Medicaid Reform & 1115 Waivers Seema Verma, MPH President & Consultant SVC Inc

Medicaid 50 Year Anniversary President Johnson & War on Poverty: “We want to give the forgotten fifth of our people opportunity not doles..” Changing Health Landscape Over 50 Years Private Health Insurance Changes Copays, deductibles, coinsurance, health savings accounts Managed Care, HMOs Medical advances, new pharmaceuticals & technology Rising uninsured as health care costs increase

Pre Affordable Care Act: Patchwork Quilt of Programs Government Programs Ryan White Care Act Children’s Health Insurance Program- CHIP Medicaid Low Income Parents 1115 Waivers (childless adults)

Medicaid Entitlement Program Designed for Vulnerable Populations Aged, Blind, Disabled, Pregnant Women & Children Financing Mechanism Retroactive coverage, presumptive eligibility Limited cost sharing & enforceability Choice provisions Robust benefits Results: Health Outcomes- Oregon Study Limited incentives for health improvement Little to no disincentives for undesired behaviors Seek coverage only when sick, in ER rooms Lack of focus on prevention, maintaining health, & preventing disease Access issues Over-consumption

State Concerns Medicaid Growing Proportion of State Budgets Significant Efforts Around Controlling Growth Growing use of managed care Restrict enrollment Provider Rates Limited State Flexibility Supreme Court Decision Reluctance to Expand

Innovating with Medicaid Expansions To date 30 states and D.C. have elected to expand Medicaid Expansion discussion is different in every state Legislative Approval (?) Expansions in 5 states through 1115 waivers Arkansas, Iowa, Michigan, Indiana, New Hampshire & Pennsylvania Efforts in Utah, Tennessee & Wyoming efforts stalled Expansion in Indiana has been estimated to cost ~2.5 Billion between 2014 and 2020.

Reform Themes Platform for Reforming the Program Promoting Self-Sufficiency Not Dependency Familiarizing Individuals with Private Market Personal Responsibility Improving Health Outcomes Push for State Flexibility Garner support from local legislators

1115 Waivers HHS has broad authority to grant waivers & ACA does not limit its authority Requested Waivers: Entitlement Reform Through Increased Personal Responsibility Provide Health Incentive Programs Disincentives Benefit Flexibility Cost-Sharing* (limited flexibilities) Retroactivity Cost-Effectiveness Work Requirement (not approved) Policies Structured to Encourage Maintenance of Coverage New Hampshire Legislation: XXIII.(a) The commissioner shall provide access to the health insurance premium payment (HIPP) program established by the department pursuant to section 1906 of the Social Security Act of 1935 to Medicaid newly eligible adults from 0 – 133 percent of the federal poverty level (FPL) who are eligible for medical assistance under section 1902(a)(10)(A)(i)(VIII) of the Social Security Act of 1935, as amended, 42 U.S.C. section 1396a(a)(10)(A)(i) (“newly eligible adults”) and their spouse and dependents if applicable until December 31, 2016 to maximize the use of private insurance and available federal assistance. All newly eligible adults who have access to qualified employer sponsored insurance either directly as an employee or indirectly through another individual who is eligible for qualified employer sponsored insurance, shall be required to participate in the HIPP program in order to receive medical assistance, if eligible and determined by the department to be cost effective as required by the federal Centers for Medicare and Medicaid Services (CMS).

Original Healthy Indiana Plan (HIP) Structure Key Features: High deductible plan paired with a Health Savings like account Comprehensive benefits, but no dental, vision or maternity $1,100 deductible paid by POWER account Required monthly contributions No copays, except for non-urgent use of ER Enrollment cap Medicare payment rates $500 Free Preventive Care Smoking cessation Cancer screenings Diabetes care Physicals Personal Wellness and Responsibility (POWER) Account $1,100 individual* & State contributions Controlled by participant to cover initial medical expenses 3/2/15: Update formatting Power Account is the key innovation in HIP Account is used to cover $1,100 HIP deductible All members have a POWER account Members required to contribute a monthly amount to the POWER account, not to exceed 5% of income State also contributes to ensure account is funded to $1,100 If members receive preventive services they may roll over any balances in the POWER account to reduce future contributions Members keep POWER account contributions if they leave the program POWER accounts may not be used to pay required $25 co-payments for non-emergency use of the emergency room Insurance Coverage $300,000 annual coverage $1 million lifetime coverage *Individual contribution not to exceed 5% of gross annual household income

Additional Features No Retroactive Coverage Effective date: Must make payment within 60 days to begin coverage Once payment is made, plans changes only for cause Plan Choice must be made before payment and at time of application 3/2/15: Update formatting

