04242013 affordable care act and kansas


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04242013 affordable care act and kansas

  1. 1. The ACA and Kansas:Where do wego from here?Kansas Insurance DepartmentECMUniversity-CommunityForumApril 24, 2013Sandy Praeger,Commissioner of Insurance
  2. 2. Affordable Care Act considerations• What is in effect now• What goes into effect in 2014• State decisions• ACA implementation• State Legislature inputACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  3. 3. • 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 wagesincreases• 2010-2013: Up to 35% of total employercontribution• 2014 and later—up to 50 %2010 Affordable Care Actprovisions—in effect NOWACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  4. 4. 2010 Affordable Care Actprovisions—in effect NOW• No rescissions, except in cases of fraud orintentional misrepresentation• Coverage of preventive health serviceswith no out-of-pocket costs• Enhanced appeals procedures• Federal Pre-existing Condition High RiskPools—no longer accepting participants• No lifetime limits• and phase-out of annual limitsACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  5. 5. 2014 ACA provisions• Elimination of pre-existing condition exclusions• Guaranteed issue and renewability of coverage• Rating factors limited to age, tobacco use, geographyand family structure• Tax credits and subsidies to help pay premiums andout-of-pocket costs; up to 400% of the Federal PovertyLevel• Limits on out-of-pocket costs inqualified health plansACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  6. 6. 2014 ACA provisions• Mandated coverage for “essential health benefits”• Uniform explanation of benefits and standardizeddefinitions• Individual mandate to ensure consumers do notwait until they are ill to seek coverage—healthy andyoung people needed to keep down costs• You will be penalized for no coverage (with someexceptions)-push for more incentives• Establishment of an online marketplace(exchange)ACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  7. 7. Kansans & insurance--now• Approximately 365,000 Kansans are uninsured—13.1percent of the state’s population• Of all Kansans, 51.8 percent are covered byemployment-based insurance• Public insurance (Medicare, Medicaid, other) covers29.6 percent of all Kansans• A total of 5.5 percent of Kansans haveindividual (other private) insurance(Source: Kansas Health Institute, 2012)ACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  8. 8. Kansans & insurance-now• Non-elderly people in Southeast Kansas orWyandotte County are more likely than otherKansans to be covered by Medicaid (now KanCare) orthe CHIP (Healthwave) program• Kansas’s Medicaid eligibility threshold for adults (lessthan 32 percent of the Federal Poverty Level) isamong the lowest in the country• Currently, childless adults who are not disabledcannot qualify for MedicaidApproximately 380,000 Kansas adultsand children are enrolled in Medicaidor CHIP(Source: Kansas Health Institute, 2012)ACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  9. 9. Kansans & Medicaid-predictions• Federal Medicaid expansion, if approved by thestate, would provide eligibility to ALL adults earningless 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 inMedicaid if the state expands the eligibilityas set forth in the ACA.(Source: Kansas Health Institute, 2012)ACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  10. 10. Kansans & insurance-future• As designated by the ACA, Kansans will have theopportunity to buy insurance (or be eligible forMedicaid assistance) through an online healthinsurance marketplace called the Exchange.ACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  11. 11. Marketplace (exchange)provisions• People who apply to buy insurance throughthe online marketplace (Exchange) who areeligible for a public program (like Medicaid)will be enrolled in that program.• The basic concept is much likeExpedia or Travelocity—you aredirected to the proper areadepending on the information you giveACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  12. 12. • Under the ACA, each state shall establish anAmerican Health Benefit Marketplace (Exchange)by January 1, 2014• The Secretary of Health and Human Servicesmust certify if a state will be able to operate aqualified online marketplaceIf a state does not choose to operate anonline marketplace, the federalgovernment will operate it for thestate—deadline for this decisionwas Feb. 15, 2013Marketplace (exchange)provisionsACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  13. 13. Marketplace operation• 17 states and the District of Columbiaare going to operate state-basedexchanges• 7 states are partnering with HHS•26 states opted to have the federalgovernment run the exchangeACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  14. 14. 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 marketsACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  15. 15. Five core marketplace(exchange) functions1. Consumer assistance• Support, education, outreach, Navigator mgmt.2. Plan management• Active purchaser or any willing plan; data collection3. Eligibility• Applications verification; connection to Medicaid,CHIP if needed4. Enrollment• Transactions, transmission5. Financial management• User fees; risk adjustmentACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  16. 16. Marketplace (exchange)provisions• The Exchange must be operated by agovernmental agency or nonprofit entity createdby the State.• The Exchange must make “qualified”health plans available to individuals oremployers (may include dental or other types ofbenefit plans).• The Exchange must provide for thefollowing:• Initial open enrollment period• Annual open enrollment period• Special enrollment periodsACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  17. 17. Marketplace (exchange)provisions• Under the ACA, the Marketplace (Exchange)must be interoperable with the Medicaiddatabase, so that Medicaid-eligible Kansanswould be directed to that portal.• Insurance companies operating in a KansasMarketplace (Exchange) must be approved bythe Kansas Insurance DepartmentACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  18. 18. 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 oneemployee) – 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 tochoose from carriers offering at that level beginning in 2015• Exchange collects and combines premiums and sends tocarriers beginning in 2015• State may elect to combine individual and small groupmarketsACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  19. 19. Large Employer Responsibility(50 or more FTEs)—difficult formulaIf an employer doesn’t offer minimum coverage and one of itsemployees receives a subsidy through the Exchange, theemployer will be subject to a penalty: $2,000 annually, times thenumber of employees, minus 30.If an employer does offer coverage, but an employee receives asubsidy through the Exchange to pay for the premium, theemployer will be subject to a penalty of $3,000 annually for eachemployee receiving a subsidy, up to amaximum of $2,000 times the numberof full-time employees, minus 30.ACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  20. 20. 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 eachmember• Plus, single risk pool in small group market andindividual market (except for grandfathered plans)• This will significantly impact rates foryounger/healthier enrollees in most states.ACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  21. 21. Benefit design & cost-sharing• Individual and small group plans must includeEssential Health Benefits (EHBs). Large group and self-insured plans may not have annual or lifetime limits onEHBs.• EHBs based on “benchmark” plan in each state• Cost-sharing levels:Bronze = 60% actuarial valueSilver = 70% actuarial valueGold = 80% actuarial valuePlatinum = 90% actuarial valueCatastrophic plan (limited to young and thosewithout affordable option in the market)ACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  22. 22. Essential Health Benefits• “Essential Health Benefits” in health plans mustcontain 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 habilitativeservices and devices- Laboratory services- Preventive and wellness servicesand chronic disease mgmt.- Pediatric services, including oraland vision careACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  23. 23. Qualified Health Plans• At a minimum, QHPs must:1. Be licensed and provide Essential Health Benefits2. Offer at least one Silver (70%) and one Gold (80%) plan3. Charge same price in and out of Exchange for same plan4. Meet marketing requirements (state rules in 2014-15)5. Meet network adequacy requirements (state rules in2014-15)6. Include essential community providers in network7. Be accredited by organizations recognized by Secretary8. Implement quality improvement strategies (2016)9. Utilize uniform enrollment form and standard format forpresenting plan optionsNote: HHS and/or states could imposeadditional certification requirementsACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  24. 24. Other Plans available in marketplaceCo-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 andMarketplace regulationsMulti-State Plans• Must be licensed and complywith state regulationsACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  25. 25. 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 anycompensation from carriers)• Navigators conduct public education and distributeinformation, facilitate enrollmentKansas Navigator federal grants total$600,000 (from $54 million to 33 states)ACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  26. 26. Navigators (cont’d)• HHS to develop standards to ensure that Navigatorsare qualified and trained• Navigators may not be insurers or receive direct orindirect compensation from insurers for enrollment in aQHP• States may not require a Navigator to be licensed asan agent or broker• States should be careful to ensure that Navigators donot perform functions that would require aproducer’s licenseACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  27. 27. 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 issuesACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  28. 28. Marketplace key decision points• Role of the State/Legislation• Governance of online marketplace• Regulation of the Outside Market• Funding of OperationsACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  29. 29. 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 successACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  30. 30. Cost Control• Rate review, MLR provisions attempt to deal withadministrative costs of insurance companies• Accountable Care Organizations (ACOs) and bundledpayments are attempts to influence underlying costs• These are not enough. Unless we get underlying costsunder control, we will not solve the long-term crisisACA &ConsiderationsKey DecisionPointsExchanges(Marketplace)ImplementationIssues
  31. 31. 420 SW 9th St.Topeka, KS 66612www.ksinsurance.orgcommissioner@ksinsurance.orgPhone:785-296-3071Consumer Assistance:800-432-2484Fax:785-296-7805Kansas Insurance Department