The ACA & Exchange: What are the specifics?

Lisa Chan-SawinHarbage Consuling, LLClisa@harbageconsulting.comApril 3, 2013

Agenda

• Overview of the Affordable Care Act▫ Timeline of provisions impacting children

• Health Benefit Exchanges▫ California’s implementation

• Children’s Coverage and the Exchange

• The Uncertain Future…

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Patient Protection and Affordable Care Act (ACA)

Remaking the U.S. Health Care System

• Signed in March 2010

• Landmark moment: Most significant change since the establishment of Medicare and Medicaid

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Reforming America’s Health Care System

• Majority of changes enacted between now at 2018

• Opportunity to enroll 7 million Californians into health coverage

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Road to Universal Coverage

• Under the ACA, everyone is required to have health care coverage, either through:▫Private insurance▫Public program like Medi-Cal,

Medicare, or Healthy Families

• Low and middle income persons are offered subsidies and lower cost-sharing

• Tax penalties for no coverage5

Insurance Market Reforms

Children’s CoverageKey Dates

September 23, 2010: Plans may not withhold coverage for children under 19 due to pre-existing conditions

• Children’s wellness visits offered with no co-pay• Young adults covered on parent’s plan up to age 26.

January 1, 2014: State must transition children ages 6-18 with family incomes between 100% and 133% FPL from HFP to Medi-Cal

• State must implement procedures to simplify Medi-Cal and Healthy Families Enrollment

• Exchange coverage begins

April 1, 2015: State may transition children eligible for HFP to Medi-Cal or coverage in the Exchange (coverage must be comparable to HFP)

Cont…

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Children’s CoverageKey Dates

September 30, 2015: End of new federal CHIP funding

October 1, 2015: State may start enrolling HFP-eligible children in the Exchange

October 1, 2015: State starts drawing down 88% federal matching for HFP

January 1, 2019: MOE for HFP eligibility ends

Source: California Healthcare Foundation, 2011

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California Key LegislationA number of ACA related bills were passed that:

…Requires insurers to provide maternity-related care as a basic benefit starting July 2012.

…Provided young adults coverage up to age 26 on their parent’s health coverage.

…Establishes a standardized application for Medi-Cal, the Exchange, and county programs.

…Prevents insurers from denying coverage or discriminating based on pre-existing conditions.

… Improves grievance & appeals process.

…Requires individual and small group health plans to cover essential health benefits and ties EHB at the Kaiser Small Group HMO benefit level

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What is a Health Benefits Exchange?

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What is a Health Benefit Exchange?• A virtual marketplace for individuals, families

and small businesses to buy private health insurance

• Increase competition between insurers

• Can be State or federally run

• The goal of an Exchange is to promote:▫Transparency ▫Competition▫Price▫Quality

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Applying for health insurance is complicated

• Consumer must be able to choose:▫Plan▫Network▫Benefit level▫Quality ratings

• The Exchange must facilitate enrollment▫ Real-time eligibility determinations▫ Single point of entry for all public programs▫ Coordinate with other enrollment entities▫ Subsidies

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Who can buy insurance in an Exchange?

Eligibility and Premium Subsidies• Citizens and legal, permanent residents can

purchase coverage in an Exchange

▫ Those with incomes between 133% and 400% FPL qualify for premium subsidies through the Exchange

133% FPL - $15,282/year (individual), $31,322/year (family of 4) 400% FPL - $45,960/year (individual), $94,200/year (family of 4)

• Small employers will be eligible to purchase coverage in an Exchange▫ 50 FTE in 2014, 100 FTE after 2016▫ Up to 50% premium subsidy for small, low-wage employers

for two years

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• Caps premiums on a sliding scale between 2% and 9.5% of incomeIndividual earning 133% FPL spends no more than $290/year (2% of income)Individual earning 400% FPL spends no more than $8,493/year (9.5 percent of income)

• 4 levels of plan benefits (+ catastrophic for young invincibles/financial hardship)

▫ Platinum▫ Gold▫ Silver ▫ Bronze

• Premiums cannot be varied by any factor except for:▫ Age (3:1)▫ Tobacco usage (50%)▫ Geography▫ Family Size

• Minimum standard for benefits that must be included

• Risk adjustment mechanisms to help stabilize the insurance market

What do Exchange plans look like?

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Federal LegislationState Flexibility

•ACA included many provisions for Exchange, but left a few key decisions up to the states, including:▫Governance▫Public, public-private, or private non-profit▫State-run or federal, statewide or regional▫Size (statewide, regional, multi-state, federal)▫Selection of insurance carriers▫Relationship/size of employer exchange▫Navigators & outreach▫Information technology

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California’s Exchange:

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California LegislationState Flexibility

• SB 900 (Alquist & Steinberg) and AB 1602 (Perez) were signed by the governor on September 30, 2010 creating the California Health Benefit Exchange

• California’s Exchange is:▫ An independent, statewide, public

entity;▫ Free from annual budget

appropriation;▫ Financed by fees on participating

health plans;▫ Governed by an ED and BoD (5

members);▫ An active purchaser; and▫ A single point of entry for all types of

coverage.▫ Include a toll-free hotline

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Timeline

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Covered CA has significant work• Create a functioning insurance marketplace

