved a lot of work.  Let’s keep our eye on the document and the implementation progress (including the important funding that APS needs).  If implemented, the recommendations provide an opportunity to better protect vulnerable adults across AZ.

New Research Finds Medicaid Expansion Has Saved at Least 19,000 Lives Nationally

Back in 2013- via a lot of hard work by public health advocates, solid support from many legislators, funding via an assessment on hospitals, and with the urging of Governor Brewer, Arizona restored Medicaid coverage to “childless adults” (who has previously been frozen out of the state’s Medicaid program) and extended coverage up to 138% of the federal poverty level. 

Those decisions have extended access to healthcare to hundreds of thousands of Arizonans (400,000 folks in the expansion population alone)- and have been a big reason why Arizona’s uninsured rate has dropped so precipitously.

A new study published this week (using national data) found that the states (like Arizona) that expanded Medicaid have saved lives in their states.  Likewise, the study found that the policy decision states made to not expand has led to premature deaths.  The new study compares mortality rates among 55- to 64-year-olds likely eligible for Medicaid in expansion states to mortality rates among similar older adults in non- expansion states.

The study found that Medicaid expansion from 100% of FPL to 138% saved the lives of at least 19,200 adults aged 55 to 64 from 2014 to 2017.  Conversely, 15,600 older adults died prematurely because of state decisions not to expand Medicaid.  Remarkably, there was an estimated 39 to 64% reduction in annual mortality rates for older adults gaining coverage. 

If all states had expanded Medicaid, the number of lives saved just among older adults in 2017 would roughly equal the number of lives that seatbelts saved among the full population.

Other studies have found similar results, so this week’s results aren’t surprising, since a large body of research has already documented mechanisms by which Medicaid expansion could be preventing premature deaths, and other studies have found reductions in mortality from pre-ACA coverage expansions. 

For example, other studies have found that Medicaid expansion resulted in:

  • Large increases in prescriptions filled for heart disease, diabetes, mental health conditions, and other chronic conditions.

  • Large increases in the share of low-income adults getting regular check-ups and other preventive care, and large decreases in the share without a personal physician or usual source of care.

  • Large decreases in the share of low-income adults skipping medications due to cost.

  • Decreases in the share of low-income adults screening positive for depression.

  • An increase in the share of people getting surgical care consistent with clinical guidelines, for example less invasive surgical techniques where feasible.

  • Increases in cancer screenings and early-stage cancer diagnoses.

  • A decrease in one-year mortality rates for patients diagnosed with end-stage renal disease.

How is Medicaid Funded?

Medicaid is financed by both the federal government and the states using a formula that is based on a state’s per capita income. The federal share (FMAP) varies by state from a floor of 50% to a high of 74% with exceptions for certain services or populations. The Affordable Care Act (ACA) expanded Medicaid eligibility for adults under age 65 and provided the states that chose to expand with an Enhanced FMAP of 100% federal funding through 2016 for the newly eligible adults. The federal share for the expansion population phased down to 95% in 2017 and to 90% by 2020 and beyond.

HERE is the Kaiser breakdown of Medicaid expansion spending by state.

Community Health Centers File Lawsuit Challenging AHCCCS Reimbursement Practices

Federally Qualified Health Center Primer

Federally Qualified Health Centers occupy a special place in America’s healthcare system.  Better known as FQHC’s, they operate under a mandate to provide comprehensive community-based health care in underserved areas- basically in areas where there’s a shortage of healthcare providers (often in rural and lower income urban areas).   

FQHCs are often also called Community Health Centers, Migrant Health Centers, Health Care for the Homeless, and Health Centers for Residents of Public Housing.

FQHCs are a super-important part of the healthcare network because they provide access to healthcare in areas that would otherwise likely have very few providers. Much of their mission focuses on primary care- which as I’ve written about many times is critical to improving public health outcomes and reducing costs.

In addition to funds from HRSA- federal law provides some financial incentives like special reimbursement programs which keep FQHC’s business models afloat.  Without these special incentives their business models would be in jeopardy- risking already thin networks in rural and under-served areas.

