DEPARTMENT OF HEALTH AND HUMAN SERVICES PROPOSED RULE

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1 DEPARTMENT OF HEALTH AND HUMAN SERVICES PROPOSED RULE January 2013 Medicaid, Children s Health Insurance Programs, and Exchanges On January 14, 2013 the Department of Health and Human Services (HHS) issued a proposed rule outlining options for coordinating Medicaid, CHIP, and Exchange eligibility notices and appeals; providing additional benefits and cost-sharing flexibility for state Medicaid programs; and codifying several provisions included in the Affordable Care Act and Children s Health Insurance Program Reauthorization Act (CHIPRA). According to HHS, the intent of this rule is to afford states substantial discretion in the design and operation of an Exchange, with greater standardization provided where directed by the statute or where there are compelling practical, efficiency or consumer protection reasons. Comments on this proposed rule (CMS-2334-P) must be received by February 13, Medicaid Eligibility Expansion Coordinated Exchange and Medicaid Appeals Process The proposed rule would allow states to coordinate appeals of eligibility decisions across Medicaid, CHIP, and an Exchange by providing them with two options: (1) States could delegate the authority to make final determinations in Medicaid and CHIP eligibility appeals to an Exchange appeals entity or (2) States could retain the Medicaid and CHIP appeals functions. Individuals denied eligibility for Medicaid must be given the option to have a fair hearing conducted by the Medicaid agency, even if the Medicaid agency did not deliver the denial. In the event that a decision made by an Exchange appeals entity conflicts with the determination of the state Medicaid agency, the Medicaid agency s decision will take precedence and is binding on the Exchange. The rule also establishes an informal resolution process that will be conducted by an HHS appeals entity. The process would grant applicants the opportunity for a preliminary case review by HHS appeals staff prior to a formal hearing process. Applicants may accept the outcome of the informal resolution, or formally appeal the decision through a federally-managed appeals process. Individuals deemed ineligible for Medicaid during their fair hearing or appeals process must be assessed by the Medicaid agency for potential eligibility for other insurance affordability programs. The rule also lays out guidelines for State-based Exchange appeals entities to adopt a similar process. Notices of Eligibility Determinations To the maximum extent feasible, applicants must be provided a single notice regarding the determination of their eligibility status. The notice will be provided by the last entity to review the applicant (either the Exchange or the Medicaid or CHIP agency). According to the rule, the notice must provide clear and accurate information about eligibility for all insurance affordability programs, including Medicaid, CHIP, advance payments of the premium tax credit and cost-sharing reductions, as well as eligibility to enroll in a qualified health plan through the Exchange. HHS solicits comments on the level of detail which should be required for inclusion in the notice.

2 Applicants must also be given the option to receive these notices electronically. This provision will not be required until January 1, Medicaid Eligibility Changes This proposed rule continues the agency s previous work towards streamlining the Medicaid eligibility categories that take effect in The rule also establishes new eligibility categories, such as: Adults under age 26 who would not otherwise be eligible for Medicaid and who were in foster care and receiving Medicaid when they aged out of foster care (mandatory) Coverage for women and men below a certain income threshold for family planning or related services under the state plan (optional depending on the state) The rule also simplifies certain eligibility pathways, including families with Medicaid eligibility extended because of increased earnings or hours of employment; families with Medicaid eligibility extended because of increased collection of spousal support; pregnant women eligible for extended or continuous eligibility; continuous eligibility for hospitalized children; and optional eligibility for parents and other caretaker relatives, individuals needing treatment for breast or cervical cancer, and certain targeted low-income children. Presumptive Eligibility Determinations States may select qualified entities to make presumptive eligibility determinations for children under the age of 19, as well as for certain other categories of individuals, including pregnant women, parents and other caretaker relatives, and former foster care children. As established under PPACA, as of January 1, 2014 hospitals may elect to determine presumptive eligibility for Medicaid. This provision would allow beneficiaries who have not applied for Medicaid to be eligible for assistance immediately if they are provided care in a hospital that has elected to do make these determinations. Hospitals must follow standards established by the state Medicaid agency in making these presumptive determinations. HHS requests comments on whether this should be a federal requirement, a state option, or neither, and what such reasonable standards would be. Coordinated Medicaid/CHIP Enrollment Process Beginning October 1, 2013, Exchanges, Medicaid agencies, and CHIP agencies must start accepting a single streamlined application for coverage beginning January 1, HHS reiterates its intention that no matter where applicants submit the single, streamlined application during the initial open enrollment period, they will receive an eligibility determination for all insurance affordability programs and be able to enroll in appropriate coverage for 2014, if eligible, without delay. Medicaid agencies must also begin making eligibility determinations by October 1, 2013, and must be capable of electronically transferring to the Exchange any applications that did not meet Medicaid criteria but that may be eligible for other insurance affordability programs. Eligibility for advance payment of the premium tax credit and cost-sharing reductions will be determined by the Exchange so that plan selection and enrollment can occur in time for January 1,

