Medicaid managed care plans could be sold on state health benefit exchanges

With Medicaid enrollments strongly outpacing commercial individual plan enrollments in state health benefit exchanges, a number of factors are aligning to set the stage for policymakers to allow Medicaid managed care plans be offered on the exchanges alongside individual Qualified Health Plans (QHPs). They include:

  • A rulemaking issued in June by the federal Center for Medicare & Medicaid Services that would apply requirements similar to those for commercial individual and Medicare Advantage plans to Medicaid managed care plans, including allowing plan issuers to advertise products offered across the Medicaid and exchange markets (Click here for a summary of the proposed regulations posted at the Health Affairs blog);
  • The need to assure operational sustainability among state health benefit exchanges, particularly in states that have expanded Medicaid eligibility standards to households earning up to 138 percent of federal poverty levels and single childless adults. Beginning in 2015, federal establishment grant funding began drying up, leaving exchanges reliant on generating fees from participating plan issuers. Adding Medicaid managed care plans to commercial QHPs assessed exchange participation fees would bolster exchange revenues and reduce fiscal uncertainty;
  • Substantial and ongoing difficulties fully integrating exchange eligibility and enrollment IT platforms with legacy state Medicaid eligibility and enrollment systems to meet the Affordable Care Act’s mandate of a single application process for QHP and Medicaid eligibility determinations and enrollment;
  • Financial considerations in the distribution channel: insurance producers are wary of enrolling households eligible for Medicaid since they earn commissions only on commercial individual plans sold on and off the exchanges. The role of brokers and agents relative to Medicaid enrollments is currently under evaluation by California’s exchange, Covered California.

Sections 1301(a) and 1311(c) of the Patient Protection and Affordable Care Act defining a QHP eligible for sale on the exchanges would appear to allow Medicaid managed care plans be deemed QHPs in the exchanges provided the plan issuer also offers individual plans on the exchange that also meet state requirements (The Affordable Care Act requires a minimum of one silver and one gold level plan be offered). Indeed, the QHP requirements set forth in Section 1311(c) have some overlap with those proposed for Medicaid managed care plans in the June CMS proposed rulemaking, including provisions requiring provider network adequacy standards, plan quality improvement programs and clinical care quality management.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Debate over future of ACA shifts to adequacy and affordability of coverage

Henry J. Aaron of the Brookings Institution has boiled down the future policy debate around the Patient Protection and Affordable Care Act. Now that the law is firmly in place – at least for the near term – and is meeting a primary policy goal of reducing the number of medically uninsured Americans, the next debate will be over the adequacy and affordability of coverage. Specifically, whether it’s too much, too little or just about right.

Conservatives, Aaron writes, prefer increasing the financial exposure of patients when they buy insurance and when they use care. By comparison, those of a more liberal bent prefer no insurance whatsoever to protect against financial exposure to medical bills but rather Canadian-style “single payer” where a government monopsony pays the nation’s collective health care bill.

Likely to fuel the debate are reports like this recent Kaiser Health News item. It reported that even with advance tax credit premium subsidies for coverage sold on state health benefit exchanges, premiums alone for some moderate income households approach nearly a tenth of their gross incomes and can really add up when out of pocket costs are included:

For instance, families of three earning $73,000 have to pay nearly $7,000 on premiums despite also receiving subsidies They still face deductibles, which this year averaged around $2,500 for the most common types of insurance plans, known as silver tiers. If a family required extensive medical care and reached the maximum they would be held responsible for—$13,200 this year—their total health care-related bills, including premiums, would exceed $20,000, or 28 percent of their gross incomes. “Even some of those who are eligible for financial assistance are still finding the coverage not to be affordable for them,” said Linda Blumberg, a senior fellow at the Urban Institute, Washington think tank.

All individual and small group plans that originated after the enactment of the ACA now basically operate as major medical plans of the pre-HMO days, minus the lifetime limits. They do so by virtue of calendar year maximum out of pocket limits: $6,600 for self-only coverage $13,200 for family coverage for 2015 plans (rising to $6,850 for self-only coverage $13,700 for family coverage for 2016). The annual premium is partly to cover catastrophic risk above these amounts. The amount of the premium paid by individuals and families depends on how much risk short of the calendar year OOP limits they want to assume. If they want less exposure to co-insurance, deductibles and co-pays, the premium is higher. If they’re willing to assume more, the premium is lower and lowest for “bronze” rated plans that cover 60 percent of expected annual medical utilization as well as pure catastrophic plans available to individuals under age 30 or households that would have to spend more than eight percent of their incomes to buy the lowest cost bronze plan offered in their area.

