‘The Commonwealth of Massachusetts Executive Office of Health and Human Services One Ashburton Place, Room 1109 Boston, Massachusetts 02108 canes eaKeR ‘ta 1617 573-600 ‘Gora Foe (017) 573.1081 anne uit sma. poco March 22, 2017 Seema Verma ‘Administrator US. Centers for Medicare and Medicaid Services 7500 Security Boulevard Baltimore, MD 21244 ‘As Seoretary for Health and Human Services forthe Commonwealth of Massachusetts, Im ‘riting asa follow up to the letter from Secretary Price and you to Governors pledging a new era ‘of federal and state partnership. Massachusetts is eager to work with HHS on our shared goal of| providing affordable and effective health care coverage tothe residents of Massachusets through innovative health reforms; and in that spirit of partnership have identified several eritcal areas ‘that would benefit from swift federal intervention. These interventions create addtional state flexibility as we continue to reform and improve our Medicaid and insurance market systems. Massachusetts has a longstanding commitment to universal health care coverage for its residents, ‘Working with the federal govemment, we have reached and maintained an insurance rate of 96+ (97 percent, the highest rate in the country." Massachusetts retains a vital employer-sponsored insurance market, covering just under 60% of those insured, despite recent deereases in employer ‘coverage and inereases in public coverage.? Our state marketplace, known as the Health ‘Connector, administers mast individval and small pup insane exchange with mone than 10 health insurers participating. Today approximately 250,000 individuals have health eare ‘coverage through the Health Connector, including 195,000 low to moderate income residents ‘who receive federal and state subsidies. MassHalth, our Medicaid and Children's Health Insurance Program, covers 1.9 million residents, or neaely 30 percent ofthe Commonvwealth's ‘residents. Over 300,000 MassHTealth members have coverage due to the ACAA's Medicaid ‘expansion. shams v/a urvey/mhs:2015/2015-MHS pat * hind chimassgovasset/docsisurvey/mhis2035/2035-MS pt 2‘Massachusetts attibutes much ofits success in expanding health coverage due to strong state bipartisan collaboration and tothe federal-state partnerships that have supported the (Commonwealth's reform elforts and flexibility that Congress and HAS have made available to slates via existing Section 1115 and Section 1332 waivers. Looking towards the future, the federal government is actively considering options for major Jnealth care reform while a the same time, many states, including Massachusetts, ate actively engaged in restructuring the Medicaid program and health insurance markets. First itis eritical ‘that during the next few years, Massachusetts is able to maintain existing state lexibiity ‘agreements while any future changes aze considered or before they go int effect. Inthe spirit of partnership, we seek immediate relief from certain federal rules and requirements. The flexibilities we seek are intended to improve the funetioning and stability of our health insurance ‘market, reduce administrative burdea for employers and health plans, achieve cost savings and improve care delivery in the Medicaid program, and address some of the unintended. consequences of ACA implementation. ‘We note several areas below where federal flexibility would best meet the unique needs of Massachusetts. These areas include: Expanding flexibility in the administration of Medicaid, including with respect to benefit sesign, managed care delivery, pharmacy coverage, behavioral health, and care for dual eligible individuals, ‘© Flexibility to implementa state-spesific approach to employer-sponsored health insurance coverage, including replacing the federal employer mandate witha state- specific approuch 10 shared responsibility for employers, and developing creative pathways for employers to offer coverage to their employees; ‘© Flexibility to ensure the continued stability of the private insurance masket (including retaining Massachusetts’ merged non-group and stall group market and our slate- specific approach to rating factors) plus adding risk adjustment, reinsurance, health insurance coverage standards, and the operation of Massachusetts? State Based ‘Marketplace, of Medi iy fr lates as ech state can determine which optional populations and services to cover based on state-specific context and needs. 2 had a Section 1115 waive since 1997, allowing the Commonwealth to implement mandatory masapel care, streamline eligibility processes, and most rece, move towards Accountable Cae payment and cate delivery models; in fat, we lhe lveady enirked on this system restuctaing. Our projections show that this move to ‘ACOs wl result in reduced spending while improving health outcomes. Consistent with your Jeter frst we would secka waiver that would provid flexibility in designing benefit packages while maintaining important paint protections States should ean de exbility to design benefit packages that best mee the needs oftheir enrollees snd that more closely align Medicaid coverage with commercial heath plans. Massachusets is commited to providing coverage that recognizes the health challenges that particulary affect Medicaid enollees, such as stong ‘mental health and addiction treatment services, beyond what is curently covered in a typical commercial plan. Atthe same time, Massachusetts ha seen significant deereese in private 2‘neath insurance and increases in Medicaid coverage over te last several years; one ofthe ways we seek to addres this shift isto more closely align Medicaid benefits for non-disabled adults ‘with those available inthe commercial market, with ceriain exceptions as noted above. We ‘welcome CMS" commitment to work with states toward flexibility in alternative benefit design, including the willingness