Insurance Officials Must Work With Medicaid For Successful Exchanges, NAIC Meeting Told

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AUSTIN, Texas--State insurance regulators developing the health insurance exchanges set up by the Patient Protection and Affordable Care Act need to work closely with their state's Medicaid officials, according to presentations made at the National Association of Insurance Commissioners conference March 25.

Speaking at the meeting of the NAIC Health Insurance and Managed Care (B) Committee's Exchanges (B) Subgroup, Andy Allison, executive director of the Kansas Health Policy Authority and also president of the National Association of Medicaid Directors, told the regulators to ask their state Medicaid staffs to set up the enrollment program for the health exchanges. While that is a huge challenge for the Medicaid program, he said, “it's less of a challenge for them than it would be for you,” since they already do related work.

The importance of coordination between the health exchanges--which will offer individuals opportunities to purchase health insurance and handle government subsidy programs for those who need financial assistance--and Medicaid was also a focus of a second subgroup of the Health Insurance and Managed Care Committee, the Consumer Information (B) Subgroup. That committee, which is assisting the Department of Health and Human Services Center for Consumer Information and Insurance Oversight (CCIIO) with developing coverage scenarios and application forms, discussed the importance of a single enrollment form regardless of whether the applicant qualifies for Medicaid or subsidized insurance, or is simply using the exchange as the best place to get individual coverage.

CCIIO officials spoke at both meetings. Joel Ario, director of the Office of Health Insurance Exchanges, told the exchange subgroup that the proposed rule governing the health exchanges will be out in late spring. “That rule has to address all the issues that are mission-critical to the states,” he said, and must be in place in time for states to comply before the Jan. 1, 2013, date for certification of the state program.

At the consumer subgroup, CCIIO's Karen Pollitz, director of the Office of Consumer Support, said regulations will be out in a “matter of weeks.” And the center's Lauren Block, in soliciting assistance with the enrollment form development, noted that the goal is to create “streamlined access.” We want a “21st century shopping experience,” she said, perhaps “more complicated than finding a pair of shoes on Zappos” but more like that experience than the typical insurance application.

Innovator Grants.

Seven states were awarded innovator grants to develop their programs, with particular emphasis on the information technology aspects, and Ario pointed out that in all of these cases, the programs are being built around the Medicaid system. In his exchange subgroup presentation, Gary Schneider, who is working with the innovator grant in Kansas, said his state was developing a set up that would allow a “smooth handoff” between Medicaid and the health exchange.

Schneider noted that Kansas was already working to replace its Medicaid system when PPACA was adopted, so that, with the grant, the state was able to work on the two systems at the same time.

A brief presentation on the Wisconsin innovator grant from Dan Schwartzer, that state's deputy insurance commissioner, provided the day's only reminder that many states oppose PPACA. While Wisconsin is using the innovator grant, he said, it is trying not to get too deeply committed to the development of the exchange in the event that the reform law is thrown out by the courts. He also said that Wisconsin consumers were choosing insurance coverage that was not as “benefit-rich” as under PPACA.

Schwartzer emphasized that one goal of the Wisconsin program was to maintain the competitive nature of the state's insurance market, in which no carrier has more than 18 percent of the market.

Despite the continued objections to the law, Ario said that 49 states were now doing planning for their health exchanges. “We expect the vast majority-- and hopefully all 50--will do their own,” he said, adding that “you can never get all 50 states to do anything the same way.” Although the law requires the federal government to handle the exchange function if it is not set up by some of the states, he noted that “the challenge is not appreciably different for the federal government than it is for the state governments.”

Medicaid Coordination.

A presentation at the exchange subgroup by Lee Goldberg, director of health policy for the National Academy of Social Insurance (NASI), emphasized the importance of coordination between Medicaid and the health exchanges.

States can expect “significant movement” in and out of Medicaid as people's incomes change--a process referred to as “churning”--and need to set up systems that will allow continuity of care for those who go back and forth between Medicaid and subsidized insurance.

Sonya Schwartz of the National Academy for State Health Policy pointed out that Medicaid now operates as a health insurance program and will continue to do so. By 2014, she said, 51 million people are projected to be covered by Medicaid, while 24 million will be covered by the exchanges.

Schwartz also emphasized the continuity of care issue between the programs and said states should think about how to fit Medicaid into their exchanges.

The exchange subgroup also heard from states with existing programs. Norm Thurston, coordinator of Utah's Health Reform Implementation, and Dave Jackson, an employer who also serves as director for the Utah Health Exchange, spoke about that state's experience. Thurston emphasized the exchange as a technology solution, and Jackson said that, as a small employer, his firm got a cheaper renewal rate--though still an increase- by using the exchange. His 32 employees also selected 18 different plan options.

