Transcript CHI Advocacy Group November 29, 2012

Health Insurance
Marketplaces and
Texas Update
March 14, 2013
Emily Wey
[email protected]
Polsinelli Shughart PC
In California, Polsinelli Shughart LLP
Polsinelli Shughart provides this material for informational purposes only. The
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PART I:
MARKETPLACES GENERALLY
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Insurance Market Reforms, v. 1.1
• Temporary High Risk Pool Programs: state-based
• Rate Review Standards
• First-line Coverage Reforms (September 23, 2010)
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No Lifetime Limits
Restricted Annual Limits
Restrictions on Rescission
First Dollar Coverage of Preventive Services
Extended Dependent Coverage (age 26)
External Review Organizations: state-regulated
No Pre-Existing Conditions for Children
Disclosure of Justifications for Premium Increases
• Medical Loss Ratios with Rebates
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Insurance Market Reform v.2.1: 1.1.2014
• Market Coverage Reforms
– Guaranteed Issue
– No Pre-existing Condition Exclusion for Adults
– Rating Rules
• No health status ratings
• 3:1 maximum variation for age
• 1.5:1 maximum variation for tobacco use
– Health Plans must be “Qualified”
– No Annual Limits for Essential Health Benefits
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Health Insurance Marketplaces
Essential Health Benefits
Premium Subsidies
Individual mandate & employer penalties
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Health Insurance (Exchange) Marketplaces
 Marketplace for health
insurance – like Expedia
 Provide coverage options for
individuals & small
businesses – increased
transparency
 Site to manage new federal
tax credits for certain
individuals who do not have
coverage through their
employer
 Enrollment “facilitators” for
public programs
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Marketplace Basics
• Every state must have a Marketplace) for
individuals and small businesses (up to 50
employees), effective January 1, 2014; number
will be raised to 100 employees in 2016
• “Qualified” health plans must offer a minimum
level of coverage
• Each state must define (and be approved by the
government) the “Essential Health Benefits” to be
offered by marketplace plans
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What the marketplaces will be
 A marketplace and support network for
individuals and small employers to:
 Compare information regarding cost and quality
 Shop features of plans containing the same base
benefits
 Determine eligibility for federal financial
assistance (premium subsidies)
 Call, text or sit down with someone for help
 Enroll in a plan
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Critical Marketplace Dates
Date
Action of State
November 16, 2012
Original deadline to declare SBM
December 14, 2012
State declares SBM & applies to HHS,
round 1
January 2013
HHS began certification of SBMs
February 15, 2013
State declares SPM & applies to HHS,
round 2
October 1, 2013 – March 31, 2013
Initial Open Enrollment Period
January 1, 2014
Effective Date for Marketplace Coverage
January 2015
Marketplace must be self-sufficient
January 2017
States may seek waivers
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Marketplace Options & State Decisions
State-Based
Marketplace
State operates all exchange
activities; however, state
may use federal
government services
for the following activities:
State
Partnership
State Operates
activities for one
or both of the
following:
Federally-Facilitated
Marketplace
Federal government
operates the
marketplace. State may
elect to perform on its
own, or can use federal
government services, for
the following activities:
–Premium tax credit &
cost sharing reduction
– Plan
Management
–Reinsurance
program
–Exemptions
– Consumer
Assistance
–Medicaid & CHIP
eligibility:
assessment &
determination
–Risk adjustment
program
–Reinsurance
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Core Functions of the Health
Insurance Marketplace
Consumer
Assistance
Consumer support assistors; education & outreach, including stakeholder &
tribal consultation plans; Navigator management & oversight of
brokers/agents & web brokers; call center operation; website management; &
written correspondence with consumers to support eligibility & enrollment
Plan
management
Plan selection approach (e.g., active purchaser or any willing plan); collect &
analyze plan rate and benefit package information; QHP certification,
compliance--issuer monitoring and oversight; ongoing issuer account
management; issuer outreach and training; and data collection & analysis for
quality
Eligibility
Accept single-streamlined application; conduct verification of applicant
information; determine eligibility for enrollment in a QHP & for insurance
affordability program, including payment exemption determination; connect
Medicaid & CHIP-eligible applicant to Medicaid and CHIP; and conduct redeterminations and appeals
Enrollment
Enroll consumers for QHPs; transactions with QHPs & transmission of
information necessary to initiate advance payments of the premium tax
credit and cost-sharing reductions
Financial
Management
User fees; financial integrity, including long-term operational cost, budget &
management plan; support risk adjustment, reinsurance, & risk corridor
programs.