3 Changes to the Children s Health Insurance Program (CHIP) Currently, CHIP allows states to require waiting periods of uninsurance between disenrollment from private group health coverage and the beginning of enrollment in CHIP. This proposed rule would continue to permit states to impose waiting periods of up to 90 days, but would also allow states to grant exemptions from waiting periods in certain cases (e.g. if the employer stopped offering coverage of dependents or the child has special health care needs). HHS is considering whether to also allow an exemption for cases when the child s parent qualifies for premium tax credits because their employer-sponsored insurance was deemed unaffordable. HHS solicits comment on its waiting period proposals and on alternative strategies to reduce substitution of coverage (e.g. ensuring that CHIP coverage does not substitute for coverage available under group health plans). Premium Assistance As described by HHS in the proposed rule, premium assistance provides an option for states to assist families who wish to enroll in the same health plan when some family members are eligible for either Medicaid or CHIP while other family members obtain coverage on the Exchange Premium assistance could help increase the likelihood that individuals moving from Exchange coverage into Medicaid or CHIP may remain in the same QHP in which they had been enrolled through the Exchange. Additionally, the proposed rule would require that: Medicaid-eligible individuals enrolled in a private health plan would remain qualified for all benefits for which the individual is covered under the state plan, regardless of whether or not the state is providing payment for enrollment in the private plan. A state opting to provide premium assistance support for enrollment in an individual health plan would have to provide covered benefits not covered under the private policy. Individuals must not incur excess cost-sharing charges, meaning that the cost of purchasing coverage under an individual health plan for a Medicaid-eligible individual in the private market must be comparable to the cost of providing direct coverage under the state plan. Technical Changes to Modified Adjusted Gross Income (MAGI) Stepparents will be considered the same as natural and adopted parents, and stepchildren and stepsiblings the same as biological and adopted children and siblings, for purposes of determining household composition and household income Instead of applying the five percent income disregard to determine eligibility for a particular eligibility category, the five percent disregard will be applied when its application affects eligibility on the basis of MAGI. The impact of this change would be that the five percent disregard would apply only to the highest income threshold under a MAGI-based group available for that person. Individuals who request coverage for long-term care services and supports for the purpose of being evaluated for an eligibility group for which meeting a level-of-care need is a condition of eligibility can be exempt from application of MAGI-based methods. Certain elderly or disabled adults may be eligible for Medicaid as pregnant women or as parents or caretaker relatives based on state MAGI-based Medicaid standards. 3

