Monthly Archive: March 2015

Arkansas exploring creating alternative state health plan

Arkansas, which pioneered the so-called “private option” to use expanded federal Medicaid funding under the Patient Protection and Affordable Care Act to subsidize commercial insurance plans sold on the state’s health benefit exchange, is also out front among states when it comes to preparing to potentially exercise an Affordable Care Act option to opt out of key requirements of the law starting in 2017 and set up its own plan to provide health coverage to low and moderate income households.

The Arkansas Health Reform Legislative Task Force created by Act 46  signed last month by Gov. Asa Hutchinson will work on developing an alternative health care coverage model by the end of this year, replacing the private option as of Jan. 1, 2017.

“Notwithstanding any other rule, regulation, or law to the contrary, the Department of Human Services may submit and apply for any federal waivers or authority necessary to transform the Arkansas Medicaid Program into a program with maximum state flexibility in the use of the funds for innovative and cost-effective solutions for the provision of healthcare services,” Act 46 states. Among the options to be studied is obtaining a federal block grant to fund the alternative program.

Section 1332 of the Affordable Care Act titled Waiver for State Innovation allows states to petition the U.S. Department of Health and Human Services for a waiver to opt out of key ACA requirements beginning in 2017 including the state health benefit exchange, premium tax credit subsidies and cost sharing reductions for plans sold on the exchange as well as the individual and employer “shared responsibility” mandates. States receiving a Section 1332 waiver would be eligible for “pass through” funding operating like an annual block grant. The funding would cumulatively represent what state residents would otherwise be eligible to receive under ACA rules for premium tax credits, cost-sharing reductions and small business tax credits if they are ineligible for them under the state programs.

The Section 1332 waiver comes with some provisos. States opting out of the ACA rules would have to demonstrate their programs would ensure individual and small group plans offer coverage at least on a par with plans providing the 10 essential benefits prescribed by the ACA. State programs would also have to cover a comparable number of residents as well as ensure individuals and small employers have access to coverage with affordable premiums and protections against “excessive” out-of-pocket costs.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Business groups, broker association urge 2-year delay in expansion of small group market starting in 2016

Seventeen business groups and the National Association of Health Underwriters have requested the U.S. Department of Health and Human Services delay implementation of a Patient Protection and Affordable Care Act provision requiring states to expand the small group health insurance market starting next year.

Section 1304(b)(2) of the law defines the small group market as employers who employed at least 1 but not more than 100 employees on business days in the previous calendar year. Section 1304(b)(3) allows states to temporarily define the small group market as 50 or fewer employees for plan years starting before January 1, 2016.

In a February 18, 2015 letter to HHS Secretary Sylvia Burwell, the signatories urge extending that date to January 1, 2018. Doing so would allow organizations employing 51 to 100 employees to continue to purchase company rated coverage not compliant with Affordable Care Act requirements for small group coverage including modified community-based rating based on a single statewide risk pool, specified essential health benefits and standards for minimum actuarial value and affordability for participating employees. They warn broadening the scope of the small group market will lead to market disruption among health insurers that could limit employer coverage options as well as potentially lead to premium increases. The signatories cite an Oliver Wyman study finding that two thirds of employers affected by the expansion would see premiums rise by an average of 18 percent in 2016. That could lead some employers to choose to self-insure, reducing the size of the risk pool and putting additional upward pressure on premiums, they contend. The implication is employers with 50 or fewer workers tend to employ less healthy staff with higher medical utilization than firms with 51 to 100 employees, degrading the quality of the risk pool if all employers of 100 or fewer employees were forced to jointly pool their risk.

In an issue brief examining the effect of the expansion of the small group market, the American Academy of Actuaries concluded premiums could increase for some employers – such as those employing relatively younger, healthier workforces – and conversely decline for those with less healthy staff members. The brief noted that since there are more than twice as many covered employees in the 1-50 employee group size cohort than in the 51-100 category, the impact on premium rates would be moderated.

John Arensmeyer, founder and CEO of Small Business Majority, opposes the requested delay that would continue to segment off the smallest employers given no states have opted thus far to define their small group markets as employers with up to 100 employees. Businesses with fewer than 50 employees would benefit from the increased spread of risk of more covered lives by having larger employers in the small group market, Arensmeyer wrote in a March 5, 2015 blog post. “The entire pool becomes bigger,” he observed.

