High Risk Pools/Pre-Existing Condition Insurance Program (PCIP)

Transcription

1 High Risk Pools/Pre-Existing Condition Insurance Program (PCIP) Summary: Provides $5 billion in immediate federal support for a new program to provide affordable coverage to uninsured Americans with pre existing conditions to help assure coverage until the new Exchanges are operational. Status update: On August 3, 2010, Vermont asked the Department of Health and Human Services (HHS) to run its high risk pool program. On August 19, 2010, Kaiser Health News notes that [a]bout 3,600 people have applied and about 1,200 have been approved so far in state plans that started in the beginning of July, with another 2,400 in plans operated by HHS. The number of enrollees is lower than many expected. On August 20, 2010 President Obama submitted a letter to Congress, requesting an additional $55 M for the high risk pool program. Next steps: June 21, 2010 High risk pools must be established by June 21, 2010 and exist until January 1, The Secretary is required to develop procedures to provide for the transition of eligible individuals enrolled in health insurance coverage offered through a high risk pool into qualified health plans offered through an Exchange, which may involve extending the January 1, 2014 deadline. July 1, 2010 The Secretary of Health and Human Services (HHS) announced a new Preexisting Condition Insurance Plan (PCIP). HHS will run the plan (as part of the Federal program) in the following 21 states: Alabama, Arizona, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Nebraska, Nevada, North Dakota, South Carolina, Tennessee, Texas, Virginia, and Wyoming. (Note: On August 3, 2010, Vermont also asked HHS to run its program.) July 30, 2010 HHS issues an interim final rule regarding the PCIP, effective July 30, 2010 July 30, 2010 Effective date of the IFR August 1, 2010 PCIP coverage begins for the Federal program, if an individual has appropriately applied by July 15, August 3, 2010 Vermont asks HHS to run its program August 19, 2010 Kaiser Health News provides initial numbers for the program about 3600 applications and 1200 approved applications from the States, with another 2400 individuals enrolled in plans operated by HHS August 20, 2010 President Obama submitted a letter to Congress, requesting more funds for the high risk pool program. September 28, 2010 Comments due on the IFR

2 Additional information: President Obama s August 20 budget request letter ment_08_20_10_0.pdf Kaiser Health News August 19 article risk pools healthinsurance.aspx?utm_source=feedburner&utm_medium=feed&utm_campaign=feed%3a+kh n+%28all+kaiser+health+news%29&utm_content=google+reader July 30, 2010 interim final rule htm Healthcare.gov information regarding the Pre Existing Condition Insurance Plan (PCIP) July 1 HHS press release HHS pamphlet on the PCIP Where consumers can go to find additional information about health care options in their state HHS Fact sheet on high risk pools April 2 HHS letter to Governors Overview of state high risk pools (Kaiser Family Foundation ) Issues for structuring high risk pools (Kaiser Family Foundation issue brief) Study examining the shortage of funds for the high risk pools program ( RiskPools.pdf) CBO letter regarding the impact of high risk pools 21 High Risk_Insurance_Pools.pdf Sen. Enzi s press release regarding the lack of funding for the program ecord_id=61b099d6 802a 23ad 460c 2d32fe0e227d&Region_id=&Issue_id= Congressional Research Service (CRS) report regarding the application of various abortion provisions to high risk pools df Sen. Enzi s letter (signed by 9 other Republicans) to Secretary Sebelius regarding the application of various abortion provision to high risk pools ortion%20final%20doc2.pdf Long summary: Sec Immediate access to insurance for uninsured individuals with a preexisting condition. Requires the Secretary, no later than 90 days after the date of enactment, to establish a temporary high risk pool program to provide health insurance coverage for eligible individuals from the date of establishment until January 1, Updated September 23, 2010 Page 2

3 Administration. Allows the Secretary to implement the program directly or through contracts with state or nonprofit private entities. Requires, as a precondition for a state contract, that the state agree to not reduce previous spending levels on the operation of high risk pools. Rules for the high risk pool. Establishes a series of rules for an eligible pool, including no preexisting condition restrictions, rules related to affordability of the premiums and cost sharing, and rating requirements. Eligible individual. Deems an individual to be eligible if he or she is a citizen or national or lawfully present; has not been covered under creditable coverage (as defined in 2701(c)(1) of the PHS Act (Health Insurance Portability and Accountability Act (HIPAA) provisions) as in effect on the date of enactment during the 6 month period prior to the date on which the individual is applying for coverage through the high risk pool; and has a pre existing condition, as determined in a manner consistent with guidance issued by the Secretary. Anti dumping restrictions. Adds specific restrictions to ensure that insurers and employers do not dump employees for the pool. Funding. Provides $5 B, without any fiscal year limitation. Also provides the Secretary to adjust payments if there are insufficient funds for the high risk pool expenses. Termination. Terminates the program as of January 1, 2014, with a provision to allow the Secretary to extend the program if it is necessary to avoid a lapse in coverage between individuals covered by the high risk pool and the new Exchanges. Summary of the Regulations: Definition of pre existing condition. The program will use the definition of pre existing condition currently used in the group market under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and further specifying that pre existing condition exclusion has the same meaning as under 45 CFR That is, the term refers to a denial of coverage, or limitation or exclusion of benefits, based on the fact that the individual denied coverage or benefits had a health condition that was present before the date of enrollment for the coverage (or a denial of enrollment), whether or not any medical advice, diagnosis, care, or treatment was recommended or received before that date. This would include exclusions stemming from a condition identified via a pre enrollment questionnaire or physical examination, or the review of medical records during the pre enrollment period. Waiting period. Pre existing Condition Insurance Plan (PCIP) also cannot impose any type of coverage waiting period upon eligible individuals. For purposes of this rule, a waiting period is defined as the period immediately following the effective date of enrollment in which some or all benefits in the coverage are not provided. Accordingly, once an individual is enrolled in a PCIP consistent with the rules set forth in subpart C, full coverage must be provided to the individual starting with the effective date of enrollment. Application to children less than 6 months old. In light of the unique circumstances presented by infants who are less than six months old, the Department will issue guidance on how the requirement that the individual not have had creditable coverage during the six month period prior to the application for the PCIP program applies to and can be satisfied by such infants. Factors to be considered in this guidance include whether coverage in the hospital under the mother's plan at Updated September 23, 2010 Page 3

4 birth counts, current practices regarding insurers' coverage of newborns, and the anti dumping rules that direct the Secretary to prevent disenrollment of individuals from existing insurance due to their health status. Verifying pre existing condition. A PCIP may determine that an individual has a pre existing condition, for purposes of PCIP eligibility, based on satisfying any one or more of the following criteria, subject to HHS approval: (1) The individual provides documented evidence that an insurer has refused, or has provided clear indication that it would refuse, to issue individual coverage on grounds related to the individual's health; (2) the individual provides documented evidence that he or she has been offered individual coverage but only with a rider that excludes coverage of benefits associated with a pre existing condition; (3) the individual provides documented evidence that he or she has a medical or health condition specified by the State and approved by the Secretary; or (4) other criteria as defined by the PCIP and approved by HHS. In the PCIP program serving States that have elected not to play a role in operating a PCIP program, only the first two criteria will be used, except with respect to individuals who are guaranteed to be issued a policy. Residence requirement. An individual must be a resident of one of the 50 States or the District of Columbia which constitutes or is within the service area of the PCIP. Eligibility does not include territories. Enrollment/Disenrollment. PCIPs must establish a process for enrolling and disenrolling individuals that is approved by HHS, with the intent that the use of established enrollment policies and procedures in place under existing State high risk pools would be appropriate, to the extent that they are consistent with the statute. PCIP must allow an individual to remain enrolled unless the individual is disenrolled under specified circumstances (i.e., the individual moves out of the service area, obtains other creditable coverage, dies, does not pay the premiums, or other special circumstances) or the PCIP program is terminated. For disenrolling an individual who does not pay premiums on a timely basis, the PCIP must provide the enrollee with sufficient notice and reasonable grace period for payment prior to any disenrollment taking effect not to exceed 61 days (the longest period currently provided for by States). The consequence of failing to pay premiums and any subsequent disenrollment is that an individual loses access to coverage and may not be able to re enroll for 6 months. Those special circumstances would include cases of fraud or intentional misrepresentation of material fact, and HHS will work with the PCIPs to establish guidance in this area. An individual who is disenrolled because he or she no longer resides in the service area of a PCIP does not have to satisfy another 6 month continuous period without creditable coverage before applying to enroll in a PCIP in the new State of residence. PCIP must also establish rules governing effective dates of enrollments and disenrollments. In particular, a PCIP program must specify the deadline for receiving an enrollment application that would take effect on the first of the following month. In general, an individual who submits a complete enrollment request by an eligible individual by the 15th day of a month could access coverage by the 1st day of the following month. Exceptions to this policy will be subject to approval by HHS. Updated September 23, 2010 Page 4

5 Additional flexibility. Given the capped appropriation for this program, PCIPs need sufficient programmatic flexibility to manage their costs and enrollment, to help ensure that the PCIP program's funding allocation is sufficient to cover claims and other program costs for the entire duration of the program. Thus, a PCIP program may employ strategies to manage enrollment over the course of the program that may include enrollment capacity limits, phased in (delayed) enrollment, premium and benefit adjustments that indirectly affect enrollment, and other measures, as defined by the PCIP and approved by HHS. Required benefits. The list is consistent with the most commonly covered services offered in existing State high risk pools, according to a survey conducted by the National Association of State Comprehensive Health Insurance Plans (NASCHIP) in Its benefits are also parallel to the benefits offered by the Federal Employees Health Benefits Plan (FEHBP). Excluded services. This list of excluded services parallels that of FEHBP. The services covered by the PCIP program shall not include abortion services except in the case of rape or incest, or where the life of the woman would be endangered. Insurance rates. PCIP must not offer enrollees premiums at a rate that exceeds 100 percent of the standard individual market rate in the PCIP service area. This interim final rule does not mandate a specific formula for calculating the standard rate, but any methodology must be approved by the Secretary. Premiums charged in the PCIP can vary by age on a factor of not greater than 4 to 1. Gender rating is prohibited in the PCIP program, and rating must be based on a finite number of factors outlined in section Out of pocket costs. Out of pocket costs are defined as the sum of the annual deductible and the other annual out of pocket expenses, other than for premiums, required to be paid under the plan. The out of pocket limit may be applied only for in network providers, consistent with the terms of PCIP plan benefit package. Network providers and emergency room coverage. PCIP may specify the network of providers from whom enrollees may obtain services, provided that the PCIP demonstrates to HHS that it has a sufficient number and range of providers to ensure that all covered services are reasonably available and accessible under such coverage. In the case of emergency room services, such services must be covered out of network and out of area if (1) the enrollee had a reasonable concern that failure to obtain immediate treatment could present a serious risk to his or her life or health; and (2) the services were required to assess whether a condition requiring immediate treatment exists, or to provide such immediate treatment where warranted. Appeals procedures. PCIP must provide for a timely redetermination of an eligibility or coverage determination; coverage determinations include both whether an item or service is covered and the amount paid by the PCIP. For coverage determinations, an enrollee has the right to a timely second level appeal, or ``reconsideration,'' by an independent entity. Anti dumping provisions. PCIPs must establish procedures to identify and report to HHS instances where health insurance issuers or group health plans are discouraging high risk individuals from remaining enrolled in their current coverage, in instances where such individuals subsequently are eligible to enroll in the PCIP. Cap on administrative expenses. PCIPs can spend no more than 10 percent of its total allotted funds towards administrative expenses. Typical examples of the types of administrative costs and Updated September 23, 2010 Page 5

6 expenses include: Start up and program implementation activities, the production and distribution of information and outreach materials, eligibility determination and enrollment processing, claims processing, costs associated with prevention and detection of fraud, waste and abuse, and other ancillary services such as operation of a customer service call center, account maintenance, and appeals. Given the start up costs for the new PCIPs, and the need for expeditious implementation, this 10 percent cap applies to the total allotment for the duration of the program, as opposed to spending in a given year. PCIP funding. PCIP funding allocations are based on a blended formula based on the State population, number of uninsured individuals under 65, and geographic health care costs, in which half of the allocation is based on the number of the nonelderly population in each State, compared to the total U.S. nonelderly population. The health care cost index that HHS will use to adjust the funding allocations will be based on the wages of employees in the health services industry, and is consistent with the Children's Health Insurance Program. Over time, spending under the PCIP program will be determined based on the actual enrollment and cost experience of the PCIPs across the country, which means that HHS may propose appropriate reallocations of funds. State maintenance of effort. States must submit a process, which must be approved by the Secretary of HHS, to ensure that they are maintaining their current effort, which may include maintaining either the total amount or the total per capita amount of State funding for the operation of an existing high risk pool, maintaining the same formula for providing funding for a State high risk pool, or establishing an altered formula that the Secretary determines will not reduce the total funds expended on the existing high risk pool. Termination of program. Enrollee coverage under the PCIP program will end effective January 1, 2014 and coverage of claims under the PCIP program will extend only to the costs of covered services provided up through December 31, Legislative text: SEC IMMEDIATE ACCESS TO INSURANCE FOR UNINSURED INDIVIDUALS WITH A PREEXISTING CONDITION. (a) IN GENERAL. Not later than 90 days after the date of enactment of this Act, the Secretary shall establish a temporary high risk health insurance pool program to provide health insurance coverage for eligible individuals during the period beginning on the date on which such program is established and ending on January 1, (b) ADMINISTRATION. (1) IN GENERAL. The Secretary may carry out the program under this section directly or through contracts to eligible entities. (2) ELIGIBLE ENTITIES. To be eligible for a contract under paragraph (1), an entity shall (A) be a State or nonprofit private entity; (B) submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require; and (C) agree to utilize contract funding to establish and administer a qualified high risk pool for eligible individuals. (3) MAINTENANCE OF EFFORT. To be eligible to enter into a contract with the Secretary under this subsection, a State shall agree not to reduce the annual amount the State expended for the operation of one or more State high risk pools during the year preceding the year in which such contract is entered into. (c) QUALIFIED HIGH RISK POOL. (1) IN GENERAL. Amounts made available under this section shall be used to establish a qualified high risk pool that meets the requirements of paragraph (2). (2) REQUIREMENTS. A qualified high risk pool meets the requirements of this paragraph if such pool (A) provides to all eligible individuals health insurance coverage that does not impose any preexisting condition exclusion with respect to such coverage; (B) provides health insurance coverage (i) in which the issuer s share of the total allowed costs of benefits provided under such coverage is not less than 65 percent of such costs; and (ii) that has an out of pocket limit not greater than the applicable amount described in section 223(c)(2) of the Internal Revenue Code of 1986 for the year involved, except that the Secretary may modify such limit if necessary to ensure the pool meets the actuarial value limit under clause (i); Updated September 23, 2010 Page 6

