04242013 affordable care act and kansas

The ACA and Kansas:Where do wego from here?

Kansas Insurance Department

ECMUniversity-Community

ForumApril 24, 2013Sandy Praeger,

Commissioner of Insurance

Affordable Care Act considerations

• What is in effect now

• What goes into effect in 2014

• State decisions• ACA implementation• State Legislature input

ACA & Considerations

Key DecisionPoints

Exchanges(Marketplace)

Implementation Issues

• No pre-existing condition exclusions for children

• Dependent coverage to age 26

• Small Business Tax Credit• For businesses with 25 or fewer employees• Average wages less than $50,000• Employer must contribute at least 50% of premium• Tax credit phases out as number of employees and wages

increases• 2010-2013: Up to 35% of total employer

contribution• 2014 and later—up to 50 %

2010 Affordable Care Act provisions—in effect NOW


Key DecisionPoints

Exchanges (Marketplace)


2010 Affordable Care Act provisions—in effect NOW

• No rescissions, except in cases of fraud or intentional misrepresentation

• Coverage of preventive health services with no out-of-pocket costs

• Enhanced appeals procedures

• Federal Pre-existing Condition High Risk Pools—no longer accepting participants

• No lifetime limits• and phase-out of annual limits


Key DecisionPoints



2014 ACA provisions

• Elimination of pre-existing condition exclusions

• Guaranteed issue and renewability of coverage

• Rating factors limited to age, tobacco use, geography and family structure

• Tax credits and subsidies to help pay premiums and out-of-pocket costs; up to 400% of the Federal Poverty Level

• Limits on out-of-pocket costs in qualified health plans


Key DecisionPoints



2014 ACA provisions

• Mandated coverage for “essential health benefits”

• Uniform explanation of benefits and standardized definitions

• Individual mandate to ensure consumers do not wait until they are ill to seek coverage—healthy and young people needed to keep down costs

• You will be penalized for no coverage (with some exceptions)-push for more incentives

• Establishment of an online marketplace(exchange)


Key DecisionPoints



Kansans & insurance--now

• Approximately 365,000 Kansans are uninsured—13.1 percent of the state’s population

• Of all Kansans, 51.8 percent are covered by employment-based insurance

• Public insurance (Medicare, Medicaid, other) covers 29.6 percent of all Kansans

• A total of 5.5 percent of Kansans haveindividual (other private) insurance

(Source: Kansas Health Institute, 2012)


Key DecisionPoints



Kansans & insurance-now• Non-elderly people in Southeast Kansas or

Wyandotte County are more likely than other Kansans to be covered by Medicaid (now KanCare) or the CHIP (Healthwave) program

• Kansas’s Medicaid eligibility threshold for adults (less than 32 percent of the Federal Poverty Level) is among the lowest in the country

• Currently, childless adults who are not disabledcannot qualify for Medicaid

Approximately 380,000 Kansas adultsand children are enrolled in Medicaidor CHIP



Key DecisionPoints



Kansans & Medicaid-predictions

• Federal Medicaid expansion, if approved by the state, would provide eligibility to ALL adults earning less than 138 percent of the Federal Poverty Level ($30,660 for a family of four, $15,415 for an individual)

• More than 240,000 Kansans are expected to enroll in Medicaid if the state expands the eligibility as set forth in the ACA.



Key DecisionPoints



Kansans & insurance-future

• As designated by the ACA, Kansans will have the opportunity to buy insurance (or be eligible for Medicaid assistance) through an online health insurance marketplace called the Exchange.


Key DecisionPoints



Marketplace (exchange) provisions

• People who apply to buy insurance through the online marketplace (Exchange) who are eligible for a public program (like Medicaid) will be enrolled in that program.

• The basic concept is much likeExpedia or Travelocity—you are directed to the proper area depending on the information you give


Key DecisionPoints



• Under the ACA, each state shall establish an American Health Benefit Marketplace (Exchange) by January 1, 2014

• The Secretary of Health and Human Services must certify if a state will be able to operate a qualified online marketplace

If a state does not choose to operate an online marketplace, the federal government will operate it for thestate—deadline for this decisionwas Feb. 15, 2013



Key DecisionPoints



Marketplace operation

• 17 states and the District of Columbia are going to operate state-based exchanges

• 7 states are partnering with HHS

•26 states opted to have the federal government run the exchange


Key DecisionPoints



Marketplace upcoming deadlines

• Exchanges:

• Carriers began submitting applications April 1, 2013

• All applications due April 30, 2013

• State recommendations complete by July 31, 2013

• Exchange sales begin on October 1, 2013

• Market Rule gave states until March 29th to request

• Family tiers; rating areas; age ratio; age curve; tobacco rating

• Merging of small group & individual markets


Key DecisionPoints



Five core marketplace (exchange) functions

1. Consumer assistance• Support, education, outreach, Navigator mgmt.

2. Plan management• Active purchaser or any willing plan; data collection

3. Eligibility• Applications verification; connection to Medicaid, CHIP if needed

4. Enrollment• Transactions, transmission

5. Financial management• User fees; risk adjustment


Key DecisionPoints




• The Exchange must be operated by a governmental agency or nonprofit entity created by the State.

• The Exchange must make “qualified” health plans available to individuals or employers (may include dental or other types of benefit plans).

• The Exchange must provide for thefollowing:

• Initial open enrollment period• Annual open enrollment period• Special enrollment periods


Key DecisionPoints




• Under the ACA, the Marketplace (Exchange) must be interoperable with the Medicaid database, so that Medicaid-eligible Kansans would be directed to that portal.

