Tag Archive: QHPs

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;
  • The success of the Arkansas “private option” in expanding coverage under a federal Section 1115 waiver permitting adults that would have otherwise been eligible for expanded Medicaid coverage under the Affordable Care Act to purchase exchange QHPs;
  • 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.


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 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.


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

Obama administration concerned over QHP provider network volatility

“The impact of inaccurate provider directories on consumers can be devastating, especially on those consumers who need to carefully examine networks for specific subspecialists, cancer centers or children’s hospitals,” the American Medical Association told state insurance officials in a recent letter endorsed by dozens of health care provider and patient groups.But insurers say that the problems might not be easy to fix, and that doctors are partly to blame for the directory errors. Insurers “are unable to guarantee the accuracy of the provider’s status” in a directory because doctors often “stop accepting particular health plans’ members off and on throughout the year and fail to notify the plan in a timely manner,” America’s Health Insurance Plans, the chief lobby for the industry, said in a letter to the Obama administration.

Source: White House Moves to Fix 2 Key Consumer Complaints About Health Care Law – NYTimes.com

I previously wrote about the volatility within provider networks serving qualified health plans (QHPs) sold on the state health benefit exchanges and how it generates uncertainty that undermines the value of these plans. This New York Times story points to a potential underlying cause: providers exercising discretion at the point of service on whether to accept QHP coverage. Beneath that are likely tensions between health plan issuers and providers over reimbursement rates. Accepting QHPs — which employ narrow provider networks to hold down premium rates — could mean more patients but less income overall for providers relative to the increased patient workload.

As The Times reports, the Obama administration is concerned the uncertainty over the accuracy of provider networks calls into question their adequacy and plans to pressure QHPs in the federal marketplace to update their provider directories at least once a month under the pain of $100 a day penalties for each plan member adversely affected by directory inaccuracies. Pending California legislation, SB 137, would require provider directories be updated weekly.

If plan issuers begin feeling the heat of fines from federal and state regulators, the matter could up in the courts as they seek redress from contracted providers who refuse to honor QHPs. The plan-provider relationship in the post Affordable Care Act environment is shaping up to be major point of friction in the implementation of the law that bears watching closely.


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

AHIP’s catastrophic plan proposal needs rethinking

America’s Health Insurance Plans (AHIP) has proposed the creation of a new Patient Protection and Affordable Care Act-compliant catastrophic individual health plan. (Link here) According to AHIP:

The new catastrophic plan would offer an AV (actuarial value) just below the current minimum requirement (covering an average of 60 percent of medical utilization costs) allowing for lower premiums, but would still include coverage of the law’s mandated essential health benefits, have no annual or lifetime benefit limits, and cover all preventive health services with zero cost-sharing for consumers. This would allow individuals and families eligible for premium subsidies to use that financial assistance to purchase the new plan, an option currently unavailable to consumers purchasing the ACA catastrophic plan.

Since bronze plans and catastrophic plans are quite close in actuarial value, have the actuaries found any potential for meaningfully lower premiums for these proposed catastrophic plans? In other words, is the medical services utilization of a population covered at 57 percent AV, for example, significantly lower than one covered at 60 percent such that it can produce meaningfully lower premiums? Especially given that the Affordable Care Act limits annual maximum out of pocket costs for in-network providers?

Not likely. But the apparent goal isn’t so much to reduce premium rates but rather to make catastrophic plans eligible to become qualified health plans (QHPs) sold in the state health benefit exchange marketplace and thereby eligible for advance premium tax credit subsidies. That has raised criticisms from some quarters that proposed catastrophic plans would not be beneficial to lower income individuals and families since the plans’ high cost sharing (deductibles, co-insurance and co-pays) would discourage their getting necessary care. But lower income people and especially those who utilize a lot of catastrophic (i.e. hospital inpatient) care aren’t likely to choose catastrophic plans and instead opt for plans with at least 70 percent AV (this level includes additional cost sharing subsidies for lower income earners).

If the goal however is to bring more relatively healthy people into state risk pools who are comfortable covering their own out of pocket costs for non-catastrophic care and using tax deductible health savings accounts to cover them, a more appealing catastrophic plan would be one that provides lower cost sharing for hospitalizations and other unexpected high cost medical events. Even with annual out of pocket cost limits of $6,350 for an individual plan and $12,700 for a family plan, a hospitalization can result in large medical bills, particularly for out of network hospitals used in an emergency situation that can double those limits.


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

Achieving single, integrated marketplace for individual, Medicaid health plans faces initial difficulties

Section 1413(c)(1) of the Patient Protection and Affordable Care Act requires each state to “develop for all applicable State health subsidy programs a secure, electronic interface allowing an exchange of data …that allows a determination of eligibility for all such programs based on a single application.” That means state health benefit exchanges must operate as integrated marketplaces offering both commercial insurance plans (referred to as Qualified Health Plans or QHPs) as well as Medicaid coverage for those whose household incomes meet their state’s Medicaid eligibility guidelines. The policy rationale – known as “no wrong door” and “one touch and you’re done” – is to reduce the ranks of the medically uninsured by simplifying the process of getting health coverage and removing roadblocks to enrollment.

