1. Medicaid Opportunities & Challenges Task Force May 14, 2013 Jeff Bechtel, Senior Consultant Premium Subsidy Approach to Medicaid (Arkansas Model)

2. Arkansas Proposal Summary Premium Assistance Under Existing Federal Law Premium Assistance Through 1115 Waivers Discussion Presentation Overview 2

3. Through premium assistance, Arkansas Medicaid would fund the purchase of qualified health plan (QHP) coverage in the Exchange on behalf of eligible participants. Low-income adults would apply for benefits in the exchange in the same fashion as higher income adults, and if their income is found to be below 138% FPL and they meet other qualifying criteria (e.g., citizenship), premium assistance would come from the Medicaid program rather than the Federal Treasury. The group of adults expected to participate in the premium assistance QHP buy-in includes both the new eligibility category, as well as the existing category of adult caretaker/parents. This group of adults would select coverage from among the insurance carriers offering a QHP in the Silver category of the exchange. What is the Arkansas Proposal? 3

4. The Medicaid program would pay insurance premiums and supplemental cost sharing subsidies directly to the QHP issuers for enrolled low-income participants Enrollees essential health benefits would be covered through the same health insurers serving the States individual and small group health insurance markets. The State would implement its market based approach to cover low income adults by taking steps to ensure that QHPs in the Silver plan level have appropriate regional or statewide coverage. What is the Arkansas Proposal? (contd) 4

5. CMS recently issued federal guidance relating to premium assistance in Medicaid. Guidance clarifies that premium assistance is a means of attaining Medicaid coverage, not an alternative to coverage. Premium assistance aimed at purchasing a private health plan sold through an Exchange would be combined with the additional coverage Medicaid provides. Under premium assistance, beneficiaries remain Medicaid beneficiaries and continue to be entitled to all benefits and cost-sharing protections. What is Premium Assistance in Medicaid? 5

6. States must have mechanisms in place to wrap around private coverage to the extent that benefits (e.g. non-emergency transportation, behavioral health services) are less and cost sharing requirements are greater than those in Medicaid. States may pursue premium assistance without formal demonstration waivers as long as approach is cost effective, complies with wrap-around requirements and beneficiaries remain free to choose an alternative to private insurance (i.e. remain in the states Medicaid program). According to a report by the Congressional Budget Office, the cost of purchasing a private plan through the insurance marketplaces would cost $9,000, while traditional Medicaid coverage would cost $6,000. Source: Estimates for the Insurance Coverage Provisions of the Affordable Care Act Updated for the Recent Supreme Court Decision, CBO (July 2012); http://www.cbo.gov/sites/default/files/cbofiles/attachments/43472- 07-24-2012-CoverageEstimates.pdfhttp://www.cbo.gov/sites/default/files/cbofiles/attachments/43472- 07-24-2012-CoverageEstimates.pdf What is Premium Assistance in Medicaid? (contd) 6

7. CMS has indicated that it is willing to consider a limited number of Medicaid premium assistance demonstrations. CMS indicated that it will consider states ideas on cost-effectiveness resulting from the new factors that flow from the introduction of Exchanges, such as the potential for cross-market movement among low income people who experience income fluctuation. CMS indicates that it will consider only those proposals that: Guarantee a choice of at least two QHPs; Make arrangements with QHPs to provide necessary wrap around benefits and cost sharing assistance; and Are limited to individuals whose benefits are closely aligned with the benefits available in the marketplace. Premium Assistance Demonstrations (1115 Waivers) 7

8. Discussion 8

9. Questions? Sellers Dorsey sellersdorsey.com Jeff Bechtel Senior Consultant Sellers Dorsey 717.695.4342 jbechtel@sellersdorsey.com 9