Say Ahhh!

One of the many questions I have asked myself since passage of the Patient Protection and Affordable Care Act is what the role of Section 1115  waivers will be come 2014 when the major provisions of PPACA are implemented. In the past, Section 1115 waivers have sometimes been used to expand coverage to groups previously not eligible for Medicaid (think childless adults) and/or to change the delivery system and benefits package (usually limits that Medicaid doesn't allow). The state of Utah, for example, is using a Section 1115 waiver to establish its Primary Care Network or "PCN" program which offers a very limited benefits package (no inpatient or specialist care) to childless adults and parents not otherwise eligible for Medicaid. States also used CHIP waivers to cover parents and other adults with extra CHIP funds, but Congress shut that down when CHIPRA was reauthorized. In general, the federal Secretary of Health and Human Services has broad discretion to waive provisions of the Medicaid law, although how broad that discretion is has been a matter of dispute.

PPACA does not change the provisions of Section 1115 (with a few notable exceptions I will talk about it in a minute) so states will still have the option to come in and request that many provisions of the Medicaid law be waived. But will they do so given the new environment in 2014 when states must cover all adults below 133%FPL, will receive a very favorable matching rate to do so  and will have new flexibility with respect to the benefits package?  Will states that are currently expressing resistance to features of the new law look to waivers as a way to get around them??? That is a key question which it is hard to predict the answer to.

One option states looking for flexibility in the new world may consider, but that is not a waiver, was included in the bill by Sen. Cantwell (D-WA) and developed to accommodate the continuation of a program like the state of Washington's Basic Health Plan. These provisions are found in Section 1331 of the new law and allow states to receive 95% of the federal premium tax credits that would have flowed to eligible individuals in their state between 133-200%FPL and who are not eligible for Medicaid. States must then contract with more than one plan to offer a benefits package that is at least good as the essential health benefits package offered in the exchange and with cost-sharing that is no higher than cost-sharing required under a "platinum" plan (for people under 150%FPL) and no higher than cost-sharing in a "gold" plan for people between 150-200% FPL. Since states are subject to a maintenance of effort requirement for children until 2019, this option would only apply to adults in most states where kids today are covered at 200%FPL or above. But one question is whether a state might seek a waiver of that provision to allow families to be covered together through a Basic Health program such as that contemplated by Section 1331 of PPACA. This might have some benefits such as covering families together and possibly charging a higher percentage of the costs to the feds. However important questions would have to be examined on the benefits and cost-sharing side to make sure that kids still had comparable coverage.

Another new feature of PPACA is Section 1332, which establishes a new Waiver for State Innovation. This provision, championed by Sen. Wyden (D-OR) does establish new waiver authority that is broader than Section 1115 authority and would allow states to waive the provisions of the new law related to exchanges, benefits and cost-sharing protections A state could apply for this new waiver through a new coordinated process with a Section 1115 Medicaid and/or CHIP waiver. Coverage provided must be at least as comprehensive and cost-sharing must be at least as affordable as it would have been under the exchanges.

This new waiver awaits more detail in guidance, but one critical note is that it is not a tool available to states until plan years beginning January 1, 2017. So this will not be an option for states to bypass the main features of health reform before it even gets started.

Much of the current waiver activity is about renewing existing waivers (typically three years which will bring some states right to 2014) and/or extending managed care to people with disabilities. But please let us know if you hear about any new major waiver ideas your state is contemplating. This one bears watching.

Tune in for Part 2 which will focus on the new rules we are expecting on public participation in the waiver process.

Late this spring, the Alaska legislature overwhelmingly passed an expansion of Denali KidCare (Alaska's CHIP program), from 175% to 200% of the FPL, a policy that Governor Parnell had indicated support for earlier this year, but switched directions on last week.  Currently, Alaska is one of only three states that still doesn't cover children at or above 200% of the FPL, the others being Idaho and North Dakota. (Oklahoma is currently at 185% but has had a state-approved expansion in the works for a while now).

The Alaska Legislature's action was actually a restoration of Alaska's CHIP program.  Until 2003, Denali KidCare had been available to children in families with incomes up to 200% of the FPL.  In 2003, Alaska policymakers decided to cut eligibility and set it at 175% of the 2003 federal poverty level guidelines.  That policy resulted in a declining eligibility level each year as the federal poverty level increased.  In 2007, this meant that the state was only covering children up to 154% of the 2007 FPL.  At this point in 2007, the legislature removed the reference to the 2003 poverty level guidelines so that kids were eligible up to 175% of the current year's federal poverty level. Since that time, there have been numerous attempts to restore the income eligibility for Denali KidCare to its original levels - efforts which had looked to be very promising this year. The expansion was expected to cover an additional 1,000 children and was sent to the Governor for his signature weeks ago, however, no action was taken until last week when he reversed himself and vetoed the expansion along with a number of other spending measures.

The outcry against the Governor's veto has been strong and widespread - particularly among state legislators.  We'll see in the coming days if there is any effort to override his veto and put Alaska back to where it was prior to 2003 and in line with the 47 other states offering coverage to children at or above 200% of the FPL.

