Remember a year ago when we asked the question, “To BHP or not to BHP?” Well at the Dec. 13 Connector Board meeting, we learned the answer to that question. No BHP. Instead, we’ll have a wrap.
The core of the Connector Board discussion revolved around two big questions:
- Should the Commonwealth maintain its individual mandate policy in addition to the federal mandate required in the Affordable Care Act (ACA)?
- Given there is no federal guidance on the Basic Health Plan (BHP), what can the state do to ensure continuity and affordability of coverage for low-income residents who are not eligible for MassHealth?
Materials from the meeting are posted here, and our full report is below the fold.
Before diving into these areas, Glen Shor provided his Executive Director’s report:
- HHS approves Connector: This week, the US Department of Health and Human Services approved six state-based Exchanges, including the Massachusetts submission from the Health Connector.
- Connector program enrollment: As of December 1, 2012, CommCare enrollment has continued to increase to 197,767 and CommChoice enrollment has stayed fairly stable, with 43,019 subscribers.
- Business Express Marketing: The Health Connector has intensified their marketing of the Business Express program, which offers coverage to small businesses.
- Schedule HC: The Health Connector is preparing Schedule HC forms to send to CommCare members in preparation for tax filing season.
State Individual Mandate Under the ACA
Kaitlyn Kenney, Director of Policy & Research and Coordinator of Health Care Reform, presented the Board with considerations related to the state individual mandate and proposed amendments to the state’s Minimum Creditable Coverage (MCC) regulations.
Both federal and state reform laws include individual mandate provisions – requiring individuals to purchase health insurance if they can afford it, but details, such as what is considered affordable, are different. Massachusetts must comply with the federal mandate, which is administered and enforced by the IRS. Thus, the question is: Should Massachusetts retain its state mandate in addition to the federal mandate?
After analyzing options and considering stakeholder input, Connector staff recommended that the Commonwealth maintain its mandate – in addition to the federal mandate – with some revisions. Changes to the Affordability Schedule, MCC standards, penalties and other rules will require regulatory change and Board approval. The recommendations:
- Affordability: Maintain a progressive schedule capped at 8% of income. For calendar years 2013 and 2014, the Connector proposes to keep premium dollar amounts for specified income buckets. For calendar years 2015 onward, the proposal is to convert progressive schedule to percentage of expected income capped at 8% of income.
- MCC standards: Adjust MCC regulations to align with similar ACA provisions and remove outdated sections.
- Adopt ACA standards for Maximum out-of-pocket costs (a.k.a. MOOPs.): The state’s current MOOP standard is $5,000 for an individual and $10,000 for a family. Connector staff recommended that the state adopt the ACA’s MOOP limits, which are tied to federal limits for High Deductible Health Plans (HDHPs) and annually indexed to premium growth. For reference, 2013 limits were $6,250 for an individual and $12,500 for a family. In addition, the Connector proposed to require all cost-sharing for Essential Health Benefits (EHBs) to count towards the MOOP, whereas today the Connector only counts cost sharing over $100.
- Adopt ACA standards for deductible limits: Like Massachusetts, the ACA imposes deductible limits of $2,000 for an individual and $4,000 for a family with a twist – like MOOPs, they are also indexed to average national premium growth.
- Replace Young Adult Plans (YAPs) with Catastrophic Health Plans: The ACA introduces Catastrophic Health Plans to be sold exclusively through the Exchange to people 30 years old and younger or people who do not have affordable insurance available. The deductible can equal the MOOP (exception to the $2000/$4000 rule).
- Delete outdated language: Since MCC standards were phased in over time, there are several provisions which are no longer applicable.
- Retain Connector discretion to determine plans MCC-compliant even when they don’t meet every element of the regulations.
Kenney also reviewed some outstanding issues to consider as the Connector moves forward with meshing the state and federal mandates, including differences in exempt populations, allowable gaps in coverage, filing status, appeals process, and operational concerns.
Nancy Turnbull raised a concern about students being drawn into Catastrophic Plans when there may be more affordable options available to them, and that student health insurance plans still need significant improvement. Jon Gruber inquired as to whether risk adjustment for Catastrophic Plans is separate from the rest of the market. Jean Yang responded that risk adjustment is done on the back-end, but rating is done market-wide.
The Board voted to release the proposed MCC regulations for public comment.