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CURRENT STATE DECISIONS
• 17 & DC State Based Marketplaces:
– CA, CO, CT, DC, HI, ID, KY, MA, MD, MN, NM, NV, NY, OR, RI,
UT**, VT, WA
• 7 State Partnership Marketplaces (February 15, 2013):
– AR, DE, IA, IL, MI, NH, WV
• 26 Federally Facilitated Marketplaces
– AK, AL, AZ, FL, GA, IN, KS, LA, ME, MO, MS**, MT, ND,NE, NH,
NJ, OH, OK, PA, SC, SD, TN, TX, VA, WI, WY
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•
* UT wants to operate a small employer group marketplace only
**Secretary rejected MS application from DOI because Governor refused to
implement SBM letter
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Essential Health Benefits
• Health plans participating in the marketplaces
(called “Qualified Health Plans”) must offer a
certain package of benefits, called “Essential
Health Benefits”
• Each state has chosen an existing insurer’s plan
as a benchmark plan
• Information on benchmark plans for each state
available at
http://cciio.cms.gov/resources/data/ehb.html
• Member costs may vary for benefits (e.g.,
“bronze” vs. “platinum” coverage)
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QHP PLAN LEVELS
• Qualified Health Plan Actuarial Values
– “Metal” Levels
• Bronze = 60% actuarial value
• Silver = 70% actuarial value
• Gold = 80% actuarial value
• Platinum = 90% actuarial value
– Catastrophic Plan
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Access to premium subsidies
• Who qualifies?
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Individual earning ~ $14,858 to $44,680/ year
Couple earning ~ $20,123 to $60,520/ year
Family of 4 earning ~ $30,657 to $92,200/ year
Small businesses with 25 or fewer employees earning
on average less than $50,000, sliding scale up to 50%
of premium
• Managed by the IRS
• Applied up-front for individuals as a premium
reduction
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10 Essential Health Benefits Categories
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Ambulatory patient services
Emergency services
Hospitalization
Maternity and newborn care
Mental health and substance use disorder services,
including behavioral health treatment
Prescription drugs
Rehabilitative and habilitative services and devices
Laboratory services
Preventive and wellness services and chronic
disease management
Pediatric services, including oral and vision care
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Potential Marketplace Effects
• Subsidies available to help with affordability
– Low uptake could lessen the benefit of the subsidies
• Less cost shifting – result of broader base of insured population
• Premium increases may result, both in and outside of the
exchanges
– Underlying medical costs increase because more are covered
– Essential benefits mandates may increase costs to insurers
• Insurer demands on marketplace participants: effects on
providers
– Payment rates may go down - transparency
– Benefit designs (coverage OR payment levels) could disadvantage
providers
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Practical concerns for payers
• Are we going to play? Answer seems to be “yes”, at least
for the Big 5 (Blues, CIGNA, UHC, Aetna, Humana)
• Increased dealings with the federal government – federal
fraud and abuse laws
• Network Adequacy
– Amending current contracts to specify addition of exchange
products
– Contracting with more providers in the market
– Careful network structuring and payment
• Benefit plan structure – EHBs! If only thinking about this
now, very late to the game.
• Transparency – are payers ready to share pricing?
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Practical concerns for providers
• Network Participation
– Amending current contracts to specify addition of
exchange products
– Contracting with new QHPs in the market
– Be proactive in approaching payers – avoid network deselection
• Relationships with new payers – be open to new
QHPs
• Benefit plan education – knowing new product
characteristics
• Transparency – are providers ready to share
pricing?