In order to qualify for the financial incentives they receive, FQHC’s have to meet stringent requirements like providing care on a sliding fee scale based on ability to pay (e.g. for uninsured folks), providing a full array of services including primary care and preventive services as and operating under a governing board that includes patients. 

Many FQHCs integrate access to pharmacy, mental health, substance use disorder, and oral health services and are often the only truly accessible place to get care in a community.

The ADHS website has easy to use tools to find FQHCs and Sliding-Fee-Schedule Clinics including ones for Primary Care Providers, Behavioral Health Providers and Oral Health Providers.  One can also download a mobile app to find federally-funded health centers on the go.

The Lawsuit Filed this Week

This week the Arizona Alliance for Community Health Centers- a nonprofit group that represents many of Arizona’s FQHCs – filed a lawsuit (in the 9th Circuit Court of Appeals) on behalf of Arizona FQHCs challenging some of AHCCCS’ reimbursement practices with respect to FQHCs (mostly for adult dental services but more on that in a bit). 

The case is called Arizona Alliance For Community Health Centers v. Arizona Health Care Cost Containment System.  The named Plaintiffs are Sunset Community Health Center, North Country Healthcare, Sun Life Family Health Center and others And the Defendant is Jami Snyder, the Director of AHCCCS.

There are several areas in the lawsuit that challenge the way AHCCCS is reimbursing for (or not reimbursing for) services in FQHCs…  but after reading the complaint (which isn’t posted on the court’s website yet) and talking to a few folks this week – the core issue seems to be that AHCCCS hasn’t been paying for adult dental services the way the 9th Circuit has previously ruled that they should (in CA).  

The FQHCs that have been providing adult dental services say they’ve been forced to pay for those services with other funds (like sliding fee scale funding) rather than the funds that they argue should be coming back from AHCCCS.  Other grievances in the Complaint argue that AHCCCS hasn’t been reimbursing for podiatry, optometry and chiropractic services the way the 9th Circuit has previously ruled that they should (again in CA).

A few months ago, the Federal 9th Circuit ruled that state Medicaid programs need to reimburse for adult dental services even if the state’s Medicaid program doesn’t cover adult dental services (or they limit them to emergency dental only or caps the services like Az does). 

So, at the core it looks to me like the suit is geared to leverage the previous 9th Circuit ruling that health centers are entitled to reimbursement when providing dental services to Medicaid members (and not limited to the existing $1K or $2K annual financial cap).

It’ll be awhile before it’s all settled, but if the suit is successful it will likely result in a more robust oral health network for adults covered by Medicaid as well as improve oral health outcomes.

AZ Kids Health Insurance Coverage Lagging

The number of uninsured children in Arizona rose dramatically more than 10% between 2016 and 2018 and the state jumped to the third highest in the country for percentage of uninsured kids, according to a new report released by the Georgetown University Center for Children and Families.  The report is full of very interesting data.

Arizona does not fare well in the report- ranking near the bottom in terms of the percentage of kids that have some kind of health insurance. In Arizona, 146,000 children (8.4%) lacked coverage in 2018. 

The states which have lost statistically significant ground are Alabama, Arizona, Florida, Georgia, Idaho, Illinois, Indiana, Missouri, Montana, North Carolina, Ohio, Tennessee, Texas, Utah, and West Virginia.

Nationally, the loss of coverage is most pronounced for kids under age 6, and children in families who earn between 138 percent and 250 percent of poverty ($29,435 – $53,325 annually for a family of three)- basically the CHIP or Kids Care population.

The report finds a number of factors have contributed to the rise in uninsured children, including a chilling effect caused by a shifting immigration policy landscape and parents not enrolling their eligible children in Medicaid or Children’s Health Insurance Program (CHIP or KidsCare); confusion over the Affordable Care Act’s individual mandate and open enrollment dates; and added red tape to the Medicaid enrollment process.  

Children’s health coverage has long had broad bipartisan support in Congress and in Arizona. It’s time to double-down on our efforts to let families know quality health coverage options are here! One thing you can do is to let families know that the ACA Marketplace (or Obamacare) open enrollment begins tomorrow, November 1st. You can find out more by visiting CoverAZ.org. Marketplace Open Enrollment info is happening right now with enrollment and other info at https://www.healthcare.gov/.

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