• Insurance companies operating in a Kansas Marketplace (Exchange) must be approved by the Kansas Insurance Department


Key DecisionPoints



The Exchanges (Marketplaces)

• Individual Exchange:

• Provides information on subsidies and Medicaid eligibility

• Small Group (SHOP) Exchange:• For small employers 1-100 (“1” defined as employer and one employee) – 70% participation rate allowed in federal SHOP

• State may elect to define as 1-50 until Jan. 1, 2016

• Employer may choose coverage level and allow employees to choose from carriers offering at that level beginning in 2015

• Exchange collects and combines premiums and sends to carriers beginning in 2015

• State may elect to combine individual and small group markets


Key DecisionPoints



Large Employer Responsibility (50 or more FTEs)—difficult formula

If an employer doesn’t offer minimum coverage and one of its employees receives a subsidy through the Exchange, the employer will be subject to a penalty: $2,000 annually, times the number of employees, minus 30.

If an employer does offer coverage, but an employee receives a subsidy through the Exchange to pay for the premium, the employer will be subject to a penalty of $3,000 annually for each employee receiving a subsidy, up to a maximum of $2,000 times the numberof full-time employees, minus 30.


Key Decision Points

Exchanges(Marketplace)


Adjusted community rating

• For the small group and non-group markets:• No rating based on health status

• Maximum age variation of 3:1 (ages 21 to 64)

• Maximum variation based on tobacco use of 1.5:1

• Actuarially justified variation based on geographic areas (state may set areas)

• Family rates built up based on age and tobacco use of each member

• Plus, single risk pool in small group market and individual market (except for grandfathered plans)

• This will significantly impact rates for younger/healthier enrollees in most states.


Key DecisionPoints



Benefit design & cost-sharing

• Individual and small group plans must include Essential Health Benefits (EHBs). Large group and self-insured plans may not have annual or lifetime limits on EHBs.

• EHBs based on “benchmark” plan in each state

• Cost-sharing levels:

Bronze = 60% actuarial value

Silver = 70% actuarial value

Gold = 80% actuarial value

Platinum = 90% actuarial value

Catastrophic plan (limited to young and those

without affordable option in the market)


Key DecisionPoints



Essential Health Benefits

• “Essential Health Benefits” in health plans must contain at least the following 10 categories:- Ambulatory patient services- Emergency services- Hospitalization- Maternity and newborn care- Mental health and substance use disorder services,

including behavioral treatment- Prescription drugs- Rehabilitative and habilitative

services and devices- Laboratory services- Preventive and wellness services

and chronic disease mgmt.- Pediatric services, including oral

and vision care


Key DecisionPoints



Qualified Health Plans

• At a minimum, QHPs must:1. Be licensed and provide Essential Health Benefits

2. Offer at least one Silver (70%) and one Gold (80%) plan

3. Charge same price in and out of Exchange for same plan

4. Meet marketing requirements (state rules in 2014-15)

5. Meet network adequacy requirements (state rules in 2014-15)

6. Include essential community providers in network

7. Be accredited by organizations recognized by Secretary

8. Implement quality improvement strategies (2016)

9. Utilize uniform enrollment form and standard format for presenting plan options

Note: HHS and/or states could impose

additional certification requirements


Key DecisionPoints



Other Plans available in marketplace

Co-Op Plans• New, non-profit insurers with consumer focus• Receive loans from federal government for initial funding-

future funding has been cut off• Must be fully licensed - comply with state and

Marketplace regulations

Multi-State Plans• Must be licensed and comply

with state regulations


Key DecisionPoints



Navigators

• Exchanges must make grants to “Navigators.”• At least two one-year grants per state

•Trade, industry & professional associations

• Fishing, ranching, and farming organizations

• Community and consumer-focused nonprofits

• Chambers of commerce

• Unions

• Licensed agents & brokers (if they do not receive any compensation from carriers)

• Navigators conduct public education and distribute

information, facilitate enrollment

Kansas Navigator federal grants total

$600,000 (from $54 million to 33 states)


Key DecisionPoints



Navigators (cont’d)

• HHS to develop standards to ensure that Navigators are qualified and trained

• Navigators may not be insurers or receive direct or indirect compensation from insurers for enrollment in a QHP

• States may not require a Navigator to be licensed as an agent or broker

• States should be careful to ensure that Navigators do not perform functions that would require a

producer’s license


Key DecisionPoints



Other “Assisters”

• State Assisters (grant funds available)

• Application Assisters (Counselors)

• Primarily in hospitals and clinics

• Volunteers with training and certification

• Agents and Brokers

• Listed on the Exchange

• Commissions paid by insurers

• Appointment issues


Key DecisionPoints



Marketplace key decision points

• Role of the State/Legislation

• Governance of online marketplace

• Regulation of the Outside Market

• Funding of Operations


Key DecisionPoints



Additional Medicaid considerations

• Kansas hospital officials worry about“disproportionate share” phase out

• Concern over KanCare changes andfor-profit managed care oversight

• State cost of expansion

• Public awareness of programs

• IT infrastructure success


Key DecisionPoints



Cost Control

• Rate review, MLR provisions attempt to deal with administrative costs of insurance companies

• Accountable Care Organizations (ACOs) and bundled payments are attempts to influence underlying costs

• These are not enough. Unless we get underlying costs under control, we will not solve the long-term crisis


Key DecisionPoints



420 SW 9th St.Topeka, KS 66612

[email protected]

Phone:785-296-3071

Consumer Assistance:800-432-2484

Fax:785-296-7805

Kansas Insurance Department

04242013 affordable care act and kansas

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