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PART II:
TEXAS MARKETPLACE
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Texas Health Insurance Facts
• Texas has the largest proportion of citizens in the
nation without health care at approximately 25%, or
6.2 million people
– Roughly equal to the population of Massachusetts
• Insurance rates are largely unregulated
– Texas does not require insurers in the individual market to sell to
anyone who applies for a policy, nor does it limit “rating” of
customers, where insurance carriers charge more to older
subscribers and women, who tend to have higher health care costs
• Texas legal immigrants tend to have a higher rate of
uninsurance than non-immigrants
– Of the 1.2 million foreign-born, naturalized U.S. citizens in Texas,
31% are uninsured, compared to 22% of U.S.-born Texans
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GOVERNOR PERRY-HHS “NEGOTIATION”
• On July 9, 2012, Governor Perry sent a letter to HHS Secretary
Kathleen Sebelius, opposing the expansion of Medicaid and state
insurance exchanges
– “Neither a ‘state’ exchange nor the expansion of Medicaid under the
Orwellian-named PPACA would result in better ‘patient protection’ or
‘affordable care’”
• On November 15, 2012 deadline, Governor Perry sent another
letter to Secretary Sebelius, stating that Texas would not
implement a state insurance exchange
– “It is clear there is no such thing as a state exchange. Instead, there is a
federally mandated exchange with rules dictated by Washington…Our
state will not be a party to helping facilitate the taxation of millions of
Texans, at an unknown cost, to implement bad policy”
• Gov. Perry was joined by Mississippi Insurance Commissioner
Mike Chaney, who also formally notified the HHS that Mississippi
would not proceed with a state-run exchange
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Behind the scenes practicality – Texas prepares
• Despite Gov. Perry’s opposition to a state marketplace, officials
at Texas’ Department of Insurance (DOI) have been planning for
an exchange
– “We’ve been going full speed ahead on implementation, doing the due diligence so
that we can be on time with what the law says” - John Greeley, Public Information
Officer at the Texas Department of Insurance
• The Texas Department of Insurance received a federal “Exchange
Planning Grant” of $1 million in 2010
– However, Texas has since returned $900,000 of the grant to the federal government
because of its decision not to run its own marketplace
• In February 2011, the Texas DOI and the Health and Human
Services Commission held an “Exchange Planning Symposium”,
seeking guidance from stakeholders regarding the exchange
– Should Texas establish an exchange or defer to the federal government?
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Federal Marketplace Deadlines – Texas
• States were required to notify the HHS whether they planned to
establish a state-based exchange by February 15, 2013
• If HHS did not receive notification by that date the state was
deemed to have deferred to a federally-facilitated exchange
• Governor Perry’s final decision was not to implement a statebased health insurance marketplace in Texas, instead deferring
to the federal government to set up and run the marketplace
– HHS will assume full responsibility for running a health insurance
exchange in Texas, beginning in 2014 (but many preparations taking place
now)
– Note: HHS’ largest contractor (to which it has delegated FFE
responsibility) is a UnitedHeathcare subsidiary, QSSI – data hub
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Federally-Facilitated Exchange (“FFE”)
• Since Texas declined to set up a state-based
exchange or partnership, PPACA will require HHS to
establish a “federally-facilitated exchange” (“FFE”)
• Can be implemented by HHS alone, or a state can
enter into a “partnership” combining state and federal
operations and functions (IF state applied)
• Partnerships are considered a subset of an FFE; HHS
retains authority over partnerships
– Texas did not submit a Declaration Letter or Exchange Blueprint
application before the February 2013 deadline, and thus does not
have federal approval to operate its own marketplace OR partner
with HHS
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Federally-Facilitated Exchanges, cont.
• The final rule establishing marketplaces does not
include provisions specific to the operation of FFEs –
more details to come?
• FFEs:
 are required to carry out many of the same functions as
state-based marketplaces
 must adhere to many of the standards outlined in the
Affordable Care Act and the final rule
 are required to offer the same tools to help consumers
access an exchange and assess their plan options through
an exchange
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Policy Objectives of the Federally-Facilitated Exchanges
• HHS has published key core functions of an
FFE, including:
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Offering a positive consumer experience
Creating an attractive and viable market for issuers
Working quickly and effectively with States
Reducing administrative and operational burdens on all
marketplace participants
– Developing safeguards and processes to protect and
oversee public dollars spent for advance payments of
the premium tax credit and cost-sharing reductions
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Administration of the Federally-Facilitated Exchanges
• HHS is developing a comprehensive administrative
infrastructure capable of addressing a wide range of state
needs (“plan management”)
• Plan management will include:
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QHP certification, recertification, and decertification
Eligibility determinations
Accreditation and quality reporting
Benefit and payment parameters
Technical and other assistance through “Account Managers”
General monitoring and oversight of the FFE
• Again, unprecedented degree of control to actual player in
the market
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Big FFE Consequence: QHP Certification
Process
• HHS will evaluate each potential QHP against all
applicable certification standards, either by
confirming the outcome of a state’s review (as in
the case of licensure) or by performing the review
itself.