4 Essential Health Benefits in Alternative Benefit Plans Benchmark Benefit and Benchmark-Equivalent Coverage Alternative benefit plans, previously called benchmark-equivalent plans, are included among the plans that are required to cover Essential Health Benefits (EHB). States are permitted to choose one of four alternative benefit plans other than their state Medicaid plan: 1. The benefit package provided by the Federal Employees Health Insurance Benefit plan (FEHB) Standard Blue Cross/Blue Shield Preferred Provider Option; 2. State employee health coverage that is offered and generally available to state employees; 3. The health insurance plan offered through the Health Maintenance Organization (HMO) with the largest insured commercial non-medicaid enrollment in the state; or 4. A benefit package the Secretary has approved that will provide coverage appropriate to meet the needs of the population provided that coverage. This proposed rule clarifies that: The PPACA-established new adult eligibility group for low-income adults age 19 to 64 will be eligible for coverage under an Alternative Benefit Plan. Benchmark-equivalent health benefits coverage must include prescription drug, mental health, and family planning services in accordance with the standards for such defined in PPACA. States will define their own habilitative services essential health benefit category for Medicaid. HHS requests comment on whether the benefit definition for habilitative services that a state uses for QHPs in their Exchange should also apply to Medicaid, or whether states should be allowed to separately define habilitative services for Medicaid beneficiaries. Eligibility and Enrollment for Exchanges Application Counselors Application counselors are expected to play a key role in assisting individual in applying for and maintaining coverage in plans offered through the Exchanges. The proposed rule establishes standards for application counselors to assist individuals with the application and renewal process, including use of a dedicated web portal, as well as with managing their case between the eligibility determination and regularly scheduled renewals. The rule proposes that these counselors would go through a certification process, would not be funded by the Exchange, and would not be licensed as agents or brokers. HHS suggests that states could utilize a single set of core training materials for Navigators, agents and brokers, and application counselors, and that it also plans to make available federal training and support materials for states. Authorized Representatives Exchanges must permit individuals and employees to designate an individual or organization to act on that individual or employee s behalf. The authorized representative would be legally bound to maintain confidentiality standards, data security standards, and all perform all duties with the scope of responsibility of their position. Eligibility Standards and Process The rule amends residency standards for enrollment in a QHP by proposing not to terminate an individual s eligibility for reasons of temporary absence from the service area. The rule also proposes that the Secretary of 4

5 Treasury must notify an employer of those individuals claiming premium tax credits on their tax returns, in addition to reporting cases where the individual received premium tax credits in advance. This provision is intended to limit employers liability when meeting the affordable coverage requirement for their employees. HHS solicits comment on this proposal. Verification of Employer-Sponsored Coverage Individuals who are enrolled in or eligible for employer-sponsored coverage or may not receive advance payments of the premium tax credit or cost-sharing reductions through the Exchange. HHS determined that a comprehensive electronic data set for the entire Exchange population that could verify enrollment in or eligibility for employer-sponsored coverage will not be available from a single source by October 1, The agency will, however, provide access to this data for federal employees under the Federal Employee Health Benefit Program (FEHBP), and also proposes that Exchanges use SHOP records to verify enrollment in an eligible employer-sponsored plan. In the rule HHS outlines an interim strategy that will evolve as additional data and data sources will become available. Exchanges may conduct the verification process themselves or elect to have HHS do so. Medicaid Cost Sharing The proposed rule aims to create a single set of rules for all Medicaid premiums and cost sharing by updating the maximum allowable cost-sharing levels and consolidating redundant provisions. The rule deletes and replaces current Medicaid premium and cost sharing rules with a new set of provisions outlined in this proposed rule. Among the proposals are: A new definition for premiums, which includes enrollment fees and other similar charges A new definition for cost sharing that encompasses deductibles, copayments, coinsurance, and other similar charges A flat $4 maximum allowable charge for outpatient services An option under consideration to set the maximum allowable cost sharing related to an inpatient stay to either $4, $50, or $100 (following a transition period) A separate distinction for nominal levels of cost sharing for community-based long-term services and supports To allow cost sharing of up to $8 for non-preferred drugs for individuals at or below 150 percent of the FPL (states are permitted to apply differential cost sharing; e.g. $2 for preferred and $6 for nonpreferred drugs or $0 for preferred and $8 for non-preferred drugs) To allow cost sharing of up to $8 for non-emergency use of the ED The option to impose premiums on individuals with family income above 150 percent of the FPL 5