Washington Report – August, 2013
Bill Finerfrock, Zhaneta Mansaku, Greg Price, Kirk Shields
Cost and Participation in Healthcare Marketplaces
The Role of the States in the ACA
Mostashari Announces Departure from ONC
Employer Mandate under the ACA
Medicare to Accept Revised 1500 Claim Form Starting January 2014
Legislation Introduced to Strengthen Medicare Anti-Fraud Efforts
Congress and Congressional Staff MUST get healthcare insurance the Marketplaces
CMSTransmittals
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Cost and Participation in Healthcare Marketplaces
Who will actually sign up for health insurance through the Marketplaces under the Patient Protection and Affordable Care Act (ACA) and how much that insurance will cost remains an open question in late August. But with each passing day until the opening of the Marketplaces on October 1, new information is coming forward that tries to answer these questions.
The Henry J. Kaiser Foundation has been a leader in researching and analyzing the Affordable Care Act. Recently, the Foundation published a new report entitled, An Early Look at Premiums and Insurer Participation in Health Insurance Marketplaces, 2014
Background
Beginning October 1, 2013, many previously uninsured individuals and families will be able to purchase private health insurance coverage through “Marketplaces” (nee Exchanges). Coverage under these policies will begin January 1, 2014.
As has previously been reported, these Marketplaces will either be run by the state or the federal government and a small number will be jointly run by a partnership between the state and federal governments. In states that decide against operating their own exchanges, the federal government will either run the exchange or work in partnership with the state to create an exchange.
Regardless of who operates the Marketplace, enrollees with family incomes from 100% to 400% of the Federal Poverty Level (FPL) may qualify for tax credits to help lower the out-of-pocket cost of the insurance premiums. For 2012, the FPL for a family of 4 is approximately $24,000. Based upon this, federal tax credits would be available for a family of fourwith household income as high as $96,000 per year.
The Kaiser Foundation report tries to take an “early look at insurer participation and exchange premiums – both before and after tax credits – for enrollees in 17 states plus the District of Columbia.” In putting the report together, Kaiser researchers used publicly released data on rates or the rate filings submitted by insurers.
Ten of the States (and WashingtonDC) reviewed by Kaiser researchers will be operating their own state-run Marketplaces. Seven of the states in the analysis will have federally-facilitated Exchanges (either totally or partially run by the federal government).
All plans sold through the Exchanges must offer a standard set of benefits, referred to as “Essential Health Benefits”. While plans can offer additional benefits, it is expected that Exchange Plans (aka Qualified Health Plans) will offer the basic benefits mandated by the Affordable Care Act.
There will be Four levels of coverage available to all individuals:
Bronze
Silver
Gold
Platinum
The more precious the metal, the higher the premiums will be,but the lower the consumer’s deductible or co-pay expense. Conversely, the less precious the metal, the lower the premium but the higher the deductible and/or co-pay.
Roughly speaking, a Bronze plan will be expected to cover 60% of beneficiary costs, a Silver Plan 70%, a Gold Plan 80% and a Platinum Plan 90%. Marketplaces will also be authorized to offer a catastrophic policy (i.e. very high deductible). However, in order to purchase a high deductible insurance policy through the Marketplace, the purchaser must be under the age of 30. If a family wishes to purchase a catastrophic policy ALL covered lives must be under the age of 30.
During the first year, plan premiums will be based upon the insurance company’s estimated cost of offering benefits to the people who are expected to enroll. After the first year, plans will have a better sense of costs but their ability to raise premiums will be regulated.
In most states, the state will be divided into “Rating Areas”. In Virginia, for example, the state has been divided into 12 separate rating areas. In California, the state has been divided into 19 rating areas.
Insurers will be permitted to offer products in some or all rating areas. Because insurers can limit sales to some or all rating areas of a state, the numbers in the chart Kaiser produced can be somewhat misleading.
State / Number of InsurersCA / 12
CO / 10
CT / 3
DC / 4
IN / 4
MD / 6
ME / 2
MT / 3
NE / 4
NM / 5
NY / 16
OH / 12
OR / 11
RI / 2
SD / 3
VA / 9
VT / 2
In California for example, the State operated Exchange (CoveredCA) has identified the plans that
will be offered and the specific rating areas in which those plans will be offered. Of the 12 plans that will be sold through CoveredCA, only two will be available state-wide. Most of the plans will be limited to specific geographic regions of the state (Los Angeles only, San Francisco only, San Diego only, etc.). A closer look at the California market shows that the average number of plans per rating area will be 3 or 4 with many rural areas of the state only having the two state-wide plans.
Plans can vary individual and family premiums between rating areas within a state for a variety of reasons but within a rating area, individual and family plan pricing can only vary due to the age of the individual(s), size of the familyor smoking status of the individual(s) seeking insurance.
There is a 3:1 rating ratio between the highest rated (i.e. oldest) person in the rating area and the youngest. What this means is that the highest age-based premium charged within a rating area can only be 3 times the lowest age-based premium charged within that rating area.
As the Kaiser Report notes, it is sometimes difficult to compare the cost and coverage of plans currently available in a market with the cost and coverage of the plans that will be sold in the Marketplaces because there are so many fundamental differences between the products you are trying to compare that you end up trying to compare an apple to an orange.
What Kaiser Found
As previously noted, using rate filings, Kaiser tracked insurer participation and plan offerings in the Marketplaces. Kaiser then calculated the unsubsidized premiums for enrollees of bronze and silver plans at various ages (25, 40, and 60 years old) in the rating area of the largest city in each of the 17 states and Washington, DC.
For each of the rating areas, they then calculated the expected tax credit that individuals and families at various income levels would qualify for in an attempt to ascertain the actual out-of—pocket premium cost in those rating areas.
Kaiser found that insurersgenerally were planning to offer plansat the various tiers of coverage (catastrophic, bronze, silver, gold, or platinum), and that they also planned to offer more than one plan option within a given coverage tier. As a result, the number of plans available to consumers will be significantly greater than the number of insurers participating.
However, it appears that at least in the states reporting thus far, all of the products that the plans intend to sell will be network products (e.g.,HMOsorPPOs).
Not surprisingly, Kaiser found that premiums will vary from state to state and from rating area to rating area within a state. Kaiser concludes that this variation is due to a variety of factors, including: differences in the underlying cost of health care; market competition; and, the effectiveness of state rate review programs at lowering premiums.
Price variability is also going to be affected by the ability of the Marketplaces to negotiate premiums with insurers or exclude plans from the market.
It was interesting to note that the highest cost premiums were found in the two states that had previously outlawed insurance pricing based upon health status and moved to community rating many years ago – New York and Vermont.
According to the Kaiser report, the lowest cost Bronze plan for a 40-year-oldranges from a low of $146 per month in Baltimore, Maryland to $308 in New York City and $336 in Burlington, Vermont.
Moving up the insurance hierarchy, Kaiser found the lowest cost Silver planin Portland, Oregon- $194per month for a 40 year old and the highest cost Silver plan again in Burlington, Vermont: $395per month.
As previously noted, premiums within a rating area can only vary due to age. But the actual out-of-pocket cost of the insurance will also be affected by the individual or family income. The “prepaid tax credits” available to individual/families with incomes up to 400% of poverty level will significantly reduce the out-of-pocket premium expense for many of these individuals or families.
What is a Prepaid Tax Credit?Normally, tax credits are calculated at the end of a tax year and are credited against the individual taxpayers tax liability. In general, in order to benefit from a “tax credit”, the taxpayer must have a tax liability against which the credit can be applied. Not only is the PPACA premium tax credit “prepaid” but it is also “refundable” which means the individual receives the full cash value of the credit regardless of whether they have an actual tax liability.
In the case of a “prepaid” tax credit, the individual gets the cash value of the tax credit throughout the tax year rather than having to wait until the tax year to claim/collect their tax credit.
In the case of the PPACA prepaid tax credits, the federal government will calculate the amount of the tax credit the individual /family would be entitled to under the PPACA but instead of waiting until the tax return is filed to claim the tax credit, the total amount available will be divided by 12 and that amount will be deducted from the premiums that person/family would have had to pay for the insurance they are purchasing through the Marketplace. The money will go directly from the federal treasury to the Health Plan on a monthly basis.
The prepaid tax credit is ONLY available to individuals who are purchasing health insurance through the Marketplace.
Kaiser assumes that most of the people enrolling in individual plans sold on the Marketplacewill qualify for a tax credit that will lower the amountthey must pay for coverage, which means that most enrollees will pay a lower monthly premium than the unsubsidized rates presented above.
The amount of the tax credit an individual will qualify for is based upon his or her income relative to the second lowest cost Silver Health Plan sold on the Exchange. Under the ACA, an individual with an income of 250 percent of the federal poverty level ($30,000 per year income) would pay no more that approximately 8percentof his or her income to enroll in the second-lowest-costSilver plan, regardless of the rating area.
This calculation sets the value of the pre-paid tax credit. Should the individual choose to enroll in a higher premium plan (Gold or Platinum or higher cost Silver Plan) the amount of the pre-paid tax credit does not rise.
So in this example, if the individual lived in Burlington, Vermont where the premium for the second lowest cost Silver Plan was $395 per month, the individual would pay an out-of-pocket premium of approximately $200 ($30,000 X .08/12) and he/she would get a pre-paid federal tax credit valued at approximately $195 per month making up the difference.
The Kaiser report makes for interesting reading and there is enough information in the report to fuel the debate over the affordability and value of the Patient Protection and Affordable Care Act for months to come.
HBMA has scheduled a Webinar on the operation of the Marketplaces and other ACA related issues for early October.
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The Role of the States in the ACA
Much of the talk about the state’s role in the implementation of the ACA has centered around either the Medicaid expansion provisions or the operation of the Marketplaces. But in reality, that is only a small part of the role the states will play in the implementation and operation of the ACA.
Historically, health insurance has been regulated at the state level. The states approve what health plans can be sold in a state, determine what benefits must be offered and, depending upon the state, will directly or indirectly determine the premiums that health plans can charge for those plans. If the plan is a network plan, state law will typically establish requirements for network adequacy and what types of providers must be included in the network.
Although the Marketplaces in many states will be federally operated, the ACA does not rescind or override the long-standing state authority to regulate insurance products sold in that state. Because of that, State Insurance Commissioners continue to have a significant role in how or how well the ACA will work. State Insurance Commissioners may often be an excellent resource for ACA related questions.
Below is a state-by-state list with contact information for the Health Insurance Commissioners in all 50 states. The chart also indicates whether the Marketplace will be state operated, federally operated (aka federally facilitated) or a state/federal partnership. If you have ACA-related questions, do not overlook this office as a possible resource for answers in that particular state.
Please contact them for further information on what insurance plans and networks will be available to consumers through the Health Insurance Marketplace in your state beginning on October 1.
State / Marketplace Model / Contact Information for State CommissionerAlabama / Federally Facilitated Marketplace / P: (334) 269-3550
Alaska / Federally Facilitated Marketplace / P: (907) 465-2515
Arizona / Federally Facilitated Marketplace / P: (602) 364-2499
Arkansas / State Partnership Marketplace / P: (501) 371-2600
California / State Based Marketplace / P: (800) 927-4357
Colorado / State Based Marketplace / P:(303) 894-7499
Connecticut / State Based Marketplace / P: (860) 297-3900
Delaware / State Partnership Marketplace / P: (302) 674-7300
District of Columbia / State Based Marketplace / P: (202) 727-8000
Florida / Federally Facilitated Marketplace / P: (850) 413-3140
Georgia / Federally Facilitated Marketplace / P: (404) 656-2070
Hawaii / State Based Marketplace / P: (808) 586-2790
Idaho / State Based Marketplace / P: (208) 334-4250
Illinois / State Partnership Marketplace / P: (877) 527-9431
Indiana / Federally Facilitated Marketplace / P: (317) 232-2385
Iowa / State Partnership Marketplace / P: (515) 281-5705
Kansas / Federally Facilitated Marketplace / P: (785) 296-3071
Kentucky / State Based Marketplace / P: (502) 564-3630
Louisiana / Federally Facilitated Marketplace / P: (225) 342-5900
Maine / Federally Facilitated Marketplace / P: (207) 624-8475
Maryland / State Based Marketplace / P: (410) 468-2090
Massachusetts / State Based Marketplace / P:(617) 521-7794
Michigan / State Partnership Marketplace / P: (517) 373-0220
Minnesota / State Based Marketplace / P: (651) 296-4026
Mississippi / Federally Facilitated Marketplace / P: (601) 359-3569
Missouri / Federally Facilitated Marketplace / P: (573) 751-4126
Montana / Federally Facilitated Marketplace / P: (406) 444-2040
Nebraska / Federally Facilitated Marketplace / P: (402) 471-2201
Nevada / State Based Marketplace / P: (775) 687-0700
New Hampshire / State Partnership Marketplace / P: (603) 271-2261
New Jersey / Federally Facilitated Marketplace / P: (609) 292-7272
New Mexico / State Based Marketplace / P: (888) 427-5772
New York / State Based Marketplace / P: (800) 342-3736
North Carolina / Federally Facilitated Marketplace / P: (919) 807-6750
North Dakota / Federally Facilitated Marketplace / P: (701) 328-2440
Ohio / Federally Facilitated Marketplace / P: (614) 644-2658
Oklahoma / Federally Facilitated Marketplace / P: (405) 521.2828
Oregon / State Based Marketplace / P: (503) 947-7980
Pennsylvania / Federally facilitated Marketplace / P: (877) 881-6388
Rhode Island / State Based Marketplace / P: (401) 462-9501
South Carolina / Federally Facilitated Marketplace / P: (803) 737-6160
South Dakota / Federally Facilitated Marketplace / P: (605) 773-3563
Tennessee / Federally Facilitated Marketplace / P: (615) 741-2825
Texas / Federally Facilitated Marketplace / P: (512) 463-6169
Utah / Federally Facilitated Marketplace / P: (801) 583-3800
Vermont / State Based Marketplace / P: (800) 964-1784
Virginia / Federally Facilitated Marketplace / P: (804) 371-9741
Washington / State Based Marketplace / P: (800) 562-6900
West Virginia / State Partnership Marketplace / P: (304) 558-3864
Wisconsin / Federally Facilitated Marketplace / P: (608) 266-3585
Wyoming / Federally Facilitated Marketplace / P: (307) 777-7401
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Mostashari Announces Departure from ONC
Dr. Farzad Mostashari has been the National Coordinator for Health Information Technology (ONC) since 2011. Over the past 2+ years, he has proven to be a dynamic and passionate leader of our nation’s efforts to transition from a paper dependent healthcare delivery system to one that fully embraces electronic technology.
In an email message to ONC staff, HHS Secretary Kathleen Sebelius noted,
“During his tenure, ONC has been at the forefront of designing and implementing a number of initiatives to promote the adoption of health IT among health care providers. Farzad has seen through the successful design and implementation of ONC’s HITECH programs, which provide health IT training and guidance to communities and providers; linked the meaningful use of electronic health records to population health goals; and laid a strong foundation for increasing the interoperability of health records—all while ensuring the ultimate focus remains on patients and their families.”
Although there has been much speculation behind the reasons for his sudden announcement, neither Dr. Mostashari nor Secretary Sebelius have spoken on the record about this development.
Over the past two years, HBMA leaders and staff have developed a solid working relationship with Dr. Mostashari and his senior staff. His leadership at ONC will be missed.
In addition to the Sebelius email, Dr. Mostashari sent a message to his senior staff announcing his departure. A member of the ONC staff sent HBMA a copy of that email.
After outlining what he considered some of the successes of the Department under his leadership, he ended with the following: