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Health Law and Policy Update

This week's updates

Headlines of the week

Review finds extensive problems with benefits processing, calls on Colorado to comply with the law
The Centers for Medicaid and Medicare Services (CMS) released a long-awaited review of Colorado's eligibility and enrollment systems this week, focusing on the performance of the Colorado Benefits Medicaid System's (CBMS) processing of Medicaid and Child Health Plan Plus (CHP+) applications and benefits. The major takeaways: Colorado is out of compliance with federal law in in a number of areas; the state must "comply with federal rules without exception of condition related to funding;" the state must adhere to a performance schedule and corrective action plans for improving application processing and benefits delivery and management and submit monthly reports to CMS; and the state is at risk of losing federal matching dollars if it does not comply.

The review made eight findings:

  • The state is out of compliance with the federal rules for timeliness of Medicaid eligibility determinations and redeterminations. That issue has been the subject of the Colorado Center on Law and Policy's efforts since 2004. The state recently entered into a settlement agreement with CCLP and co-counsel regarding timely processing. CMS requests that the state Department of Health Care Policy and Financing (HCPF) and the governor's Office of Information Technology (OIT) closely monitor the processing times of the CBMS system and use the remedy provisions in the CBMS contract as necessary.
  • The state is out of compliance with federal rules requiring that the Single State Agency maintain control over the operations of the Medicaid program. HCPF, as the single state agency, is directed to take back control over the Medicaid/CHP+ eligibility system. The state is directed to enter into a new contract with OIT to ensure HCPF's oversight and control is in place. CMS recommends that if application processing does not improve, HCPF consider new strategies such as a standalone Medicaid system.
  • The state is out of compliance with federal rules requiring a reasonable time be allowed for applicants to present documentary evidence of citizenship. If the client declares citizenship and is otherwise eligible for benefits, the client should receive those benefits while the documentation is being gathered. That is an issue CCLP has raised with the state since the federal law changed in 2009. The state is on a 180-day schedule for compliance with federal law as eligible applicants have been denied entry into Medicaid/CHP+.
  • The state is out of compliance with the federal rules for citizenship and alienage. The report notes CBMS is not programmed to deny eligibility if appropriate documentation is not timely submitted.
  • The state is out of compliance with the federal rules regarding the termination of eligibility. The review states Colorado inappropriately terminates clients' eligibility during the redetermination process. Client redeterminations are not timely processed and benefits are not continued during the re-application period, as required by federal law.
  • The state is out of compliance with the federal rules regarding periodic redeterminations of Medicaid eligibility. The review notes some redeterminations are undertaken because paperwork was lost at the counties, because of a lack of scanning equipment. In addition, counties have multiple and various systems for handling redetermination processing. The review notes there is a high rate of denials of redeterminations, and that CBMS does not generate reports regarding outstanding redeterminations.
  • The state is out of compliance with the federal rules for client notices. Client noticing is important because people have a right to understand the basis for decisions about eligibility and their right to appeal the state's decisions. CBMS has, since its inception in 2004, produced inadequate, confusing and incorrect client notices.
  • The state is out of compliance with federal rules for documentation and maintenance of an adequate and complete eligibility history of the Medicaid recipients. The review talks about vanishing eligibility spans, a problem that has plagued CBMS for years and that CCLP and other advocates have raised with the state. Information about prior periods of eligibility vanishes from the system, causing medical services to be denied to clients.

Overall, the review says serious problems persist despite the state's many efforts to improve and correct CBMS functionality. The report also identifies weaknesses in the state's remediation efforts. It acknowledges a number of steps HCPF has taken to address CBMS problems, including the Eligibility Modernization, Maximizing Outreach Retention and Enrollment (MORE) and PEAK projects. However, the report says the problems with timeliness of enrollment and eligibility determinations persist at nearly the same level found in CMS' 2006 review, and two new serious problems were uncovered. The state is currently processing initial applications for medical programs at 78.8 percent timely and has shown improvements over the past few months.

