Last week, the Internal Revenue Service (IRS) released a proposed rule that would for the first time allow tax deductions for money spent for certain health care programs and arrangements, including direct primary care arrangements and health care sharing ministries.
The Trump Administration is expanding the availability of alternatives to Affordable Care Act-compliant health insurance. Rules to expand association health plans and short-term limited duration health plans are imminent. So what’s a state to do to prepare consumers and insurance markets for these alternative plans?
The Administration asserts these alternatives will provide choice and lower-cost products in the market, but opponents argue:
- Consumers may be unaware that these products generally provide fewer benefits; and
- The alternatives could siphon young, healthy enrollees out of ACA-compliant plans, causing an increase in premiums in that market in order to cover a smaller, sicker risk pool.
|Listen to the webinar, Ministries, Association, and Short-Term Health Insurance Plans – What’s a State to Do? featuring experts from Georgetown University’s Center for Health Insurance Reform.|
On May 29, 2018, with support from the Robert Wood Johnson Foundation, the National Academy for State Health Policy (NASHP) held a well-attended webinar that explored what options states have to respond to these developments featuring experts from Georgetown University’s Center for Health Insurance Reform (CHIR).
Health sharing ministry plans currently exist across the nation. They allow certain religious communities to charge a monthly contribution to members who then share the responsibility for members’ health care costs — instead of providing traditional insurance. The Affordable Care Act (ACA) exempted these programs from the individual mandate and 30 states currently exempt them from any state insurance regulations. Although no independent data source tracks sign-ups, enrollment in ministry plans appears to have grown from fewer than 200,000 to over 1 million, and these programs are looking more and more like private insurance, for example some advertise during open enrollment and pay brokers.
What states can do: Consumer confusion may result as ministry plans grow and are marketed to consumers. CHIR experts recommend these tools for states to consider:
- Establish reporting requirements to collect data on ministries’ sales to assess their impact on insurance markets;
- Issue consumer alerts educating consumers about the limitations of these programs;
- In states that do not regulate them, begin monitoring them for violations, such as use of brokers, facilitating payments between members, and failure to apply religious tests for membership; and
- Take action against those that operate illegally as insurers.
Association health plans (AHPs): Historically, AHPs have had a long history of financial instability, insolvencies, and fraud. States generally have a better track record than the federal government in regulating them. Rules to expand the availability of AHPs are expected soon but the proposed rules would make it easier for employers to band together and be treated as a large group plan. The proposal would allow self-employed consumers, who are now covered in ACA’s individual market, to enroll in an AHP. The rules also allow AHPs to design different benefit plans and pricing strategies that do not comply with ACA plan requirements. Here again, the plans could provide a lower-cost, lower-benefit option that could attract more young and healthy to enroll and leave the individual market. Whether states will retain jurisdiction over these plans is a key concern of state policymakers who await the final rule. CHIR experts outlined a series of options states could pursue to address AHPS.
What states can do about AHPs:
- Level the playing field by requiring compliance with some or all individual or small group market rules;
- Restrict creation of new AHPs, a strategy employed by California, where only a handful of AHPs remain;
- Limit membership to small businesses, such as employers with at least one employee;
- Reduce the risk of market segmentation by assessing a fee on AHPs and invest the revenue in high-risk reinsurance pools; and
- Assert jurisdiction over out-of-state AHPs.
Short-term limited duration plans: Once the AHP rule is issued, the Administration is expected to follow up with rules related to short-term limited duration plans. Designed to fill temporary gaps in coverage, these plans are not considered individual health insurance and are currently exempt from ACA standards. They often exclude some essential health benefits like maternity or prescription drugs and generally exclude coverage for pre-existing conditions. Currently, plans are limited to a three-month coverage limit, but the proposed federal rule governing short-term plans would allow extensions.
What states can do about short-term plans: In the webinar, CHIR experts detailed how some states are regulating these plans and outlined strategies for states to consider.
- Limit the duration of these plans to three or six months, and prevent renewals by imposing coverage limitations, such as restricting individual coverage to one short-term plan purchase per year;
- Prohibit waiving health status underwriting to people already enrolled;
- Level the playing field by requiring compliance with some or all individual ACA market rules, such as requiring coverage of pre-existing conditions;
- Impose a fee on short-term plan to be applied to reinsurance funds;
- Prohibit the sale of these short-term plans to people who are eligible for ACA marketplace coverage; or
- Ban short-term plans or use regulatory authority to define, limit duration, and improve consumer protections.
As federal rules make alternative plans more available and in the absence of the individual mandate compelling enrollment, state policymakers need to consider these plans’ impact on the individual market. Policymakers will weigh the promise of more affordable coverage with fewer benefits against the risk of market segmentation and rising costs in the individual ACA-compliant market. They will consider how to make sure that consumers have the transparency and information to understand new plan choices and protections should problems occur. NASHP looks forward to continuing its informative webinars with CHIR experts as federal rules are finalized and states, who hold responsibility for the individual market, consider their next steps.
Listen to the webinar, Ministries, Association, and Short-Term Health Insurance Plans Are Coming – What’s a State to Do?
Read a blog by NASHP Executive Director Trish Riley about this webinar. View the webinar | Download the slides
Will premiums in the individual market skyrocket next year? What effect will alternative forms of coverage, including expansion of association, ministry and short-term insurance health plans under the Administration’s proposals, as well as health ministry plans have on insurance markets, including price to consumers and breadth of coverage? Will people shift to coverage options with fewer protections, leaving them at financial risk?
While alternative coverage may offer consumers a lower-premium product, they are exempt from meeting many federal and state requirements for health insurance, including popular consumer protections such as coverage for pre-existing conditions and the prohibition on annual or lifetime limits. Increased availability of these alternatives will also cause splintering of health care markets, destabilizing the individual market and increasing costs. But states have options to regulate these products and protect consumers.
During this webinar, experts will review major trends expected for insurance markets, and state actions and tools to encourage stability and consumer protections in the midst of these changes.
- Trish Riley, Moderator, Executive Director, NASHP
- Kevin Lucia, Research Professor, Georgetown University Center on Health Insurance Reforms
- JoAnn Volk, Research Professor, Georgetown University Center on Health Insurance Reforms
- Dania Palanker, Assistant Research Professor, Georgetown University Center on Health Insurance Reforms
The National Academy for State Health Policy (NASHP) designed this tool kit to support states interested in developing a value-based alternative payment methodology (APM) for federally qualified health centers (FQHCs). The following section on state policy levers for implementation discusses key considerations and promising strategies based on lessons learned from states during NASHP’s Value-Based Payment Reform Academy.
Key considerations for state implementation include:
- States can amend current FQHC Medicaid state plan language to support value-based APMs.
- States can consider other Medicaid state plan options to support value-based payments for FQHCs.
- States can incorporate APMs for FQHCs in waiver applications to test new ways of delivering or paying for care that include FQHCs.
Medicaid agencies have a number of policy options to consider when developing an APM approach for FQHCs. States can submit an state plan amendment (SPA) that updates FQHC-specific portions of their state plans, or they can develop a more expansive SPA that creates a new payment mechanism to support value-based models, such as accountable care organizations (ACOs). SPAs do not need to be budget neutral.[i] States may also elect to submit a waiver to implement and test broad payment reform innovations. Regardless of the Medicaid authority selected, state policymakers report that early engagement of Centers for Medicare & Medicaid Services’ central and/or regional office leadership in the planning process can help to troubleshoot concerns related to federal regulations on FQHC reimbursement.
States can amend current FQHC Medicaid state plan language to support value-based APMs.
The District of Columbia is implementing its pay-for-performance APM through a SPA to the FQHC section of its state plan, which was approved in September 2017.[ii] The District will launch the APM at the beginning of fiscal year 2018. FQHCs that elect to participate in the APM will receive a supplemental performance payment if they perform at or above a target threshold or if they improve their performance from the baseline year on nine required measures.[iii]
Oregon also implemented its value-based APM through an approved SPA to its FQHC language, which was approved in September 2012 and launched in 2013.[iv] The SPA covers components such as:
- Assurances that FQHCs that do not want to participate in the APM will be paid under PPS, as required by federal regulations in Section 1902(bb) of the Social Security Act;[v]
- Details of the PMPM payment rate calculation, based on attributed patients and average historical utilization; and
- A description of the reconciliation process to ensure that aggregate PMPM payments to FQHCs are at least equivalent to what they would have received under PPS, per Section 1902(bb) of the Social Security Act.[vi]
States can consider other Medicaid state plan options to support value-based payments for FQHCs.
