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Affordable Care Act State Action Newsletter 51

Patient Protection and Affordable Care Act: State Action Newsletter


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March 8, 2013

Arkansas Considers Innovative Approach to Medicaid Expansion

As states consider whether to expand Medicaid, Arkansas is contemplating an alternative approach. Last week, Governor Mike Beebe announced a plan that would allow the state to use federal Medicaid funds to buy private health insurance for low-income residents through the state’s insurance exchange. Although the Obama Administration has not issued formal approval, Gov. Beebe met with Health and Human Services (HHS) Secretary Sebelius, and he reported that she expressed support for the idea. Other states—such as Ohio and Texas—are taking note.

Some Arkansas lawmakers have responded favorably to the approach, while others want more information before they weigh in. The plan would move people newly eligible for Medicaid into the private market, rather than expanding the already cash-strapped Medicaid program. The arrangement might be advantageous for insurance companies and hospitals, if it resulted in higher payment rates than those available under Medicaid. And, whether covered by private insurance or Medicaid, newly insured Arkansans likely wouldn’t notice a difference in services; either way, they’d be insured.

According to John Selig, director of the Arkansas Department of Human Services, the approach would also reduce “churn” between Medicaid and the exchange, since newly eligible Medicaid recipients would keep their private insurance, regardless of small changes in income.

If HHS formally approves the governor’s proposal, Arkansas wouldn’t be on the hook for any of the plan’s costs until 2017, when the federal government’s share begins to decline. By 2020, the state would assume responsibility for 10 percent of the total cost. However, concerns remain about whether the private-market approach would cost more than a regular Medicaid program expansion. The Congressional Budget Office estimates that, on average, private insurance costs approximately $3,000 more than Medicaid, per individual, per year. While that difference may not matter to Arkansas for the first three years, it may have an impact when the state begins to share funding responsibility. According to Gov. Beebe, Secretary Sebelius also supported the idea of applying a “sunset provision” to the expansion, which would require the legislature to re-approve the program before its cost-sharing provisions kick in.
Medicaid enrollees could face higher co-pays, deductibles and other costs under the proposed plan than under a Medicaid expansion, which may limit low-income individuals’ access to care.

Any decision to move forward requires support from three-quarters of both the Arkansas House and Senate. Before making the decision, legislators say they’re interested in more details—and, formal approval from HHS.


Inside This Issue

“Integrated Care with Financial Incentives” Could Save California Billions

A new report out of California projects that the state could save $110 billion in health care expenditures between 2013 and 2022, an average reduction of $802 per household each year, if it takes identified action.

The report, entitled, “A New Vision for California's Healthcare System: Integrated Care with Financial Incentives,” reviews the history of the state’s health care systems and focuses on seven key initiatives that target areas and populations with the highest health care costs. Those initiatives are: budgets/integrated care systems, patient-centered medical home, palliative care, physical activity, nurse practitioners and physician assistants, healthcare associated infections and preterm births.

According to the authors, the share of the Gross State Product (GSP) consumed by health care is projected to rise from 15.4% in 2012 to nearly 17.1% in 2022. However, by implementing the report’s initiatives, the authors estimate that health care expenditures as a share of GSP, could by reduced from 17.1% to 16.5% in 2022.

The report was developed by the Berkeley Forum for Improving California’s Healthcare Delivery System. The Forum partners included CEOs of six of California’s leading health systems, three health insurers, two large physician organizations, California’s secretary of Health and Human Services,  and the state’s insurance commissioner, as well as,  the U.S. Department of Health and Human Services (HHS) Region IX director.


Navigating the Health Insurance Exchanges

Navigators will help consumers shop for the best health insurance options available to them in each of the three types of exchanges—state-run, federally facilitated or a state-federal partnership.  The standards, duties and rules for the navigator program are outlined in Section 1311 of the Patient Protection and Affordable Care Act (PPACA) and in the final rule on exchange establishment.  According to HHS, states may not use funds from their federal establishment grants for their navigator program.  States may use funds gained from exchange operation revenue, such as user or insurer fees, to pay for the navigator program. States also have the authority to set additional standards for navigators in state-run exchanges; set licensing and certification standards for navigators in any type of exchange and determine the role of insurance agents and brokers in exchanges, including their interaction with the navigator program.

At least 17 states—Georgia, Illinois, Indiana, Maryland, Maine, Missouri, Montana, Nebraska, New Mexico, New York, Ohio, Oregon, Tennessee, Texas, Virginia, Vermont and Utah— introduced legislation this session to address the role, licensing and standards of navigators.  Most of these bills deal with establishing standards for licensing or authorizing a state official, most commonly the insurance commissioner, to set the regulatory standards.  Although Georgia, Illinois, Indiana, Maine, Missouri, Montana, Nebraska, Ohio, Tennessee, Texas and Virginia will have a federally facilitated exchange, the states are considering legislation to meet federal guidelines and/or to regulate navigators.

These bills, along with other health reform bills, can be found in NCSL’s Federal Health Reform State Legislative Tracking Database, which is updated every other Tuesday.


Rule Released for the Insurance Market

On March 1 the U.S. Department of Health and Human Services released the final rule for the Notice of Benefit and Payment Parameters for 2014.  The rule touches on a number of issues previously addressed in the interim rule, and provides information about the permanent risk adjustment program, the transitional reinsurance program, and the temporary risk corridors program. These three programs, created by the PPACA, are designed to stabilize premiums in the individual and small group markets beginning in 2014.

In addition, the final rule provides proposals for cost-sharing and premium tax credits to help eligible individuals pay their health insurance premiums. Final rules, including some significant changes, were also made to the small business health options program (SHOP), and the medical loss ratio program. 

For a brief summary of the final rule please read the Center for Medicare and Medicaid Services (CMS) fact sheet.  


Four States Receive Partnership Exchange Approval

Iowa, Michigan, New Hampshire and West Virginia received conditional approval from HHS on March 5 for a partnership exchange, which permits the states to run the consumer assistance and/or plan management aspect of the exchange, while the feds do the rest.  These three states join Arkansas, Delaware and Illinois, which previously received the HHS stamp of conditional approval for a partnership exchange. Seventeen states received conditional approval for their state-based exchange and 26 states will have a federally facilitated exchange.


CMS Sends Letter to Insurance Companies on Federal and Partnership Exchange

On March 1, CMS sent a letter that “provides Qualified Health Plan (QHP) issuers in federally facilitated exchanges and federally facilitated SHOP, including State Partnership Exchanges, with operational and technical guidance to help them successfully participate in exchanges.” The letter offers guidance to states with partnership exchanges, including a reminder that they may adjust and apply their own certification standards as part of the plan management function the state will administer.


Webinar: States Help Veterans Access Health Benefits and Save Money, Too

 On Monday, March 11 at 2 p.m. ET NCSL will host a “States Help Veterans Access Health Benefits and Save Money, Too” Webinar.

Veteran’s Benefit Enhancement Programs connect low-income veterans who are enrolled in Medicaid with benefits from the U.S. Department of Veterans Affairs. The result is that the veterans are getting the benefits to which they are entitled and the state saves Medicaid money. Washington was the first state to launch this program and other states have followed. This webinar features speakers from Washington and California, who will discuss issues related to setting up and implementing this type of program.  Click here to register.

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