Wisconsin State Health Exchange Policy Paper

Transcription

1 Wisconsin State Health Exchange Policy Paper June, 2011

2 Overview Wisconsin has maintained a very low uninsured rate for many years and annually ranks at or near the top nationally in health care quality. As Wisconsin looks toward the implementation of federal health care reform, our state s efforts must recognize and preserve the strengths of our current system while focusing on continuing challenges related to health care cost, quality and coverage in ways that do not jeopardize access. The State Health Benefits Exchange is a key component of the Patient Protection and Affordable Care Act (PPACA). As Wisconsin looks to implement a benefits Exchange, several decisions must be made about its Governance structure, scope of operations and funding. This document provides guidance from Wisconsin Hospital Association on key implementation issues association with the State Exchange. General Vision for the Exchange Model that Meets the WHA Guiding Principles 1. Consumer Focused: The Exchange should operate under a consumer centered approach that provides consumers with the information needed to be prudent buyers of health care services. Information should include: Cost and quality of qualified health plans Network adequacy Health and wellness opportunities offered by competing health plans, as well as other steps they can take to improve their health. 2. Authority Model: Governance of the Exchange should be through an Authority, with a board that is made up of industry experts as well as consumers and businesses buying insurance through the Exchange. 3. Market Facilitator: The role of the Exchange should be as a market facilitator not a government regulator that uses price controls to contain costs. As a facilitator, the Exchange should seek a pluralistic insurance market by maximizing choice for participants, and being accessible and attractive to private insurers. Further, the Exchange should not attempt to take over the entire market in Wisconsin, but should start by serving a segment of the market. 4. Minimalist Philosophy: The Exchange should not be a cost contributor. An Exchange that follows a minimalist philosophy should result in overall lower costs. 5. Ensure No Difference Between Market Inside and Outside the Exchange. Differences between health insurance offered within the Exchange and outside of the Exchange can result in one segment of the market being disadvantaged over the other. For example, prices could be significantly affected outside the Exchange if a benefit is required to be offered outside the Exchange but not inside the Exchange. Similarly, different rating practices outside the Exchange could disadvantage the market inside the Exchange. Thus, the Exchange should operate under the same market regulatory requirements for benefits and premium rating as the outside market. Page 2

3 Exchange Governance 1. PPACA requires that the Exchange be run by a state governmental agency or nonprofit entity that is established by a state. 2. WHA supports an Exchange that is politically insulated and publically accountable, such as a HIRSP Authority model accountable to the state through specific statutory authority, defined board appointments; and a confirmation process; or other non-profit model with some board members appointed by the Governor. 3. Similar to HIRSP, the Exchange should be governed by an Authority, consisting of a Board that includes 3 non-voting members, and a minimum of 13 voting members. a. The 3 non-voting members should be ex-officio members the Secretary of DHS, the Secretary of the ETF, and the Commissioner of Insurance. b. The 13 voting members should be nominated by the Governor and approved with the advice and consent of the Senate. A larger board provides broader representation and ensures that decisions are not made by only a couple of people. With 13, a quorum is 7, and majority vote is 4. Any smaller and decisions could rest with just one or two people. c. In order to ensure the appropriate technical expertise along with consumer representation, voting members should include: i. Representatives from the insurance industry ii. Representatives from providers, including one from WHA iii. Consumer reps iv. Business reps 4. Members should be appointed to the Board for staggered 3 or 4 year terms providing for a balance of continuity and turnover. 5. The Board should appoint the Executive Director, who would hire staff with the consent of the Board to support the activities of the Exchange. The Exchange should have authority to enter into contracts, including for services such as running a call center. Options: A. Create a new Authority separate from any other entity already existing in the state. Advantages: Creates a new authority with no previous conflict of interest; Separate entity can focus entirely on setting up and implementing the Exchange. Disadvantages: May be costly to create a new Board, new Executive Director and staff, with new infrastructure (such as office space, computers, etc.). It may not be prudent to invest resources into such start-up activities with uncertainty about the future of health care reform provisions. B. As an alternative, the current HIRSP Authority could be transitioned into the Wisconsin Health Benefits Exchange Authority. Page 3