Implementing that Affordable Care Act mandate, however, has been challenging from IT integration standpoint given the variety of legacy state computer systems that manage their Medicaid programs and state rules governing them, including those of the three dozen states using the federal marketplace, healthcare.gov.

That’s also been the case in California, where enrollment elegance has proven elusive. “I think we’ve oversold simplicity,” said Frank J. Mecca, executive director of the County Welfare Directors Association of California. Mecca made that observation today at a California Healthcare Foundation (CHCF) briefing in Sacramento on early consumer experiences with enrollment in the Golden State’s exchange, Covered California.

Mecca described the IT interface between the California Healthcare Eligibility, Enrollment and Retention System (CALHEERS) and the IT system that manages Medicaid eligibility and enrollment, the Statewide Automated Welfare System (SAWS) as a “clogged highway.” Consequently, Mecca noted, a large backlog of potential Medicaid enrollees remain stuck in the system. Mecca credited Covered California and the California Department of Health Care Services (DHCS), the state’s Medicaid administrator, for their efforts to remedy the backlog and improve the interface between the two IT systems. “It’s not an easy thing to fix,” Mecca added. “Things have improved tremendously, but we still have a long way to go.”

Both Mecca and another panelist at the briefing, Sonya Vasquez, policy director of the community-based health advocacy and policy organization, Community Health, said greater emphasis should be placed on marketing both Covered California QHPs as well as Medi-Cal, the state’s Medicaid program, particularly given Medi-Cal does not have set enrollment periods. They also said more effort should be made to make consumers aware in-person assistance is available for those seeking to enroll in coverage, including welfare department staff who can sign up applicants for either Covered California QHPs or Medi-Cal. (California is among those states have expanded Medicaid eligibility to 138 percent of federal poverty guidelines).

Consumers participating in focus groups conducted in early 2014 by PerryUndem Research/Communication were mostly uninsured and had substantial knowledge gaps for both Medi-Cal and QHP coverage and advance tax credit subsidies for the latter for households with incomes between 138 and 400 percent of federal poverty. (Click here for the full report on the findings presented at today’s CHCF briefing.)


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

Federal government liberalizes ACA definition of QHP to boost enrollment in troubled state exchanges

The U.S. Department of Health and Human Services’ Center for Consumer Information & Insurance Oversight issued guidance (.pdf) this week aimed at boosting enrollments in six state health benefit exchange marketplaces hobbled by glitches in their online enrollment web portals. The guidance issued February 27, 2014 allows the marketplaces to deem individuals eligible for retroactive coverage back to January 1, 2014 if they meet eligibility requirements but were unable to enroll in a plan by the upcoming March 31 plan year 2014 enrollment deadline due to the technical problems with the portals – described as an “exceptional circumstance” in the guidance.

The federal guidance uses the exceptional circumstance declaration to get around the definition of a qualified health plan (QHP) at Section 1301 of the Patient Protection and Affordable Care Act as one certified by an exchange exclusively for sale on the exchange marketplace. The guidance does so by including those who enrolled in non-QHPs – plans sold outside the exchange marketplace. Those enrollees would then be potentially eligible for subsidies in the form of advance premium tax credits and cost sharing reductions that would not otherwise be available to them. According to The New York Times, Oregon Gov. John Kitzhaber requested the federal government to allow the premium tax credits for people buying insurance outside that state’s troubled exchange.

This limited relief from the March 31 deadline for plan year 2014 enrollment and the extension of premium tax credit and cost sharing subsidies to non-QHPs will take pressure off the six troubled state exchange marketplaces that due to enrollment shortfalls may be unable to support themselves financially starting in 2015 when federal establishment grant assistance ceases as required by the Affordable Care Act. For more on this, click here.


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

California exchange retains former state budget chief as financial sustainability advisor

California’s health benefit exchange marketplace, Covered California, has retained the former head of the state’s Department of Finance to provide counsel relative to financial sustainability, budgeting and evaluation analytics, the exchange announced. Ana J. Matosantos served as the Golden State’s top budget official from 2009 to 2013 under the administrations of Arnold Schwarzenegger and Jerry Brown. Matosantos was given a six-month contract and will be paid $120,000 for her services. The appointment of Matosantos comes as the exchange prepares to transition starting in 2015 from federal grant support to an operating budget fully based on revenues from fees assessed on health plan issuers offering qualified health plans (QHPs) through the exchange.

In July of 2013, the California State Auditor deemed Covered California a “high risk” state entity due to uncertainty associated with projected enrollment in exchange QHPs and the associated impact on fee revenues. The State Auditor’s report concluded Covered California “appears to have engaged in a thoughtful planning process to ensure that it will remain solvent in the future,” adding that its “financial sustainability will continue to be an area of risk that will need to be closely monitored.” Last week, Covered California announced robust enrollment in QHPs during the last quarter of 2013 — the first half of the 6-month-long plan year 2014 initial open enrollment period — reporting slightly more than 500,000 Californians enrolled in QHPs during the quarter.