Pressure rises over industry influence on exchange board
Scrutiny of insurance company influence on the governing board of Colorado's Health Benefit Exchange intensified this week. Five of the nine voting board members have ties to the health insurance industry, including four who are directly employed by health plans. The board is set to hold its first meeting Monday.

The Colorado Center on Law and Policy detailed concerns about insurance company influence in last week's edition of Health Law and Policy Update.

The Denver Post noted one of the board members, Eric Grossman, is a vice president for TriZetto, a company that has had vendor contracts with at least three of the four managed-care companies represented on the board. Grossman recently wrote an article titled "There's gold in exchanges - here's how to stake your claim." Those factors add up to "a major conflict of interest," CCLP Health Care Program Director Elisabeth Arenales told the Post.

The news website Health Policy Solutions pointed out the law setting a governing structure for the exchange includes a provision to prevent people with direct financial interests from running the exchange board. The story highlights CCLP's concern that an industry bloc "might have a substantial effect on the board's deliberations."

Arenales also discussed the exchange board Wednesday on the Morning Magazine program of KGNU-radio (beginning at nine minutes, 30 seconds).

Advancing the debate

Public health insurance greatly benefits the poor, study finds
People with low incomes who are given publicly supported health insurance have better health outcomes than those with no insurance and are more likely to maintain financial stability, according to a landmark study published Thursday by the National Bureau of Economic Research.

"Health economists and other researchers said the study was historic and would be cited for years to come, shaping health care debates," The New York Times reported.

"Some people wonder whether Medicaid coverage has any effect. The study findings make clear that it does. People reported that their physical and mental health were substantially better after a year of insurance coverage, and they were much less likely to have to borrow money or go into debt to pay for their care," said Amy Finkelstein, professor of economics at Massachusetts Institute of Technology and co-principal investigator of the study, in a news release from the Harvard School of Public Health.

Doctors report difficulty referring children on public programs to specialists
Primary care doctors experience much more difficulty referring children enrolled in public health programs to specialists than they do referring children with private insurance, a study issued June 30 from the Government Accountability Office (GAO) found.

While 84 percent of physicians who responded to a survey reported difficulty referring children in Medicaid and the Children's Health Insurance Program (CHIP) to specialists, only 24 percent reported the same difficulty with privately insured children. The GAO studied children's access to care under Medicaid and CHIP as part of a requirement of the Children's Health Insurance Program Reauthorization Act of 2009.

The study found 83 percent of primary care physicians are enrolled as providers and serving Medicaid and CHIP children, compared to 71 percent of specialty physicians. For all children, the physicians reported difficulties with referrals most frequently cropped up with specialty referrals for mental health, dermatology and neurology.

States can take steps to protect health exchange viability
States can take steps to balance risk among products offered in a health insurance exchange and maintain a range of financially viable coverage plans, the Center on Budget and Policy Priorities said in a paper issued June 28.

Without careful policy and monitoring, health insurance exchanges risk "adverse selection," where only healthy people enroll in low-cost plans and only sick people in plans with more complete coverage. Adverse selection drives up the cost of insurance because risk is concentrated in certain plans, and it could lead insurers to stop offering plans with more complete coverage.

While the Patient Protection and Affordable Care Act includes provisions to protect against adverse selection, the Center on Budget details additional steps states may consider.

Paper advises strategies for creating health exchanges
States can address rising health care costs by carefully implementing health insurance exchanges, one of the key elements of the Patient Protection and Affordable Care Act, the consumer advocacy group U.S. PIRG said in a study released last week.

"State leaders have the flexibility to craft an exchange that enhances choice and competition," U.S. PIRG Policy Analyst Mike Russo said in a news release. "Consumers need this new exchange to lower costs and improve the quality of their coverage."

Health Law and Policy Update is issued weekly by the health staff of the Colorado Center on Law and Policy. Subscribe by e-mail or read previous editions.

Health Care Director
Elisabeth Arenales

Health Care Attorney
Adela Flores-Brennan

Special Counsel
Ed Kahn

Communications Director
Perry Swanson

Released July 8, 2011