Patient Protection and Affordable Care Act: State Action Newsletter
April 5, 2012
Containing Medicaid Costs: Moving Toward Managed Care—Webinar—April 20, Friday at 2 p.m. ET
Nationally, about 66 percent of all Medicaid beneficiaries are enrolled in managed care, but the most expensive of beneficiaries—the elderly and people with disabilities, who account for three quarters of Medicaid spending—are traditionally served through fee-for-service programs. As state legislators seek ways to balance their budgets, they are increasingly interested in expanding managed care to these high-cost populations. Moderated by Raúl Burciaga, director of the New Mexico Legislative Council Service, with presentations by Neva Kaye, managing director of Health Systems Performance at the National Academy for State Health Policy, and Allan I. Bergman, president and CEO of High Impact Mission-Based Consulting & Training, this webinar will highlight state trends and successful managed care expansions.
Click here to learn more and register.
Study Looks at ER Use Under PPACA
According to a study by the University of Colorado School of Medicine, achieving coverage provisions included in the Patient Protection and Affordable Care Act could increase emergency room use. The study compared ER use among newly insured adults with continuously insured adults and among newly uninsured adults with continuously uninsured adults. The findings show “recent changes in health insurance status for newly insured adults and for newly uninsured adults were associated with greater emergency department use.” The study authors suggest that “as policy and economic forces create disruptions in health insurance status, new surges in emergency department use should be anticipated.” PPACA is expected to expand coverage to 16 million Americans through Medicaid and an additional 23 million through exchanges by 2019.
Inside This Issue
States Consider Funding Options for Exchanges
States that have established a state-based health insurance exchange must determine what sustainable funding options are available to them when federal funding ends in 2015. For now, most states that have committed to establishing an exchange are using federal establishment grants to develop the exchange and plan to continue to use these funds through Dec. 31, 2014.
State lawmakers are considering their options, with some already making concrete decisions about what to do after 2014. For example, Oregon’s SB 99 will impose an administrative fee on insurance companies, based on a percentage of premiums for individuals enrolled in the exchange. Any fees collected over what is needed to operate the exchange will be put into a reserve or returned to insurance companies. Colorado, Hawaii and Oregon’s exchange laws specifically do not allow the use of state funds for the development or operation of the exchange. California’s enabling legislation allowed a $5 million loan from the general fund.
Nevada’s Finance and Sustainability Subcommittee for the Silver State Health Insurance Exchange recently issued recommendations to the board on how its exchange could be financed. The subcommittee recommended using key principles adopted by Maryland’s Health Benefit Exchange, which include being flexible to the changing environment of the exchange, preventing fraud, waste and abuse, and balancing expenses and revenue, among others. The subcommittee also recommended that the board fund the exchange with a monthly assessment on enrollment of qualified health plans offered in the exchange or of all plans offered in the individual and small group markets. Other recommendations include charging user, licensing and referral fees on dental, vision and Medicare products and charging advertising fees.
The report from the Nevada subcommittee also reviewed how operational exchanges are funded. Current exchanges in Massachusetts and Utah use state funds in addition to some assessed fees. Administrative costs for Massachusetts’ exchange are paid for by a 3 percent premium fee or assessment to individuals participating in the exchange. Utah charges a monthly fee to each subscriber to cover broker fees and administrative costs.
New Federal Loans for Consumer Operated and Oriented Plans
There is $3.8 billion in federal loans available through the Patient Protection and Affordable Care Act to create nonprofit member-run health insurers called “Consumer Operated and Oriented Plans” or Co-Ops. These plans are directed by their customers, use proceeds to benefit customers, and are designed to offer individuals and small businesses health insurance options. The Centers for Medicare and Medicaid Services (CMS) so far has awarded $845,012,408 to 10 nonprofit groups in 10 states, which leaves more than $2.9 billion still to be allocated.
Federal start-up loans are available to help set up Co-Ops; solvency loans are also available to help meet state reserve requirements. All start-up loans must be repaid within five years. All solvency loans must be repaid, with interest, within 15 years.