Herein is a primary element of the near term debate over the ACA: whether it provides affordable coverage regardless of whether households assume a high deductible and pay more out of pocket for non-catastrophic care or pay a higher premium in order to pay less out of pocket for these services. In a still fraught economy that has placed particular financial stress on moderate income households falling somewhat below and above the 400 percent of federal poverty cut off for advance tax credit subsidies for coverage sold on state health benefit exchanges – and those that have not or cannot easily afford to set aside money in health savings accounts to defray out of pocket costs — these costs and tradeoffs come into sharp focus.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Medicaid drove NY State of Health exchange enrollment to double in 2015 – Business – The Buffalo News

Enrollment in New York’s health insurance exchange more than doubled between 2014 and 2015, across the state and in Western New York, driven by soaring enrollment in Medicaid, the state Health Department reported Wednesday.

About 2.1 million New Yorkers were enrolled in coverage through the NY State of Health marketplace at the end of February, a sharp increase from the 961,000 enrolled at the end of the 2014 period, with 80 percent of them enrolled in Medicaid or Child Health Plus, according to the department’s first detailed breakdown of exchange enrollment through the end of the 2015 sign-up period. In the eight counties of Western New York, enrollment more than doubled from 55,844 to 117,330 between last year and this year.

Source: Medicaid drove NY State of Health exchange enrollment to double in 2015 – Business – The Buffalo News

This item comes as state health benefit exchange officials convene with their federal government partners this week in McLean, Virginia to discuss meeting the challenge of keeping the exchanges financially self sustaining. As I discussed in a recent post, states like New York that established their own exchanges and expanded Medicaid eligibility criteria are finding Medicaid enrollment far outpacing that of commercial qualified health plans (QHPs) offered on the exchanges. That’s a big financial sustainability issue for the exchanges since they obtain no ongoing income for Medicaid eligibility and enrollment processing but are required to perform that function under the Affordable Care Act’s “no wrong door” provision mandating a single integrated application process for both QHPs and Medicaid.

Now that the federal Department of Health and Human Services has issued a proposed rulemaking that would subject Medicaid managed care plans to regulatory requirements like those for commercial QHPs, I expect allowing health benefit exchanges to assess fees on Medicaid managed care plans will be one of the financial sustainability ideas discussed at the McLean meeting.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Obamacare rates to rise 4% in California for 2016 – LA Times

Defying dire predictions about health insurance rate shock across the country, California’s Obamacare exchange negotiated a 4% average rate increase for the second year in a row.The modest increase for 2016, announced Monday, may be welcome news for many of the 1.3 million Californians who buy individual policies through the state marketplace, known as Covered California.California’s rates are a key barometer of how the Affordable Care Act is working nationwide, and the state’s performance is sure to be hotly debated among supporters and foes of the healthcare law, including the current crop of presidential candidates.

Source: Obamacare rates to rise 4% in California for 2016 – LA Times

What’s notable about this figure is it is lower than the closely watched barometer of CalPERS health plan cost trends for large group health plans that have traditionally had less rate volatility and lower increases than individual plans such as those sold through Covered California.

By comparison to the four percent increase for 2016 Covered California plans, HMO plans for California state and local government employees and their dependents are set to increase on average by 7.2 percent next year and 10.8 percent for PPO plans.

However in Northern California, Covered California plans will on average track the CalPERS statewide average. According to Covered California, premiums in that half of the state will rise by an average of seven percent for plan year 2016.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Health Insurance Companies Seek Big Rate Increases for 2016 – The New York Times

WASHINGTON — Health insurance companies around the country are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected. Federal officials say they are determined to see that the requests are scaled back.Blue Cross and Blue Shield plans — market leaders in many states — are seeking rate increases that average 23 percent in Illinois, 25 percent in North Carolina, 31 percent in Oklahoma, 36 percent in Tennessee and 54 percent in Minnesota, according to documents posted online by the federal government and state insurance commissioners and interviews with insurance executives.

Source: Health Insurance Companies Seek Big Rate Increases for 2016 – The New York Times

Large annual premium rate increases at this double digit level prompted the enactment of the Patient Protection and Affordable Care Act in 2010 when it became clear the individual health insurance market segment had entered an unsustainable death spiral. Sharp premium hikes ensued because adverse selection trashed the insurers’ risk pools, making them actuarially unsustainable. The Affordable Care Act attempts to restore the pooling function by putting everyone into statewide risk pools and eliminating medical underwriting to bring more people into the pool.

