Commonwealth of Massachusetts Executive Office of Health and Human Services Roadmap to 2014: Subsidized Insurance Workgroup Update Stakeholder Meeting December 21, 2011

2 EOHHS Guiding Principles and Key Concepts

3 EOHHS Guiding Principles As we prepare for providing health insurance coverage to Massachusetts’ subsidized population under national health care reform in 2014, these guiding principles were developed by inter- agency leaders 1.Creating a consumer-centric approach to ensuring that all eligible Massachusetts residents avail themselves of available health insurance subsidies to make health care affordable to as many people as possible. 2.Creating a single, integrated process to determine eligibility for the full range of health insurance programs including Medicaid, CHIP, potentially the Basic Health Program and premium tax credits and cost-sharing subsidies. 3.Offering appropriate health insurance coverage to eligible individuals by defining both the populations affected and the health benefits that meet their needs. 4.Working within state fiscal realities, maximizing and leveraging financial resources, such as FFP. 5.Focusing on simplicity and continuity of coverage for members by streamlining coverage types, thereby making noticing and explanation of benefits more understandable, and also minimizing disruptions in coverage. 6.Creating an efficient administrative infrastructure that leverages technology and eliminates administrative duplication. 7.Building off the lessons learned since passage of Chapter Creating opportunities to achieve payment and delivery system reforms that ensure continued coverage, access, and cost containment and improve the overall health status of the populations served.

4 EOHHS ACA Key Concepts Medicaid Expansion The ACA mandates that adults 0-133% FPL who have not traditionally been eligible for Medicaid be covered under the Medicaid State Plan starting in January 2014 Massachusetts, as a state that has already expanded to this population, will receive 75-93% FMAP from CY2014 to CY 2019, and 90% FMAP from CY States must provide at least “Benchmark coverage” for the new State Plan-eligibles Basic Health Plan Option (BHP) The ACA provides states the option of establishing a BHP (Sec. 1331) The state would receive 95% of the premium and cost-sharing tax credits that would have been allotted if these individuals had purchased through the Exchange The BHP must provide at least the Essential Health Benefits package Tax Credits The ACA provides advanced tax credits to eligible individuals with incomes up to 400% FPL who purchase through the Exchange The amount ($ value) of the tax credit varies by income, with individuals required to spend a certain percentage of their income on health insurance Essential Health Benefits (EHBs) The ACA requires all plans offered through the Exchange to provide Essential Health Benefits Regulations defining the EHBs will be developed by the US Secretary of HHS

5 EOHHS Transition Populations MassHealth Toggle Populations Pregnant Women % FPL Breast and Cervical Cancer HIV Year Olds 0-150% FPL CommCare CommCare Bridge CommChoice MassHealth Basic MassHealth Essential Medical Security Plan Insurance Partnership Health Safety Net Static Populations MassHealth/Family Assistance Children < 300% FPL MassHealth Parents < 138% FPL MassHealth Pregnant Women < 185% FPL MassHealth Limited Children’s Medical Security Plan CommonHealth MassHealth Disabled Adults Dual Eligibles (Disabled and Elders) Populations

6 EOHHS Subsidized Population Transition Analysis “As Is”“To Be” Population Program Options Current Eligibility LevelsCurrent ProgramEligibility LevelsProgram Options Children Under 1 ≤ 200% FPLMassHealth Standard≤ 200% FPLMassHealth Standard32,580 Children 1-18 ≤ 150% FPLMassHealth Standard≤ 150% FPLMassHealth Standard403,877 Children Under 18 ≤ 300% FPLFamily Assistance (CHIP)≤ 300% FPLFamily Assistance (CHIP)45,160 Parents ≤ 138% FPLMassHealth Standard≤ 138% FPLMassHealth Standard179,617 Disabled Adults ≤ 138% FPLMassHealth Standard≤ 138% FPLMassHealth Standard105,898 Pregnant Women ≤200% FPLMassHealth Standard ≤ 185% FPLMassHealth Standard22, % FPL MassHealth Standard 296 MassHealth Benchmark BHP QHP Women with Breast and Cervical Cancer ≤ 250% FPLMassHealth Standard ≤ 138% FPL MassHealth Standard <200 MassHealth Benchmark 139 – 250% FPL MassHealth Standard <200 MassHealth Benchmark BHP QHP

