Covering Low-Income Uninsured Pennsylvanians: The Path to and from Healthy Pennsylvania

Transcription

1 Covering Low-Income Uninsured Pennsylvanians: The Path to and from Healthy Pennsylvania Kristen M. Dama Staff Attorney Community Legal Services of Philadelphia (215) George L. Hoover Health Policy Director Pennsylvania Partnerships for Children (717) x 212 ghoover@papartnerships.org Antoinette Kraus Director Pennsylvania Health Access Network (267) akraus@pahealthaccess.org Laval Miller-Wilson Executive Director Pennsylvania Health Law Project (215) LMiller-Wilson@phlp.org Sharon Ward Director Pennsylvania Budget and Policy Center (717) ward@pennbpc.org This paper is part of the work of the Close the Gap Campaign, to ensure that states accept the federal dollars set aside to extend Medicaid to low-income adults, and that Medicaid expansion waivers do not undermine the goal of providing comprehensive coverage with minimal burdens on potential enrollees. The Close the Gap Campaign is funded by the ACA Implementation Fund, a collaboration of eight national foundations that include The Atlantic Philanthropies, The Nathan Cummings Foundation, and The Jacob and Valeria Langeloth Foundation. Medicaid Expansion and the Affordable Care Act On January 1, 2014, several key provisions of the Affordable Care Act (ACA) took effect. People with incomes above the poverty line could buy health insurance through the ACA s Federally Facilitated Marketplace. People with incomes between 100 percent and 400 percent of the federal poverty income guidelines could receive tax credits and other financial help to make the insurance affordable. 477,000 Pennsylvanians became newly insured through the end of the first federal open enrollment period on March 31, Also on January 1, 2014, funding for Medicaid expansion became available to cover people between the ages of 19 and 64 with incomes below 138 percent of the federal poverty income guidelines (slightly more than $16,000 for single people) who do not qualify for traditional Medicaid benefits because they are not pregnant, do not have disabilities, or are not very low-income parents. Under the ACA, Medicaid expansion is the only health insurance option for most people below the poverty line who do not meet these categorical requirements. The Pennsylvania Department of Public Welfare (DPW) estimates that more than 600,000 low-income Pennsylvanians make up the Medicaid expansion population. Medicaid expansion is a great deal for states. The federal government pays 100 percent of the costs of covering the new adult group in Medicaid through The federal share declines in 2017 to 95 percent. The federal match is 94 percent in 2018 and 93 percent in 2019, and then remains permanently at 90 percent beginning in States may leave the program at any time if the federal share declines below the 90 percent threshold or the state share becomes unaffordable in some other way. The Path to Medicaid Expansion in Pennsylvania Since the ACA s enactment, studies have demonstrated the enormous fiscal and economic benefits of Medicaid expansion in Pennsylvania. A joint study by the Urban League and the Robert Wood Johnson Foundation found that not expanding Medicaid would cost Pennsylvania $37.8 billion in federal funding over ten years, and would result in $10.6 billion in lost reimbursements to Pennsylvania hospitals. Three independent studies, including one by Pennsylvania s nonpartisan Independent Fiscal Office, found that Medicaid expansion would have a positive budgetary impact of more than $600 million in 2015 and 2016 due to savings and new tax revenues. Two of the studies also projected that Pennsylvania would create 35,000 to 40,000 new jobs due to expansion. Page 1 of 6

2 Despite the fiscal and economic benefits of Medicaid expansion, Pennsylvania did not immediately expand Medicaid. Instead, in February 2014, Pennsylvania filed its Healthy Pennsylvania 1115 Demonstration Application with the federal Centers for Medicare & Medicaid Services (CMS). The proposal sought an unprecedented twenty-four waivers of federal Medicaid law. In exchange, Pennsylvania would extend Medicaid coverage to newly eligible adults on January 1, In August 2014, following a public comment period and extensive negotiations, CMS approved four of Pennsylvania s proposed waivers. Under the agreement, Pennsylvania will establish a second capitated Medicaid managed care system, called the Private Coverage Option (PCO), to cover most adults in the Medicaid expansion group. Pennsylvania will administer the PCO through contracts with nine managed care organizations, operating in nine regions across Pennsylvania. The PCO will operate separately from Pennsylvania s existing capitated Medicaid managed care program, called HealthChoices, which offers coverage through seven managed care organizations in five regions. Although the new PCO will share some features with commercial managed care plans, it will operate separately from Pennsylvania s Federally Facilitated Marketplace, and it remains subject to federal Medicaid managed care requirements. In those respects, the Pennsylvania approach differs significantly from the Medicaid waivers that CMS approved for Arkansas and Iowa. In those states, new eligibles use Medicaid funds to purchase commercial health coverage sold by insurers on their Marketplaces, which are operated as state-federal partnerships. (At Pennsylvania s election, its Marketplace is managed by CMS, without state involvement.) For an overview of many of Pennsylvania s waiver requests and their current statuses, please see Figure 1. Figure 1: Status of Pennsylvania Medicaid Waiver Requests Pennsylvania Request Premiums of $25 or $35 for many Medicaid recipients over 100 percent of the poverty line. Lockouts of up to nine months for nonpayment of premiums. $10 copayments for Medicaid recipients non-emergency use of hospital emergency rooms. Work search requirement (mandatory or optional) for many Medicaid recipients. Waiver of non-emergency medical transportation for new eligibles. Status Following Waiver Approval Approved in part. Beginning in 2016, DPW may charge premiums of 2 percent of recipients income (approximately $20 per month for single recipients). Denied. However, MCOs may disenroll recipients following 90 days of premium nonpayment. Approved in part. Beginning in 2016, recipients who use hospital emergency rooms for non-emergencies must pay copayments of $8, the maximum permitted by federal law. Copayments will be implemented via a separate State Plan Amendment. Denied. Medicaid funds may not be used to incentivize work. DPW will set up a state-funded Encouraging Employment program in 2016 that will allow participants to reduce Medicaid costs by participating in designated work activities. Approved in part. Pennsylvania must make non-emergency medical transportation available to new eligibles in Page 2 of 6

3 Waiver of choice of family planning provider for new eligibles. Coverage begins the month following application approval for new eligibles. No retroactive coverage to cover recent medical bills for new eligibles. No Medicaid appeals rights for new eligibles. Steep benefits cuts for current adult Medicaid recipients Denied. Denied. New eligibles will enroll as of the date of application. Denied. New eligibles will be eligible for up to three months of retroactive coverage to cover medical bills. Denied. New eligibles will be entitled to participate in DPW s hearings and appeals processes for coverage or service denials or terminations. If appealing terminations, they may receive coverage pending fair hearings. Pending. DPW and CMS are negotiating separate State Plan Amendments to cut benefits for current Medicaid recipients. As noted in Figure 1, Pennsylvania has asked CMS for permission to cut benefits for the 1.1 million adults who currently rely on Medicaid, most of whom are pregnant or seniors or have disabilities. It would collapse its existing Medicaid benefits packages into two packages, a high risk and a low risk package. Medicaid recipients would be assigned to a package based on an online screening questionnaire. Even the more generous package would be much less comprehensive than current Medicaid benefits. It would include new limits on radiology, blood tests and other lab work, inpatient hospitalizations, outpatient surgeries, and mental health treatment. Very sick enrollees who bumped up against those limits would have to meet a stringent exceptions process to qualify for more coverage. The proposed benefits cuts as of February 2014 are summarized in Figure 2, with updated information provided where available. Figure 2: Proposed Medicaid Benefits Limits as of February 2014 Service Current Medicaid Limits for Adults New Low Risk Plan New High Risk Plan Essential Health Benefits Package Optometrist Services Covered Covered + Covered + 1 routine exam every 2 years Chiropractor Covered Covered + Covered + 20 visits/year Services Podiatrist Services Covered Covered + Covered + Not covered if routine Radiology 6 tests/year 8 tests/year Lab work $350 $450 Inpatient Acute Hospital 2 admits per year (nonemergency) 3 admits per year (nonemergency) Page 3 of 6

4 Durable Medical Equipment $1,000 $2,500 $2,500 Medical Supplies $1,000 $2,500 Unclear Inpatient Drug & Alcohol Hospital Outpatient Drug & Alcohol Treatment Targeted Case Management Covered for serious mental illness 30 days 30 visits Not covered 45 days 40 visits Only for serious mental illness 30 days / 90 per lifetime 60 visits / 120 lifetime Unclear + Change from DPW proposal submitted to CMS in February Services may be subject to new limits. New eligibles will receive the Essential Health Benefits package, plus certain additional services like choice of family planning provider, or the high risk package, based on the completion of the same online screening questionnaire that will be used for current Medicaid recipients. In its Healthy Pennsylvania announcement, CMS said that it has reached agreement with Pennsylvania on the overall benefits approach that is, the establishment of high risk and low risk packages. However, Pennsylvania and CMS have not yet reached agreement on the parameters of the packages, so details were not formalized through Healthy Pennsylvania approval. Instead, the packages will be the subject of Medicaid State Plan Amendments, to be submitted by Pennsylvania once negotiations with CMS conclude. Consequently, the final high risk and low risk benefits packages may look different than the proposed benefits packages outlined in Figure 2. Medicaid Advocates Response to Healthy Pennsylvania Pennsylvania s initial Healthy Pennsylvania proposal from February 2014 drew widespread criticism from many Medicaid advocates and consumers. Of the 806 online comments submitted via CMS s online comment tool during the formal public comment period, the vast majority (659, or 82 percent) of the comments opposed the plan, while only a handful (34, or 4 percent) supported it. Following approval of portions of the proposal in August 2014, public reaction was more mixed. Most Medicaid stakeholders expressed relief that many uninsured Pennsylvanians will qualify for health coverage in January 2015, and that the final proposal did not eliminate certain Medicaid protections for new eligibles, like appeal rights and retroactive coverage. However, Medicaid advocates have identified three ongoing concerns: 1. High premiums will cause loss of coverage. A significant body of research shows that premiums for low-income people result in loss of coverage, unmet health care needs, and adverse Page 4 of 6

