Affordable Care Act State Action Newsletter 23

Affordable Affordable Care Act: State Action Newsletter

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December 16, 2011

Breaking News: Essential Health Benefits

On December 16, 2011, the Department of Health and Human Services issued an Essential Health Benefits Bulletin.  The 3-page bulletin states, “HHS intends to propose that essential health benefits are defined using a benchmark approach.” The benchmark approach would allow for states to choose one of four plans that works best with their insurance market and scope of services offered by a typical employer plan.

The benchmark plans include:

  • One of the three largest small group plans in the state by enrollment;
  • One of the three largest state employee health plans by enrollment; 
  • One of the three largest federal employee health plan options by enrollment;
  • The largest HMO plan offered in the state’s commercial market by enrollment.  

If states choose not to select a benchmark, HHS will propose the small group plan with the largest enrollment in the state as a default benchmark. State officials and stakeholders are invited to provide feedback to HHS on the proposed policies by Jan. 31, 2012.

Colorado Primary Care Workforce Report

The Colorado Health Institute recently released a report that provides important information on the future need for primary care medical services in Colorado. Nationwide, about 32 million uninsured Americans will have health care coverage by 2019 based on provisions of the ACA, which will increase the demand for primary care providers. Even before the ACA, a multitude of studies warned that the U.S. will face a shortage of primary care providers as large as 45,000 by 2025. An estimated 510,000 Coloradans will become newly insured between 2014 and 2016 but this new research suggests that the situation, at least in Colorado, is not as dire as previously predicted. Even with the newly insured, the need for primary care providers will likely be manageable, requiring between 83 and 141 new doctors, nurse practitioners and physician assistants to cover additional patient visits by 2016. This represents a 2 percent to 3 percent increase in primary care providers in the state. Challenges, however, remain as areas that already struggle with health care provider shortages— rural counties and urban clinics—seek to attract the necessary doctors and nurses to keep up with demand. The ACA created the National Health Care Workforce Commission to serve as a resource for Congress, the President, states and localities.

Inside This Issue


New Reports Detail Health of States

A new report released this month by the Centers for Medicare and Medicaid Services provides a state-by-state look at per capita personal health care spending, per enrollee Medicare spending, and per enrollee Medicaid spending, as well as where provisions of the ACA may be most effective.

The research, which appeared in the December edition of the Medicare and Medicaid Research Review, showed that, in the United States, personal health care spending rose to $6,815 in 2009, up from $3,728 in 1998. The variations by state ranged from $5,031 in Utah to $9,278 in Massachusetts.

Of the findings, the researchers found that: “States with the highest per capita spending tended to have older populations and the highest per capita incomes; states with the lowest per capita spending tended to have younger populations, lower per capita incomes, and higher rates of uninsured.”

Also released this month, the 22nd edition of the United Health Foundation’s America’s Health Rankings  report provides a state-by-state snapshot of population health based on 23 measures. 

According to the findings, Vermont is the nation’s healthiest state for the fifth year in a row. New York and New Jersey showed the most substantial improvement, based upon advances in smoking cessation. Idaho and Alaska showed the most downward movement. Idaho dropped 10 spots, from nine to 19 in this year’s rankings, and Alaska dropped five places.


 Update on NCSL’s Health Reform Task Force

Members of NCSL's Health Reform Task Force met jointly with NCSL’s Standing Committee on Health for a six-hour strategy and educational session during Fall Forum in Tampa, Florida. Task Force co-chairs Assemblyman Herb Conaway of New Jersey and Representative Greg Wren of Alabama moderated presentations on several issues related to health reform. The presentations and full audio recording of the sessions are available “on-demand” on NCSL’s Web page.

The topic segments include:

  • NCSL's legislative database of "State Actions on Health Reform."
  • Private sector activities related to the ACA, featuring health providers representing insurers, hospitals and community health clinics.
  • Hitting the Ground Running in 2014: The Role of Accreditation with URAC and NCQA.
  • What's Ahead for 2012: A panel of key directors at the U.S. Department of Health and Human Services, heading Intergovernmental Affairs, Consumer Assistance and Insurance Oversight, and Medicaid and CHIP. Their HHS State Exchange Information Q& A fact sheet provided valuable updates as of Nov. 29.
  • ACA and the U.S. Supreme Court: Issues and Implications.
  • Member Roundtable Discussion on state Exchange implementation, with reports from members in a dozen states. 
  • Budget Update:GAO reports on countercyclical assistance and the Medicaid program.


States Receive Additional Funding for Exchanges

On Nov. 29, 2011, the federal Department of Health and Human Services granted level one establishment grants to an additional 12 states, bringing to 29 the total number of states that have received this grant to build a state-based health insurance exchange. In August, 13 states and the District of Columbia were awarded $185 million in Level One Establishment Grants to continue their health exchange implementation efforts. Indiana, Rhode Island and Washington were the first to receive level one grants in May, following completion of a number of activities under their previous exchange planning grants, which were awarded to most states in September 2010. 

