October 25, 2011 Anne Hadreas Health Law Fellow Kentucky Equal Justice Center

1. Overview of the Affordable Care Act 2. Updates on Medicaid Managed Care 3. Brief description of KY’s Medicaid Waiver programs

 Divided into five sections:  Employer-based insurance modifications  Health Benefit Exchanges  Funding for low- and middle-income consumers  Health insurance reforms  “Individual Mandate”

 the Act builds upon the existing system that most consumers are used to  Establishes tax incentives for small businesses to purchase health insurance for their employees  Up to 50% of cost of health insurance  Penalties for certain large employers to offer health insurance to their employees

 What they should look like:  Consumer-friendly  Standardized information  Promote competition  Similar to Travelocity or Expedia  Provide buying power  State flexibility but must be approved by 1/1/2013 or the federal government can step in with a federal exchange  Can be separate for individuals and small businesses

 Medicaid Expansion!  Up to 133% FPL ($29,326/year for family of 4)  NO CATEGORIES!!!  Premium Tax Credits  Up to 400% FPL  Operates through federal income tax  No co-pays for preventative services

Medicare Donut Hole: 50% discount on brand name drugs and 7% for generic after $2,840 in total drug costs. The hole will disappear by Picture Source: Consumer Reports

 Prevent denial of coverage for medical conditions  Prohibit higher premiums for medical conditions  Prevent unfair rescission of coverage  Requires evidence of fraud or intentional misrepresentation  Require higher percentage of spending on care  80% medical loss ratio (MLR)  Refunds to consumers if requirements not met  Youth coverage on parents’ plan until age 26

 “Requirement to Maintain Minimum Essential Coverage” (26 U.S.C. § 5000A)  Need to have essential minimum coverage or make “shared responsibility payment.”  Penalty gets phased in  Penalty at 2016: $695, per person per year, or 2.5% of income, if higher  Goals:  More preventative care  Spread out the cost and lower premiums

 Changes will roll out over a decade  Some changes are already in effect

 New health plans to cover preventative care with no co-pays  Young adults up to age 26 can stay on parents’ plans  Health insurers prohibited from:  Denying coverage to children with pre-existing conditions  Places lifetime limits on coverage  Dropping coverage due to illness  Federal pre-existing condition plan and temporary high risk pool  $250 Medicare donut hole rebate  Initial tax credits for small employers (25 employees or less) that provide health insurance

 MLR  75% for KY; 80% in 2012  Discounts on drugs for Medicare beneficiaries  10% bump in Medicare payments for primary care providers

 Increased payments to accountable care organizations (ACOs)  More changes to Medicare!  Payments linked to outcomes  No payments for preventable readmissions (e.g. hospital-acquired infections)

 Limitations on medical deductions  Medical expenses must equal 10% of income to be deductible. (Currently, it is 7.5%) Exception: Individuals over 65 can use 7.5% until 2016  Flexible spending accounts limited to $2,500/year

 Minimum Essential Coverage Requirement begins  Exchanges open  Medicaid expands to 133% of FPL  Premium tax credits start  Health insurance regulations begin  Cannot deny new or renewed coverage for medical conditions  No higher rates based on health

 2016  States can band together to sell coverage and create larger markets  2018  Tax on “Cadillac plans” begins (over 10,200/year for individuals)  2020  Medicare donut hole completely eliminated

 920,000 – Persons with pre-existing health conditions that who cannot be denied coverage  261,000 – Eligible beneficiaries for Medicaid with expansion to 133% of FPL  221,000 – Families who will receive tax credits for health insurance  51,500 – Small businesses who will receive tax credits for employees health care coverage  129,000 – Benefitting from the elimination of Medicare donut hole  16,800 - Young adults who may be covered until age 26 on parent’s health insurance  63,200 – Support for early retirees

 Appellate cases  Individual mandate is unconstitutional but severable 11 th Circuit - Florida v. HHS (26 states joined)  Everything constitutional under Commerce Clause 6 th Circuit - Thomas More v. Obama  Dismissed for lack of standing 3 rd Circuit - NJ Physicians v. Pres. of U.S. 4 th Circuit -Virginia v. Sebelius; Liberty Univ. v. Geithner (AIA prohibits suit) 9 th Circuit - Baldwin v. Sebelius  Will be heard by SCOTUS in Spring 2012

 32 million more people estimated to covered  Current system is confusing and complicated  A lot of details are still being worked out

 One health plan that coordinates all or most of an individual’s care  Aim is to control costs  Plans are called “managed care organizations” or “MCOs”

 Money savings  State pays a set amount per person ahead of time  Easier to budget  Coordinated care  Better alignment of physical and mental health  Chronic disease management  Incentive is to encourage preventative care

 Cutting care saves money  Incentive to make it more difficult to get more expensive services, medications  Lower reimbursement rates for providers  Reduces access to care

 Change from fee-for-service model  Should receive same services as before, with potential for additional services  Who is covered? Everyone, EXCEPT:  Passport region  Nursing homes  Waiver programs (e.g. Michelle P., SLC)  Only Medicare Savings Plans  Spend-down  Time-limited Medicaid  Qualified Medicare Beneficiaries (QMBs), specified low income Medicare beneficiaries (SLMBs) or qualified Disabled Working Individuals (QDWIs)  A few other groups

 What services will the MCOs cover?  All Medicaid services for these beneficiaries, EXCEPT: Non-emergency transportation School-health services First Steps HANDS  Medical, behavioral and (some) dental

 Coventry Care of Kentucky  In seven other states    Kentucky Spirit Health Plan  Subsidiary of Centene  Will have office in KY    WellCare of Kentucky  Large company serving over 2 million Americans  

 Provider networks will differ  Look at your clients’ PCP, specialists, pharmacy, hospital  Medicaidmc.ky.gov  Toll-free hotline:  Beneficiaries will have chances to change later

 7/7/2011: Governor signed contract with MCOs  7/ /2011: MCOs establish networks  Mid-Aug., 2011: Beneficiaries received auto- assignment  10/5/2011: New initial change deadline  11/1/2011: New implementation date  11/2011-1/2012: Change period (90 days)  Open enrollment yearly during recertification period

 Internal grievances  State fair hearings  Do not need to exhaust internal remedies  Impact litigation

 Alter normal Medicaid rules for flexibility  Must be cost neutral  Section 1115 Research & Demonstration Projects: policy innovations  Section 1915(b): Managed Care/Freedom of Choice Waivers  Section 1915(c): Home and Community-Based Services Waivers

 Managed Care  Passport (KY Health Care Partnership)  Non-Emergency Transportation System  Brain Injury Waivers (general and long-term care)  Home and Community-Based Services (seniors)  Model Waiver II (respiratory services)  Michelle P.  Supports for Community Living

   (859)  And dancing!