May 20th, 2013
Editor’s note: Health Affairs Blog has been proud to host Tim Jost’s series of posts, “Implementing Health Reform, tracking the implementation of the Affordable Care Act. In recent days the implementing agencies — Health and Human Services, Labor, and Treasury — have been issuing regulations, proposed regulations, frequently asked questions, and other guidances on an almost daily basis, and new posts by Tim have consequently often appeared almost daily as well. Going forward, to keep up with the flow of ACA guidance in an orderly fashion, Tim’s posts will generally appear twice a week, usually Mondays and Thursdays. When major rules or proposed rules are released, such as the final rules on eligibility and appeals, wellness, and the SHOP marketplaces currently under final review by the Office of Management and Budget, we will feature additional posts in Tim’s series.
You can continue to look to Tim’s posts for current information on ACA implementation. When new guidance appears, Tim will update his most recent post (a practice we have in fact already begun); we will note that there has been an addition at the beginning of the updated post and normally add the new material at the end of the post, so you can skip rereading the rest. We will also Tweet significant updates. From time to time, we correct a post when we find a typographical error or Tim receives new information as to the meaning of an issuance. If the correction is more than trivial, we will note this as well.
We hope that this new approach will make this series even more useful to our readers.
On May 17, 2013, at the end of an otherwise quiet week, CMS released an interim final rule on the Preexisting Condition Insurance Plan (PCIP). CMS also released a letter to state Medicaid directors on Facilitating Medicaid and CHIP Enrollment and Renewal in 2014. This post will discuss these issuances.
The Preexisting Condition Insurance Plan. The PCIP was established by the Affordable Care Act to provide health insurance coverage for Americans whose preexisting conditions made them uninsurable in the private market until 2014, when insurance that is not health status underwritten becomes available. Congress, however, only appropriated $5 billion for the program’s three and a half years of operation, and from the beginning the expectation was that it would run out of money and close down long before 2014. In fact, however, the program grew slowly initially, and through careful management, HHS has been able to stretch the funding almost until the end of 2013, making plausible a relatively smooth transition to 2014.
The PCIP has been administered by the 27 states that chose to administer the program themselves, and by the federal government in the remaining states. Currently about 135,000 Americans are enrolled in the program. (State by state enrollment figures are available here.) Individuals enrolled in these programs have serious medical needs, averaging $32,108 in claims per enrollee in 2012. The PCIP does not impose waiting periods or caps or exclude preexisting conditions, and it limits out-of-pocket expenditures; thus, per-enrollee costs are 2.5 times the average costs of enrollees in state high-risk pools, which antedate the creation of the PCIP. Although participation is lower than originally anticipated, the high per-enrollee cost is quickly exhausting the resources of the program.
The PCIP statute expressly requires HHS to “make such adjustments as are necessary” in any fiscal year where it appears that expenses will exceed the amount available for payment for services. As it is clear that this is now happening, HHS has taken several steps in recent months to try to stretch the funding. First, in May of 2012 it terminated payments to agents and brokers for enrolling individuals in the program and limited the documentation it would accept for establishing a preexisting condition. In August of 2012, the PCIP tightened up its provider networks and negotiated further provider discounts.
In February of 2013, HHS increased cost sharing under the program and suspended new enrollments in the federal program. In March it suspended enrollment in the state PCIPs. Earlier in May, 2013, HHS informed the states that they would have to renegotiate their PCIP contracts and accept limited funding to continue their PCIP programs. According to Sara Hansard of Bloomberg BNA, HHS has informed Congress that 17 states have opted to discontinue their programs and turn their enrollees over to the federal program, while 10 will continue to administer the PCIP in their states.
The interim final rule, which goes into effect on June 15, 2013, attempts to stretch the resources of the federal program by limiting payments to providers. Beginning with services offered on or after June 15, 2013, payments to providers for services provided in the PCIP program — other than for prescription drugs, organ and tissue transplants, dialysis, and durable medical equipment — will be limited to 100 percent of the Medicare payment rate. For pharmaceutical services not covered under the prescription drug benefit, such as physician-administered drugs, a relative value scale methodology similar to the Part B drug pricing methodology will be used.
Where Medicare payment rates cannot be implemented (for example where a provider does not participate in Medicare, where no Medicare billing code is available, or where the service is not covered by Medicare), payments will be limited to 50 percent of reasonable billed charges or to a rate generated using a relative value scale generally based on the difficulty, time, work, risk, and resource-use of the service. Providers will be able to contact the federally administered PCIP directly to determine payment rates.
To avoid providers simply shifting the cost of services to enrollees, the interim regulation further prohibits providers that accept payments from the PCIP (other than for the four excluded services listed above) from balance-billing enrollees — that is, from charging enrollees an amount in excess of the enrollees’ normal cost-sharing obligations. Although PCIP network providers currently agree not to balance bill, HHS expects that it may not be able to keep some providers in-network and thus is extending this protection to cover all providers that accept PCIP payments, whether or not they are in-network. The balance billing prohibition does not apply to out of network providers of prescription drug, organ and tissue transplants, dialysis, and DME providers, as it is hoped PCIP enrollees will continue to use in-network services. Enrollee premiums and benefits will remain unchanged.
Prescription drugs are not affected by the change because changes have already been made to limit drug expenditures. Organ and tissue transplant rates are not affected because HHS wishes to continue to rely on its current network of transplant centers of excellence. HHS also believes that its current negotiated payments for dialysis and its limited network for durable medical equipment yield prices at or below the prices imposed on other providers.
Medicaid and CHIP renewal. CMS also released on May 17, 2013, a letter to state health officials and Medicaid directors identifying strategies to facilitate Medicaid and CHIP renewal in 2014. States that are expanding Medicaid will face a massive job of signing up millions of new Medicaid enrollees in 2014. But all state Medicaid programs, regardless of whether or not they are expanding Medicaid, will have to switch to modified adjusted gross income (MAGI) and new household composition rules as of January 1, 2014, for determining Medicaid and CHIP eligibility for children, parents and caretaker relatives, pregnant women, and — if the state expands or has expanded coverage — non-elderly, non-disabled adults.
Under current rules, state programs will need to begin determining eligibility for these populations based on MAGI as of October 1, 2013, for eligibility periods beginning on January 1, 2014. The states will also, however, have to determine eligibility based on current standards for the period between October 1, 2013, and January 1, 2014. Moreover, for Medicaid or CHIP eligibility redeterminations prior to March 31, 2014, a state must apply both MAGI and prior eligibility standards to ensure that no one is dropped from coverage because prior standards (for example, for income disregards or determining family composition) are more liberal than the new standards.
The five strategies are intended to simplify Medicaid and CHIP eligibility determinations during the transition and to relieve the states of the burden of having to make duplicate eligibility determinations. They are in essence prepackaged waivers with a simplified application and approval process, which HHS intends to grant under its general section 1115 demonstration project waiver authority, or under transition waiver authority provided by Social Security Act section 1902(e)(14)(A).
The strategies are as follows:
- First, states may obtain a waiver to begin applying MAGI standards and the new household composition standards as of October 1, 2013. This would relieve states of the burden of dual eligibility determinations and allow them to coordinate better with the marketplaces. The new standards could only be applied to determine immediate eligibility for applicants in a category already eligible for Medicaid. Income eligibility based on the extension of coverage for low-income adults would still have to wait until 2014.
- Second, states will be allowed by waiver to extend current eligibility renewal dates until March 31, 2014. This would spare states the burden of determining eligibility both under the new and old standards during this period of time, which would otherwise be necessary to ensure that no one is dropped from eligibility because of the application of the new standards.
- Third, states will be allowed to request a waiver to enroll individuals in Medicaid for 2014 and 2015 based on Supplemental Nutrition Assistance Program (SNAP) eligibility. To qualify for SNAP an applicant’s household income generally cannot exceed 130 percent of the federal poverty level. Household income is rigorously verified and kept current. Recent studies show that the vast majority of non-elderly, non-disabled adults who are eligible for SNAP will also be eligible for Medicaid. Allowing states to enroll newly eligible adults (or some subset of them) based on SNAP eligibility will ease the handling of the flood of Medicaid applicants expected in states that expand eligibility. It will also assist states with an orderly transition as they move toward linking their Medicaid and human services eligibility determination systems. The states are offered several options for linking SNAP to Medicaid enrollment, such as adding a Medicaid check box to their SNAP application form or mailing a Medicaid card to a SNAP enrollee that can be activated through a phone call or online acknowledgment of the receipt of the card. States must also ensure the applicants are provided with information about available services and program rights and responsibilities.
- Fourth, states can request a temporary waiver to facilitate enrollment of parents based on their children’s eligibility. In particular, states could reactivate recent applications of parents who had been denied coverage because of income but who might be eligible under the expansion eligibility standard. States could also review children’s Medicaid cases to identify situations where a parent will likely be eligible under the new 138-percent-of -poverty-level standard. States may wish to streamline applications for parents by sending them a pre-populated form based on eligibility information the state has on children. States can also extend the renewal date of children to coincide with their parents’ renewal dates.
- Fifth, states can obtain a waiver to implement a continuous 12-month eligibility period for adults. States are currently allowed to use a 12-month period for children, and 32 states do so already for Medicaid or CHIP, with 23 states implementing this option for both programs. States will be able to obtain a waiver to use a 12-month period for adults as well. This will greatly alleviate the likelihood of “churning,” as slight variations in household income move parents from Medicaid to Advance Premium Tax Credits and back. It will also allow better coordinated care for entire families where parents and children are in the same program with the same provider network.
CMS remains open to other suggestions for easing the burden on the states and simplifying enrollment under the new Medicaid rules.Email This Post Print This Post
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