September 21st, 2013
Late in the afternoon of September 20, 2013, the Department of Health and Human Services released a notice of proposed rulemaking to establish the Basic Health Program (BHP). Congress created the BHP to give the states flexibility to offer an alternative program for lower-income individuals who have incomes just above the Medicaid eligibility level and who would otherwise be eligible to purchase qualified health plan (QHP) coverage through the exchanges. The hope was that the BHP would reduce the cost of coverage for this highly price sensitive population. It was also hoped that, by drawing plans into the program that also cover Medicaid and CHIP beneficiaries, the program would offer continuity of care for a population that is likely to “churn” into and out of Medicaid eligibility because of small fluctuations in income.
The BHP was modeled after a Washington State program by the same name. It was supposed to have been implemented in January 1, 2014, but HHS had announced in February of 2013 that the program would be delayed by a year, to the dismay of Senator Maria Cantwell, who had championed the program. At least eight states had reportedly studied the feasibility of adopting the program, although Washington has been the most interested state. HHS has committed itself to have the program ready for launch in 2015.
The proposed rule sets forth a framework for BHP state plan certification, eligibility and enrollment, standard plan benefits, delivery of services, federal funding for the BHP and transfer of funds to the states, and federal oversight. Because the program is to be coordinated with Medicaid and CHIP and with the exchange-based premium tax credit QHP enrollment program, and for the sake of simplification and efficiency, the proposed rule frequently incorporates existing rules from the Medicaid or the exchange program or gives the states the option of using one set of rules or the other. Where a state chooses to follow the Medicaid or exchange rules, it must comply with all applicable rules from the program it chooses.
As an example of this incorporation of rules, the proposed rule definitions section largely adopts by cross reference definitions from the ACA Medicaid, exchange, or premium tax credit rules. HHS intends to incorporate interpretations, guidance, and operating methodologies applicable under the existing rules to ensure a coordinated response.
The Basic Health Plan Blue Program blueprint. Under the proposed rule, each state that intends to implement a BHP must submit a “Basic Health Program blueprint,” following the model of the blueprints that states have submitted for operating their own exchanges. The blueprint must describe all of the essential features of the BHP, including the state’s funding plan. It must be signed by the state’s governor, or the governor’s designee, and must be submitted only after the state had consulted with relevant stakeholders and received public comments.
Once a blueprint is certified by the HHS Secretary, it will remain in effect unless revised by the state with HHS approval, withdrawn before enrollment begins, or terminated either by the state or by HHS with 120 days notice to the other party (and 90 days notice to enrollees and standard plan offerors). HHS may terminate the certification for a BHP only based on findings that a BHP no longer meets certification standards or that there is significant evidence of beneficiary harm, financial malfeasance, fraud, waste, or abuse, and only after notice, a reasonable period of time for correction, and opportunity for a hearing.
A state operating a BHP must ensure that all persons have the right to apply and be enrolled if found eligible and that the program operates on a statewide basis. States may not limit enrollment to a lower income level than 200 percent of poverty or impose caps or waiting lists. States must perform all core operating procedures, including making eligibility determinations using a single streamlined application, processing appeals, contracting with standard plan offerors, performing oversight and financial integrity functions, providing consumer assistance, protecting American Indians and Alaskan Natives, complying with civil rights and non-discrimination requirements, and collecting data and reporting as required.
BHPs must submit comprehensive annual reports 60 days before the end of each operational year. HHS must review state BHP compliance at least annually, based on the annual report or a separate federal review.
Under the proposed rule, a state must make available accurate, easily understood information to potential enrollees about the BHP program and coverage available under the program, including information on additional benefits available outside of standard health plan coverage and on any tiers of coverage built into the BHP. The state must require participating standard health plans to provide accessible information on premiums; covered services including limits on amount, duration, and scope of services; cost-sharing; and participating providers, following a standard format. Information must be accessible to persons with disabilities and limited English proficiency.
American Indians who enroll in the BHP will be allowed to enroll in or change their enrollment in standard health plans once a month. Indian tribes or organizations can pay BHP premiums on behalf of their members. No cost sharing may be imposed on Indian members. BHP payment will be primary to the Indian health programs for covered services. BHP and standard health plans must comply with all applicable non-discrimination statutes and requirements.
Individuals are eligible for BHP coverage if they are residents of the state; not eligible for Medicaid coverage that consists of at least the EHB; have household income between 133 percent (actually 138 percent because of the 5 percent income disregard) and 200 percent of the federal poverty level; not eligible for affordable minimum essential coverage; under 65 years of age; either a citizen or a lawfully present non-citizen; and not incarcerated other than during a period pending disposition of charge. States may not impose additional eligibility requirements.
Eligibility determinations. BHPs must, under the proposed rule, use the single streamlined application developed for the Medicaid and exchange programs. BHPs must follow Medicaid rules for permitting an opportunity to apply without delay and for assistance with applications. States may permit applications through authorized representatives, using either the Medicaid or exchange standards. They may also establish certified application counselor programs following either the exchange or Medicaid rules.
States may either determine BHP eligibility themselves or have BHP eligibility determined by the governmental entity that determines Medicaid or exchange eligibility. BHPs must follow Medicaid rules for timeliness of determinations and either Medicaid or exchange rules for the effective date of coverage. States must either offer enrollment and special enrollment periods equivalent to the exchange rules or follow the continuous eligibility rules of Medicaid.
BHP eligibility, like eligibility for Medicaid, CHIP, and premium tax credits, will be based on modified adjusted gross household income (MAGI). The BHP must coordinate application eligibility determinations with the exchange, Medicaid, and CHIP. Medicaid and CHIP agencies may either make eligibility determinations based on a BHP assessment or allow the BHP to make final eligibility determinations. Exchanges may also delegate eligibility determinations to the BHP. BHPs must accept applications forwarded from the exchange, Medicaid, or CHIP program and may not require duplicate information to be submitted. Every application for BHP coverage must result in an eligibility determination and eligibility determinations must be coordinated with the other programs.
Individuals must be given the right to appeal BHP eligibility determinations using the state’s Medicaid appeals process. (Since the federal appeal process that is available for exchange eligibility determinations does not apply to the BHP, the exchange appeal process is not available). Enrollees must report changes that could affect eligibility within 30 days. Eligibility must be redetermined at least once every 12 months. States may follow either exchange or Medicaid standards and procedures for eligibility verification.
Coverage requirements. Standard health plans must cover the 10 essential health benefits (EHBs). BHP plan coverage must be substantially equal to coverage under one of the base benchmark plans that the state may choose as the benchmark for exchange coverage. As under the Medicaid program, however, the state need not pick one benchmark plan for all enrollees, but may provide specialized plans for targeted populations so long as the targeting criteria are not based on health status or preexisting conditions. States may draw benefits from the state Medicaid plan to meet EHB requirements as long as they are actuarially equivalent to benefits within the same category, except that substitution is not permitted for prescription drugs.
BHP plans must meet QHP requirements for prescription drug, mental health and substance abuse, preventive health services, and habilitative services. Benefit design may not discriminate on the basis of age, length of life, predicted disability, degree of medical dependence, quality of life, or other health conditions. As with exchange plans, if a state enforce coverage mandates enacted after December 31, 2011 for services that are not otherwise EHB, the state will have to pay for the service out of state funds or trust fund surplus. Federal funding is only available for coverage of abortions for which federal Medicaid funding would be available.
Standard health plans may be provided either by a health insurer, a health maintenance organization, or a provider network. If a plan is provided by a health insurer, the insurer must have a medical loss ratio of at least 85 percent. States may contract with non-licensed health maintenance organizations that participate in Medicaid or CHIP. It is unlikely that individual providers will be able to offer standard health plans, but networks of providers will be able to do so. HHS will provide further guidance on plan certification requirements, but pending further guidance states may model contract requirements on QHP or Medicaid requirements.
Plan selection. States must offer a choice of at least two standard health plans, although they may be from the same plan offerer. The hope is to simulate the exchange experience of offering choice of a number of plans. States may form regional compacts and negotiate BHP contracts jointly with other states.
Standard health plans are supposed to be selected through a competitive process. This is a unique feature of the BHP that does not apply to QHPs in the exchange, although states may use a joint procurement process for negotiating with BHP and Medicaid or CHIP plans. The negotiation process is supposed to include the selection of standard health plans; the determining of premiums, cost sharing, and benefits; and the consideration of innovative features such as care coordination and incentives to encourage the use of preventive services and appropriate utilization of health services.
The competitive process must also take into account the health and resource differences of the BHP population, service utilization management, performance measures, enhancement of standard health plan availability, and coordination with other insurance affordability programs. Standards will be adopted from the exchange and Medicaid programs where appropriate to ensure coordination. A state may be excused from implementing the full contracting process for 2015 if time does not permit full implementation of the process. .
BHPs must coordinate with other insurance affordability programs to avoid disruption of care when enrollees transfer among programs. It is anticipated that such transfers will be common as enrollee income or household composition changes over time. Programs should ensure that individuals undergoing an ongoing course of treatment can continue to receive treatment and have access to providers through the duration of their treatment; promote sharing of data through health information technology; promote access to the same providers through coordinating provider enrollment procedures and coverage definitions and protocols; and using auto-enrollment protocols in BHP, Medicaid, and CHIP to maximize provider continuity.
BHPs must make available to applicants and enrollees information on the premiums and cost-sharing for each standard health plan. The monthly premium charged an enrollee cannot exceed the premium that would be charged by the second lowest-cost silver plan in the exchange reduced by the premium tax credit that would be available to the enrollee through the exchange. Plans must reduce cost sharing for enrollees so that plans offered to enrollees with household incomes below 150 percent of FPL provide 94 percent actuarial value, and those offered to enrollees with household incomes above 150 percent of FPL provide 87 percent actuarial value. Cost sharing cannot be charged to Native Americans or for preventive services.
States must use exchange disenrollment procedures for non-payment of premiums, including the 90-day premium grace period. States that use Medicaid continuous enrollment periods, however, can use the CHIP 30 day minimum grace period. BHPs may not restrict reenrollment for individuals terminated from enrollment beyond the next open or applicable special enrollment period. States using continuous enrollment may not impose a lockout period beyond 90 days, as with CHIP. States can always try to collect past-due premiums.
States will be paid 95 percent of the premium tax credit and cost-sharing reduction amounts that would have been payable for BHP enrollees had they been enrolled in QHPs through the exchange. In calculating these payments, the age, income, family composition, and geographic location of enrollees must be considered. BHP standard plans will not participate in the risk-adjustment or reinsurance programs with QHPs, but payments to the states will be risk adjusted by the health status of enrollees.
BHP payments will also be adjusted to take account of premium tax credit reconciliations that would have occurred had enrollees been enrolled in QHPs, although individual enrollees will not be subject to reconciliation for income changes over the year. Payment methodologies will be published each year in the Federal Register as part of the annual payment parameters notice. Payments will be adjusted retroactively only where there are mathematical errors or incorrect enrollment data.
Federal payments will be made quarterly to a state BHP trust fund. The trust fund may only be used to cover premiums and cost-sharing reduction payments for enrollees and for additional benefits as determined by the state. The trust fund may not be used to cover administrative expenses. States must provide reports on the trust fund, which must be independently audited. The regulations provide for corrective action requirements, restitution, and disallowance of improper expenditures.Email This Post Print This Post
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