On March 23, 2010, President Obama signed into law the Affordable Care Act (ACA), sweeping federal legislation designed to bring about near universal coverage and transform how health care is paid for and delivered throughout the United States. Under federal health reform, 32 million Americans are expected to gain coverage through an expansion of Medicaid to 133 percent of the Federal Poverty Level (FPL); premium subsidies for individuals with incomes between 134 percent and 400 percent of the FPL; new insurance markets – Health Benefit Exchanges – through which individuals and small businesses may compare coverage options and purchase insurance; and reforms of private health insurance.
A new report, “Medicaid’s Role in the Health Benefits Exchange: A Road Map for States,” authored by Manatt Health Solutions’ team of Deborah Bachrach, Patricia Boozang and Melinda Dutton, in collaboration with the National Academy for State Health Policy (NASHP), identifies opportunities under the ACA for states to consolidate and rationalize the oversight of public and private insurers, and the decision points for states as they consider how to most effectively integrate Medicaid into the administration and operation of the Exchange and into the continuum of coverage in the Exchange. Specifically, the report examines the issues states will want to consider in building, operating and financing their Exchanges and effectively integrating Medicaid. The findings, however, are as critical for plans, providers and consumers that will interface with state Exchanges as they are for the states that are building them. Indeed, over 500 attendees from the public and private sector listened in as Ms. Bachrach described the report's findings on a webinar hosted by NASHP last week.
The report's areas of focus include the following:
Eligibility, enrollment and outreach for state health subsidy programs. The pathway for coverage for adults and children eligible for subsidized coverage – Medicaid, CHIP or premium tax credits – will be new state Health Benefit Exchanges (Exchanges). The ACA requires state Exchanges to establish a single integrated process to determine consumer eligibility for the full range of subsidies and to facilitate enrollment into coverage. In designing a streamlined subsidy-eligibility process, states will require additional guidance from the federal government on a number of issues, including income counting rules under the statute’s modified adjusted gross income standard. In all cases, states will need to cross state eligibility rules with federal law and regulations, evaluating both legal requirements and practical considerations as they build systems intended to facilitate subsidy eligibility determinations and enrollment in and retention of health insurance coverage.
Once a consumer is determined eligible for a subsidy, a second critical Exchange function is triggered, namely, health plan enrollment. This raises a critical question for states: where to place the business process for enrollment into Medicaid – in the Exchange or in a separate Medicaid process? The report notes that both continuity of coverage as well as administrative efficiency argue for providing functionality in the Exchanges for all consumers regardless of their subsidies. Recognizing that consumers may transition back and forth between full subsidies (Medicaid) and partial premium subsidies, states will want to consider whether some or all plans in the Exchange should be required to offer the full range of subsidized and nonsubsidized products.
Health plan contracting, standards and requirements. The ACA requires the Secretary of the Department of Health and Human Services to establish minimum requirements for the certification of qualified health plans (QHPs) in the Exchange. States may impose additional requirements on QHPs, and states will want to consider aligning the quality, access and reporting requirements for QHPs and Medicaid managed care plans. In addition, states will want to revisit their Medicaid managed care purchasing strategies, considering whether and how best to leverage the purchasing power of the Exchange to drive access, quality and efficiency. The ACA requires states to establish a state program for risk adjustment that applies to health plans in the small group and individual markets both inside and outside the Exchange. Again, in creating an Exchange that serves all consumers regardless of income level, states should consider the potential value of a single, standard risk adjustment program across all coverage options.
Benefits. States will also have to address multiple questions with respect to the design of benefit packages in the Exchange, including both covered benefits and consumer cost-sharing obligations. The ACA requires that QHPs provide a federally mandated “essential benefit package.” The ACA also mandates that newly eligible Medicaid beneficiaries receive a benchmark benefit that must be at least as generous as the essential benefit package. And benchmark-exempt populations must receive a standard Medicaid benefit package. While alignment of covered services simplifies transitions among subsidy levels and plan enrollment, that may not be possible under federal law or may not be advantageous for states seeking to maximize federal financial support. In addition, the cost-sharing cliff between Medicaid and premium tax subsidies for individuals with incomes above 138 percent of the FPL may argue for taking advantage of the ACA option to establish a basic health program for families with incomes above 138 percent of the FPL and below 200 percent of the FPL.
Governing, operating and financing the Exchange. Finally, at the same time that states are resolving how to integrate Medicaid into the continuum of coverage options available to individuals with incomes below 400 percent of the FPL, they must also consider where Medicaid fits in the administration of the Exchange. Integration with state Exchanges has the potential to bring down Medicaid costs by bringing eligibility and enrollment systems, consumer outreach and education, health plan oversight and administrative infrastructure to scale across multiple payers. States must consider how to tap into the expertise of both Medicaid and insurance agencies in governing the Exchange, and then resolve which of the current functions of each agency could be consolidated in the Exchange. Significantly, to the extent that Medicaid functions are consolidated in the Exchange, federal matching dollars will be available to support the operations of the Exchange post-2014 when the ACA mandates that Exchanges be self-sustaining.
The full report is available on the NASHP Web site.