On March 29, CMS awarded a total of $206,335,108 in low-interest loans to nonprofit groups in Maine($61,100,000), Oregon($56,656,900) and South Carolina ($87,578,208).
Previously, on February 21, CMS awarded a total of $638,677,300 a nonprofit group that operates in Iowa and Nebraska ($112,612,100) and non-profit groups in Montana ($58,138,300), New Jersey ($107,213,300), New Mexico ($70,364,500), New York ($174,445,00), Oregon ($59,487,500) and Wisconsin ($56,416,600). Seven other nonprofit applicant groups were asked to supply more information. Additional awards will be announced on a rolling basis.
South Carolina Addresses Medicaid Efficiency
A new Kaiser Family Foundation case study highlights recent efforts in South Carolina to expand the use of data and technology to improve the efficiency of the Medicaid program.
According to the study, the state “initiated a data-driven decision-making process to identify potential simplifications to its Medicaid enrollment process” in 2011. The initiative was in response to directives from the legislature to reduce waste and create efficiencies in the Medicaid program.
During the process, state officials found that about 140,000 children were moving in and out of coverage (often called “churning”) every year. This creates difficulties for families and providers, and adds unnecessary administrative costs.
In order to reduce the churn in the program, the state began analyzing data from the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF) programs to determine eligibility, and as a result, earned its first performance bonus of $2.3 million in 2011 from the CMS.
A survey released earlier this year found that South Carolina is not alone in using data and technology to improve its Medicaid program.
The survey found that:
- Nine states use eligibility information from other public programs or the state tax or revenue department to accelerate enrollments or renewals of children’s Medicaid or CHIP coverage.
- Forty-four states match electronic data with the Social Security Administration to verify citizenship.
- More than two-thirds of states allow families to apply online for Medicaid and/or CHIP coverage for their children.
- Spurred by the availability of an enhanced 90 percent federal matching rate (up from the regular 50 percent) for upgrading their Medicaid eligibility systems, 29 states are launching major improvements.
Six Hours at the Supreme Court
On March 26-28 much of the nation took note as the U.S. Supreme Court heard oral arguments on constitutional challenges to the Patient Protection and Affordable Care Act (PPACA). The challenge was brought by executive branch officials in 26 states, and the National Federation of Independent Business.
The Supreme Court website provides an exact record with numerous insights and legal questions (audio highlight online). As widely discussed, the four issues before the court were:
- Constitutionality of the individual mandate.
- Severability of the individual mandate provision from other provisions in the PPACA.
- Constitutionality of the Medicaid expansion.
- The applicability of the Anti-Injunction Act, which could delay a decision until 2015.
What is Next?
After these three days, most pundits are not sure where the court will come down, with a decision expected in June. For now, the PPACA is law.
Among the numerous published analyses, here are some with contrasting perspectives:
“As health care arguments close, fate of law seems uncertain” from The National Law Journal; and “Recap: Obama health law at the Supreme Court, day 3
NCSL also posted an online news summary.
States Tackle Essential Health Benefits
In the coming few months, every state faces the task of choosing a single “benchmark plan” as a template for all health insurance plans to be offered starting Jan. 1, 2014, in exchanges, as well as for most individual and small market health insurance. In recent weeks, two states have released detailed studies that align existing state law with the HHS proposal for choosing one of nine benchmarks or standards, applied to plans offered in 2013-2014.
California’s Health Benefits Review Program (CHBRP) released a brief, Interaction Between California State Benefit Mandates and the Affordable Care Act’s “Essential Health Benefits,” that describes how the state’s mandates “may potentially interact with the essential health benefits, as defined by the regulatory approach proposed in a Bulletin released by the federal Department of Health and Human Services (HHS) in December 2011.”
Virginia’s Department of Medical Assistance Services and the Virginia Health Reform Initiative contracted for an analysis of the potential benchmark health benefit plans. The consultants, in their preliminary analysis, reported on what the potential impact could be on premium rates of adding currently non-covered benefits required under the definition of essential health benefits under PPACA.
While every state situation differs, these reports may be helpful when making decisions that affect in-state insurance choices for years to come. HHS guidance and regulations for benchmark plans are not yet final, so state decisions await that federal action.