to waive the requirement to provide non-emergency medical transportation forthe Mediesid expansion population. Second, certain recent federal rules, including the rules on outpatient drug coverage issued by (CMS in April 2016 and on managed care issued by CMS in 2016, have introduced an array of| ‘now requirements and conditions for Medicaid reimbursement and delivery systems. Somte of| these changes have limited states’ flexibility to manage their programs fiscally and programmatically. We strongly support CMS” recent announcement that it will review the ‘managed care tule to prioritize beneficiary outcomes and state priorities, We look forward to ‘working closely with you to consider changes that would offer states greater flexibility with respect fo rate seting, networks, administrative requirements and other aspects ofthe rule. We seek a similar review of the outpatient drug rule. In patiulat, Massachusetts is concerned that the new required profesional dispensing fee provision has a significant negative fiscal impact on the MassHealth program without any commensurate benefit. In addition, we seek greater flexibility t obtain lower drug prices and enhanced rebates for Medicaid, including using the same tools for selecting preferred and covered drugs that are available to and widely used by ‘commercial health plans ‘Third, we seek a waiver from the restriction on coverage for treatment in Insitutions for Mental Disease (IMDs). We urge CMS to remove the 15-day limit on treatment in IMDs that can be ‘covered by managed care plans. ‘The limits on Medicaid funding for treatment in IMDs are antiquated, act asa barrier to states in effectively combating the opioid addiction epidemic and addressing the noods of individuals with mental illness, and require Medicaid programs to pay for services delivered in higher costs settings e.g. acute general hospitals) when alternative seltings are less costly, less restrictive, and meet eurent clinical standards for high quality care. Inaddition, we request that 42 CFR Part 2, as recently amended, be reviewed withthe goal of protecting patient privacy whe casing restrictions on information sharing fo the greatest extent permissible under its governing statute in order to enable better care coordination, particularly in the context of integrated care models such as ACOs, ‘We would also seek a waiver to significantly expand flexibility for states to manage care for dual cligible individuals who receive coverage through both Medicare and Medicaid. Massachusetts ‘was an early innovator ia developing integrated eare for dual eligible individuals, including through 2 fly integreted special needs plan for dual eligible henefiieries (D-SNP), which combines Medicare Parts A, B and D with Medicaid covered health and long-term services and support (Senior Care Options) and our Financial Alignment Demonstration for adults with disabilities (One Care). We seck additional flexibility in administering and financing these programs, and in identifying a clear path to permanence for One Care. Specifically, we request that CMS make available the Medicare portion of funding for dual eligible individuals enrolled in these integrated care programs and allow us to take full responsibilty for managing care for these individuals in a way that is budget neural to Medicare.CMS would provide the Medicare premium as a capitation payment to the state, and the state ‘would be accountable for managing costs for dual-eigible enrollees within the combined Medicare and Medicaid resources. The Commonwealth is uniquely positioned to take this responsibilty given its long history of running integrated care options for this population, We will be better positioned to continue investing in care coordination and reduce overall casts for the dual eligible population if we ae able to share savings that have historically accrued to “Medicare (eg, through reductions in acute, postacute, and ambulatory costs). The ability to fully manage all Medicare and Medicaid services for these members will also improve our ability to set rates and deliver a fully integrated care experience for our members. This proposed change will also enable us to expand the use of accountuble eare models for dual-ligible individuals, moving providers out of fee-for-service arrangements and into payment structures that reward them for improving quality and reducing unnecessary costs In addition, we would request through a waiver that CMS provide Massachusetts with the same flexibilities granted in the duals alignment demonstration program to the Senior Care Options (SCO) program. Specifically, we sek administrative alignment in marketing, appeals and srievances, and enrollment. We seek the ability to passively enroll members with Medicare and ‘Medicaid into out SCO program, as we do into One Care, and to allow seamless conversion of ‘members nto $CO as they age out of MassHealth's managed care options for those under age 665. Wit respect to dual eligible individuals receiving fee for service long-term services and supports we seek discretion to establish rates and payment methods that best meet the unique needs ofthe providers in our state anc to achieve improvements in cost effectiveness, patient safety, and clinical outcomes. In particular, we request flexibilities to establish altemative ‘payment models und value-based payment for providers of individual services in the context of & ‘broader fee for service delivery system. Pro \dressing emplove “Massachusetts slate reforms were successful in large part due to the shared responsibilty ‘between individuals, goverment and employers. The sate repeated is Fait Share Contribution requirement (for employers with 11 or more PTES) to make way forthe ACA employer mandate (for employers with 50 or more FTES), which has added significant administrative burden for