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5 Stalled Healthcare Initiatives Likely to Re-emerge in 2021 State Sessions

by John Haughey, FiscalNote

Always a hot topic in state legislatures, healthcare is likely to spark even more debate next year

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When state legislatures convene for the 2021 sessions next year, the landscape will have likely changed significantly due to the current COVID-19 crisis. Nowhere is that likely to be more true than in healthcare legislation. 

Add to that the fact that these sessions will be taking place immediately after an election this November that sees over 70 percent of state seats up for grabs.

Healthcare, specifically programs and costs, is always a hot topic in the states, but in 2021 it's likely to be in even sharper focus in multiple legislatures across the country. Below are five likely healthcare issues statehouses will be addressing:

1. Medicaid Expansions

The number of people with private health insurance coverage is certain to decline in tandem with pandemic-related job losses, meaning enrollment in Medicaid is expected to increase. With a simultaneous decline in revenues, even with a 6.2-percent increase in the federal cost-share, Medicaid and public health costs are likely to be an urgent concern for 2021 state legislatures.

Thirty-six states and the District of Columbia have adopted Medicaid expansion under the Affordable Care Act and 14 states have not done so.

Utah, Idaho, and Nebraska became the latest to expand Medicaid when voters in those states approved the expansion in November 2018. Utah and Idaho began implementing expansion in January. Nebraska plans to do so in October.

Voters in Missouri and Oklahoma were going to see proposed Medicaid expansion ballot measures this November, but social distancing requirements derailed efforts to gather required signatures and both initiatives are unlikely to get before voters this year.

Kansas Gov. Laura Kelly, Wisconsin Gov. Tony Evers, and North Carolina Gov. Roy Cooper – all Democrats – had called upon their Republican-controlled legislatures to approve 2020 Medicaid expansion bills.

In Kansas, Medicaid expansion legislation could still move forward this year. Legislators in Wisconsin were set to take up expansion but the session has since been suspended. North Carolina’s expansion momentum is also in limbo.

2. Medicaid Reform/Innovation

Before the COVID-19 emergency altered most sessions, there were hundreds of bills in state legislatures seeking to implement or tweak an array of transitions. These included everything from volume-based to value-based care and direct contracting plans that blend Medicare Shared Savings programs with Medicare Advantage’s risk-sharing models. Also on dockets were expanding capped and global payments – one payment for all care – to Accountable Care Organizations (ACOs), partnerships between a payer, such as a private or government insurer, and a network of doctors, hospitals, and other providers.

Among other efforts were:

Reinsurance programs, Medicaid 1915(c) or 1115 waivers, which are an expanding source of “waiver innovation” to target services to specific populations and performance-based reimbursements; bundled or episodes of care (EOC); payment programs such as those in Arkansas, Ohio, and Tennessee; and dealing with high-need, high-cost patients.

Half the nation’s medical bills come from about five percent of the nation’s patients who have the most medical needs and often require long-term care (LTSS) in nursing facilities, adult daycares, home health aides, or family caregiving assistance and personal care services. 

Medicaid is the largest single-payer of LTSS, accounting for 54 percent of payments for long-term patient care nationwide. One percent of beneficiaries account for one-quarter of all Medicaid expenditures, according to the Centers for Medicare & Medicaid Services (CMS). Due to the complexity of their illnesses or conditions, these “high-need” patients are the most costly, relative to healthier groups.

In response, there is sustained momentum in state legislatures toward managed long-term services and supports (MLTSS) and in using Section 1115 waivers to address and corral these costs.

Among 2020 proposals to stem costs while ensuring access is Tennessee Gov. Bill Lee’s request that the state’s Health Care Modernization Task Force find ways to provide access to high-quality, affordable health care plans.

Meanwhile, California Gov. Newsom’s priority is that lawmakers strengthen coverage through the state’s Medi-Cal and Covered California programs even further.

West Virginia Gov. Jim Justice had proposed creating a Medicaid Families First Reserve Fund of $150 million to ensure services are available to those most in need.