Level One Establishment Grants provide up to one year of funding to states that have made some progress under their exchange planning grant. Level Two Establishment Grants are designed to provide funding through Dec. 31, 2014, to help states complete their exchanges.



Use of Award

Department of Insurance 


Hire staff and support contracts. Develop a governance model with the Health Insurance Exchange Study Commission.

Governor’s Office of Economic Recovery


Build integrated IT infrastructure for eligibility and enrollment system. Finalize plan management, including health plan certification process and the use of navigators in public outreach and education.

Department of Health and Social Services


Develop an operational plan, including a financial model. Develop an eligibility system. Assess the effects on commercial markets and regulatory changes in the state. 

Department of Insurance and Office of Commerce and Consumer Affairs


Establish the Hawaii Health Connector as described by enabling legislation passed during the 2011 legislative session.

Department of Health and Welfare


Develop policy goals, hire staff and support other resources in planning, design and development efforts. 

Department of Public Health


Conduct market research and analysis to help build the exchange. Conduct a financial assessment and budget analysis.

Dirigo Health Agency


Design and build the operations and systems for the exchange. Collect and analyze data. Research and consider options to build exchange and level two funding.

Department of Licensing and Regulatory Affairs


Continue planning; conduct analysis on effects of the exchange, and conduct market analysis. 

Department of Insurance


Conduct analysis on effects of exchange on insurance market and additional analysis on program integration.

New Mexico
Human Services Department


Develop and implement a multi-year exchange business and operation plan. Identify state laws that need to be amended to comply with federal requirements. 

Bureau of TennCare


Continue planning and research from planning grant. Secure technical expertise for consultation on building IT infrastructure.

Agency of Human Services


Engage stakeholders, conduct analysis, and hire key staff to assist with implementation.

Rhode Island
Department of Business Regulation

Level Two
Level One
$5,240,668 (awarded in May 2011)

Continue level one funding activities: design and build operation plan, IT infrastructure. Build capacity in health plan certification, financial sustainability and oversight.

Source: HHS Exchange Establishment Grants Award List, 2011.

For more information, visit

State Contracts for Dual Eligibles

A recent report from the Kaiser Family Foundation describes state plans to improve coordination of care for the roughly 9 million people who are eligible for and enrolled in both Medicare and Medicaid. Medicare is the primary payer for these “dual eligibles,” covering medical care such as physician office visits, diagnostic tests, hospitalization and prescription drugs. Medicaid provides financial assistance for services not covered by Medicare, such as Medicare premiums and other cost sharing and long-term care. 

Dual eligibles include low-income seniors and people with disabilities who have complicated health needs. Compared to non-dual eligible Medicare beneficiaries, they are more likely to need mental health care, be hospitalized, use the emergency room, live in nursing homes and require long-term care supports. These needs make them a high-cost population to cover. For example, dually eligible people make up 15 percent of Medicaid beneficiaries and account for 39 percent of total Medicaid spending.

The Affordable Care Act created the Medicare-Medicaid Coordination Office within the Centers for Medicare and Medicaid Services to improve coordination and integration of care for dual eligibles.  This spring, 15 states—CA, CO, CT, MA, MI, MN, NY, NC, OK, OR, SC, TN, VT, WA and WI—were awarded federal design contracts of up to $1 million to develop innovative models of care for dual eligibles. At the conclusion of the design phase, targeted for next year, CMS will choose state proposals to move into the implementation phase, pending availability of funds. This summer, CMS released a “State Medicaid Director” letter that provides preliminary guidance on opportunities to align Medicare and Medicaid financing. 

Three States Denied MLR Waivers

HHS denied requests from Indiana and Louisiana (Nov. 27) and Florida (Dec. 15) for state medical loss ratio (MLR) waivers from the standard 80 percent of annual health premiums required to be spent on health services. This brings the 17-state tally to six states with waivers and five with waiver denials, while six others await a determination.

Indiana’s to 65 percent for 2011; 68.75 percent for 2012; 72.5 percent for 2013; and a permanent waiver for consumer-driven health plans in the individual and small group markets. The HHS determination stated: “It appears that all issuers would remain in the market with an 80 percent MLR standard.”  

Louisiana requested an adjustment of the MLR standard to 70 percent in 2011 and 75 percent for 2012. HHS noted that Louisiana’s application was based on preliminary estimates indicating that it expected its non-dominant issuers’ aggregated MLR to be 67 percent for 2010.  However, when Louisiana submitted more recent data, it showed that the ratio in Louisiana’s individual market in 2010 was 79 percent, just under the 80 percent MLR standard.  Thus, it appears that the market will be able to meet the MLR standard beginning in 2011. 

Florida sought an MLR adjustment allowing insurers to meet lower thresholds of 68 percent in 2011, 72 percent in 2012 and 76 percent in 2013. HHS concluded that the application “shows that the state has a competitive individual health insurance market.”



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