states implementing health reform: exchanges part ii next topics in the webinar series: medicaid...

States Implementing Health Reform: Exchanges Part II

Next Topics in the Webinar Series:

Medicaid Wednesday, January 12th

2:00-3:30 p.m. EST

Primary Care WorkforceWednesday, January 19th

2:00-3:30 p.m. EST

National Conference of State Legislatures Wednesday, December 15, 2010

This webinar series is sponsored by these NCSL projects:

Legislative Health Staff Network (LHSN) Men’s Health ProjectPrimary Care ProjectRural Health Project

Minority Health ProjectNCSL’S Standing Committee on Health

through grants fromThe Robert Wood Johnson Foundation

The Kellogg FoundationHRSA’s Bureau of Primary Health Care

Office of Rural Health PolicyHHS’s Office of Minority Health

Submitting QuestionsQuestions may be submitted at any time during the presentation. To submit a question:

Click on the Question Mark icon (?) on the floating toolbar (as shown at the right).

This will open the Q&A window on your system only.

Type your question into the small dialog box and click the Send Button.

Questions will remain anonymous.

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States Implementing Health Reform: Exchanges Part II

Session Panelists:

• Joel Ario, Director, Office of Health Insurance Exchanges, Office of Consumer Information and Insurance Oversight, HHS

• Bob Carey, Senior Advisor, Public Consulting Group (Former Policy Director for the Massachusetts Connector)

• Sumi Sousa, Special Assistant to the Speaker, Office of the Assembly Speaker, California State Assembly

• Sandra Shewry, Advisor, Health Care Reform Implementation, California Health and Human Services Agency

Welcome to the webinar!We will begin shortly.

Federal Planning & Support Opportunities for States

Joel ArioDirector, Office of Health Insurance Exchanges, Office of Consumer Information and Insurance

Oversight

December 15, 2010December 15, 2010

The Health Insurance Exchange:The Health Insurance Exchange:Key Issues for State PolicymakersKey Issues for State Policymakers

National Conference of State Legislatures

CONFIDENTIAL © PCG 2010 ALL RIGHTS RESERVED

Agenda

Key Issues for State Policymakers

1. To Exchange or Not?

2. Governance and Administration

3. Role of the Exchange in the Marketplace

4. Establishing a Continuum of Coverage

5. Basic Health Program

6. Alignment with State Health Reform Efforts

7. Leveraging Existing Resources and Systems

8. Brokers and Navigators

9. Rating and Underwriting Rules

10.State Mandates and Minimum Essential Benefits

Pitfalls and Opportunities

What’s Next?


To Exchange or Not?

Options:

Establish single, statewide Exchange or regional Exchanges within a state

Join with other states to establish multi-state Exchange

Defer to the federal government

Prime Considerations:

Control/authority over portion of the commercial health insurance market

Funding and feasibility of establishing and operating an Exchange

Uncertainty over how the federal government will operate an Exchange

Ability to collaborate with other states in a timely fashion

Coordination of benefits across state programs


Governance and Administration

Options:

State agency (existing or newly created)

Quasi-public authority

Non-profit entity


Control – executive model (Utah), board (CA and MA), or advisory

Nimbleness and flexibility to respond to evolving program and changing circumstances

Accountability and transparency

Hybrid commercial/government enterprise


Role of the Exchange in the Marketplace

Options:

Market organizer/distribution channel

Selective contracting agent

Active purchaser


Market conditions

Overall goals and purpose of the Exchange

State’s approach to the commercial health insurance market

Potential population served by the Exchange


Establishing a Continuum of Coverage

Options:

“Benchmark” benefits for Medicaid expansion population

Eligibility processes across public and private insurance programs

Minimizing gaps and lowering cliffs


Benefits and products in the commercial market

Medicaid MCOs and commercial insurers

Streamlining eligibility systems and coordinating enrollment processes

Rating and underwriting rules in the commercial market/Exchange


Basic Health Program

Options:

Separate health benefit plan for 133% - 200% FPL

Richer benefit package with lower point-of-service cost sharing

Not part of the commercial market/risk pool


Can state establish and administer this program (with everything else going on)?

How will removing this group from commercial insurance pool affect the market?