Healthy Indiana Plan (HIP) Success HIP improves health care utilization Inappropriate emergency room use 7% lower than traditional Medicaid beneficiaries 60% of HIP members receive preventive care - similar to commercial populations 80% of HIP members choose generic drugs, compared to 65% of commercial populations HIP results in high member satisfaction 96% of enrollees satisfied with HIP coverage 82% of HIP enrollees prefer the HIP design to copayments in traditional Medicaid 98% would enroll again HIP promotes personal responsibility 93% of members make required Personal Wellness and Responsibility (POWER) account contributions on time 30% of members ask their healthcare provider about the cost of services 31% of HIP members had an ER visit, 38% of HHW members had an ER visit. 5% of HIP responded that the ER copay influenced their decision to seek care and an urgent care center or their regular provider. Oregon Health Insurance Experiment: (A. Finkelstein 2011)—shows that as members have insurance and are shielded from the cost of care, healthcare utilization increases. In the first year, the treatment group (those who gained access to Medicaid) had substantively and statistically significantly higher health care utilization (including primary and preventive care as well as hospitalizations) than the control group (those who did not gain access to Medicaid).

HIP 2.0: Three Pathways to Coverage Best Value Initial plan selection for all members Benefits: Comprehensive coverage with enhanced benefits, including vision, dental, bariatric, pharmacy Cost sharing: Monthly POWER account contribution required. Contribution is 2% of income with a minimum of $1 per month. ER copayments only HIP Plus Fall-back for members with income <100% FPL who do not make POWER account contribution Benefits: Minimum coverage, no vision or dental coverage Must pay copayment ranging from $4 to $75 for doctor visits, hospital stays, and prescriptions HIP Basic Employer plan premium assistance paired with HSA-like account Enhanced POWER account to pay for premiums, deductibles and copays in employer-sponsored plans Provider reimbursement at commercial rates HIP Link 3/2/15: Added comprehensive coverage to HIP Plus (so it doesn’t JUST sound like they are getting vision, dental, etc.), update “income” and “who” for Basic, add hyphens to Link language 1/21/15: Update HIP Basic benefits w/ minimum coverage standards, rephrase HIP state plan individuals Updated with 2% of income, with min of $1 and max $100 per month

Non-Payment Penalties Members remain enrolled in HIP Plus as long as they make POWER account contributions (PACs) and are otherwise eligible Penalties for members not making the PAC contribution: Moved from HIP Plus to HIP Basic Copays for all services Income ≤100% FPL Dis-enrolled from HIP* Locked out for six months** Income >100% FPL 3/2/15: added “income” 1/21/15: Clarified exceptions, removed sending to FFM 1/19/15: Added what happens if a person becomes medically frail during lockout period. Added: Exceptions to lock-out over 100% FPL *EXCEPTION: Individuals who are medically frail. **EXCEPTIONS: Individuals who are 1) medically frail, 2) living in a domestic violence shelter, and/or 3) in a state-declared disaster area. If an individual locked out of HIP becomes medically frail, he/she should report the change to his/her former health plan to possibly qualify to return to HIP early.

Emergency Department (ED) Copayment Collection HIP features a graduated ED copayment model HIP requires non-emergent ED copayments unless: Member calls MCE Nurse-line prior to visit or The visit is a true emergency 1st non-emergent ED visit in the benefit period $8 Each additional non-emergent ED visit in the benefit period $25 3/2/15: Update formatting UPDATE: Changed ER to ED to align with previous slide terminology, standardize “copayment” and “cost sharing” UPDATE: formatting

Final Agreement Nation’s first Preservation of HIP Ends traditional Medicaid for Non-Disabled adults 6-Month Lock-Out $25 ER copayment for non-emergency visits Defined contribution premium assistance program Minimum contributions for HIP Plus at all levels of poverty Two-tiered benefit structure Preservation of HIP Lock-out- Consistency With Exchange Policies Effective date Retroactivity Plan changes 3/2/15: Update formatting

Activity so far… Program began same day as announcement In the first month since Governor Pence announced HIP 2.0: Transitioned 170,000 from Medicaid into HIP Approx. 297,0000 applications for health coverage 70% Participating into HIP Plus 3/4/15: ADD newly eligible approved, CHANGE time since HIP approved, DELETE reference to 37000 and call volume #s 3/2/15: Need to clarify the 37,000 in month one – what does that number represent? Notes: 60% increase in our online applications

Approved Demonstration: Arkansas Element Detail Effective Date January 2014 Structure Non-medically frail adults receive premium assistance to enroll in qualified health plans offered on the federal Marketplace. Benefits Offers the QHP benefits that are certified to be EHB to non-medically frail adults. EPSDT, non-emergency transportation, and free choice of family planning provider are provided as wrap around services. Cost Sharing State plan copayments are required for individuals over 100% FPL. Waiver amendment requests cost sharing at state plan amounts to be applied to individuals over 50% FPL. Incentives Waiver amendment requests addition of health savings accounts for members. Unique feature: Covers all non-medically frail adults through premium assistance in the Marketplace. AR has not implemented the cost sharing? Can you give me details on the HSA model?