That larger pool, Arensmeyer wrote, would help boost the struggling Small Business Health Options Program (SHOP) of the state health benefit exchange marketplace and benefit brokers. “We’ll also see more broker involvement in SHOP as firms of this size are more likely to utilize the help of agents,” Arensmeyer added.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Health benefit exchanges post modest premium increases in 2015; ability of narrow networks to continue to moderate premiums uncertain

A review of plan year 2015 premium rates by the Robert Wood Johnson Foundation and the Urban Institute found premiums in state health benefit exchange marketplaces increased by 2.9 percent over 2014 plans. The report cautions continued overall modest premium rate growth is dependent on market forces in the provider and patient segments. On the provider side, health plan issuers have been able to get fewer providers to care for larger patient panels for lower reimbursement rates.

[W]hether these arrangements are sustainable and remain attractive to consumers over time is unknown,” the report concludes. “If consumers prefer broader networks and are willing to pay for them, the market will respond by offering such products, and premiums will consequently increase.”

Most observers, however, believe keeping premiums as low as possible – particularly in a mostly subsidized market like the exchanges – will trump other consumer desires, including wider provider networks. But as the report notes, the sustainability of the narrow provider network model is under pressure from patients who complain to regulators and public policymakers when they have problems finding a provider who will accept their coverage. That in turn could generate legislation and regulations making it harder for plans to rely on narrow networks to moderate premium rates. “States and the federal government could also engage in greater regulation of network adequacy; this, too, could cause premiums to increase,” the report notes.

In addition, the report cautions if underlying health care costs begin to grow at historical rates versus lower rates seen in recent years, “it will be hard for insurers to avoid reflecting this in their premiums.”

Click here for the full report.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Policy tension over restricted exchange open enrollment emerges in California

A primary element of the Patient Protection and Affordable Care Act’s reforms of the individual health insurance market is the elimination of medical underwriting and requiring health insurers to accept all applicants for coverage regardless of their medical history and condition, including pregnancy.

For plans sold on the state health benefit exchange marketplace, Section 1311(c)(6) of the law requires the federal government to determine limited to annual open enrollment periods such as those used in large employer group health plans. In addition, Section 2702(b) of the Public Health Safety Act allows health plan issuers selling plans outside the exchange marketplace to restrict enrollment to open or special enrollment periods. Individuals and families can enroll outside these periods only if, for example, they move to another state, lose employer-sponsored coverage or change their family status. Changes in health status are not excepted.

A request this week by California’s U.S. senators, Dianne Feinstein and Barbara Boxer urging their state’s health benefit exchange, Covered California, to add pregnancy to the list of exceptions to the open enrollment timeframe reflects an emerging policy tension point in the implementation of the Affordable Care Act’s individual market reforms.

Nicole Evans of the California Association of Health Plans cautioned “[i]f we start to provide exceptions for people to wait to get coverage until they have a need, you could be undermining the goals of the Affordable Care Act.”

The rationale for restricting enrollment to specified periods of the year is to deter opportunistic enrollment by those who might purchase coverage only when they have a health crisis requiring costly medical treatment and allowing it to lapse once their course of care is completed. Supporters of this policy might argue that allowing enrollment at any time (such as permitted for small group insurance and Medicaid) would convert an insurance product sold in the private market into something more like a government mandated (and subsidized for those who qualify) benefit.

A contrary view is expressed by Anthony Wright, executive director of the consumer nonprofit Health Access California. Wright suggests ending specified open enrollment periods would bring more generally healthy people into coverage offsetting any potential adverse selection, noting those in poor health have the greatest motivation to obtain coverage and are likely already in the risk pool. Wright’s position is reinforced by analysis of 2014 plan year enrollment indicating that those with costly, chronic medical conditions and who might have been denied coverage in the past were among the first to sign up for coverage.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Higher than expected Medicaid enrollment strains IT infrastructure, finances of Colorado health benefit exchange

Medicaid patients enrolling through the state health insurance exchange are taking too much of its resources, exchange board members said Monday, but state officials propose an even tighter partnership with a single technology vendor.