4 HIRSP in its current form may cease to operate after the Exchange is implemented. With the implementation of guaranteed issue in PPACA, new members will no longer meet the requirements for HIRSP and the program could enter a death spiral. The program s 20,000 members will likely become some of the first participants in the Exchange. Advantages: No new infrastructure required, so this option would be less costly. The staff likely has the appropriate expertise needed to operate an Exchange. The Board already exists and the entity has been looked to as a model. The Board consists of consumers as well as industry experts (including a member from WHA). Disadvantages: Additional Board members may have to be added such as business representation, and a method would have to be formed to ensure no conflict of interest during the transition phase. Powers and Duties of the Exchange The Exchange powers and duties should be consistent with a market facilitator model. Implement PPACA Requirements: The Exchange must implement the provisions of the PPACA Law, including operating a website and toll free hotline, as well as certifying health plans as qualified, including appropriate network adequacy and quality rating. No Authority to Regulate the Market: The primary purpose of the Exchange should be to assist individuals in becoming more prudent buyers of health care services. Thus, its authority should be limited. The Exchange should be prohibited from using rate setting or price controls as a cost containment tool. Any decisions about premium rating, provider reimbursements, or other market regulations are made by elected officials through the state law and regulatory processes. This would include limits on rating factors for health insurance premiums in the small group market, as well as provisions that would extend some or all exchange specific regulations to the outside market. Enrolling Medicaid Recipients PPACA requires the Exchange to inform individuals applying for health insurance through the Exchange of the eligibility requirements for Medicaid. If the Exchange determines they are eligible for Medicaid, the Exchange is to enroll the individual into Medicaid. The PPACA requirements should be implemented in a manner that provides individuals with full choice. Individuals should be presented with all options for insurance, including Medicaid if the individual appears to be eligible. Day-to-Day Operations: The Exchange should have authority to administer its daily operations, including the authority to enter into contracts, including for services such as running a call center. Page 4

5 Qualified Health Plans The Exchange will be required to certify health plans as qualified health plans under the criteria set forth in the PPACA law and by federal regulation. Earlier drafts of potential legislation for an Exchange in Wisconsin would have allowed the Exchange Authority broad discretion with respect to several issues related to qualified health plan. WHA supports having these issues determined by the Legislature, and included in the statutes rather than left to the discretion of the Exchange. These issues and WHA s position on them are described below: Choice The State can choose to allow all health plans meeting the criteria of qualified to participate in the Exchange, or it can restrict which qualified plans may participate. All health plans meeting the criteria of qualified should be able to participate in the Exchange. This would support a pluralistic insurance market that maximizes choice for all participants; is attractive and accessible to private insurers and ensures fair competition among them; and prevents dominance by a single or small number of payers. Network Adequacy The Secretary of HHS is to promulgate rules that would include network adequacy provisions. The Exchange should use specific network adequacy criteria that include broad access to choice of providers, breadth of geographic variation and continuity of care. Should the federal regulations fall short of this goal, the state law should include requirements for network adequacy. Quality The Secretary of HHS is to develop a rating system for qualified plans that includes price and quality, and develop quality improvement criteria. The Exchange should support the use of quality criteria that encourages and rewards provider value. Should the federal regulations fall short of this goal, state law should include requirements for quality measurements that reward value. Funding for the Exchange Federal law requires that the Exchange be self-sustaining by January 1, The federal law states that the Exchange may charge assessments or user fees to participating health insurance issuers, or may otherwise generate funding, to support its operations. Earlier drafts of legislation for the exchange allowed the Exchange Authority broad discretion to impose assessments on health care facilities, providers, services and insurance products. Any assessment imposed should be approved by the Legislature and its formula should be included in state law. Page 5

