States Find Medicaid “Silver Lining” in Court Decision

By Robert Holden, Vice President

Prior to the Supreme Court’s decision, most Court watchers’ attention was focused on the challenge to the individual mandate.   Striking down the individual mandate could have brought down the entire Affordable Care Act (ACA), or at least eliminated the private health insurance provisions of the law.  But instead of striking down the private insurance provisions, the Court instead supported the plaintiff states’ contention that the law unfairly allowed federal agencies to withhold Medicaid funding to compel state compliance with the ACA’s Medicaid expansion.  As Chief Justice Roberts stated in the Court’s ruling (which can be found here in full):

“The threatened loss of over 10 percent of a state’s overall budget is economic dragooning that leaves the states with no real option but to acquiesce in the Medicaid expansion.”

The Medicaid holding, what disappointed Colorado Attorney General John Suthers referred to as the “Silver Lining,” offers states a real opportunity to opt out of the Medicaid expansion under the ACA and continue to receive funding for their existing Medicaid programs.

The Supreme Court’s decision will have enormous fiscal impacts on the states and political implications on ACA implementation.  While implementation of a state-level health insurance exchange has always been optional under the law, Medicaid eligibility expansion to 138% of the federal poverty level was practically a given.  Federal funding would have picked up the entire direct cost of additional Medicaid claims, at least for a few years.  But the states would be required to support the administrative cost of adding, in some instances, 50% more enrollees to Medicaid programs already strained by the recession.  These additional costs were tolerable for states only given the alternative catastrophe of losing all of their existing federal Medicaid funding if they did not agree to the Medicaid eligibility expansion.  This proposition will be revisited now that they can avoid those administrative costs and receive Medicaid matching funds.

Thirty states have now either joined lawsuits to strike down the ACA, or have made formal requests for flexibility in Medicaid reform implementation.  If a large number of these states opt out of the ACA’s Medicaid expansion, and assuming implementation of the private insurance exchanges, many people formerly eligible for Medicaid will now seek federal subsidies in the health insurance exchanges.  This gives states inclined to disrupt ACA implementation leverage by increasing federal costs in two ways.  A larger number of state residents will be seeking federal subsidies – adding to the program’s bottom line.  Additionally, states could continue to opt out of creating state exchanges and rely on a federally established insurance exchange.  What the states do next will frame much of the debate as we head into the ultimate challenge for ACA implementation in November.

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Robert Holden is Vice President at Stateside Associates managing the health care practice, addressing issues concerning public and private payers, as well as service and product providers. Mr. Holden also uses his issue and policy group experience to guide the legislative and regulatory monitoring teams focusing on healthcare policy issues.

Cold Symptoms Acting Up? Red Tape May Be Between You and Relief

By Robert Holden, Vice President

The term “access” is ever present when discussing health care policy.  Access to needed care, be they services, pharmaceuticals, contraceptives, or medical supplies drives much of the current debate on essential health benefits and health insurance reform.  But increased access sometimes runs counter to other policy goals.

State efforts to control illegal drug manufacture are one area in which policy goals have traditionally impacted consumer access to health care products.  This winter, a satirical scientific “study” was put online, humorously demonstrating how “easily obtainable” methamphetamines could be converted into hard to get cold medication.

For those of us seeking cold relief in the form of a pseudoephedrine based medication, the point of the satire was clear.  In an effort to cut down on the use of legal pseudoephedrine products as a base for illegal methamphetamines, states and the federal government have been adding numerous requirements and restrictions to purchasing what were at one time easy to obtain cold medications.

In ways that are both obvious and not so obvious to consumers, states continue to pursue numerous anti-meth production policies.  In this legislative session more than 100 bills were considered in 31 states to address the issue, in a variety of ways.  While many of these policies still affect consumers directly at the point of sale, increasingly states are moving towards electronic reporting and recordkeeping by the retailer to lighten the impact on consumers.

Amount Restrictions, Identification Requirements, and Log-books

Initial state efforts to combat improper use of pseudoephedrine (PSE) products in the 1990s and early 2000s directly impacted the consumer.  Policies focused on restricting access to products through location and supervision, as well as recording transaction information: placing products behind a counter or in a location that could be monitored by a pharmacist or retail staff; signing log books to record purchases; restricting amounts that could be purchased; and requiring identification for purchases.

These requirements were applied uniformly at the federal level through the Combat Methamphetamine Epidemic Act of 2005 (CMEA) as part of the Patriot Act.  As consumers know, these restrictions are an annoyance compared to the alternative: taking a product off the shelf.  Furthermore, they impose additional work, training, and guidelines for pharmacists and retail staff.  Nevertheless, however inconvenient and burdensome the restrictions, a perseverant customer can still walk into a pharmacy and purchase the product of his or her choice over-the-counter.

Prescription Requirements

As is often the case, federal legislation was not the last word on this issue.  Many states found that the restrictions imposed under federal law were not addressing the problem.  While restrictions and administrative requirements may have cut down on the illegal use of these products to some extent, they could be circumvented by determined methamphetamine manufacturers by purchasing smaller amounts and visiting numerous pharmacies and retailers to avoid arousing suspicion.  Accordingly, states looked to more severe restrictions on access to these products: the requirement that they be prescribed by a physician.

Under federal law, PSE products have been available over the counter for more than thirty years.  However, states have the authority to go beyond federal law in scheduling drugs as controlled substances and requiring prescriptions.  In 2006, Oregon opted to use this authority to make PSE products legend (prescription only) drugs.  That change posed a far greater burden on consumers, as it required that they schedule an appointment with a doctor or other medical professional with prescriptive authority.

This impact on consumers has limited the appeal of such a policy.  While a considerable amount of legislation has been consistently introduced in other states, only Mississippi (in 2010) has followed Oregon in requiring a prescription for PSE products.

Electronic Reporting

As an alternative to scheduling PSE products, many more states have turned to electronic reporting systems and central databases to strengthen the weaknesses of existing identification and reporting systems.  Currently, 20 states are using electronic tracking systems to monitor PSE purchases.  While Oklahoma and Arkansas have systems unique to their states, the other 19 mandate the use National Precursor Log Exchange (NPLEx) system to track PSE purchases.  This number will likely grow to 21 as bills mandating NPLEx in Idaho and Maine are awaiting approval from their respective Governors.

The NPLEx system, which can be accessed for no charge by state law enforcement and retailers, allows the PSE restrictions adopted in the states to be enforced without resorting to a prescription—only model.  It allows identification, product sales limit, and purchase logging information to be compiled and shared across state lines.  Because it blocks potentially illegal sales at the retail level, it permits legal purchases without the consumer cost and inconvenience of a prescription.

Greater Health Care Trend Toward Electronic Communication

The use of electronic reporting systems like NPLEx reflects a larger trend in health care policy towards the use of electronic communications and records to address traditional health care transactions.  State policy makers are active in addressing standards and requirements for electronic prescribing, prescription monitoring programs, and electronic health records.

As health care reform implementation continues, states will be engaging additional systems which, like NPLEx, act as an interface between health care consumers, providers, and regulators.  One of the visions for state health benefit exchanges is that individuals will be able to shop for health insurance online, like they do for travel.  As a result, there will be much more focus put upon access to other health products and services online, as well as an electronic flow of regulatory information to regulate them.