The federal policy of “no wrong door” was meant to be a single online portal for the uninsured that would seamlessly determine their eligibility for either Medicaid or private insurance with tax subsidies they purchased on the exchange.

But system and user errors have created problems for thousands of Colorado customers seeking financial assistance under the Affordable Care Act.

via Colorado health insurance exchange officials clash over Medicaid role – The Denver Post.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

SCOTUS should issue ruling in King v. Burwell ASAP

The U.S. Supreme Court should issue its ruling in King v. Burwell regarding the availability of advance premium tax credits in the nearly three dozen states where the federal government operates state health benefit exchanges as soon as possible. Waiting to issue its decision at or near the expiration of its current term at the end of June will produce months of needless uncertainty adversely impacting the policy planning of the states with federally facilitated exchanges (FFEs), particularly given that many of their legislatures are in session now and considering contingencies including establishing state-based exchanges should the subsidies be ruled illegal in those states.

If the subsidies are found to be contrary to the Patient Protection and Affordable Care Act — even though there’s at least an even chance they will not — states will need sufficient time to authorize and set up their own exchanges and select exchange qualified health plans prior to the start of plan year 2015 open enrollment on November 1. Health plan issuers also need to know if the subsidies will be available in order to make decisions as to what if any plans they will offer in the affected FFE states. Finally, with Congress trapped in partisan gridlock, there is little likelihood of a quick fix from the legislative branch of the federal government if the subsidies are cut off in the FFEs. It’s up the the judiciary to end the uncertainty. A rapid ruling would also be consistent with the high court’s expedited decision to hear the case before a full split could develop among the U.S. circuit courts of appeal.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Burgeoning enrollment in California’s Medicaid program raises tensions between administration, lawmakers over access to care, provider reimbursement rates

California Gov. Jerry Brown took a cautious approach on expanding Medicaid eligibility under the Patient Protection and Affordable Care Act. It was well into 2013 and not long before the start of the new fiscal year (July 1) and the October 1, 2013 launch of open enrollment in that state’s exchange marketplace, Covered California, before Brown approved legislation authorizing the Medicaid expansion. Even though the federal government would initially be covering most of the cost of the expansion, Brown was concerned about the overall growth of the state’s Medicaid program, Medi-Cal.

With good reason. Kim Belshé, who served as Health & Human Services Agency secretary in the previous administration of Gov. Arnold Schwarzenegger, warned in 2009 that even with a $10 billion infusion of supplemental federal cost share funding provided by the American Recovery and Reinvestment Act of 2009, “California cannot afford the Medicaid program as currently structured and governed by federal rules and requirements.” In other words, it’s a budget buster.

In 2013, Brown was at odds with his fellow Democrats in the Legislature who wanted to increase reimbursement rates paid to medical providers unhappy with low reimbursement rates. Since providers can opt not to accept Medi-Cal, they argued, it’s critical that they have sufficient incentive to do so to allow Medi-Cal enrollees adequate access to health care. Brown didn’t go along with boosting provider reimbursement rates that year, reasoning the state was still on the road to recovering its fiscal health after tax revenues were severely crimped in the 2008-09 recession.

Now two years later, Medi-Cal enrollment has jumped to more than 12 million, covering nearly 1 in 3 Californians and following the pattern seen in other states where Medicaid enrollments are outpacing by 2 to 1 sign ups for subsidized commercial health plans sold though state health benefit exchanges. The burgeoning enrollment has heightened the pre-existing tensions between Brown and legislative Democrats over increasing Medi-Cal provider reimbursement rates, as the Los Angeles Times reports in this story on two measures that would reverse the recession-era cuts in provider reimbursement rates.

As The Times reports, those tensions surfaced in this blunt exchange between the chair of the Senate Health Committee, Ed Hernandez (D-West Covina), and Jennifer Kent, director of the state Department of Health Care Services, at a hearing this week. Hernandez asked Kent to respond directly as to whether Medi-Cal patients have the same access to doctors as presumably more affluent Silicon Valley workers covered by commercial health plans.

“Yes or no?” he said.

“Yes,” Kent said.

“I don’t think so,” Hernandez replied.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

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