How will the Exchange be affected (e.g., membership, sustainability, attractiveness to commercial carriers)?

Can state negotiate lower costs and richer benefits, without indirectly shifting costs to the commercial market?


Alignment with State Health Reform Efforts

Options:

Laissez faire approach

Activist role for the Exchange

Selective support/promotion of health reform initiatives


Ability (and willingness) of commercial insurers to participate

Marketability/attractiveness of commercial products in the Exchange

Difference between health plans inside and outside the Exchange

Size of the Exchange market

Medicaid program and state employees health insurance program also included?


Leveraging Existing Resources and Systems

Options:

State (Medicaid) agency systems and processes

Private sector operations

Stand-alone Exchange functions


Ability to modify/upgrade existing public agency systems to support Exchange operations (e.g., eligibility, enrollment broker)

Use of private sector to provide key functions and services

Competing priorities of existing programs/entities

Buy, rent or build?


Brokers and Navigators

Options:

Determine role for Navigators

Brokers as active (and willing) sales force or not

Reimbursement structure for brokers


Existing resources/entities and their role in the marketplace (e.g., community-based outreach efforts, non-profit agencies, human service contractors)

Licensure and regulatory authority over Navigators vis-à-vis brokers

Brokers role in the individual and small group markets

Compensation model for brokers and Navigators


Rating and Underwriting Rules

Options:

Establish standard rating and underwriting rules

Allow carriers to apply different rating and underwriting rules inside and outside the Exchange

Apply base rating and underwriting rules, with some flexibility


Differences among carriers in the existing commercial market

Potential impact on premiums

Comparability of rules inside and outside the Exchange

Willingness of carriers to participate


State Mandates and Minimum Essential Benefits

Options:

Adjust/revise state mandates to reflect minimum essential benefits

Maintain existing state mandates that exceed minimum essential benefits and pay for those benefits for individuals and families purchasing coverage through the Exchange

Maintain mandates outside the Exchange, but eliminate mandates for policies purchased inside the Exchange


Cost of mandates that exceed minimum essential benefits

Political realities and influence of advocacy community

Market realities and impact of modifying mandates


Pitfalls and Opportunities

Outreach is critical to ensure broad risk pool, stabilize premiums, and attract sufficient volume

Administrative efficiencies are contingent upon economies of scale

Opportunity to streamline, consolidate or eliminate existing public subsidy programs

Strategic contracting with carriers and vendors can help lower costs

Inventory existing resources – public and private – to identify and leverage available infrastructure

Learned behavior can be difficult to overcome

Continuous open enrollment in guaranteed issue, modified community rated individual market can create adverse selection problems for carriers

Carrier underwriting rules (e.g., contribution and participation requirements) can affect small group coverage through the Exchange

Capitalize on health reform to promote other state priorities


What’s Next?

States developing strategic plans for Exchange design and implementation

Additional federal guidance expected in early 2011

“Innovator” grants to jump-start technology and establish prototypes to be awarded in early 2011 Eligibility

Enrollment

Premium tax credits administration

Cost-sharing assistance administration

Exchange implementation grants available in Spring 2011

Impact of Congressional changes and altered political landscape TBD

Progress throughout 2011 will ultimately determine states’ ability to establish a fully-functioning Exchange


Bob Carey

Bob Carey is a senior advisor at Public Consulting Group (PCG). Prior to joining PCG, Mr. Carey was the Director of Planning and Development for the Commonwealth Health Insurance Connector Authority, an independent authority established pursuant to Massachusetts’ landmark health reform law of 2006.

In this role, Mr. Carey worked closely with the Executive Director and the Board of the Connector Authority to design and implement new health insurance programs, including establishing publicly-subsidized and commercial health benefit plans, as well as developing health care financing arrangements and coordinating activities across state agencies.

Mr. Carey has experience setting up and managing a statewide Health Insurance Exchange, and has first-hand knowledge of the myriad issues – and choices – that states will confront in establishing and operating an Exchange under federal health reform.