employers. ‘The inital implementation of this federal mandate involved burdensome new reporting requirements for employers even though the federal penalty for employers that do not offer coverage has never been enforeed. We would request through a waiver en immediate reprieve for employers ftom reporting requirements associated with the federal mandate, ané Aexibilty to waive penalties associated with the federal mandate for employers in theie sates if they have an altemative policy for employers to share esponsibility inthe costs of health eare coverage. Maintaining an employer mandate is eritial to market stability in Massachusetts: indeed, our Fair Share Contibution was an important component of our state healthcare reform, However, such mandates should be state-run and based on state-specific needs We also sock federal flexibility or a waiver tht allows states to develop creative ways for employers to offer coverage to their employees. Examples include flexibility to tailor the use and availability of Health Reimbursement Accounts (HRAS), such as those contemplated by the 21" Contury Cures Act, through State Based Marketplaces to meet the needs ofthe local market and promote state-specific policy features, Similarly, we request to waive the tax codeprovisions that curently prohibit allowing the use of Section 125 cafeteria plans or other tax. preferred mechanisms so that non-benefits eligible employees ean use pre-tax dollars to purchase the non-group coverage oftheir choice, including coverage onthe Exchanges. Massachusetts administered a successol program called the Voluntary Plan, which enabled the purchase of Section 125 plans va employers, prior to changes in federal ax rules in 2013 and wants to resume this practice We also seek a waiver to provide the flexibility on utilization of small business tax credits and request that states be allowed to secess avaiable Funds immediately and disburse them using sale-speciieerteria for eligible small businesses in a manner that could help promote affordable, high value coverage for employees. The Affordable Care Act changed a number of previous rules governing eligibility for subsidized coverage for individuals with aces to emplayer sponsored coverage, changing the dynamic between employers, employees and taxpayer-funded programs in concerning ways. Over the past soveral years, the Commonwealth has seen a shift of ~500,000 lives from the commerval, ‘employer-sponsored market and a concomitant inerease onto public coverage. We would like to explore ways to give states more authority to manage this dynamic while maintaining access to health coverage for low income workers. Ensuring the continued stability of health insurance markets “Massachusetts has received flexibility since 2013 for a transition period, authorized under Sestion 1321(6) ofthe ACA, for certain elements of our merged market to come int full alignment with the Affordable Care Act, suchas the small group rating factors not specified under federal law. We seek to extend that flexibility, atthe state’s option, to contine using these state-specific rating factors inorder to maintain stability in our insurance market ‘Massachusetts alo plans to continue operating our existing merged small group and non-group ‘market, preventing significant market disruption and instability in pricing, In addition to continuing previously permitted flexibilities, Massachusetts looks forward to ‘working with HHS to ensure efficient administration of currently-available federal subsidies through the Health Connector marketplace. ‘The Health Connector has identified several ‘complexities within the current subsidy framework that could be mitigated by HHS and its {federal pertners atthe Department of Treasury, such as permitting Marketplaces greater aceess to ‘federal tax information if necessary to administer and ensure program integrity for advance premium tax credits. ‘Other areas where state flexibility in private ingurance requitements is requested include ‘© Allowing for state specific Actuarial Value Calculators for benefit standards; “Allowing for state specific rating factors to apply for small group premium development; “Allowing pathways for state flexibility around approaches to risk adjustment; “Allowing states to establish preventive health standards and applicable cost-sharing requirements, + Allowing states to establish state-specific benefit rules, beyond what is currently permitted ‘under Essential Health Benefits (EHB) standards; ‘© Simplifying administrative rules and regulations and compliance with such rules. 5“Transition period for any new rules Health insurance eariers need clear and timely guidance to develop appropriate produets and to sot premiums for the insurance market. Any regulatory changes must be introduced on a gradual timeline, ideally with state flexibility to opt out or grandfather existing programs, to prevent ‘market shock and to improve market subility. During any transition period, we urge that HHS ‘maintain risk corridor and reinsurance payments in 2017 with coverage in place in 2016 and ‘maintain cisk adjustment for 2017 as carters have built risk adjustment into already offered 2017 premiums. Unless additional guidance related to risk adjustment is forthcoming prior t0 2018 plan filing and approval, we would suggest maintaining a similar approach to risk adjustment in 2018 forthe same reasons. ‘We stand ready to workin partnership to improve on the suecesses we have had o date in ensuring effective and affordable health insurance coverage for our residents, Thank you for your consideration of these requests. We look forward to discussing with you as soon as possible the next stops. Mag Sblo,s oe cc: Daniel Tsai, Assistant Secretary for MassHealth and Medicaid Director Louis Gutierez, Executive Director of the Massachusets Health Connector