New Hampshire Element Detail Effective Date Approved Structure Non-medically frail individuals will have mandatory enrollment in QHPs available on the federal marketplace Individuals with access to cost-effective ESI will be mandatorily enrolled in ESI Benefits QHP benefits with state plan benefit wrap Cost Sharing State Plan cost sharing Incentives NA Unique feature: Requires individuals with access to cost effective ESI to enroll in ESI and mandatorily enrolls non-medically frail individuals in QHPs available on the federal marketplace.

Approved Demonstration: Iowa Element Detail Effective Date January 2014 Structure Individuals with income under 100% FPL served through Medicaid Accountable Care Organizations. Individuals with income over 100% FPL enrolled in Marketplace QHPs with premium assistance or ESI. Benefits Income under 100% FPL: Benefits based on state employee benefits with EHB Income over 100% FPL: Benefits based on state essential health benefits offered in QHPs. Offers dental benefits for those who complete periodic dental exams. 1- Year waiver for non-emergency transportation. Cost Sharing Premiums required for all individuals with income at 50% FPL or more. Copayments for non-emergency use of ER but waived in year 1. Incentives Premiums are waived in the subsequent year if beneficiaries complete health targeted healthy behaviors. Unique feature: Premium payments authorized beginning at 50% FPL. Premiums waived if healthy behaviors completed.

Approved Demonstration: Michigan Element Detail Effective Date April 2014 Structure Covers the expansion population through the existing Medicaid Managed Care structure Benefits Medicaid Alternative Benefit Plan based on the ACA’s 10 EHBs. Cost Sharing No copayments for the first six months. Copayments for the next six month period are applied from the State Plan schedule and are based on care utilization in the previous six months. Individuals with income over 100% FPL pay a contribution to a health savings-like account of 2% of their household income. Incentives Cost-sharing is paid into health accounts and can be reduced through completion of targeted healthy behaviors. Unique feature: 6 month look-back feature for assessing cost-sharing. Cost sharing collected through health accounts instead of by providers. Cost sharing reduced through completion of targeted healthy behaviors. Michigan benefits = state plan benefits, add compliance with EHBs

Approved Demonstration: Pennsylvania Element Detail Effective Date January 1, 2015 Structure Covers the expansion population through private Medicaid managed care plans. Benefits Base benchmark plan for newly eligible not specified, pending future State Plan amendment. Will not provide non-emergency transportation services. Cost Sharing All demonstration beneficiaries pay state plan copayments in year 1. In year 2 copayments will only be charged for non-emergency use of the ER. Beneficiaries with income over 100% FPL will be subject to monthly premiums of 2% of income. State will collect and analyze copay data for individuals under 100% FPL and submit amendment seeking premiums for this group based on average copayment amounts. Incentives Beneficiaries may reduce their premiums or copayments by completing healthy behaviors in the prior year. Reductions will be evaluated every 6 months. Provides incentives for job search and work related activities. Unique feature: Premiums for individuals under 100% FPL will be based on average copays assessed in year 1. Do they charge premiums for everyone under 100% FPL. Need more info on the job search and work related activities

New Waiver Issues Work Requirements Time Limited Benefits Cost-Sharing Pennsylvania & Utah Administration Perspective Welfare Reform Oklahoma Time Limited Benefits Cost-Sharing

Indiana Waiver HIP 2.0 applicants and members referred to existing State workforce training programs and job search resources if: Unemployed or working less than 20 hours per week AND Not full-time students QUESTION: Will there be any opportunity for other individuals to access DWD resources? Notes: SNAP recipients who have already been sent to Gateway to Work will not be referred again Not participating in the Gateway to Work program does not impact HIP 2.0 eligibility

1332 Waivers ACA allows for 1332 waivers starting in 1/1/2017 QHPs, Exchanges, Tax Credits, Cost-Sharing Requires State legislation Waivers Must: (1) provide coverage that is at least as comprehensive (2) provide coverage and cost sharing protections against excessive out-of-pocket spending that are at least as affordable as current provisions (3) provide coverage to at least a comparable number of people (4) will not increase the federal deficit.

1332 Waivers Activity Will Pick-Up After 2016 Election Coordination with Medicaid/Expansion & 1115 Waivers Individual & Employer Mandates Rating Rules Benefit Design

Seema Verma sverma@svcinc.org (317) 809-8536 Questions Seema Verma sverma@svcinc.org (317) 809-8536