5 health outcomes. Despite the research, Pennsylvania will impose the highest Medicaid premiums of any state in the country beginning in The new delivery system creates bureaucratic hurdles for Medicaid recipients. The new Medicaid managed care system will operate separately from the existing Medicaid system and the Federally Facilitated Marketplace, and recipients will have to move among the systems as their circumstances change. Pennsylvania has a long history of difficulties in linking health systems, like the Medicaid system, CHIP system, and Federally Facilitated Marketplace for children, and the Medicaid system and the Federally Facilitated Marketplace for adults. Recipients may experience coverage disruptions as they churn among systems. Moreover, a new system will create administrative complexity and expense, burdening applicants and recipients, DPW staff, and taxpayers. 3. Benefit cuts for current adult Medicaid recipients remain on the table. Pennsylvania and CMS have left the door open to deep benefits cuts in Medicaid coverage for the most vulnerable Pennsylvanians. For these reasons, most Medicaid stakeholders, including advocates and consumers, believe that traditional Medicaid expansion remains the best option for low-income Pennsylvanians. The Future of Healthy Pennsylvania and Medicaid Expansion in Pennsylvania DPW s information technology systems are programmed for traditional Medicaid expansion, and the seven HealthChoices Medicaid managed care organizations have expressed willingness and capacity to provide Medicaid coverage for new eligibles. For these reasons, many Pennsylvania Medicaid experts believe traditional Medicaid expansion could be implemented quickly, in a matter of weeks. Because DPW is building the PCO managed care system for new eligibles, however, it will have to scramble to be ready by December 1, 2014, when open enrollment begins. Most significantly, DPW must ensure that the new system can interact seamlessly with its existing eligibility and enrollment systems and PCO insurers networks. DPW must also negotiate capitated rates and other terms and conditions with each of the nine insurers that it has tentatively approved to offer coverage to new eligibles. According to the final approved waiver, CMS will require Pennsylvania to provide six months notice before it terminates coverage for the Medicaid expansion population altogether. However, CMS has said that it will permit Pennsylvania to shift the type of coverage that it provides to new eligibles for example, from the PCO to straightforward Medicaid expansion with much less lead time, provided that Pennsylvania submits an adequate transition plan. Because DPW s systems are already set up for traditional Medicaid expansion, CMS could be expected to approve the transition very quickly. CMS has also said that Pennsylvania is not obligated to use its full waiver authority. In other words, Pennsylvania can decide not to impose premiums before or after they are scheduled to Page 5 of 6

6 take effect in CMS will not require Pennsylvania to provide advance notice of a decision to forgo premiums. Pennsylvania s Executive Branch has broad authority over the Medicaid program, and Demonstration Projects and State Plan Amendments do not require legislative approval. However, the General Assembly must appropriate both state and federal Medicaid funds. In its budget for the Fiscal Year, the General Assembly appropriated federal funding for expanded coverage effective January 1, 2015 via expanded Medical Assistance Outpatient, Medical Assistance Inpatient, and Medical Assistance Capitation line items. The budget does not link the federal appropriations specifically to Healthy Pennsylvania. The General Assembly is not required to act again until it votes on a budget for the Fiscal Year. If Pennsylvania decides to move toward traditional Medicaid expansion, Medicaid appropriations could be contentious in the next budget cycle, because Pennsylvania House leadership has not been supportive of Medicaid expansion, and rolling back proposed benefits cuts could create additional costs, though the costs would be offset by administrative savings due to not operating a PCO. But a bipartisan majority of House members support traditional Medicaid expansion, and the Senate is overwhelmingly supportive as well. The Executive Branch s Medicaid authority, the General Assembly s recent appropriations, and CMS s flexibility enable Pennsylvania to adopt traditional Medicaid expansion quickly in the coming months. However, Pennsylvania s ability to move down that path may be hindered by the terms and conditions of impending contracts with the PCO insurers. As of the date of this publication, no contracts have been signed. Conclusion Following many months of debate, deliberation, and implementation, Pennsylvania will extend coverage to more than 600,000 low-income Pennsylvanians on January 1, 2015 through the Healthy Pennsylvania plan. Though Medicaid advocates are relieved that many uninsured Pennsylvanians will qualify for health coverage for the first time, concerns about affordability and efficiency remain. Meanwhile, 1.1 million existing adult Medicaid recipients are bracing for significant benefits cuts in the coming months. Advocates believe that traditional Medicaid expansion, without benefits cuts, remains the best path for Pennsylvania, and are pleased that a path to traditional expansion is clear. Page 6 of 6