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Perspectives

Four strategies for overcoming potential work-requirement barriers in Medicaid

Health Care Current | June 5, 2018

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My Take

Four strategies states should consider to help beneficiaries comply with Medicaid work requirements

By Jim Hardy, specialist executive, State Health Transformation Services, Deloitte Consulting LLP

Work requirements in the Medicaid program have gained a lot of attention recently, but beneficiaries might face challenges in meeting these new rules. Rather than have enrollees lose health care coverage, there are several strategies states could consider to help members satisfy the new requirement.

Since the beginning of the year, four states—Arkansas, Indiana, Kentucky, and New Hampshire—have been given the green light to add work requirements to their Medicaid programs. Another six states are awaiting approval, and several others are considering it.

In January, the US Centers for Medicare and Medicaid Services (CMS) announced that it would support state efforts “to test incentives that make participation in work or other community engagement” a requirement for Medicaid eligibility through demonstration projects authorized under section 1115 of the Social Security Act.

New Hampshire is the latest state have its waiver approved.1 Under that demonstration, non-exempt and able-bodied Medicaid-eligible adults under age 65 will be required to spend at least 100 hours per month on community engagement activities such as working, going to school, training for a job, or participating in community service.

Why work requirements?
The states seeking approval for Medicaid work requirements see it as a way to support Medicaid beneficiaries’ transition from safety-net programs by encouraging them to seek and find jobs, and in turn increase the Labor Force Participation Rates. Work requirements also could help states win support to expand Medicaid eligibility—as allowed under the Affordable Care Act (ACA).

According to the journal Health Affairs,2 about half of all able-bodied adult Medicaid beneficiaries have jobs, but might not earn enough to keep them above the federal poverty level. Another 14 percent are looking for work. That leaves about one-third of Medicaid beneficiaries who are neither working nor looking for work.

SNAP participation fell after work requirements were reinstated
While work requirements are novel in Medicaid, they are included in the Supplemental Nutrition Assistance Program (SNAP), and some states are building their Medicaid work requirement around that model. SNAP, which replaced food stamps in 1996, requires able-bodied adults without children (between the ages of 18 and 49) to work or volunteer at least 20 hours a week—or to participate in a job-training program—in order to earn additional SNAP coverage beyond the three months of coverage for which they are eligible in any three-year period. The struggling economy prompted many states to waive that requirement between 2009 and 2015. As the job market has improved, those rules have been reinstated in many areas.3

After states reinstated SNAP work requirements, following the economic recovery, many reported substantial drops in SNAP participation—between 50 percent and 85 percent. In Kansas, for example, work requirements were reinstated in 2013. By late 2015, enrollment had fallen 75 percent. In Maine, SNAP participation dropped 80 percent three months after work requirements were reinstated in 2014.4 It is unclear exactly why these programs had reductions in participation.

If Medicaid adds similar work requirements, states could see significant reductions in Medicaid enrollment. If they want to avoid that scenario, states could take a close look at why some Medicaid beneficiaries don’t work. Focus groups could help state Medicaid offices determine why some Medicaid beneficiaries don’t have jobs and identify innovative strategies to support their efforts to find work. Strategies to improve compliance might have to be tailored to address the unique characteristics of each region within a state.

As a first step, state Medicaid officials will need to determine how many beneficiaries are likely to be affected by a work requirement. They could then assess, by region, the capacity of the state’s labor markets to absorb an influx of individuals who are looking for work, and determine how well the job skills of the Medicaid beneficiaries match up with available job opportunities. It could also be helpful to determine the capacity of existing job-training programs to assist new participants.

States that intend to add a work component to their Medicaid programs could look at some of the challenges SNAP participants have encountered in meeting work requirements. Identifying potential barriers (and solutions) early on could help Medicaid programs have more enrollees work. Consider these four strategies:

  1. Add capacity to work-training programs: Tens of thousands of Medicaid beneficiaries might need to enroll in training programs to meet the new requirements. Many of these beneficiaries likely have limited education and work experience. States might need to increase or re-purpose existing workforce-development funding to support training programs that are specifically targeted to this Medicaid population. States might also need to strengthen their agreements with local and regional workforce-development boards to increase their focus on helping Medicaid beneficiaries meet the work requirement.
  2. Address transportation barriers: While SNAP includes a limited transportation benefit, job-related transportation assistance is not a covered service under Medicaid. Not having access to reliable transportation can keep some beneficiaries out of the workforce. Paying for transportation can be a significant barrier for people, particularly if they need to wait two weeks or a month before receiving their first paycheck. While CMS has not approved Medicaid expenditures for non-Medicaid services in any of the work requirement related 1115 waivers, CMS has not yet issued guidance on whether or not Medicaid funding could be used for innovative transportation strategies. Indiana and Kentucky, for example, included rewards accounts in their waivers. Beneficiaries can use these accounts to pay for certain services and benefits. States could ask CMS to allow beneficiaries with these types of accounts to use their funds for job-related transportation.
  3. Encourage health plans and providers to help members meet the requirements: Managed care organizations and health care providers have a vested interest in helping Medicaid beneficiaries (their members and patients) maintain eligibility. Some health plans might even find opportunities internally (e.g., call-center jobs) for beneficiaries, or develop their own work-training programs. Health plans also could work with their community partners to find or create volunteer opportunities. While some health plans might develop their own solutions, states could use contracts to require health plans to develop training programs or volunteer opportunities for their Medicaid members.

    Hospitals, health systems, and physician groups also have a financial stake in helping ensure that Medicaid beneficiaries don’t lose eligibility. States might consider using Disproportionate Share Hospital (DSH) or their Delivery System Reform Incentive Payment (DSRIP) programs in a way that encourages creation of job-training programs or employment/volunteer opportunities for Medicaid beneficiaries.
  4. Consider the relationship between the work requirement and the sanction policy: States should determine whether their sanction policies could lead to unintended consequences. Sanction policies are aimed at beneficiaries who do not meet the work requirement. But what about beneficiaries who remain unemployed, despite actively seeking employment?

I expect CMS will approve 1115 waivers from other states that include a work requirement. Before implementing this requirement, Medicaid programs should consider aggressively publicizing the new rule among members, remind people of the benefits of maintaining eligibility, and provide as much support and assistance as possible to help ensure that the goals of the program are met by helping people find work or other qualifying activities.

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1 https://www.dhhs.nh.gov/pap-1115-waiver/index.htm
2 https://www.healthaffairs.org/do/10.1377/hblog20170412.059575/full/
3 https://www.fns.usda.gov/snap/able-bodied-adults-without-dependents-abawds
4 https://www.healthaffairs.org/do/10.1377/hblog20180412.310199/full/

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In the news

‘Right to Try Act’ signed into law

On May 30, the president signed into law a bill granting terminally ill patients access to medical treatments not yet approved by the U.S. Food and Drug Administration (FDA). Under the Right to Try Act of 2017 (Right to Try Act), eligible patients who have exhausted all approved treatment options and do not meet the criteria for clinical drug trials can now buy unapproved, experimental drugs that have undergone FDA Phase I (safety) testing. Manufacturers of eligible investigational drugs must report to the FDA on any use of the drug on a “Right to Try” basis, and the FDA will publish an annual summary report of “Right to Try” uses on its website. Further, this law limits the liability of drugmakers and prescribers that provide (or decline to provide) an eligible experimental drug to a patient.

Currently, 38 states have their own “right to try” laws; this federal law introduces legislation across state lines. The FDA also has an expanded-access policy, sometimes called “compassionate use,” which allows terminally ill patients to buy investigational medical products.

Supporters of the Right to Try Act argue that allowing terminally ill patients to buy formerly-unavailable treatments could improve their prognoses. Opponents fear that, without FDA approval, experimental drugs could expose patients to ineffective and even dangerous therapies. Moreover, patients will likely pay themselves for experimental treatments.

Back to the Blueprint: FDA issues a pair of guidance documents to spur competition among generic drugs

On May 31, the Food and Drug Administration (FDA) issued two draft guidance documents to assist with market entry for generic drugs with safety restrictions. Recently, the White House released its blueprint, American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs, which proposed several initiatives to reduce drug prices and increase market competition, including expediting the generic drug approval process (see the May 15, 2018 Health Care Current). The two draft documents are open for public comment.

  • One document outlines the process in which brand-name and generic drugmakers must share a risk evaluation and mitigation strategy (REMS). The FDA requires a REMS for certain drugs for which safety monitoring is mandatory, and generic drugs must carry the same REMS as their brand-name counterparts. In the past, delays for brand-name drug companies and generic drugmakers to reach a shared REMS agreement have delayed generic equivalents from entering the market.
  • The second document outlines considerations for waiving the single, shared system REMS requirement, as well as how a generic applicant can request a waiver. The waiver would apply if one of two criteria are met: (1) the burden of developing a single REMS outweighs the benefit of having one, or (2) an aspect of the brand-name drug’s REMS is covered by a patent or trade secret and the generic drugmaker cannot obtain license to use it.

Report: Cancer treatments are greater in number and more effective than ever

Oncology drugs have advanced tremendously in a very short amount of time, according to a report from the IQVIA Institute for Human Data Science (formerly the IMS Institute).

Over the last five years, the US Food and Drug Administration (FDA) has approved 63 drugs that treat 24 different types of cancer. These drugs include 14 new active substances (NAS), all of which are all targeted therapies, and 11 designated breakthrough therapies. Clinical trials for certain treatments (for lymphoma and leukemia) demonstrated remission rates above 80 percent.

According to IQVIA, rapid improvements in treatment are likely to continue as more than 700 cancer drugs are in late-stage development. Additionally, more than a third of trials now use biomarkers, with the goal of producing more specific and effective treatments.

Total spending and list prices among cancer drugs have increased considerably in recent years, the report noted. Out-of-pocket costs vary considerably by drug and by health plan, and patients with commercial plans spend, on average, less than $500 annually on the treatments.

CBO: Health care subsidies for people under 65 will rise over the next decade, as will the uninsured rate

Net federal health insurance subsidies will exceed $1 trillion within the next decade. The number of people without insurance also is likely to rise within the same time frame, says a recent report from the Congressional Budget Office (CBO).

Net federal health insurance subsidies for people under age 65 will total $685 billion this year and climb to $1.2 trillion by 2028. These figures include the cost of preferential tax treatment for employer-sponsored coverage, Medicaid and CHIP, Medicare for eligible non-seniors, and individual market subsidies. The agency estimates that:

  • People under age 65 with employer-sponsored coverage will peak at 159 million in 2019 before declining to 154 million by 2028.
  • Individual market coverage will decrease, including a two-million drop among those with subsidized coverage received through the exchanges.
  • The number of adults and children enrolled in Medicaid and CHIP will rise from 66 million to 70 million.
  • The number of uninsured Americans will go from 29 million to 35 million.

Reasons for these trends include eliminating the individual mandate penalty, premiums rising faster than wages, higher premiums for benchmark plans in exchanges, a greater share of people eligible for premium tax credits, and future state Medicaid expansions.

Related: On May 30, New Jersey Governor Phil Murphy (D) signed a law requiring all state residents to have health insurance or pay a penalty. Democratic legislators in the state had drafted the legislation after the ACA’s individual mandate penalty was removed as part of Congress' tax reform package. Also on May 30, the Virginia Senate voted in favor of expanding the state’s Medicaid program, which will provide coverage to an expected 400,000 people. Once Governor Ralph Northam (D) signs the bill, Virginia will become the 33rd state to expand its Medicaid program.

Ebola vaccinations begin in the Democratic Republic of the Congo

Medical teams have begun administering an experimental Ebola vaccine in the Democratic Republic of the Congo (DRC), where the World Health Organization says 35 confirmed cases and 25 deaths have occurred throughout late April and May 2018. So far, more than 400 people have received the vaccine. Officials are using a “ring vaccination” strategy—that is, vaccinating the people most likely to be infected, including direct contacts of ill individuals, which creates a “ring” around where the disease is present. The DRC’s Minister of Health has said people are eager to be vaccinated. The experimental vaccine has been shown in trials to be safe in humans.

AHIP predicts insurance premium increases for 2019

In a May 25 brief, America’s Health Insurance Plans (AHIP) discussed several factors that might influence individual market plan premiums and predicted a premium hike for the 2019 plan year. Several factors might cause premiums to rise in 2019:

  • CMS projects a 5.7 percent increase in national medical expenditures from 2018 to 2019.
  • According to the Congressional Budget Office (CBO) and independent actuaries, removal of the individual mandate penalty could increase average individual market premiums by 9 to 10 percent in 2019.
  • If the administration expands association health plans (AHPs) and short-term, limited duration insurance (STLDI), young and healthy consumers might leave individual market plans for these lower-cost options, which would alter the risk pools—and raise premiums—for market plans.

The brief also discusses factors that might stabilize or reduce growth in premiums. For example, several states are seeking to establish reinsurance programs or other risk-pool funding efforts through the section 1332 waiver process. Additionally, Congress recently placed a moratorium on the health insurance tax (HIT) for 2019.

Most eligible clinicians participated in the first year of the MACRA Quality Payment Program

On May 31, CMS Administrator Seema Verma announced in a blog post that most eligible clinicians (91 percent) participated in the first year of the Quality Payment Program (QPP) established by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). This figure exceeded CMS’ goal of 90 percent participation in the first year. Submission rates for some specific groups were even higher—98 percent of accountable care organizations (ACOs) submitted documentation under the QPP.

This announcement came shortly after CMS said it had created a process for Medicare Advantage plans to submit their payment arrangements for inclusion under the Other Payer Advanced Alternative Payment Model (APM). In a November 3, 2017 Final Rule, CMS finalized the Payer Initiated Other Payer Advanced APM Determination Process, which the agency will use to determine whether health plan payment arrangements qualify as Other Payer APMs beginning in 2019. Health plans use the Health Plan Management System (HPMS), to submit their payment arrangements for consideration. They are required to include the name of the payment arrangement; how it meets the certified electronic health record, quality, and financial risk criteria; and where it is available (geographic footprint). CMS says it will publish a list of payment arrangements that qualify as Other Payer APMs for the 2019 performance period by September 2018.

The deadline for MA plans to submit payment arrangement information to CMS for consideration was June 4, 2018.

Breaking Boundaries

FDA launches innovation challenge to combat opioid crisis

The U.S. Food and Drug Administration (FDA) launched, on May 30, an innovation challenge to spur the development of medical devices, including digital health technologies and diagnostic tests, to address addiction, diversion, and pain treatment. In a press release, the agency acknowledged recent advances in the opioid crisis, but noted that there are still many opportunities for new technologies and products to enter the market. The challenge could provide innovative companies an opportunity to work closely with the agency to accelerate the development and review of new products.

Prescription opioids can effectively treat certain kinds of pain. However, sometimes, whether taken alone or in combination with other drugs, they can lead to abuse, addiction, and in some instances, life-threatening adverse events. There is wide interest in alternatives to the treatment of pain that do not involve opioids. Through this innovation challenge, the FDA aims to collaborate with public health and technology stakeholders to identify and accelerate the development of new technologies, including devices, diagnostic tests, mobile medical apps, or clinical decision support software, that can prevent addiction to opioids, and help those currently addicted.

The agency encourages companies with products in any stage of development to submit proposals, from concept to testing. The challenge also is open to developers of currently marketed devices who would like to demonstrate that their device has an improved benefit-risk profile in the management of pain, relative to opioids. The challenge is open from June 1, 2018 through September 30, 2018. Winning applicants will be announced in November. The FDA’s Center for Devices and Radiological Health will evaluate submissions based on the product’s feasibility, potential public health impact, and novelty of the concept. Winning applicants will be able to get feedback from the FDA during the review process and be eligible for breakthrough device designation.

Related: Deloitte’s recent paper, Strategies for stemming the opioid epidemic, discusses strategies health plans and pharmacy benefit managers (PBMs) are using to address the opioid crisis. The report is based on interviews with clinical, pharmacy, data analytics, and policy leaders from health plans and PBMs across the country. In addition to focusing on how health plans and PBMs are using data analytics and predictive modeling to identify those at high risk for dependency and addiction, the paper also describes how emerging technologies may be used in the future, including medical technology innovation.

Some companies that are developing devices for pain management are focused on cryoblation to stop pain signals from traveling to the brain. Some are focused on spinal cord stimulation or neurostimulation to treat acute and chronic pain though the development of implantable devices that send mild electrical pulses to the nerves to help interrupt the transmission of pain signals to the brain. Others are focused on non-invasive devices which deliver dual-field pulsed electromagnetic energy to an area of pain for a therapeutic and drug-free solution.

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