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Affordable Care Act: State Action Newsletter
September 23, 2011
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Exchange Boards at Work
Among the many tasks for states creating a state-based health insurance exchange is making decisions about who and how the exchange will be governed. These governing bodies, often created as boards, ensure that the state exchange complies with federal and state requirements and that the operation and goals of the exchange are met. In many cases, they are granted authority in their enabling legislation to move forward implementation of the exchange by making various policy decisions or recommendations about operation, selecting insurance carriers, financing, accountability, staffing and more. The boards serve as the vehicle through which the implementation process is able to move forward.
Of the 13 states that have enacted legislation establishing exchanges, all have used a board as the governing mechanism for the exchange. California, Colorado, Connecticut and Maryland have appointed board members and conducted at least one meeting. California and Maryland appointed the state’s first health insurance exchange executive director. Colorado’s governing board drafted by-laws for consideration and hosted an educational event to learn more about the financial impact the exchange will have on middle class Coloradans. During Connecticut’s initial board meeting on September 15, 2011, the board appointed a vice-chair and became informed on state activities.
Hawaii, Nevada, Oregon, Washington and West Virginia have not yet announced board members. In Illinois, North Dakota and Virginia, which intend to establish state-based exchanges, committees are conducting meetings to provide additional directions about specifics of the exchanges.
HHS Awards $109 Million in Rate Review Grants
On September 20, the Department of Health and Human Services (HHS) awarded $109 million in Affordable Care Act grants to 28 states and the District of Columbia. The grants are intended to improve states’ health insurance rate review processes, create greater transparency, improve accountability and lower rates. New ACA provisions went into effect on September 1 requiring health insurers in the individual and small group markets to justify publicly unreasonable premium increases and submit for approval any proposed premium increase of 10 percent or more. The new grant money is the second round handed out by HHS. In the first funding cycle on August 12, 2010, 42 states and the District of Columbia received $43 million for rate review improvements. HHS expects to award additional grant money in 2012.
HHS also released a new report entitled Rate Review Works. The new report explains how states used the first cycle of funds to improve the health insurance market place and outlines how the 28 states and the District of Columbia will use the new funds.
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Inside This Issue
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HHS Provides Additional Guidance on Exchange State-Federal Partnerships
On September 19, HHS provided more information on the Exchange Partnership model.
The state partnership model was introduced in July 2011 as part of the exchange rules. The model is intended to allow states to partner with the federal government to create an exchange that meets local needs. In this model the state and federal government work together to operate separate functions of the exchange.
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ACA Grants for Organizations to Become Community Health Centers
On September 15, the U.S. Department of Health and Human Services awarded $10 million to 129 organizations in 39 states, the District of Columbia and Puerto Rico. These funds, appropriated by the Affordable Care Act, are intended to support planning efforts of community-based organizations to develop into future community health centers. Grantees will expand services to a larger community and provide a more comprehensive range of primary health services to populations not served by existing community health centers or private providers. Grant award amounts ranged from $71,000 to $80,000 for each organization. Grant recipients include seven tribal/urban Indian health organizations, five mental health service entities, four organizations that focus on HIV/AIDS services, three faith-based organizations and one senior center. Currently, more than 8,100 health center delivery sites exist across the nation, providing care for approximately 19.5 million Americans. Existing health center grantees were not eligible to receive this funding. For more information about Affordable Care Act grants, please see http://www.ncsl.org/?tabid=21994.
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Delaware Medical Loss Ratio Request Denied
The medical loss ratio (MLR) provision of the Affordable Care Act requires insurance companies that issue individual and small employer policies to spend at least 80 percent of the premium money they collect on medical care and quality improvement activities beginning in 2011. On September 9, Delaware became the second state, along with North Dakota, to have its application for an adjustment of the medical loss ratio (MLR) standard completely denied by HHS. Delaware sought a modification to allow 65 percent in 2011, 70 percent in 2012, and 75 percent in 2013. According to HHS’s Center for Consumer Information and Insurance Oversight (CCIIO), “the evidence presented does not establish a reasonable likelihood that the application of the 80 percent MLR standard will destabilize the Delaware individual market.”
Nine other states’ applications (Florida, Georgia, Louisiana, Kansas, Indiana, Michigan, Texas, Oklahoma and North Carolina) are undergoing review. For more information visit the CCIIO MLR webpage, or the NCSL MLR webpage.
Medicare Enrollees Save $461 million on Prescription Drugs
As of January 2011, the Affordable Care Act provides some Medicare patients with a 50 percent discount on out-of-pocket costs for brand-name prescription drugs. Generic drugs earn a parallel 7 percent discount. These apply when enrollees in Part-D Prescription Drug Plans reach the coverage gap or “donut hole.” This gap begins after enrollees reach the initial coverage limit of $2,840 in drug spending, continuing until they reach the “catastrophic coverage” level of $6,447.50 in spending. HHS data show that, as of June 30, 898,938 people have used the discounts to save an average of $517 for a total of more than $461 million. Those savings will continue to increase until people with high drug costs get beyond the donut hole by December 31, 2011. Without the discount plan, Medicare clients that reach the donut hole would spend a maximum of $3,607 on prescription drug costs per person in 2011.
A state breakdown on consumers’ out-of-pocket prescription drug cost savings while in the donut hole is online here. About a dozen states help some residents with coverage gap prescription subsidies so this discount can save these states a modest amount as well.
In a related development, HHS announced that consumers’ premiums for private Part D benefit plans in 2012 will average about $30 per month — down from $30.76 in 2011.
Announcements
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