HEALTHCARE REFORM AT THE STATE LEVEL Melinda L. Young, M.D. Speaker-Elect, APA Assembly May 18, 2013

Today’s Presentation The Patient Protection and Affordable Care Act (PPACA or ACA) ACA’s General Regulatory Scheme State Role in the ACA New Concepts in the ACA American Health Benefits Exchanges Benchmark Plans Essential Health Benefits Qualified Health Plans

Today’s Presentation (cont’d) Goals for Affordable Health Care Coverage Regulatory Approach for Developing Affordable Health Care Products Benchmark Plans Benefits Categories Missing Categories State Mandated Coverage Actuarial Value of Plans

Patient Protection and Affordable Care Act (PPACA or ACA) Signed into law on March 23, 2010 Upheld by the U.S. Supreme Court on June 28, 2012 Provides important protections and benefits to patients in... General insurance provision Those parts of the law that specifically reference mental illness and substance use disorders

ACA’s General Regulatory Scheme All U.S. citizens 18 and over must maintain health insurance coverage Premium support to help low- and moderate- income individuals afford coverage and pay for benefits Includes obligations on LARGE EMPLOYERS that penalize the failure to offer appropriate coverage (“employer-shared responsibility”)

ACA’s General Regulatory Scheme (cont’d) For SMALL GROUPS EMPLOYERS or INDIVIDUAL PURCHASERS of insurance new concepts come into play with Health Benefits Exchanges (“Exchanges”) Benchmark Plans Essential Health Benefits (EHBs) Essential Health Benefit Packages Qualified Health Plans (QHPs)

The State Role HHS has determined that MANY PROVISIONS OF THE ACA MUST BE DECIDED AND IMPLEMENTED BY THE STATES, including: Creation of Health Benefits Exchanges Determination of Benchmark Plans Development of Essential Health Benefits packages Medicaid Expansion An Office of Health Insurance Consumer Assistance Creation of a Basic Health Plan for the uninsured

The State Role (cont’d) HEALTH BENEFITS EXCHANGES Online marketplaces through which small groups and individuals can purchase affordable insurance

The State Role Health Benefits Exchanges (cont’d) STATES HAVE 3 CHOICES, as determined by HHS: Develop their own state-based Exchanges (17 states and the District of Columbia*) Plan for a Partnership Exchange with the federal government (7 states*) Default to the Federal Exchange (26 states*) * as of 5/9/13

The State Role Health Benefits Exchanges (cont’d) States creating their own State-based Exchanges: CA, CO, CT, HI, ID, KY, MD, MA, MN, NV, NM, NY, OR, RI, UT, VT, WA and the District of Columbia States planning for a Partnership Exchange: AR, DE, IL, IA, MI, NH, WV States defaulting to a Federal Exchange: AL, AK, AZ, FL, GA, IN, KS, LA, ME, MS, MO, MT, NE, NJ, NC, ND, OH, OK, PA, SC, SD, TN, TX, VA, WI,WY

The State Role MEDICAID EXPANSION Policy implications and certain decisions aside, this is not an entirely new concept and will not be the focus of this power point

The State Role Medicaid Expansion (cont’d) STATES HAVE 2 CHOICES: Support (28 states and the District of Columbia*) Oppose (20 states*) Still weighing their options (2*) *Based on statements made by governors in budget documents, State of the State addresses and other recent public statements as of 5/9/13

The State Role Medicaid Expansion (cont’d) States supporting Medicaid expansion: AZ, AR, CA, CO, CT, DE, FL, HI, IL, KY, MD, MA, MI, MN, MO, MT, NV, NH, NJ, NM, NY, ND, OH, OR, RI, VT, WA, WV States opposing Medicaid expansion: AL, AK, GA, ID, IN, IA, LA, ME, MS, NE, NC, OK, PA, SC, TN, TX, UT, VA, WI, WY States still weighing their options: KS, SD

New Concepts in the ACA DEFINITIONS American Health Benefits Exchanges (“Exchanges”) Benchmark Plans Essential Health Benefits (EHBs) Qualified Health Plans (QHPs)

Definitions (cont’d) HEALTH BENEFITS EXCHANGES (“EXCHANGES”) Publicly available, online marketplaces for Individuals and small groups to purchase “affordable” health insurance coverage from Qualified health plans (QHPs) that offer Essential health benefits (EHBs) that must Meet or exceed the specific benefits of each state’s benchmark plan.

Definitions (cont’d) Health Benefits Exchanges (cont’d) If a state declines to develop its own Exchange, one will be developed and run by the federal government. Exchanges must be developed by October, 2013 Exchanges must begin serving consumers by January, 2014

Definitions (cont’d) BENCHMARK PLAN Each state must designate a benchmark health plan, Chosen from among health plans already available in the state, to serve as a Standard or benchmark plan for the state’s Exchange Specific benefits of all individual and small group plans in the Exchange must meet or exceed the specific benefits in the benchmark plan

Definitions (cont’d) Benchmark Plan (cont’d) If a state does not select a benchmark plan - A plan will be determined in accordance with default rules established by the Health and Human Services Administration (HHS)

Definitions (cont’d) ESSENTIAL HEALTH BENEFITS (EHBs) A core set of specific, standard benefits (health- related items and services) Defined by the state’s designated benchmark plan That must be offered in all individual and small group plans, including all plans available through the state’s Exchange

Definitions (cont’d) ESSENTIAL HEALTH BENEFITS PACKAGE Health insurance policies that provide the core set of essential health benefits Must also satisfy certain cost-sharing requirements

