On December 17, 2015, the Centers for Medicare and Medicaid Services (CMS) approved Michigan’s request to amend its Healthy Michigan Section 1115 demonstration, through which the State provides coverage for more than 594,000 newly eligible adults in its Medicaid managed care program.1 The waiver amendment was required by Michigan’s Public Act 107 of 2013, which directed the State to seek a waiver from CMS by September 1, 2015 to institute new program features for Healthy Michigan enrollees with incomes above 100% of the federal poverty level (FPL). Absent CMS approval of the waiver request by December 31, 2015, Michigan’s Medicaid expansion would have terminated on April 30, 2016.
Specifically, the law directed the State to obtain CMS approval of the following changes to coverage for enrollees with incomes above 100% FPL who had been enrolled in Healthy Michigan coverage for 48 cumulative months:
- Provide enrollees with a choice between receiving coverage through a Medicaid managed care plan or a qualified health plan (QHP) in the Marketplace
- Charge premiums of 3.5% of income, beyond the 2% of income that has been approved in other states, for individuals enrolled in managed care plans
- Increase the cost-sharing cap from 5% of income, the amount permitted by federal law, to 7% of income for individuals enrolled in managed care plans
Effective April 1, 2018, 48 months after the start of Healthy Michigan coverage, all enrollees with incomes between 100% and 133% FPL who are not medically frail will have the following coverage options:
- Healthy Michigan Plan: Individuals who choose coverage through the Healthy Michigan Plan will continue to be enrolled in Medicaid managed care. Only individuals who have completed a healthy behavior (described in more detail below) may enroll in this option. The waiver permits the development of an “alternative cost sharing model” for this coverage option, the details of which are left to forthcoming operational protocols.
- Marketplace Option: Individuals who choose the Marketplace Option will be enrolled in QHP coverage purchased by the State through premium assistance. These individuals will be subject to premiums up to 2% of income and cost-sharing amounts consistent with Michigan’s State Plan. By April 1, 2017, the State must submit a transition plan for individuals moving from the Healthy Michigan Plan to the Marketplace Option.
Key Waiver Features
Benefits. Individuals enrolled in the Healthy Michigan Plan and the Marketplace Option will receive an alternative benefit plan (ABP). For Marketplace Option enrollees, the State will wrap non-emergency medical transportation, Early and Periodic Screening, Diagnostic, and Treatment, and out-of-network family planning benefits. In addition, enrollees must have access to at least one QHP in each QHP service area with a federally qualified health center and rural health center in-network.
Premiums and Cost Sharing. Today, enrollees with incomes between 100-133% FPL are required to pay a monthly premium of 2% of income as well as co-payments. Co-payments are billed on a quarterly basis, rather than at the point of service. Together, premiums and cost sharing may not exceed 5% of income.
Under the amended waiver, as of April 1, 2018, individuals with incomes above 100% FPL will be subject to the following premiums and cost sharing:
- Healthy Michigan Plan: Healthy Michigan Plan enrollees “may be subject to an alternative cost sharing model, which requires completion of healthy behaviors.” To obtain CMS approval of this new model, the State is required to submit updated versions of its Operational Protocol for MI Health Accounts (similar to health savings accounts) and Healthy Behaviors Incentives Program Protocol by July 1, 2017. The State has received a waiver authorizing it to collect premiums from all Healthy Michigan enrollees with incomes above 100% FPL. Co-payment amounts will be consistent with Michigan’s State Plan. The State did not receive any waivers of federal cost-sharing requirements, suggesting that the forthcoming operational protocols will articulate an approach to cost-sharing that CMS views as complying with federal Medicaid requirements.
- Marketplace Option: Marketplace Option enrollees will be subject to premiums up to 2% of income and cost sharing consistent with Michigan’s State Plan. The State may make monthly advance cost-sharing reduction (ACSR) payments to carriers so that enrollees’ co-payments align with Medicaid rules. Annually, the State will reconcile enrollees’ actual utilization with the ACSR payments made to carriers.
As is the case currently, when enrollees (in either option) fail to pay required premiums or cost sharing, they will incur a debt. Managed care plans or QHPs may seek to collect unpaid premiums or cost sharing, and the State may recoup these funds against an enrollee’s tax returns or lottery winnings.
Healthy Behavior Incentives. Currently, Healthy Michigan enrollees may reduce their premium and cost-sharing obligations if they visit their primary care provider, complete a health risk assessment and maintain or adopt specified healthy behaviors, such as receiving a flu vaccine or working to quit smoking. Initially, enrollees with incomes between 100 and 133% FPL who meet healthy behavior standards receive a 50% reduction in premiums, while individuals with incomes at or below 100% FPL receive a gift card. In addition, if enrollees meet healthy behavior standards and pay 2% of their income in co-payments, their co-payment obligations will be cut by half for the following year.
As noted above, under Michigan’s waiver amendment, beginning on April 1, 2018 individuals must complete certain healthy behaviors to enroll in the Healthy Michigan Plan. The healthy behaviors will be specified under the forthcoming updated operational protocols, and “must be no more restrictive” than the healthy behaviors currently required for an enrollee to be eligible for reduced premiums and cost-sharing obligations. In addition, the State and CMS will coordinate to identify ways to promote the achievement of healthy behaviors.
When an existing Healthy Michigan Plan enrollee’s income crosses above the 100% FPL threshold or a new individual with an income above 100% FPL enrolls in Healthy Michigan Plan coverage, he or she will have a year to complete a healthy behavior prior to being subject to the alternative cost sharing model. Marketplace Option enrollees may move into the Healthy Michigan Plan if they complete healthy behaviors.
Michigan’s statutory requirements related to increased premiums and cost-sharing obligations for individuals with incomes above 100% FPL enrolled in its managed care option presented a unique challenge for waiver negotiations because of the threat of the termination of expansion without CMS approval of these features. State and national stakeholders will be watching for the release of the operational protocols that will provide details on the Healthy Michigan Plan’s alternative cost sharing model, which is likely to enable enrollees to reduce their cost-sharing obligations by completing healthy behaviors. A spokeswoman for the Michigan Department of Health and Human Services seems to confirm this view, commenting, “Because of the enhanced focus on healthy behaviors, it would be very difficult to reach 7 percent cost sharing.”
While the State statute linked the coverage options and cost-sharing requirements to individuals enrolled in Healthy Michigan for 48 months or more, CMS has authorized linking these new waiver features to a point in time – April 2018 (the first possible date that any Healthy Michigan enrollee could hit the 48 month enrollment mark) – and applied the new program requirements to all Healthy Michigan enrollees with incomes from 100-133% FPL, regardless of enrollment duration. This is consistent with the requirement that Medicaid is not a time limited benefit and states may not limit duration of coverage in Medicaid.
Approval of Michigan’s waiver amendment demonstrates CMS’s continued commitment to certain core principles dictated by federal statute and regulation, and its willingness to work with states to tailor their Medicaid expansion programs to meet state needs.