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

The next IT challenge for the health benefit exchange marketplace

In addition to the grueling IT challenge state health benefit exchanges have faced processing the initial surge of enrollments for 2014 coverage for individuals and small employers, their next IT test will be how well they serve as agents of the federal Internal Revenue Service.

The exchanges provide a critical tax reporting and monitoring function for the IRS, reporting small employer contributions to exchange qualified health plans (QHPs) offered their workers and advance income tax credits to subsidize QHPs purchased by individuals. The exchanges also track and report changes in monthly income of households purchasing tax-subsidized QHPs. Finally, the exchanges are charged with processing requests under the various exemption categories specified in the Affordable Care Act that allow individuals to avoid tax penalties for not having health coverage starting in 2014 or to qualify to purchase catastrophic plans.

The key test will be how well the exchanges work on an ongoing basis to obtain and process taxpayer reported data and interface with IRS data obtained through the federal data services hub that serves both federally operated and state-based exchanges. How proficiently and accurately the exchanges execute that function isn’t likely to be fully known until early 2015 when individuals and small businesses file their 2014 tax returns. That’s also when individuals must reconcile amounts they received as advance tax credits reported by the exchanges to purchase exchange-based plans with their actual earnings.

Presumably performing this critical tax function will be easier in the nearly three dozen states where the federal government is operating the exchanges. But with the IT snags in the enrollment process, there can be no guarantees it will go smoothly.


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

Medicaid enrollment glitch in federally operated state exchanges impairs “no wrong door” policy, initial enrollment for QHP issuers offering Medicaid plans

Today’s New York Times follows on a previous report by The Washington Post on a glitch involving the eligibility and enrollment process in state exchange marketplaces operated by the federal government. According to The Times, the federal website HealthCare.gov that serves as the online enrollment portal in those states is currently unable to electronically transfer applications to state Medicaid offices for individual plan applicants whose incomes qualify them for Medicaid under the guidelines established by their states.

That’s a serious issue for a couple of reasons. The exchanges are intended to operate as a single, integrated marketplace for both subsidized commercial insurance plans (referred to as Qualified Health Plans or QHPs) and Medicaid. The idea is affording people a single source for coverage regardless of household income makes it easier to enroll, thereby reducing the number of medically uninsured individuals. However The Times story notes under the current circumstance, those determined eligible for Medicaid will have to make a separate application though their state Medicaid offices, adding another step that could discourage enrollment.

Second, the glitch is problematic for QHPs that offer both commercial health plans as well as Medicaid managed care plans since it could deter initial enrollment of Medicaid eligibles in these plans. According to an issue brief (.pdf) by the Association for Community Affiliated Plans (ACAP), QHP issuers in 33 states and the District of Columbia have both commercial and Medicaid managed care plans, with 39 percent operating Medicaid plans in the same state. Having both commercial and Medicaid plans in the same state exchange marketplace could help reduce administrative costs and coverage gaps when enrollees’ incomes fluctuate across income guidelines for commercial and Medicaid plans, the ACAP brief notes.


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

Consumer survey findings bode well for exchanges offering narrow network QHPs

A recent survey of consumer healthcare provider preferences by Harvard University and Booz & Company via the Harvard Business Review blog (Registration required) came up with some rather counterintuitive findings that bode well for the health benefit exchange marketplace. In order to keep premium rates low, some participating exchange qualified health plans (QHPs) have narrowed their networks of providers.

Consumers don’t necessarily prefer a wide selection of hospital networks. The survey found consumers preferred a small network with a high-quality system. “Consumers worried about receiving care for an unknown illness at some point in the future, find more comfort in knowing they will receive high quality care from a discrete set of facilities than in pondering a sea of options with little expertise in how to make sound decisions.” That makes sense considering that hospitalization isn’t typically a planned use of medical care and that most areas of the U.S. tend to be served by a small number of hospitals.

What’s noteworthy is the survey found the desire for a high-quality hospital system trumps having one’s primary care physician (PCP) in network, with respondents ranking an in-network PCP only half as important as having a good hospital system in network.  In a surprising finding, having one’s PCP in network represented less than five percent of the value consumers attribute to their health insurance. “While a dedicated patient/PCP relationship was once sacrosanct, today’s consumers are increasingly comfortable with getting primary care at retail clinics (e.g., CVS, Walgreens, Walmart, and Target) or using online and tele-health services that are quicker, more convenient, and often more cost-effective than a traditional office visit,” the HBR blog post notes. “Furthermore, as consumers become savvier in their decisions about benefits, even those who truly value their relationship with their PCP quickly recognize that picking up the occasional $150 co-pay to see a PCP who is no longer in-network is a relatively minor trade-off compared to the potential for a five-figure bill at an out-of-network hospital.”

Having upper-tier hospitals and health systems in network such as academic medical centers didn’t rank as a “must-have” among consumers.  “While reputation remains an important factor in consumers’ decisions, our research indicates that many safety-net and local hospitals are also well-regarded by consumers — and in particular by those who are currently uninsured. As such, lower-cost, high-value networks designed around these ‘lower-tier’ institutions could be attractive and desirable offerings for consumers.”


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 fpilot@pilothealthstrategies.com or call 530-295-1473. 

%d bloggers like this: