HEALTHCARE REFORM

AT THE STATE LEVELMelinda L. Young, M.D.

Speaker-Elect, APA AssemblyMay 18, 2013

Today’s PresentationThe Patient Protection and Affordable Care Act

(PPACA or ACA)ACA’s General Regulatory SchemeState Role in the ACANew Concepts in the ACA

American Health Benefits ExchangesBenchmark PlansEssential Health BenefitsQualified Health Plans

Today’s Presentation (cont’d)

Goals for Affordable Health Care CoverageRegulatory Approach for Developing

Affordable Health Care ProductsBenchmark PlansBenefits CategoriesMissing CategoriesState Mandated CoverageActuarial Value of Plans

Patient Protection andAffordable Care Act (PPACA or ACA)Signed into law on March 23, 2010Upheld by the U.S. Supreme Court on June 28,

2012Provides important protections and benefits to

patients in . . .General insurance provisionThose parts of the law that specifically

reference mental illness and substance use disorders

ACA’s General Regulatory Scheme

All U.S. citizens 18 and over must maintain health insurance coverage

Premium support to help low- and moderate-income individuals afford coverage and pay for benefits

Includes obligations on LARGE EMPLOYERS that penalize the failure to offer appropriate coverage (“employer-shared responsibility”)

ACA’s General Regulatory Scheme (cont’d)

For SMALL GROUPS EMPLOYERS or INDIVIDUAL PURCHASERS of insurance new concepts come into play withHealth Benefits Exchanges (“Exchanges”)Benchmark PlansEssential Health Benefits (EHBs)Essential Health Benefit PackagesQualified Health Plans (QHPs)

The State RoleHHS has determined that MANY PROVISIONS OF THE ACA MUST BE DECIDED AND IMPLEMENTED BY THE STATES, including:Creation of Health Benefits Exchanges

Determination of Benchmark PlansDevelopment of Essential Health Benefits packages

Medicaid ExpansionAn Office of Health Insurance Consumer AssistanceCreation of a Basic Health Plan for the uninsured

The State Role (cont’d)

HEALTH BENEFITS EXCHANGES

Online marketplaces through which small groups and individuals can purchase affordable insurance

The State RoleHealth Benefits Exchanges (cont’d)

STATES HAVE 3 CHOICES, as determined by HHS:Develop their own state-based Exchanges (17

states and the District of Columbia*)Plan for a Partnership Exchange with the federal

government (7 states*)Default to the Federal Exchange (26 states*)

* as of 5/9/13

The State RoleHealth Benefits Exchanges (cont’d)

States creating their own State-based Exchanges:CA, CO, CT, HI, ID, KY, MD, MA, MN, NV, NM, NY, OR, RI, UT, VT, WA and the District of Columbia

States planning for a Partnership Exchange:AR, DE, IL, IA, MI, NH, WV

States defaulting to a Federal Exchange:AL, AK, AZ, FL, GA, IN, KS, LA, ME, MS, MO, MT,

NE, NJ, NC, ND, OH, OK, PA, SC, SD, TN, TX, VA, WI,WY

The State Role

MEDICAID EXPANSION

Policy implications and certain decisions aside, this is not an entirely new conceptand will not be the focus of this power point

The State RoleMedicaid Expansion (cont’d)

STATES HAVE 2 CHOICES:Support (28 states and the District of

Columbia*)Oppose (20 states*)Still weighing their options (2*)*Based on statements made by governors in budget documents, State of the State addresses and other recent public statements as of 5/9/13

The State RoleMedicaid Expansion (cont’d)

States supporting Medicaid expansion:AZ, AR, CA, CO, CT, DE, FL, HI, IL, KY, MD, MA, MI, MN, MO, MT, NV, NH, NJ, NM, NY, ND, OH, OR, RI, VT, WA, WV

States opposing Medicaid expansion:AL, AK, GA, ID, IN, IA, LA, ME, MS, NE, NC, OK, PA, SC, TN, TX, UT, VA, WI, WY

States still weighing their options:KS, SD

New Concepts in the ACA

DEFINITIONSAmerican Health Benefits Exchanges

(“Exchanges”)Benchmark PlansEssential Health Benefits (EHBs)Qualified Health Plans (QHPs)

Definitions (cont’d)

HEALTH BENEFITS EXCHANGES (“EXCHANGES”)Publicly available, online marketplaces forIndividuals and small groups to purchase “affordable”

health insurance coverage fromQualified health plans (QHPs) that offer Essential health benefits (EHBs) that mustMeet or exceed the specific benefits of each state’s

benchmark plan.

Definitions (cont’d)

Health Benefits Exchanges (cont’d)

If a state declines to develop its own Exchange, one will be developed and run by the federal government.Exchanges must be developed by October,

2013Exchanges must begin serving consumers by

January, 2014

Definitions (cont’d)

BENCHMARK PLANEach state must designate a benchmark health plan,Chosen from among health plans already available

in the state, to serve as aStandard or benchmark plan for the state’s

ExchangeSpecific benefits of all individual and small group

plans in the Exchange must meet or exceed the specific benefits in the benchmark plan

Definitions (cont’d)

Benchmark Plan (cont’d)

If a state does not select a benchmark plan -A plan will be determined in accordance with default rules established by the Health and Human Services Administration (HHS)

Definitions (cont’d)

ESSENTIAL HEALTH BENEFITS (EHBs)A core set of specific, standard benefits

(health-related items and services)Defined by the state’s designated benchmark

planThat must be offered in all individual and

small group plans, including all plans available through the state’s Exchange

Definitions (cont’d)

ESSENTIAL HEALTH BENEFITS PACKAGEHealth insurance policies that provide the

core set of essential health benefitsMust also satisfy certain cost-sharing

requirements

Definitions (cont’d)

QUALIFIED HEALTH PLANS (QHPs)Essential health benefits packages that are properly accredited and certified as offering the 10 core essential health benefits as determined by the state’s benchmark plan by

NCQAURAC

Must all health plans provide Essential Health Benefits?NO

Health plans that are not required to provide essential health benefits are:Self-insured, self-funded, or employer funded,

group health plansHealth insurance offered in the large group

markets (100 or more FTEs, or, at an individual state’s discretion, 50 or more FTEs)

Grandfathered health plans

Should plans that are not required to provide Essential Health Benefits pay attention to their state’s benchmark plan and EHBs?YES

ALL plans in each state are prohibited from imposingAnnual dollar limitsLifetime dollar limits

on any of that state’s EHBs that are offered in the individual and small group insurance market

Should plans that are not required to provide Essential Health Benefits pay attention to their state’s benchmark plan and EHBs? (cont’d)

Large employers must also provide plans that offer “minimum value” – analogous to the actuarial value for EHB packages – to avoid imposition of an assessment

GOALS for affordable health care coverage: Individual and small group plans in Exchanges mustEncompass 10 specific categories of benefits that

must be covered by all health insurance plansReflect balance among the 10 categories of

benefitsReflect typical employer health benefit services

already existing within each stateAccount for the diverse health needs across many

populations within each state.

GOALS for affordable health care coverage: Individual and small group plans in Exchanges must (cont’d)

Ensure that no incentives for coverage decisions, cost sharing, or reimbursement rates discriminate impermissibly because of:

AgeDisabilityExpected length of lifeGenderPre-existing or chronic conditionsOccupation

GOALS for affordable health care coverage: Individual and small group plans in Exchanges must (cont’d)

Ensure premiums vary within limits, based only on broad age groups

ENSURE COMPLIANCE WITH THE MENTAL HEALTH PARITY AND ADDICTION EQUITY ACT of 2008. This is expressly required!

Balance comprehensiveness and affordability

REGULATORY APPROACH for developing affordable health care products for ExchangesBENCHMARK PLANSThe state’s Benchmark Plan must be modeled

on an existing, “typical employer plan” within the state

The Benchmark Plan: Select a currently available, “popular” employer-sponsored plan in each state (as defined by enrollment numbers), selected from 4 specific types of plans

Regulatory ApproachBenchmark Plans (cont’d)

Will serve as the standard for benefits in all 10 categories of required benefits

Supplement the selected Benchmark Plan’s coverage, as necessary, to ensure it covers each of the 10 categories of essential health benefits

Regulatory ApproachBenchmark plans (cont’d) Plan TypesThe largest plan of any of the 3 largest small group

insurance plans in the state’s small group market (as defined by enrollment numbers)

Any of the largest 3 state employee health benefit plans (as defined by enrollment numbers)

Any of the largest 3 national Federal Employee Health Benefits Plan (FEHBP) options (as defined by enrollment numbers)

The largest insured commercial non-Medicaid HMO operating in the state.

Regulatory ApproachESSENTIAL HEALTH BENEFITS10 BENEFIT CATEGORIESAll categories must be covered by all health plans offered in the individual and small group market, including those offered through an ExchangeAmbulatory careEmergency servicesHospitalizationMaternity and newborn care

Regulatory ApproachEssential Health Benefits

10 Benefit Categories (cont’d)

Mental Health and substance use disorders, including behavioral health treatment

Prescription drugsRehabilitative and habilitative services and devices,

e.g. for autism or cerebral palsyLaboratory servicesPreventive and wellness services and chronic disease

managementPediatric services, including oral and vision care

Regulatory ApproachEssential Health Benefits MISSING CATEGORIESIf a category is missing from the designated

benchmark plan, it must still be covered in any health plan that is required to offer essential health benefits.

A state must supplement the benchmark plan to cover any of the 10 required categories by selecting the required benefits from

the largest plan in the designated benchmark type that offers the benefit category

The Federal Employee Health Benefit Plan with the largest enrollment

Regulatory ApproachEssential Health BenefitsSTATE MANDATESSome state-mandated benefits go above and beyond the

federal standardsIf the benchmark plan’s essential health benefits don’t

include all state coverage mandates:A state may require individual and small group plans

to cover the mandated benefitThe ACA requires the state to defray the cost of

additional benefits in excess of a benchmark planIf the mandates in excess of the benchmark plan were

in effect by 12/31/11, they are deemed EHBs and not subject to a surcharge at least for the 2014 and 2015 benefit years

Regulatory Approach4 LEVELS OF ACTUARIAL VALUEThe “Metal Levels”Regulations adopt a standard methodology for

determining the level of coverage under a health planSmall group and individual plans and plans on the

Exchange must offer 4 levels of actuarial value, or levels of coverage, to the consumer – the “Metal Levels”

These levels of coverage will allow consumers to compare plans with similar levels of coverage, along with consideration of premiums, provider participation, etc., to help the consumer make an informed decision about expenses and benefits of a plan

Regulatory Approach4 Levels of Actuarial ValueThe “Metal Levels” (cont’d)

Define the levels of coverage

Provide an estimate of the overall financial protection provided by the health plan

Describe the portion of covered medical expenditures across a

“typical” or “standard” covered populationBronze = 60%Silver = 70%Gold = 80%Platinum = 90%

MEDICAID EXPANSION

Saved for a later presentation

RESOURCESKaiser Family Foundation: www.kff.org

Select “Topics” “Health Reform” www.statehealthfacts.org

The National Conference of State Legislatureswww.ncsl.org

/issues-research/health/state-implementation-entities-to-implement-the-aca.aspx

RESOURCESThe APA’s website for State Health Exchanges www.psychiatry.org/statehealthexchangesWatch for APA’s Rush NotesContact the APA’s Department of Government

Relations (703-907-7800 or email at advocacy@psych.org) or the Office of Healthcare Systems and Financing (866-882-6227 or email at hsf@psych.org) with specific questions