HHS Releases Proposed Rules for PPACA Implementation
HHS released several proposed rules to guide state implementation of federal health reform. State officials, insurers, advocates and others have been requesting this clarification since the law passed in 2010.
The flood of information included HHS guidance on insurance market reforms and rate review. Insurers in the individual and small group market will be required to sell insurance coverage to any applicant or enrollee. The rules set clear expectations about the four factors insurers can use to set premiums: age, tobacco use, family size, and geography. Plans cannot discriminate on the basis of gender, preexisting condition, occupation, and other factors. The rules allow insurers to charge tobacco users up to 50 percent more than non-users, with an exemption for most people trying to quit. States or insurers can opt for a smaller tobacco-use surcharge, such as 20 or 30 percent.
The method for calculating insurance premiums will be dramatically different under the Patient Protection and Affordable Care Act (PPACA). Effective January 1, 2014, premiums will go up incrementally each year for people between the ages of 21 and 63. Premiums will stay the same for children up to age 21 and for older adults, over age 63. Older people cannot be charged more than three times the premiums of younger people.
HHS also released proposed rules on essential health benefits, actuarial value and accreditation. Noteworthy for states, especially those that already made their benchmark plan selection, is that they now have the flexibility to change their selections. NCSL compiled an easy-to-use 50-state table, which includes plan selections by the state or federal fall-backs, with links to details for each plan. The proposed rules allow more flexibility for insurers to set premiums, co-pays and deductibles within benefit packages, as long as plans provide the 10 essential health benefits and meet the actuarial value requirements for each “tier,” as set out by PPACA. The actuarial value is an estimate of the annual amount of medical costs the plan pays for the typical consumer. HHS also released a proposed actuarial value calculator and instructions on how insurers can make these estimates.
Proposed rules for employer wellness programs support continuation of “participatory” programs (i.e., offering benefits such as health club dues reimbursement or health education classes regardless of health status) and protect consumers from unfair practices in “health-contingent” programs (i.e., generally offering a reward when consumers meet a specific health standard). As proposed, maximum permissible rewards in health-contingent programs rise from 20 percent to 30 percent of the annual cost of coverage, or 50 percent for smoking cessation as previously mentioned. Reasonable alternatives must be offered to employees unable to participate because of undue burden or medical reasons. Wellness program rules comments are due in 60 days. Comments for all other proposed rules are due within 30 days. Instructions for submitting comments are included at the front of the HHS document.
The Centers for Medicare and Medicaid Services (CMS) released guidance to state Medicaid directors about the benefits states are required to provide to newly eligible beneficiaries, known as the expansion population. Newly eligible Medicaid beneficiaries must receive the same services spelled out in the 10 essential health benefit categories. CMS outlined the variety of ways Medicaid programs could meet these standards.
CMS also released answers to some frequently asked questions, including those about enhanced funding for information technology (IT) systems. State Medicaid programs, whether or not they are expanding and whether or not they are operating their own exchange or opting for a federally facilitated one, must interface seamlessly with the exchange. States can access an enhanced federal match of 90 percent) to update their eligibility and enrollment systems through 2015.
Today, Nov. 30, the U.S. Department of Health and Human Services (HHS) released a proposed rule, Notice of Benefit and Payment Parameters for 2014, which “provides further information related to policies such as the risk adjustment, reinsurance and risk corridors programs, advance payments of the premium tax credit, and cost-sharing reductions,” according to HHS. They expect the final rule to be published in the Federal Register on Dec. 7, 2012. Also today, the U.S. Office of Personnel Management (OPM) published a Notice of Proposed Rulemaking to Implement the Multi-State Plan Program (MSPP) pursuant to section 1334 of the Affordable Care Act. According to HHS, the final rule will be published in the Federal Register on Dec. 5, 2012.
The new information will satisfy some key questions, but guidance is still missing on issues state legislators will likely consider in the upcoming sessions, such as the option for a partial Medicaid expansion, how disproportionate-share hospital (DSH) dollars will be allocated, and how the federal government will set up insurance exchanges in states that will not create their own.