What’s striking here is the Affordable Care Act anticipated those who lacked medical insurance before the law’s major individual health insurance market reforms took effect in 2014 might have poorer health status and use more medical services. Hence, it contains premium stabilization provisions designed to prevent the kinds of steep rate increases spotlighted in by The Times. That raises questions as to the effectiveness of these provisions.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Sacramento region hit hard by CalPERS health plan rate hikes – Sacramento Business Journal

This set up a dynamic where next year, single public agency workers in Los Angeles will pay a monthly premium of $611 for traditional Anthem HMO coverage, while their counterparts in Sacramento will pay $1,113. Family coverage for the same plan is $1,588 in Los Angeles, $2,893 in Sacramento. Employers pay part of the tab, but workers pick up the rest. The breakdown varies by employer.“Ouch,” said Phil Wright, administrative services manager for the city of West Sacramento, said of the public agency rate hikes next year. “When your monthly health insurance premium is more than your mortgage payment, there’s a problem.”

Source: Sacramento region hit hard by CalPERS health plan rate hikes – Sacramento Business Journal

Wright’s comment reflects the unsustainable structural costs that are at the heart of the health insurance crisis. Wright is essentially putting the cost of health coverage on a par with housing costs. What’s noteworthy here is these are premiums negotiated with the purchasing power of many combined local government agencies in the nation’s largest state: California. Because of the state’s size and the purchasing power of the California Public Employees Retirement System (CalPERS), health plan cost trends in the Golden State are seen as an indicator of where rates are headed nationally.

“Frankly, these costs are unacceptable,” Doug McKeever, chief of the CalPERS health policy research division, told the Sacramento Business Journal. “It’s a really tricky dynamic for us as the cost is born by employers and members,” he added. “We need to look at alternative strategies to bring down costs.”

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

SCOTUS takes holistic, broad contextual reading of ACA in rejecting challenge of exchange tax credit subsidies

The U.S. Supreme Court adopted a holistic, broad contextual reading of the Patient Protection and Affordable Care Act in ruling today in King v. Burwell that premium tax credits to subsidize the purchase of individual health coverage are available on all state health benefit exchanges, including those states that opted to allow the federal government to set up the exchange.

The majority opinion by Chief Justice John Roberts is the second major decision he authored turning back significant challenges to the law. In June 2013, Roberts upheld the Affordable Care Act’s requirement that all individuals have some form of health coverage or pay a tax penalty.

The petitioners argued the Affordable Care Act permitted the tax credits only in states that established an exchange through direct state action rather than defaulting to the federal government operation of an exchange. The majority opinion however took a three-legged stool analysis in concluding the tax credit subsidies are one of three critical elements of the law’s reforms of the individual health insurance market that work together in a unified manner. Removing the subsidies in some states would thus collapse this tripartite reform scheme and result in the failure of the market that Congress clearly intended to remedy, the majority concluded.

“The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral” of adverse selection, Roberts wrote for the majority. “It is implausible that Congress meant the Act to operate in this manner.” Roberts noted Congress passed the Affordable Care Act “to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is con­sistent with the former, and avoids the latter.”

Two words trump four: The petitioners’ challenge turned on the last four words at Section 1311(d)(1) in the Affordable Care Act, defining an exchange as a governmental agency or nonprofit entity that is “established by a State.” But the law’s general reference to the mandatory exchanges using the term “such exchange” trumped those four words, the majority reasoned, creating parity between exchanges created by state action and those set up by the federal government: (The Affordable Care Act requires exchanges operate in all states from 2014-16 with provisions for a waiver beginning in 2017)

If a State chooses not to follow the di­rective in Section 18031 to establish an Exchange, the Act tells the Secretary of Health and Human Services to establish “such Ex­change.” §18041. And by using the words “such Exchange,” the Act indicates that State and Federal Exchanges should be the same. But State and Federal Exchanges would differ in a fundamental way if tax credits were available only on State Exchanges—one type of Ex­change would help make insurance more affordable by providing bil­lions of dollars to the States’ citizens; the other type of Exchange would not.

The majority’s legal analysis was not based on the doctrine of deference to reasonable regulatory agency interpretation of ambiguous statutory law under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837. While that analysis is based on the premise that Congress delegated interpretation of a statute to regulators, it is not appropriate in this case, Roberts wrote:

“In extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.” This is one of those cases. The tax credits are among the Act’s key reforms, involving billions of dollars in spending each year and affecting the price of health insur­ance for millions of people. Whether those credits are available on Federal Exchanges is thus a question of deep “economic and political significance” that is central to this statutory scheme; had Congress wished to assign that question to an agency, it surely would have done so ex­pressly.

The full opinion as well as a dissenting opinion authored by Justice Antonin Scalia is available here.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Growing Medicaid enrollment poses potential fiscal threat to state health benefit exchanges

The biggest threat to the future financial sustainability of the state health benefit exchange marketplace may be declining economic prosperity and the resulting polarization of household income strata, particularly in the states that have elected to expand Medicaid eligibility to households earning up to 138 percent of federal poverty and to single adults.

