State employee health plans (SEHPs), which provide health coverage for millions of public employees, their dependents, and some retirees, are making rapid changes to address the COVID-19 pandemic. This retooling of insurance plans must meet emerging federal requirements and ensure that coverage meets enrollees’ needs while managing costs and anticipating budget constraints.
During a recent teleconference convened by the National Academy for State Health Policy (NASHP), SEHP administrators shared strategies for implementing new federal mandates and highlighted ways they are making changes to other benefit offerings.
Federal mandates: The Family First Coronavirus Response Act and the Coronavirus Aid, Relief, and Assistance Act (CARES Act) added mandates to SEHP coverage, including:
- Any COVID-19 testing, preventive services, treatment, and vaccine are now covered with no member cost sharing.
- Telehealth benefits are to be made widely available and under a high-deductible health plan, these visits are excluded from deductible provisions.
These provisions are designed to reduce immediate individual cost responsibilities that can be a barrier to accessing these services. However, costs are not eliminated, so each SEHP must cover them. During their teleconference, administrators noted that language in the CARES Act requires health plans to reimburse diagnostic testing at the negotiated rate for “items and services,” which is charged by in-network providers. However, out-of-network providers should be reimbursed for the “cash price as listed on public internet websites,” which presents a potentially costly challenge.
SEHP administrators are concerned about these out-of-network claims because they could be expensive, unpredictable, and subject to change throughout the course of the pandemic. NASHP will monitor the impact this CARES Act provision has on SEHPs.
Benefit design: Plan administrators have worked with their governing structures, which in some states include trustees and boards, to make changes that help ensure that enrollees have access to needed care. North Carolina’s SEHP administrator made changes to prior authorization requirements, in addition to other changes. SEHPs across the country also adopted pharmacy refill flexibilities that include paying for refills sooner or covering a greater number of doses, etc. and lifted member non-payment penalties during the COVID-19 emergency.
Plan eligibility: Eligibility for coverage becomes an issue as public entities add temporary staff or reduce employee hours. Washington State is not only extending enrollment paperwork deadlines for new hires, but also implementing a new eligibility policy for targeted new state employees. Effective April 1, 2020, anyone hired or rehired in a specific position type and who works a minimum of eight hours is eligible for benefits with the full employer contribution for benefits. Washington defined the position types as:
- First responders (firefighters, police, EMTs, public safety personnel, etc.);
- Health care professionals (physicians, nurses, pharmacists, behavioral health specialists, etc.);
- Any medical facility position (e.g., health care professionals, lab technicians, administrative staff, sanitation workers, etc.);
- Public health officials; and
- Any COVID-19 research position.
Washington is also extending the maximum number of months for Continuation of Health Coverage (COBRA) and other self-pay coverage options until two months after the state of emergency is lifted.
Monitoring: While SEHP leaders strive to ensure enrollees have access to needed providers without delay, they are stewards of public funds and must be vigilant and aware of opportunists who may take advantage of this crisis, so they must maintain fraud prevention policies. As signature requirements for medical supplies and prescription drugs are eased to ensure access, New Jersey is exploring alternative forms of verification. For example, New Jersey’s SEHP administrator encouraged the plan’s third-party administrators to conduct follow-up phone calls or track data analytics to ensure enrollees received home deliveries of prescriptions or medical supplies.
Telehealth: Many plans are extending telehealth services beyond the requirements mandated by the CARES Act. Specifically, plans are now including mental health and physical therapy care through remote care options, as well as considering maintaining these benefit plan offerings after the pandemic, such as critical substance use services.
These changes and others that are being made as needed to meet the demands for flexibility and new services to respond to the pandemic could be costly. However, the financial impact to these plans is still evolving, and there are many unknowns. But what administrators acknowledged is that initial costs will increase for COVID-19-related hospitalizations, testing, and preventive services. Moving forward, it is anticipated that plan costs will continue to increase as a result of COVID-19 treatments and related vaccines. While COVID-19 costs increase, there has been a corresponding decrease in elective procedures, but administrators don’t know the financial impact of these delayed treatments, elective procedures, and foregone care. SEHPs have funding reserves to cover their immediate cost increases but may need to raise premiums and/or enrollee cost sharing in the future.
SEHP administrators also acknowledged the significant impact of the economic crisis and its immediate impact on reducing state revenues, which will have a serious impact on state budgets that finance SEHPs. One official noted there has already been an $11 million “withhold” from her SEHP budget in response to the dramatic loss of state revenue. NASHP and SEHP leaders will work together to analyze these impacts and will share analytic models to assist SEHPs in projecting impacts to their plan reserves, contributions, and premiums.
Meanwhile, the CARES Act’s Title VI Relief Fund authorizes the US Treasury Department to issue $150 billion in payments to states, tribal governments, and units of local government. The receipt of funds must be used for necessary expenditures due to the COVID-19 public health emergency that were not accounted for in the most recent state budgets and are incurred between March 1 and Dec. 20, 2020. SEHPs may consider working with their respective leaders and executive branch members to determine qualifications for receiving relief funds for their plans.
This new NASHP chart details the amounts and required oversight of COVID-19 federal funds allocated to hospitals, providers, and states by the Families First Act, CARES Act, and HR 266.