1. The ACA and Kansas:
Where do we
go from here?
Kansas Insurance Department
ECM
University-Community
Forum
April 24, 2013
Sandy Praeger,
Commissioner of Insurance

2. 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 Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

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 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
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

4. 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
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

5. 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
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

6. 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)
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

7. 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 have
individual (other private) insurance
(Source: Kansas Health Institute, 2012)
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

8. 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 disabled
cannot qualify for Medicaid
Approximately 380,000 Kansas adults
and children are enrolled in Medicaid
or CHIP
(Source: Kansas Health Institute, 2012)
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

9. 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.
(Source: Kansas Health Institute, 2012)
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

10. 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.
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

11. 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 like
Expedia or Travelocity—you are
directed to the proper area
depending on the information you give
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

12. • 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 the
state—deadline for this decision
was Feb. 15, 2013
Marketplace (exchange)
provisions
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

13. 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
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

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 markets
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

15. 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
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

16. Marketplace (exchange)
provisions
• 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 the
following:
• Initial open enrollment period
• Annual open enrollment period
• Special enrollment periods
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

17. Marketplace (exchange)
provisions
• 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
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

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 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
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

19. 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 number
of full-time employees, minus 30.
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

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 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.
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

21. 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)
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

22. 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
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

23. 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
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

24. 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
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

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 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)
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

26. 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
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

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 issues
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

28. Marketplace key decision points
• Role of the State/Legislation
• Governance of online marketplace
• Regulation of the Outside Market
• Funding of Operations
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

29. Additional Medicaid considerations
• Kansas hospital officials worry about
“disproportionate share” phase out
• Concern over KanCare changes and
for-profit managed care oversight
• State cost of expansion
• Public awareness of programs
• IT infrastructure success
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

30. 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
ACA &
Considerations
Key Decision
Points
Exchanges
(Marketplace)
Implementation
Issues

31. 420 SW 9th St.
Topeka, KS 66612
www.ksinsurance.org
commissioner@ksinsurance.org
Phone:
785-296-3071
Consumer Assistance:
800-432-2484
Fax:
785-296-7805
Kansas Insurance Department