Integrated Care Models, described in a 2012 State Medicaid Director letter, provide additional flexibility to states to support value-based payment systems that can include FQHCs.[vii] Minnesota implemented its Integrated Health Partnerships (IHP), a Medicaid ACO initiative, through an approved Integrated Care Models SPA. The SPA details how cost, quality targets, and shared savings are calculated, and describes criteria for providers or provider groups that would like to participate. The SPA also includes FQHC services as eligible “core services” under the initiative, facilitating the participation of groups of FQHCs, such as FUHN, to participate.[viii]
States can incorporate APMs for FQHCs in waiver applications to test new ways of delivering or paying for care that include FQHCs.[ix]
FQHC value-based APMs can be a part of a broader state 1115 waiver initiative. Approved waivers allow states to forgo one or more federal Medicaid requirements; however, they are typically time-limited and have significant reporting requirements.[x] Massachusetts will begin its accountable care organization (ACO) initiative in March 2018[xi] as part of its five-year 1115 Medicaid waiver.[xii] The state has contracted with 17 ACOs, including an ACO formed by 13 FQHCs, to participate in the ACO program. Massachusetts’ ACO program is designed to improve care quality and patient experience, while reducing costs through better integration and coordination of physical and behavioral health and long-term care.[xiii]
For more resources about state policy levers to implement value-based APMs, see the resources tab. To view additional information about developing a value-based APM for FQHCs, return to the toolkit home.
[i] 42 CFR 430.32; Medicaid and CHIP Payment and Access Commission, “State Plan,” accessed September 29, 2017.
[ii] Centers for Medicare & Medicaid Services, approval letter, District of Columbia State Plan Amendment related to Pay-for-Performance (IHP) Program, September 20, 2017. https://www.medicaid.gov/State-resource-center/Medicaid-State-Plan-Amendments/Downloads/DC/DC-16-009.pdf.
[iii] District of Columbia Department of Health Care Finance, Notice of Emergency and Proposed Rulemaking, Governing Medicaid Reimbursement for Federally Qualified Health Centers, October 6, 2017. https://www.dcregs.dc.gov/Common/DCMR/SectionList.aspx?SectionNumber=29-4502.
[iv] Centers for Medicare & Medicaid Services, State Plan Amendment, State Plan Under Title XIX of the Social Security Act: Oregon, accessed November 20, 2017, https://www.medicaid.gov/State-resource-center/Medicaid-State-Plan-Amendments/Downloads/OR/OR-12-008-AtT.pdf.
[v] Social Security Act, 42 U.S.C. § 1902.
[vi] Ibid. Centers for Medicare & Medicaid Services, amendment, State Plan Under Title XIX of the Social Security Act: Oregon, accessed September 29, 2017, https://www.medicaid.gov/State-resource-center/Medicaid-State-Plan-Amendments/Downloads/OR/OR-12-008-AtT.pdf.
[vii] Center for Medicaid and CHIP Services, letter to state Medicaid Directors: SMDL# 12-001, Integrated Care Models, July 10, 2012. https://www.medicaid.gov/federal-policy-guidance/downloads/smd-12-001.pdf.
[viii] Centers for Medicare & Medicaid Services, approval letter, Minnesota State Plan Amendment related to Integrated Health Partnership (IHP) Program, September 20, 2016. https://mn.gov/dhs/assets/15-15-spa_tcm1053-270779.pdf.
[ix] Medicaid and CHIP Payment and Access Commission. “Waivers.” Accessed September 29, 2017. https://www.macpac.gov/subtopic/waivers/.
[x] To learn more about the different types of waivers and waiver requirements, visit https://www.macpac.gov/subtopic/waivers/.
[xi] Massachusetts Department of Health and Human Services, Press Release: MassHealth Partners with 17 Health Care Organizations to Improve Health Care Outcomes for Members, August 17, 2017. Accessed November 15, 2017. https://www.mass.gov/eohhs/gov/newsroom/press-releases/eohhs/masshealth-partners-with-17-health-care-organizations.html.
[xii] Mass.gov. “1115 Waiver.” Accessed November 14, 2017. https://www.mass.gov/service-details/1115-waiver.