7 EOHHS Subsidized Population Transition Analysis “As Is”“To Be” Population Program Options Current Eligibility LevelsCurrent ProgramEligibility LevelsProgram Options HIV+ Individuals ≤ 200% FPLFamily Assistance ≤ 138% FPL MassHealth Standard 893 MassHealth Benchmark % FPL MassHealth Standard 351 MassHealth Benchmark BHP QHP Childless Adults Receiving Mental Health Services ≤ 100% FPLMassHealth Basic≤ 100% FPLMassHealth Benchmark11,842 Childless Adults Who are Long Term Unemployed ≤ 100% FPLMassHealth Essential≤ 100% FPLMassHealth Benchmark74,319 Individuals Eligible for Unemployment Compensation ≤ 400% FPLMedical Security Plan ≤ 138% FPLMassHealth Benchmark3, % FPL BHP 24,672 QHP % FPLQHP16,037 Employees of Small Employers Who Are Receiving Premiums ≤ 300% FPLInsurance Partnership ≤ 138% FPLMassHealth Benchmark % FPL BHP 4,250 QHP Five Year Grandfathered Immigrants Eligible for CommCare 8/1/09 ≤ 300% FPL Commonwealth Care Bridge Program 0-300% FPL BHP 22,920 QHP Five Year Bar Immigrants ≤ 400% FPLHealth Safety Net 0-300% FPL BHP 23,000 QHP % FPLQHP-

8 EOHHS Subsidized Population Transition Analysis “As Is”“To Be” Population Program Options Current Eligibility Levels Current ProgramEligibility LevelsProgram Options Disabled Adults and Children N/A MassHealth CommonHealth N/A MassHealth CommonHealth 37,067 Individuals Not Eligible for MassHealth ≤ 300% FPLCommonwealth Care year olds: ≤ 138% FPL MassHealth Standard 14,674 MassHealth Benchmark 21 year olds+: ≤ 138% FPL MassHealth Benchmark81, year olds: % FPL MassHealth Standard 385 MassHealth Benchmark BHP QHP 21 year olds +: % FPL BHP 61,509 QHP Individuals with Incomes above 300% FPL % FPLCommonwealth Choice % FPLQHP38,107 Non-Qualified Aliens MassHealth Standards for Adults and Children Children < 1: ≤ 200% FPL Children 1-18: ≤150% FPL Parents: ≤ 138% FPL Pregnant Women: ≤ 200% FPL MassHealth Limited MassHealth Standards for Adults and Children Children < 1: ≤ 200% FPL Children 1-18: ≤150% FPL Parents: ≤ 138% FPL Pregnant Women: ≤ 200% FPL MassHealth Limited55,543 Children Who are Non-Qualified Aliens N/A Children’s Medical Security Plan N/A Children’s Medical Security Plan <200 HSN 0-138% FPLHealth Safety Net0-138% FPLMassHealth Benchmark49,000

9 EOHHS Subsidized Coverage Options

10 EOHHS Subsidized Coverage Options FPL0%100% 200%300%400% Transition Options Medicaid BHPQHP (Standard and Benchmark) Medicaid QHP (Standard and Benchmark)

11 EOHHS Coverage Options Initial Modeling

12 EOHHS Initial Modeling Assumptions MassHealth Benchmark BHP OptionQHP Coverage Level0-133% FPL0-200% FPL % FPL Covered Lives296,330119,000245,000 BenefitsCommCare PT1 + NEMT + EPSDT CommCare PT2 (Very similar to EHBs) EHBs Cost-SharingNominalSliding Scale (Similar to CC PT2, subject to ACA restrictions) ACA Levels Provider Reimbursement 105% - 110% Medicaid 105% - 110% Medicaid Commercial

13 EOHHS Key Issues in Evaluating Options

14 EOHHS Key Issue: Continuity MassHealth and CommCare have similar plan offerings with similar provider networks. Data shows significant levels of dropped coverage when moving from MassHealth to CommCare. New model must prioritize continuity across subsidized programs.