• HHS intends to certify as a QHP any health plan
that meets all certification standards (sort of an
“Any Willing QHP” standard)
– ***In future years, HHS will analyze the QHP certification process
and may identify improvements or changes to the process.
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QHP Certification Process – Issuer-Level Review
• HHS will look to the QHP Issuer Application to assess
at least the following certification standards:
– Licensure and good standing: confirm state licensure and
compliance with state solvency and other related requirements
– Network adequacy: in states meeting minimum federal standards,
verify state review. Otherwise, review network adequacy data
submitted in QHP Issuer Application
– Essential Community Providers (ECPs): collect information on
inclusion of ECPs in provider networks and review for sufficiency
– Accreditation: confirm accreditation status, depending on
certification year
– Program attestations: ensure submission of required attestations
(e.g., attestation of compliance with marketing standards)
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QHP Certification Process – Plan-Level Review
• HHS will look to the rate and benefit data submissions to assess
at least the following certification standards:
– Essential health benefits: confirm coverage of essential health benefits
– Actuarial value standards: confirm actuarial value levels of potential QHPs,
including compliance with standards related to cost-sharing reductions, cost-sharing
limits, and variations to cost-sharing structures
– Discriminatory benefit design: conduct plan-level analysis to determine where
discrimination would most likely occur
– Meaningful difference: conduct review for meaningful difference across QHPs
offered by the same issuer to ensure that a manageable number of distinct plan
options are offered
– Service area: confirm that service area is at least one county or that smaller
service area is necessary, non-discriminatory, and in the interest of consumers
– Rates (new and increases): review new rates and rate increase justifications for
reasonableness, including confirmation of compliance with market rating reforms
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FFE: Potential Texas Complications
• Establishment and operation of FFEs may come
with a number of complicated issues ahead of the
October 2013 open enrollment deadline,
including:
– Consequences of Texas choosing not to expand
Medicaid
– Overlap of state and federal regulations regarding
health plans
– Adverse Selection
– Availability of subsidies
– Consumer assistance
– Funding (marketplaces are to be self-sufficient by 2015)
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Small Business Health Options Program
• The Affordable Care Act also calls for states to
establish a Small Business Health Options
Program (“SHOP”)
• Intended to provide an array of affordable, highquality health insurance plans for small
businesses and their employees
• States can also choose to combine the individual
and small business or SHOP exchanges
• SHOP exchanges will be competing with
insurance offered in the outside market, so they’ll
need to offer health plans that are high quality and
cost-effective
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Small Business Health Options Programs
• A SHOP has responsibilities similar to an
individual exchange:
– Collect and verify information from employers and
employees (both considered applicants)
• A qualified employee is an employee who receives an offer of
coverage from a qualified employer
• A qualified employer is a small group employer that elects to
make all full-time employees eligible for one or more QHPs or
offers coverage to each eligible employee through the SHOP
serving the employee’s worksite
– Process applications
– Determine eligibility
– Facilitate enrollment
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Federally-Facilitated SHOP
• Similar to state SHOP exchanges; will
 provide a number of tools and resources to assist employers and
employees to evaluate coverage options and select a health plan
 allow employers to model various plan scenarios (i.e., changing
the employer contribution percentage) before making a final
selection
 collect an aggregated payment from each employer and distribute
that payment to QHPs based on participating employees’ plan
selections
• Other functions:
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Health plan data collection
Offer coverage to multi-state employers
Administrative support
Consumer services
Facilitate agent and broker interface with the exchange
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Practical concerns for payers
• Are we going to play? Resounding “yes” from BCBSTX
– “Be Covered Texas” – BCBS will “spend what it takes” to get 6
million lives onto the marketplace
– Acting almost as the exchange operator in Texas
• Increased dealings with the federal government – federal
fraud and abuse laws
• Network Adequacy
– Amending current contracts to specify addition of exchange
products
– Contracting with more providers in the market
– Careful network structuring and payment
• Benefit plan structure – EHBs! If only thinking about this
now, very late to the game.
• Transparency – are payers ready to share pricing?
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Practical concerns for providers
• Network Participation
 Amending current contracts to specify addition of exchange
products
 Contracting with new QHPs in the market
 Be proactive in approaching payers – avoid network de-selection
 Stay on good terms with BCBSTX
• Relationships with new payers – be open to new QHPs
• Benefit plan education – knowing new product
characteristics
• Transparency – are providers ready to share pricing?
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QUESTIONS?
[email protected]
303.583.8255
Thank you!
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