BHP Alternative: QHP Wrap
Ashley Hague, Chief of Staff, Director of External Affairs and Assistant General Counsel, and Jean Yang, Chief Financial Officer, walked through changes in the state’s development of an ACA subsidized insurance structure.
About seven months ago, officials from EOHHS, MassHealth and the Connector announced their decision to implement a Basic Health Plan (BHP), an option under the ACA to provide coverage to people between 133-200% FPL who would otherwise be eligible for Advanced Premium Tax Credits (APTCs) through the Connector. However, federal regulations detailing the requirements for a BHP will not be released in time to operate a BHP in 2014.
So the Connector has been working with MassHealth to develop an alternative structure which:
- Meets the goals of affordability and continuity of coverage for this population;
- Resembles CommCare, providing coverage that is affordable to enrollees and the state;
- Builds systems to minimize gaps in coverage as people transition from MassHealth to the Connector; and
- Works within existing state and federal laws without having to seek legislative changes.
Keeping the above state goals in mind, the Connector and MassHealth developed a BHP alternative that builds upon previous planning for a state Qualified Health Plan (QHP) wrap for people between 200-300% FPL, using CommCare as a basis. In essence, the alternative proposal provides a state wrap of APTCs and cost-sharing reductions (CSRs) to people between 133-300% FPL, to be administered by the Connector, in order to get premiums and cost-sharing as close as possible to CommCare levels.
Key features of the QHP wrap include:
- Limited choice of plans: The state wrap will only be available to enrollees through a subset of plans offered by the lowest-cost carriers in the Connector’s Silver tier, and may need to meet other criteria as determined by the Connector, promoting competition among carriers.
- CommCare-like enrollee contributions: As in CommCare today, premiums and cost-sharing will vary by plan type, based on income. Enrollees who choose the lowest cost wrap plan will pay the base premium for their income level and those who choose more expensive plans will pay higher premiums.
- Uphold positive member experience: The Connector will have to implement complicated operational arrangements on the back-end to make this model work and are committed to making the member experience as simple as possible. Enrollees will only be responsible for paying the premium and cost-sharing amounts tied to their income, net of federal and state contributions.
A crucial factor in the degree to which the Connector can wrap premiums and cost-sharing are funds made available through the state budget and federal contribution. MassHealth is seeking federal financial participation (FFP) through the 1115 Medicaid waiver for the wrap up to 300% FPL; the state is awaiting a response from CMS on this matter.
The Connector Board’s discussion brought up many issues and questions, some of them yet to be resolved. Here is a sampling of some paraphrased questions from Board members and responses from Connector staff:
Will this alternative model replace the BHP for good?
The alternative model is in the context of what the Connector knows right now. Massachusetts is not the only state in this position, and that in the absence of a BHP, and depending on what federal guidance looks like, it may make sense to keep this model.
Why does the Connector need to offer the state wrap only through a subset of plans?
Federal APTCs are available for any plan within an Exchange, but federal cost-sharing reductions tied to Silver plans, and are not available for plans in other metallic tiers. As such, the proposed model aims to offer enrollees ample choice and ensure the lowest cost plan makes the wrap affordable for enrollees and the state.
What is the impact of the QHP wrap on the overall market?
Under state law, the same plans at the same cost must be offered market-wide, both inside and outside the Connector. The Connector is taking steps to promote competition on price and value among carriers, which could have an impact on prices in the rest of the market. Competition has been used successfully in CommCare for the past few years.
What are the implications of selecting a limited number of plans for risk adjustment?
The Connector’s proposal is similar to the federal model, but includes additional layers. The impact of merging the BHP population into the broader Connector depends on whether this population represents higher or lower risk.
Communications Consultant Procurement
Stephanie Nichols, Director of Marketing, Communications and Outreach presented the Board with the results from their procurement for the design of print and electronic communications to potential Connector customers and navigators. The RFP required bidders to detail their experience with subsidized and commercial insurance, health insurance law, culturally and linguistically appropriate communications, health literacy, and privacy issues. After careful review, the Connector recommended entering into a contract with Maximus Health Services. The Board voted to approve this contract.
With that, the Connector Board’s meetings are concluded for the year. The next meeting is scheduled for Thursday, January 10, 2013 at 9:00am, 1 Ashburton Place, 21st floor.