6 Additional Considerations One Exchange vs. Two PPACA allows states to establish one exchange for both the individual and small group markets; or two separate exchanges, one for each market. Earlier drafts of legislation for the Wisconsin Exchange allowed the Exchange Authority to determine if the small group exchange and the individual market exchange should be merged. WHA takes no position on whether the state should operate one exchange or two. WHA supports the Legislature s authority to determine the number of exchanges, with the advice of the Exchange Authority. Benefit Mandates WHA understands the need to ensure that the market inside of the Exchange operates under the same regulations as the market outside of the Exchange. With the implementation of the Exchange, the state will have choices to make in the area of benefit mandates. Wisconsin state law currently requires that all insurers in the state offer health plans that include certain benefits mandated by law. These include coverage of home health care, minimum amounts for kidney disease, skilled nursing care, autism, cochlear implants, and other services. The federal government is required under PPACA to develop an essential benefits package. Services included in the essential benefits package will have to be covered by health benefit plans if the payer wants to offer the benefit plan in the exchange. If the essential benefits package does not contain all of the services mandated by state law, the State will have to decide if these mandated benefits apply to qualified health plans offered in the exchange and/or if they continue to apply outside of the Exchange. o o o If the state requires all mandated benefits be offered in the Exchange, the state will have to pick up the cost for any subsidy amount related to the higher benefit level (the amount above the essential benefits package). It is unclear what this would cost the state. If the state determines that all mandated benefits do not have to be offered in the Exchange, this will distort the market outside the exchange if the benefit plans offered outside of the exchange continue to have to include the benefit mandates. An alternative would be to modify the market so that all mandated benefits in the state are the same as the essential health benefits package determined by the federal government. Page 6

7 Appendix WHA Guiding Principles for Establishing Wisconsin s Health Insurance Exchange

8 Guiding Principles for Establishing Wisconsin s Health Insurance Exchange Wisconsin has maintained a very low uninsured rate for many years and annually ranks at or near the top nationally in health care quality. As Wisconsin looks toward the implementation of federal health care reform, our state s efforts must recognize and preserve the strengths of our current system while focusing on continuing challenges related to health care cost, quality, and coverage in ways that do not jeopardize access. To that end, the following guiding principles should be employed to measure the success of Wisconsin s health insurance exchange and help define its structure, power and function: 1. Pluralistic insurance marketplace: The exchange must be committed to strengthening Wisconsin s pluralistic private sector based coverage options. The exchange must have as its primary focus an insurance marketplace that maximizes choice for all participants, is accessible and attractive to private insurers, ensures fair competition among insurers, prevents dominance by a single or small number of payers, and preserves and strengthens Wisconsin s tradition of employer-provided health insurance. The exchange should coordinate with Medicaid and BadgerCare in a manner that preserves both programs as a safety net, not as a low-cost competitor. 2. Governance that is politically insulated and publically accountable: The diverse functions of the exchange: attracting consumers, processing commercial transactions, using tax-financed subsidies, and regulating the insurance market require that its governance be insulated from political influence while at the same time being publically accountable. (See specific recommendations on exchange governance structure.) 3. Focus on cost-effectiveness: The viability of an exchange will ultimately be driven by its ability to encourage value strategies, such as maximizing competition and choice, minimizing administrative costs and adverse selection, and rewarding quality through phased-in payment reforms that recognize better outcomes and efficient, effective delivery of health care. The exchange should be prohibited from using rate setting or price controls as a cost containment tool. Price controls are artificial mechanisms that serve a political rather than effective policy purpose. Price controls mask the underlying drivers of health care costs, allow policymakers to avoid difficult choices and ultimately reduce access to services. 4. Offer broad access, measure and reward value: The exchange must foster broad access to a choice of providers able to provide true continuity of care. The exchange also must foster consumerism by using quality measures that are nationally recognized and consistently applied, providing consumers with uniform, comparable information to support rational decision-making. Quality criteria also should be used to support payment reforms that encourage and reward provider value whenever possible. 5. Make personal responsibility and prudent use of health care services a top priority: The exchange needs to champion incentives for employees, employers, and all participants to improve and maintain good health and encourage the more efficient use of health care services.