Last week, CMS issued a final rule on the premiums and cost-sharing that states can charge Medicaid and CHIP beneficiaries in light of the Deficit Reduction Act of 2005  and cost-sharing provisions relating to Native Americans included in the American Recovery and Reinvestment Act of 2009.  This rule has been kicking around for quite a while - it was first issued by the Bush Administration in November of 2008 and since then has been subject to a number of revisions and delays.  Within the confines of what is allowed under the DRA and Recovery Act, the latest changes are explicitly aimed at better protecting low-income people from premiums and cost-sharing charges that could adversely affect their access to care.  Some of the most notable improvements include: 

• No more "shoebox" method.  Under the final rule, states (not families) are responsible for tracking and making sure that cost-sharing charges (including premiums) faced by low-income beneficiaries do not consume more than 5 percent of their income.  This means states can't use the "shoebox" method for tracking cost-sharing charges.  Under this method, families were expected to keep track of their cost-sharing and premium payments, keep a running tab on their cumulative total, and calculate the point at which their payments for cost-sharing begin to consume more than 5 percent of their income.  Now, states will need to figure out how to track and inform families about when they hit the five percent limit.  Alternatively, states can design cost-sharing and premium charges in such a way that families are never at risk of hitting the five percent limit.
• Stronger public input.  The final rule requires states to document that they have given the public advance notice about major changes in cost-sharing rules, and given people the opportunity to provide input in accordance with state rules.
•  Clearer protection of preventive care for children.  The final rule specifies that, for children under 18, all well baby and well child care and immunizations described by the American Academy of Pediatrics in its Bright Futures guidelines must be exempt from cost-sharing (as is required more broadly under the health reform law.)
•  New limits on cost sharing and premiums for Native Americans.  As required by the Recovery Act, the final rule outlines that Native Americans are exempt from premiums and cost-sharing charges if they secure care (or are eligible to secure care) from an Indian Health Provider.  Also, the cost of protecting Native Americans from the cost-sharing charges cannot be passed along to Indian health care providers in the form of reduced payments for providing services. 
• Other changes.  Some of the other changes include: 1) reduces the maximum co-payment that can be imposed on kids in CHIP-financed Medicaid expansions who are in managed care from $5.70 to $3.40 per visit in fiscal year 2009 (indexed in future years); 2) Clarifying that family planning services exempt from cost-sharing charges includes contraceptives and other pharmaceuticals; 3) Requires states to describe how they will alert providers when a service is subject to cost-sharing for an individual beneficiary and if that service can be denied for failure to pay the charge; and 4) Requiring states to describe how they will modify a family's aggregate limit on premiums and cost-sharing set at 5 percent of income when they experience a reduction in income.

Finally, it turns out that the final rule is not entirely final in the sense that CMS is still taking comments on provisions that exempt Native Americans from premiums and cost-sharing under certain circumstances.  This is because, unlike the DRA provisions, the language relating to Native Americans is relatively new, having been passed as part of the Recovery Act in February of 2009.

I'm all for light meals but the smorgasbord offered by the health reform law is something we need to make reform meaningful and to ensure that all Americans have access to affordable health care. Whether you go straight to the entrees (the Medicaid expansion or subsidized coverage through exchanges) or nibble on the appetizers (no more pre-existing exclusions or lifetime caps), there is something for everyone.

One such tidbit will allow certain dependents of state employees to enroll in the Children's Health Insurance Program (CHIP). For the past thirteen years, children of state employees who are eligible for health benefits from the State employee health plan have been explicitly excluded from the definition of "targeted low-income" children who are eligible for CHIP. The new health reform law has eased those restrictions effective immediately.

State CHIP programs may enroll children of state employees (who are otherwise eligible) if one of these conditions is met:

• Maintenance of Effort - the amount the State contributes to health benefits on behalf of employees including dependent coverage for the most recent State fiscal year cannot be less than the amount it expended in SFY 97 increased for inflation. (If you want the nitty-gritty, the most recent contribution cannot be less than the 1997 contribution increased by the percentage increase in the medical care expenditure category of the Consumer Price Index for All-Urban Consumers for each preceding fiscal year.)

• Hardship waiver - The annual aggregate amount of premiums and cost-sharing for coverage of the family of the child in the state employee plan exceeds 5 percent of the family income.

If the state meets the first condition, any eligible state employee child can be enrolled in CHIP. The second condition is applicable on a family-by-family basis. 

Interest is high among advocates and state officials in this change but federal guidance is needed to answer certain questions. In particular, given crowd-out rules is this option only available to new employees or to employees whose children have been uninsured long enough to meet CHIP waiting periods? How will states estimate a family's total cost-sharing to determine if a family meets the hardship waiver?

Whether you like savory or sweet, there's something to please everyone's palate in health reform. While we wait for the meat and potatoes to be served in 2014, there are lots of tasty treats to satisfy our hunger in the meantime. And we'll keep serving them up for you to sample at Say Ahhhh!