Definitions (cont’d) QUALIFIED HEALTH PLANS (QHPs) Essential health benefits packages that are properly accredited and certified as offering the 10 core essential health benefits as determined by the state’s benchmark plan by NCQA URAC

Must all health plans provide Essential Health Benefits? NO Health plans that are not required to provide essential health benefits are: Self-insured, self-funded, or employer funded, group health plans Health insurance offered in the large group markets (100 or more FTEs, or, at an individual state’s discretion, 50 or more FTEs) Grandfathered health plans

Should plans that are not required to provide Essential Health Benefits pay attention to their state’s benchmark plan and EHBs? YES ALL plans in each state are prohibited from imposing Annual dollar limits Lifetime dollar limits on any of that state’s EHBs that are offered in the individual and small group insurance market

Should plans that are not required to provide Essential Health Benefits pay attention to their state’s benchmark plan and EHBs? (cont’d) Large employers must also provide plans that offer “minimum value” – analogous to the actuarial value for EHB packages – to avoid imposition of an assessment

GOALS for affordable health care coverage: Individual and small group plans in Exchanges must Encompass 10 specific categories of benefits that must be covered by all health insurance plans Reflect balance among the 10 categories of benefits Reflect typical employer health benefit services already existing within each state Account for the diverse health needs across many populations within each state.

GOALS for affordable health care coverage: Individual and small group plans in Exchanges must (cont’d) Ensure that no incentives for coverage decisions, cost sharing, or reimbursement rates discriminate impermissibly because of: Age Disability Expected length of life Gender Pre-existing or chronic conditions Occupation

GOALS for affordable health care coverage: Individual and small group plans in Exchanges must (cont’d) Ensure premiums vary within limits, based only on broad age groups ENSURE COMPLIANCE WITH THE MENTAL HEALTH PARITY AND ADDICTION EQUITY ACT of This is expressly required! Balance comprehensiveness and affordability

REGULATORY APPROACH for developing affordable health care products for Exchanges BENCHMARK PLANS The state’s Benchmark Plan must be modeled on an existing, “typical employer plan” within the state The Benchmark Plan: Select a currently available, “popular” employer-sponsored plan in each state (as defined by enrollment numbers), selected from 4 specific types of plans

Regulatory Approach Benchmark Plans (cont’d) Will serve as the standard for benefits in all 10 categories of required benefits Supplement the selected Benchmark Plan’s coverage, as necessary, to ensure it covers each of the 10 categories of essential health benefits

Regulatory Approach Benchmark plans (cont’d) Plan Types The largest plan of any of the 3 largest small group insurance plans in the state’s small group market (as defined by enrollment numbers) Any of the largest 3 state employee health benefit plans (as defined by enrollment numbers) Any of the largest 3 national Federal Employee Health Benefits Plan (FEHBP) options (as defined by enrollment numbers) The largest insured commercial non-Medicaid HMO operating in the state.

Regulatory Approach ESSENTIAL HEALTH BENEFITS 10 BENEFIT CATEGORIES All categories must be covered by all health plans offered in the individual and small group market, including those offered through an Exchange Ambulatory care Emergency services Hospitalization Maternity and newborn care

Regulatory Approach Essential Health Benefits 10 Benefit Categories (cont’d) Mental Health and substance use disorders, including behavioral health treatment Prescription drugs Rehabilitative and habilitative services and devices, e.g. for autism or cerebral palsy Laboratory services Preventive and wellness services and chronic disease management Pediatric services, including oral and vision care

Regulatory Approach Essential Health Benefits MISSING CATEGORIES If a category is missing from the designated benchmark plan, it must still be covered in any health plan that is required to offer essential health benefits. A state must supplement the benchmark plan to cover any of the 10 required categories by selecting the required benefits from the largest plan in the designated benchmark type that offers the benefit category The Federal Employee Health Benefit Plan with the largest enrollment

Regulatory Approach Essential Health Benefits STATE MANDATES Some state-mandated benefits go above and beyond the federal standards If the benchmark plan’s essential health benefits don’t include all state coverage mandates: A state may require individual and small group plans to cover the mandated benefit The ACA requires the state to defray the cost of additional benefits in excess of a benchmark plan If the mandates in excess of the benchmark plan were in effect by 12/31/11, they are deemed EHBs and not subject to a surcharge at least for the 2014 and 2015 benefit years

Regulatory Approach 4 LEVELS OF ACTUARIAL VALUE The “Metal Levels” Regulations adopt a standard methodology for determining the level of coverage under a health plan Small group and individual plans and plans on the Exchange must offer 4 levels of actuarial value, or levels of coverage, to the consumer – the “Metal Levels” These levels of coverage will allow consumers to compare plans with similar levels of coverage, along with consideration of premiums, provider participation, etc., to help the consumer make an informed decision about expenses and benefits of a plan

Regulatory Approach 4 Levels of Actuarial Value The “Metal Levels” (cont’d) Define the levels of coverage Provide an estimate of the overall financial protection provided by the health plan Describe the portion of covered medical expenditures across a “typical” or “standard” covered population Bronze = 60% Silver = 70% Gold = 80% Platinum = 90%

MEDICAID EXPANSION Saved for a later presentation

RESOURCES Kaiser Family Foundation: Select “Topics” “Health Reform” The National Conference of State Legislatures research/health/state-implementation-entities-to- implement-the-aca.aspx research/health/state-implementation-entities-to- implement-the-aca.aspx

RESOURCES The APA’s website for State Health Exchanges Watch for APA’s Rush Notes Contact the APA’s Department of Government Relations ( or at or the Office of Healthcare Systems and Financing ( or at with specific questions