Contact info:

Bob Carey

Senior Advisor

Public Consulting Group

[email protected]

617-717-1345 (office)

617-470-3614 (cell)

mailto:[email protected]

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Creating the California Health Benefit Exchange

Sumi Sousa

Special Assistant to the Speaker

Office of the California Assembly SpeakerDecember 15, 2010

22

Overview

• Goals/Concerns in establishing the exchange

• How the legislation addresses these issues

23

Key Goals in Establishing the CA Health Benefit Exchange

1. Define the exchange’s role in overall market

2. Promote value, quality, transparency

3. Reduce potential for adverse selection

4. Establish a solid governance and financing structure

5. Meet the 2014 timeline

24

Major Considerations and Unknowns

• Timeline: Legislation needed to be done in 2010 in order to meet 2014.

• Unknown size other than “big”- estimates ranged from 1.25M – 8M potential enrollees.

• Concerns with adverse selection and exchange viability relative to outside market.

• Major differences in value of the federal subsidy between individual and small group, and concerns with merged markets.

• Need to provide choice, fair competition, transparency, value.

• Need to coordinate systems with existing Medi-Cal, Healthy Families, county-based administrative structure, while at same time, make transitions between coverage easier.

25

Role of Exchange in Insurance Market

OPTIONS CONSIDERED:

• Exchange as the entire market

• Exchange as simple pass through for subsidy (Craigslist with tax credits)

• Exchange operates with outside market but drives value, quality and choice in part through selective contracting

26

How Does Legislation Address These Concerns?

• Approach: Exchange operates with outside markets but adds value through, among other things, ability to standardize, selectively contract.

• Individual and small group market kept separate for now.

• Sets clear rules for participation in the Exchange to enable choice, fair competition, drive value and quality, and promote transparency.• Exchange must offer in each region of the state a

choice of qualified health plans in each of the 5 levels.• Exchange can standardize products• Exchange can selectively contract, based on choice,

quality, value and service.

How Does Legislation Address These Concerns? (cont.)

• Rules for participation in the Exchange to reduce adverse selection, promote competition and transparency• Carriers participating in the Exchange must offer at least one

product within each of the 5 levels of coverage inside and outside Exchange

• Carriers not participating in the Exchange are barred from selling the catastrophic plan.

• If Exchange board standardizes products, carriers not participating in the Exchange are required to sell at least one standardized product in each of the four precious metal coverage levels

• Exchange must coordinate with Medi-Cal, HFP and counties, but also try to reduce coverage and network disruption.

• Exchange is not a third regulator. 27

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Governance & Financing

Federal Exchange, State Exchange, or Exchange Operated by Non-Profit?

• Scope and import of the changes pointed towards need for the openness and transparency of government vs. non-profit

• Ability of state to meet CA needs was preferable to federal exchange

Significant Trade-Offs• If Exchange is be competitive with an outside market, needs to be

agile, flexible, and responsive.

• Board and staff structure must support this type of decision making.

• State government provides transparency, but can be slower than outside private market.

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Governance & Financing cont.

• Exchange funds need to be protected from bad state budget cycles.

• No state GF available and Exchange must be self-supporting by 2015.

• Other Concerns with Exchange Authority• Limits on Plan Assessments• Limit ability to increase Medi-Cal or HFP costs• Responsiveness to legislative and executive branch

30


How Do the Bills Resolve These Trade-offs?

• Independent, 5 member Exchange governing board within state government and members must have significant demonstrated expertise in various Exchange-related health care areas, such as the individual and small group markets.

• Significant conflict of interest provisions that generally bar anyone working for insurers, agents or brokers, health care facilities and health care providers.

• Staff will generally be civil service, but limited number of executive staff positions exempt from civil service.

• Board members are unpaid.

31

Governance & Financing cont.• Subject to state open meeting and public record act, laws

with an ability to meet in closed session regarding issues such as rate negotiations. Contracts are available 1 year after commencement.

• Must issue regulations but for first 2 years, can issue emergency regulations.

• Exchange must determine sufficient financial resources exist prior to commencing operations and report to the Joint Legislative Budget Committee and Dept. of Finance.

• Annual report to the Legislature and Governor on expenses, performance, operations, and progress. This report is also posted on the Exchange website.

• Budget, including staff salaries, must be posted publicly on website.

32


• No state GF and establishes a plan assessment to fund Exchange operations.

• CA Health Trust Fund is continuously appropriated but can only consist of non-GF (federal funds, assessments, CHFFA loan funds, etc.)

• Plan assessment limited to 1 year’s approved operating budget – Exchange must reduce the charges in the following fiscal year if the assessments equal or exceed that amount.

33

Questions?

Sumi Sousa

[email protected]

Office of California Assembly Speaker

John A. Pérez

California Health Benefit ExchangeEarly Implementation Tasks

Sandra ShewryAdvisor, Health Care Reform ImplementationCA Health & Human Services Agency

December 2010

Getting to 2014: Board Tasks

1. Board Appointments & Hiring Key Staff2. Infrastructure & Administration3. Eligibility & Enrollment4. Coordination with other public & private

purchasers 5. Essential Benefits6. Marketing, Outreach & Distribution7. Criteria for Qualified Health Plans 8. Self financing by 2015: assessments on

plans9. Testing of Systems10. Early Enrollments

Board Appointments & Key Staff

Appointment of Board 2 Governor; 2 Legislature; 1 Secretary of

Health & Human Services Hire Executive Officer, Chief Counsel, & other

key staff Statute:

Permits Board to hire outside of civil service

Permits Board to set salary Requires independent salary survey

Infrastructure & Administration

Establish an office Communications & Data Systems Website Business plan for 2011-2014 Buy it or make it decisions Public Meeting calendar

Eligibility & Enrollment Enrollment portal for Exchange, Medicaid,

CHIP and other health and social programs Linkages to federal data bases – Homeland

Security, Treasury, Social Security MAGI rules engine Rules for application, enrollment,

disenrollment, re-enrollment, transfers, appeals

Exemptions from individual mandate Flow of premiums; processes for free choice

vouchers Variance: individual v SHOP components of

Exchange

Coordination with other public & private purchasers

Advance goals of Health status improvement Health systems improvement Safety & quality Cultural competence Accessibility: hours, linguistic, physical Efficiency

Essential Benefits Compare federal essential minimum benefits to

state mandates. States to bear the cost of benefit in excess of federal essential benefits

Options for state-mandated benefits that exceed the federal definition of essential benefits: (statute may be needed) Conform state benefit mandates to the federal essential

benefits. Determine the revenue source to cover additional costs for

state mandated benefits Provide an exception in state law from state mandates for

products being sold through the Exchange. Application to large group market (>100 ees) Variance: individual v SHOP components of

Exchange Degree of standardization

Marketing, Outreach & Distribution

Branding of Exchange Alignment with public and private purchasers One-stop shop Driver of market reforms Price leader Maintain safety net

Navigators, community groups, agents, brokers – who, training, how reimbursed

Criteria for Qualified Health Plans Governing board to develop standards and

criteria

based on “best interests of” individuals and small employers purchasing through the Exchange

“optimal combination of choice, value, quality, and service”

Relationship to plan licensure standards

Collaboration with other purchasers: public & private

Self financing by 2015: assessments on plans

Assess a charge on plans that is “reasonable and necessary to support the development, operations and prudent cash management of the Exchange.”

How much; how to collect; process to reconcile

Testing of Systems

2013 – DHHS to conduct readiness assessment of state systems Eligibility and enrollment

User expectations: families, employers, distribution network

Transition Populations Non-mandatory Medicaid eligible groups above

new Medicaid “bright line” (medically needy) Medicaid waiver population: coverage

initiative Parents of CHIP enrollees PCIP members Persons enrolled in limited scope state

programs – breast cancer; family planning; HIV/AIDS

HIPAA, COBRA

Unknowns: Externalities

Harmonizing group size laws (<50; <100)

Basic Health Program Public support for reform State fiscal context Legal Challenges

2014 is tomorrow!

Contact info:

[email protected] 653-2902

mailto:[email protected]

Submitting QuestionsQuestions may be submitted at any time during the presentation. To submit a question:

Click on the Question Mark icon (?) on the floating toolbar (as shown at the right).

This will open the Q&A window on your system only.

Type your question into the small dialog box and click the Send Button.

Questions will remain anonymous.

Q&A icon

states implementing health reform: exchanges part ii next topics in the webinar series: medicaid...

Documents

california health

state health reform

basic health program

multistate exchange

state mandates

state programs

state join

insurance oversight