Inside This Issue
HHS Extends Deadline for States to Decide on State Exchanges
States now have until Dec. 14 to declare their intent to establish a state-run health insurance exchange and to submit their blueprints for approval. The extension was announced by U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius in a letter to Republican governors on Nov. 15. This is the second deadline change in a week from HHS. The State Actions Newsletter reported on the earlier extension in the last issue. The decision from the secretary comes in response to a letter from the Republican Governor’s Association requesting more time for states to make decisions regarding health insurance exchanges. States have until February 2013 to decide if they want to partner with the federal government to run certain functions of the exchange.
Whether or not this new extension sways states’ decisions to establish an exchange is still unknown. Many states have sent letters or made formal declarations one way or the other; however, these decisions can change until states submit their plans in the coming months. For example, media outlets have recently reported that Florida and New Hampshire may change their decisions to not run a state exchange. As of Nov. 28, 2012, at least eight states remain undecided or have not made a formal declaration. For more detailed information on the state’s status visit NCSL’s State Actions to Address Health Insurance Exchanges web page.
Status of State’s Exchange Decision (As of Nov. 28, 2012)
New Report: State-by-State Cost Calculations for Medicaid Expansion
A new report by researchers at the Urban Institute, funded and published by the Kaiser Commission on Medicaid and the Uninsured, estimates that, if all 50 states participate in the Medicaid expansion, state spending on Medicaid would increase 3 percent between 2013 and 2022. In the same scenario, federal spending on Medicaid would increase 26 percent.
The report, Cost and Coverage Implications of the ACA Medicaid Expansion: National and State-by-State Analysis, estimates the PPACA’s cost implications for all states. Health reform requirements will increase outreach and enrollment resulting in more coverage for people who were previously uninsured, thus increasing Medicaid rolls and costs for all states, no matter how they exercise their expansion option. Only the expansion population will be eligible for the enhanced federal match. The benefits for people previously eligible but not enrolled will be financed at pre-PPACA federal matching rates. According to the report’s cost estimates related to the Medicaid expansion, 12 states (Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, Nevada, North Carolina, Ohio, South Carolina, Utah and West Virginia) would see an increase in state Medicaid spending between 4 percent and 7 percent if they expand Medicaid. At least eight states (Connecticut, Delaware, Iowa, Maine, Massachusetts, Maryland, New York and Vermont), according to the report, would save money, since they will receive an enhanced federal match for people they are already covering. The remaining states fall somewhere between the two groups.
The report also explores the number of people who could gain health insurance coverage under the expansion. The researchers also examined other PPACA-related issues that will impact state budgets, such as potential decreases in the need for uncompensated care payments, the reduction in disproportionate share hospital payments and increased revenue for providers who see patients in states that expand Medicaid.
NCSL is compiling state resources on health reform implementation and Medicaid. Many states have completed their own financial analysis related to the cost of expanding Medicaid. Those reports along with other state-based information related to health reform, can be found here. Please send state reports for posting to this webpage by clicking here.
NCSL Webinar on Fiscal Implications of the Medicaid Expansion
The June 2012 Supreme Court ruling effectively gave states the option to participate in the PPACA Medicaid expansion. Given this new choice, states are weighing the costs and savings associated with expanding Medicaid to cover most people under the age of 65 with incomes at or below 133 percent of the federal poverty guidelines. Even with the federal government paying for significant portion of the cost of coverage for the newly eligible—100 percent in 2014 through 2016, decreasing to 90 percent in 2020 and thereafter— fiscal uncertainties remain.
NCSL will host a webinar, To Expand or Not to Expand, That is the (Medicaid) Question, on Wednesday, Dec. 12, at 2 p.m. ET/ 1 p.m. CT/ Noon MT/ 11 a.m. PT. This webinar features national experts who will review possible costs and cost savings associated with the expansion as well as discuss issues for legislatures to consider as they make decisions about the future of their Medicaid program.
Click here to register for the webinar.
Experts Speak on Health Reform at Fall Forum
NCSL’s Fall Forum in Washington D.C., on Dec. 5-7, features national and state leaders who will discuss the latest information on federal health reform. The NCSL Health Reform Task Force and the NCSL Standing Committee on Health will host educational and interactive sessions on December 6 related to PPACA. For those unable to attend the meeting, NCSL will post faculty slides and handouts online within days.