▫ This includes determining plan design and contracting requirements, such as networks required, contracting and negotiating rates with plans, assigning ratings and assessing fees, and coordinating with other state entities

• Develop one statewide electronic application system (CalHEERS)▫ CalHEERS must use a standardized application form for all health enrollment –

encompassing Exchange coverage, Medi-Cal and Healthy Families▫ Existing systems and CalHEERS must be able to share information

electronically

• Develop programs to help consumers and small businesses apply for coverage.▫ Develop and deliver on a statewide marketing campaign – via mass media,

radio, tv, social media, etc▫ Establish an application assistance program – have boots on the ground

(Navigator or Assister) to helps individuals and families with choosing plans and apply

▫ Develop and manage a Outreach & Education Grant program – getting the word out through trusted community sources

• Get Californians Covered!

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Target Population

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• Primary Target: California’s 5.3M residents projected to be uninsured or eligible for tax credit subsidies in 2014.

• Of the 5.3M eligible to enroll in Covered California:

▫ 2.6M will be eligible for subsidies

▫ 2.7M will not be eligible for subsidies

Profile of Target Population

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Location & Ethnicity of Target Population

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One Statewide Application System“No Wrong Door” Approach

One Standardized Application

•Community-based grants and the in-person assisters program will reach strategic points of entry where people “live, work, shop, and play.”

•Statewide approach to:▫Mobilize and educate key influencers▫Launch key milestone events▫Establish market driven partnerships▫Manage educational outreach and enrollment

Outreach, Education and Application Assistance

Reaching Eligible Californians“All Hands on Deck”

Reaching Eligible Californians“All Hands on Deck”

• In order to become a QHP, a plan must:

▫Offer standardized benefits for each “tier”▫Confirm the geographic service area and “rating

region”▫Create a cost proposal by rating region▫Describe reforms they will implement, such as

patient-centered medical homes, ACOs, narrow network, chronic disease management programs, quality and patient safety initiatives, etc.

▫Submit a “network map” of “essential community providers” that are contracted to serve the low income population.

Plan ParticipationRequirements for Insurers

Standard Benefit DesignCovered Benefits

• Visit to a health care provider’s office or clinic: Specialist visit, other practitioner visit, preventive care/screening/immunization.

• Tests: Laboratory tests, x-rays and diagnostic imaging, imagine (CT/PET scans, MRIs).• Drugs to treat illness or condition: Generic drugs, non-preferred brand drugs, specialty

drugs.• Outpatient surgery: Facility fee, physician/surgeon fees• Need immediate attention: Urgent care• Hospital stay: Facility fee, physician/surgeon fee• Mental health, behavioral health or substance abuse needs: Mental/behavioral health

inpatient services, substance use disorder outpatient services, substance use disorder inpatient services.

• Pregnancy: Prenatal and postnatal care, delivery and all inpatient services.• Help recovering or other special health needs: Home health care, rehabilitation services,

habilitation services, skilled nursing care, durable medical equipment, hospice service.• Child needs – dental or eye care: Eye exam (deductible waived), glasses, dental check-up

(preventive and diagnostic), dental basic services, dental restorative and orthodontia services.

• Copays & premiums will vary based on the level of the plan (bronze, silver, gold, platinum), with platinum having the lowest copays and bronze having the highest

Standard Benefit DesignUnderstanding Trade-offs

Trade-offs between Metal Tiers

Sliding Scale Pricing

Latest Milliman Report

Major Exchange Decisions Impacting Children’s Coverage

• Stand-alone Pediatric Dental plans:

▫ ACA allows Exchanges to offer pediatric dental benefits, but does not define how the premiums & cost sharing work

▫ Exchange Board voted in August 2012 to offer

• Stand-alone Pediatric Vision plans:

▫ Not addressed in ACA

▫ Exchange Board voted in October 2012 to offer stand-alone vision plans pending federal guidance and approval

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2013 is a Critical Year• January – Launched Consumer Website

• February –Administrative Vendor for SHOP hired

• April – Announce Outreach & Education Grantees

• May – Assisters Selection begins

• June – Plans Selected

• July – Service Center Launched

• October – Open Enrollment Begins

• December – 400,000 people pre-enrolled

• January 1, 2014 – Coverage Begins

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Consumer Friendly Websitewww.CoveredCA.com

Issues Moving Forward

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• Achieving enrollment numbers▫ Educate Consumers

• Ensuring access to providers▫ Bolster the workforce

• Improve quality of care▫ Reform the current fragmented delivery system▫ Deliver on the triple aim

• State Budgetary Issues▫ Ensure continuity as public programs change

Implementing ACA in CAPotential Challenges

California Health Benefit Exchange

Potential Challenges for Children and Families• Ensuring Access and Continuity of Care:

Children who move from CCS to coverage through the Exchange should be assured continued access to pediatric specialists approved by CCS

• Ensuring Affordability: Final premium costs dependent on where plan bids fall.

Other options for affordability, such as bridge plans, are also under consideration by state policymakers.

• Ensuring Quality: The Exchange should require quality measures specifically for children.

Questions/Comments

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Lisa Chan-Sawinlisa@harbageconsulting.com