In Idaho, Gov. Brad Little’s FY21 budget request, which would fund the first full year of Medicaid, called for a 9.2-percent increase in total program funding to $3.1 billion. The request includes a 5.2 percent increase to $722.9 million in state money. It would not draw from state general revenues but from savings in various state budgets, including the Idaho Millennium Fund tobacco settlement proceeds, and county contributions.

Connecticut Gov. Ted Lamont issued an executive order to establish healthcare cost growth benchmarks and a primary care spending target.

In New York, where the state’s $6 billion deficit before the COVID-19 emergency is primarily due to Medicaid costs, Gov. Andrew Cuomo called on lawmakers to restructure the state’s financing arrangements with local governments.

All these measures and other similar proposals will likely be among issues considered by lawmakers in 2021.

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3. Scope-of-Practice, Telehealth

More than 40 states introduced scope-of-practice legislation during the 2019 legislative sessions and at least that many were on legislative agendas in 2020 before many sessions were preempted.

Scope-of-practice describes procedures, actions, and processes healthcare practitioners, such as advanced practice registered nurses (APRNs) and pharmacists are permitted to deliver in keeping with the terms of their professional licensure.

Ohio, Kansas, and other state legislatures were reviewing proposals to remove requirements that doctors sign off on prescriptions before APRNs prescribe them to patients when sessions were suspended, while Florida lawmakers passed several bills providing greater flexibility to APRNs and pharmacists to “test-and-treat” a wide range of ailments to lower costs and expand access to basic medical services.

While most states have either expanded the range of services that can be delivered remotely or were debating doing so, any discussion on the merits and pitfalls of “telehealth” was, essentially, preempted by federal and state policymakers who loosened regulatory barriers during the COVID-19 emergency. Those included services delivered across state lines. State lawmakers will likely be looking at ways to codify those expansions or extend them further in 2021.

4. Prescription Drug Access and Price Transparency

At least 12 governors named rising drug costs as top priorities during their state-of-the-state addresses before the COVID-19 emergency swept most initiatives from the table.

Nevertheless, prescription drug costs – something state legislatures had been targeting with legislation for several years – is certain to remain a hot topic in post-pandemic sessions.

The most comprehensive proposal came from California Gov. Gavin Newsom, whose budget proposes:

— Expanding the state’s authority to consider drug prices in other countries when negotiating for state supplemental rebates;

— Leveraging the purchasing power of the Medicaid program to negotiate rebates on behalf of targeted populations outside the program; and

— Increasing the state’s purchasing program by expanding partnerships with local pharmaceutical purchasers.

Michigan Gov. Gretchen Whitmer, Colorado Gov. Jared Polis, and New Hampshire Gov. Chris Sununu all supported creating drug pricing transparency websites.

Polis and Gov. Ron DeSantis of Florida in 2019 initiated efforts approved by lawmakers to implement wholesale drug importation programs. Both await federal approval.

New York, New Hampshire, and New Mexico lawmakers were pondering similar programs this year.

5. PBM Gag Clauses, Clawbacks, and Spread Pricing

Going into 2020 sessions, at least 33 states had enacted laws prohibiting “gag clauses” in contracts with pharmaceutical benefit managers (PBMs) that restrict pharmacists from telling customers about a lower-priced generic alternative to brand-name drugs.

At least 20 states had anti-co-pay "clawback" provisions on the books aimed at preventing price overcharges to patients buying retail drugs in a pharmacy.

PBM “gag clauses” and “clawbacks” where not already prohibited were on 2020 legislative dockets and, in states where not adopted this year, have a good chance of being approved in 2021.

“Spread pricing” is another PBM practice that has garnered state lawmakers’ attention in recent years. With spread pricing, PBMs are compensated by retaining the difference, or “spread,” between the amount they charge a plan sponsor and the amount they reimburse a pharmacy.

Kentucky, New York, Ohio, Pennsylvania, Texas, and West Virginia are among legislatures that have been looking closely at spread pricing the last two years and more states are likely to do so in 2021.

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