The reason? Low income households that qualify for Medicaid generally cannot purchase qualified health plans (QHPs) offered on state health benefit exchanges. If the growing Medicaid eligible population isn’t able to purchase QHPs, the exchanges don’t derive fees assessed on health plan issuers – their main source of revenue as federal establishment grant funds dwindle — that are based on a percentage of premium or set amount for each “effectuated” enrollee. (In states that have opted not to expand Medicaid eligibility, households earning at least 100 percent of federal poverty are eligible to purchase exchange QHPs.)

A Rand Corporation analysis of 2013-15 health coverage enrollment trends issued in June 2015 reported 6.5 million newly enrolled in Medicaid as of February 2015, outpacing by 58 percent the 4.1 million that enrolled in exchange QHPs. According to federal data, 71.1 million Americans were enrolled in Medicaid and the Children’s Health Insurance Program as of April 2015, 12.3 million more than the average for July to September 2013.

While exchanges realize no revenue from Medicaid enrollments, they do incur expense in handling them. Under the Patient Protection and Affordable Care Act’s “no wrong door” policy, exchanges are required to process eligibility and enrollment for both state insurance programs like Medicaid as well as QHPs. It’s also easier to enroll in Medicaid coverage. Unlike exchange QHPs that limit enrollment to part of the year during open enrollment periods, those eligible for Medicaid can enroll at any time of the year.

In California, an expansion state with the nation’s largest Medicaid program serving 12.2 million or about 1 in 3 Californians, enrollment grew by 41.4 percent between December 2013 and January 2015, according to the state’s Medicaid administrator, the Department of Health Care Services. Before that, a severe economic downturn added about 1 million new eligibles to the Golden State’s Medicaid rolls between 2007 and 2010.

Enrollment in California’s Medicaid program – known as Medi-Cal – far outstrips that of QHPs sold through the state’s health benefit exchange, Covered California. According to the federal Department of Health and Human Services, there were 1.4 million enrolled in Covered California plans as of February 2015 — about the same number for plan year 2014. To put that in perspective, there are roughly 61 Medi-Cal enrollees for every 7 enrolled in a Covered California QHP.

Colorado, a Medicaid expansion state that operates a state-based exchange, has seen burgeoning Medicaid enrollment tax the finances of its exchange. The state enrolled 1.2 million in Medicaid — an increase of 433,172 or 55 percent — between late 2013 and February 2015. For 2015, the state’s exchange, Connect for Health, enrolled 27,465 people in Medicaid or CHIP. That’s nearly twice the 15,566 enrolled in commercial plans, blowing a $7 million hole in its budget for increased call center costs handling complex Medicaid enrollments and prompting the exchange to seek reimbursement from the federal government, according to The Denver Post.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

CalPERS 7.2% HMO plan premium rate increase in line with historical utilization cost trend

Citing higher drug prices, the California Public Employees’ Retirement System said its HMO premiums are rising by 7.2% next year. Rates for PPO, or preferred provider organization, plans are going up even more at 10.8%, on average, for 2016.This marks a departure from two years of more modest increases of about 3% at the giant pension fund. The agency’s rate hikes are a key barometer since it’s one of the largest healthcare buyers nationwide after the federal government.

Source: CalPERS approves 7.2% increase in HMO rates as drug costs climb – LA Times

The 7.2 percent average premium rate increase for 2016 HMO plans — which cover two out of three CalPERS members — aligns with the underlying medical utilization cost growth trend of recent years of about seven percent. As the story notes, CalPERS health plan rates are viewed as a harbinger of the cost of health coverage in the coming calendar year given the large size of its pool of 1.4 million active and retired state and local government workers.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

California exchange enrollees healthier than expected

SACRAMENTO, Calif. — A new study in the journal Health Services Research found that analyzing state data on health care usage by Covered California enrollees helped demonstrate that many were healthier and presented less risk to insurance companies than anticipated, helping drive down the cost of health premiums offered through the exchange in 2015.The study, “Sorting Out the Health Risk in California’s State-Based Marketplace,” which was published online June 9, 2015, found that giving health insurance companies the data needed to estimate the amount they would pay or receive from a special risk-adjustment pool helped them know they could reduce their rates in many cases. “After receiving these findings as part of their negotiations with Covered California, health plans covering the majority of enrollees decreased their proposed 2015 rates, saving consumers tens of millions of dollars in potential premiums,” the study stated.

Source: Covered California Daily News: Covered California Saved Consumers Tens of Millions of Dollars in Premiums in 2015 Through Innovative Data Analysis

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

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