15 EOHHS Key Issue: Consumer Costs ACA cost sharing is significantly higher than MA Chapter 58. New model must mitigate cost sharing increases. MA vs. ACA Subsidy Schedule

16 EOHHS Key Issue: Federal Dollars Enhanced FFP could free State dollars. Freed up State dollars could be used to reduce cost-sharing and enhance benefits or be used for other State purpose. Move FromMove To Childless adults <139% FPL MH Expansion (Basic, Essential, HIV/FA) and CommCare 50% FMAP Medicaid State Plan 75% FMAP in % FMAP in 2020 Childless adults 139% - 300% FPL CommCare 50% FMAP BHP/QHP with federal tax subsidies 100% Federal funds Five year bar legal immigrants <139% FPL HSN 50% FMAP BHP/QHP with federal tax subsidies 100% Federal funds Five year bar legal immigrants CommCare Bridge 100% State funds BHP/QHP with federal tax subsidies 100% Federal funds

17 EOHHS Key Issue: Exchange Scale Absent growth and dependent on final design decisions, Health Connector membership may decline by 70%. How will MA ensure that the Exchange will be sustainable as low income populations shift to Medicaid under ACA rules? What will be the roles of the Exchange and MassHealth in managing subsidized programs?

18 EOHHS Takeaways from Initial Modeling ACA requires higher levels of consumer cost sharing as compared to cost-sharing currently imposed in CommCare. State savings could be used to reduce cost sharing for consumers up to 300% FPL. BHP may offer opportunity to reduce cost sharing in 2014 for consumers between 139% and 200% FPL with no state investment. BHP modeling includes some federal revenue uncertainties, including premium value of 2 nd lowest cost silver plan and EHBs, which could impact State cost (since State receives 95% of premium amount). BHP has risk for Connector related to scale, leverage and sustainability

19 EOHHS Follow up Modeling To further refine Cost and FFP Estimates

20 EOHHS Population Variances Enrollment Assumptions Model using upper and lower bounds of enrollment in Medicaid Benchmark, and BHP/QHP to 200% FPL. Acuity Assumptions Model using higher acuity for certain BHP members (MSP and Bridge).

21 EOHHS Cost-sharing and Take-up Rates Premium and Cost-Sharing Assumptions Model the BHP with premiums and cost-sharing as under the ACA and as in CommCare Plan Type 1 and Type 2. Take-up Rates Model differential coverage take-up rates of the BHP, QHP, and subsidized QHP related to member cost sharing bounds.

22 EOHHS Cost/Revenue Variances Trend Assumptions Model the impact of different Medicaid-Commercial trend scenarios (current modeling assumes 4% Medicaid and 6% Commercial) to illustrate the revenue and cost implications of reasonable combinations. Benefit Assumptions Model the impact of a narrower set of Essential Health Benefits (current modeling assumes CommCare Plan Type 1 benefits) for BHP and subsidized QHP members to reflect “typical small employer.” Impact includes cost of “adding” benefits and the change in state revenue for a BHP (due to a lower premium price).

23 EOHHS Benefit Configuration Decisions To Be Made

24 EOHHS New Medicaid State Plan Populations Benchmark Coverage What are the covered services? What will the premium assistance component look like? (ESI requirements, minimum benefit levels, FFS wrap?) Who are the truly new enrollees? How many? What enrollment options will be used for the expanded Medicaid population?

25 EOHHS Basic Health Plan (BHP) Option – % FPL and AWSS Will there be a BHP? If so, What benefits and cost-sharing? How will it be administered? What will it cost members? What will it cost the State?

26 EOHHS Qualified Health Plans (QHP) Essential Health Benefits and Tax Credits Will there be a “wrapped” QHP? If so, To what % FPL? How will it be operationalized in regard to copays, premiums, and additional benefits? What will it cost members? What will it cost the State? How will tax credits work for members? What is their financial exposure for incorrect subsidy amounts (due to errors or income changes)?

27 EOHHS Movement Between Subsidized Programs Where are the transition points? at 138% FPL, at 200% FPL, both? How many people are expected to move between programs? What are the benefit “cliffs”? What are the cost sharing “cliffs”? How does movement between programs affect continuity of: coverage, providers, care?

28 EOHHS General Questions How do options align with Guiding Principles? How will budgets be aligned across programs (MassHealth, Connector, MSP, HSN)? Will health plans be required to participate across Medicaid, (BHP), QHP? When will enrollments begin? How will members be notified? What Statute changes are needed? What State Plan changes are needed? What MassHealth 1115 Waiver changes are needed?

29 EOHHS Next Steps for Subsidized Insurance Options Manatt/Mercer to provide final evaluation results, including sensitivity analysis. Stakeholder engagement relative to findings anticipated in January.