The Utah program does not work closely with Medicaid, but the Massachusetts program does. Roni Mansur, director of Massachusetts's Commonwealth Choice program, said Commonwealth Care, the state's subsidized program, works with MassHealth, the state Medicaid agency.

Massachusetts provides both online and paper enrollment applications--and the online process can be completed in about 20 minutes, he said. The insurance products are standardized for easy comparison. And the online form diverts consumers to the different programs depending on their income, Mansur said.

Of the 220,000 who sign up for coverage through the Massachusetts program, 170,000 get subsidized insurance, he said.

Ease of Enrollment for Consumers.

Coverage scenarios prepared by the NAIC consumer subgroup at the request of CCIIO represented an effort to provide information about specific treatments in a way that could easily be compared across different plan types. The two scenarios prepared so far use maternity care and breast cancer treatment, but a third scenario will also be done. No decision has yet been made on the third scenario, though there were requests for using a chronic illness or one that addressed illnesses more common in men.

Discussion among the members of the consumer panel indicated one key problem with scenarios: consumers are likely to consider the dollar figures as fixed, despite all disclaimers that they are just ballpark figures to enable a reasonable comparison.

In Block's discussion of enrollment forms, she emphasized that one goal is to minimize the number of steps required for someone to get coverage, whether through Medicaid or the health exchange. HHS wants to create one application form and make it usable both on paper and online--though there was general acknowledgment that the paper application would be more complicated, since a person would have to submit the application and get a reply before moving forward with enrollment. Online, both steps could be done together.

HHS is also hoping to do one application for both individuals and employers.

Mila Kofman, one of the subgroup chairs, said she envisioned a simple form “more like the 1040EZ” income tax form rather than the regular 1040. The subgroup formed a smaller working group to provide additional observations and assistance to CCIIO on enrollment forms.

Medigap Coverage.

A March 28 session of the NAIC Senior Issues Task Force Medigap PPACA Subgroup focused primarily on the statutory charge in Section 3210 that instructs NAIC to review and revise nominal cost sharing requirements for Medigap insurance--supplemental insurance policies for Medicare recipients. Attorney William G. Schiffbauer, of the Schiffbauer Law Office in Washington, presented a detailed presentation on both the legal requirements and the lack of firm instructions in the law, while economist Christopher Hogan of Direct Research provided a discussion of a cost sharing study he prepared for the Medicare Payment Advisory Commission.

Section 3210 of PPACA seeks a report from NAIC on this issue within nine months of a request from the secretary of HHS, which has not yet been issued. Schiffbauer's report culminated with a series of 13 questions for the working group to address in preparing its report. Noting that there is virtually no legislative history for the section of the statute, he said the review needed to address such basic issues as the meaning of “nominal” and “cost sharing” as well as that of appropriate physicians' services. Other questions included what sort of evidence of the effect of cost-saving plans was appropriate and whether the statute would permit peer-reviewed articles that oppose cost sharing plans.

Hogan's presentation concluded that completely free services, as opposed to those that required some form of copay or other cost sharing, substantially increased the use of medical services and also increased the amount of Medicare used. And among all people who had some form of supplemental insurance, including Medigap plans, the use of preventive and minor procedure services increased dramatically.

Hogan concluded that modest cost sharing did tend to reduce the use of services and that there was very little impact of these plans on the quality of health, except for the poorest and the sickest.

A third presentation by Joan Gardner of Blue Cross and Blue Shield Association and Betsy Pelovitz of America's Health Insurance Plans looked at the lessons learned from implementing new Medigap plans in 2010. Their key conclusion: “Be careful not to create obstacles for appropriate care.”

Noting that the guiding principles for these programs included making them easy for consumers to understand and making it easy for providers to collect their fees and administrators to operate the plans, they emphasized the importance of keeping things as simple as possible.

The Gardner/Pelovitz presentation also listed the key elements driving increases in cost in Medigap plans, which make up 17 percent of Medicare supplement policies: new treatments, increases in health care costs generally, increased use of care, aging population, rise in obesity and chronic diseases, challenges of cost shifting, and more intensive diagnostic testing.

In contrast to Hogan's discussion, they mentioned that some studies, including a recent one in the New England Journal of Medicine, found that increased copayments for ambulatory care led elderly patients to forgo treatment, leading to increased hospitalizations.

By Nancy J. Moore


Some conference materials are available at http://www.naic.org/committees_b_exchanges.htm. Reports from the meeting are available at http://www.naic.org/meetings1103/summaries.htm. The New England Journal of Medicine article is available at http://www.nejm.org/doi/full/10.1056/NEJMsa0904533.