7 (C) ensures that with respect to the premium rate charged for health insurance coverage offered to eligible individuals through the high risk pool, such rate shall (i) except as provided in clause (ii), vary only as provided for under section 2701 of the Public Health Service Act (as amended by this Act and notwithstanding the date on which such amendments take effect); (ii) vary on the basis of age by a factor of not greater than 4 to 1; and (iii) be established at a standard rate for a standard population; and (D) meets any other requirements determined appropriate by the Secretary. (d) ELIGIBLE INDIVIDUAL. An individual shall be deemed to be an eligible individual for purposes of this section if such individual (1) is a citizen or national of the United States or is lawfully present in the United States (as determined in accordance with section 1411); (2) has not been covered under creditable coverage (as defined in section 2701(c)(1) of the Public Health Service Act as in effect on the date of enactment of this Act) during the 6 month period prior to the date on which such individual is applying for coverage through the high risk pool; and (3) has a pre existing condition, as determined in a manner consistent with guidance issued by the Secretary. (e) PROTECTION AGAINST DUMPING RISK BY INSURERS. (1) IN GENERAL. The Secretary shall establish criteria for determining whether health insurance issuers and employmentbased health plans have discouraged an individual from remaining enrolled in prior coverage based on that individual s health status. (2) SANCTIONS. An issuer or employment based health plan shall be responsible for reimbursing the program under this section for the medical expenses incurred by the program for an individual who, based on criteria established by the Secretary, the Secretary finds was encouraged by the issuer to disenroll from health benefits coverage prior to enrolling in coverage through the program. The criteria shall include at least the following circumstances: (A) In the case of prior coverage obtained through an employer, the provision by the employer, group health plan, or the issuer of money or other financial consideration for disenrolling from the coverage. (B) In the case of prior coverage obtained directly from an issuer or under an employment based health plan (i) the provision by the issuer or plan of money or other financial consideration for disenrolling from the coverage; or (ii) in the case of an individual whose premium for the prior coverage exceeded the premium required by the program (adjusted based on the age factors applied to the prior coverage) (I) the prior coverage is a policy that is no longer being actively marketed (as defined by the Secretary) by the issuer; or (II) the prior coverage is a policy for which duration of coverage form issue or health status are factors that can be considered in determining premiums at renewal. (3) CONSTRUCTION. Nothing in this subsection shall be construed as constituting exclusive remedies for violations of criteria established under paragraph (1) or as preventing States from applying or enforcing such paragraph or other provisions under law with respect to health insurance issuers. (f) OVERSIGHT. The Secretary shall establish (1) an appeals process to enable individuals to appeal a determination under this section; and (2) procedures to protect against waste, fraud, and abuse. (g) FUNDING; TERMINATION OF AUTHORITY. (1) IN GENERAL. There is appropriated to the Secretary, out of any moneys in the Treasury not otherwise appropriated, $5,000,000,000 to pay claims against (and the administrative costs of) the high risk pool under this section that are in excess of the amount of premiums collected from eligible individuals enrolled in the high risk pool. Such funds shall be available without fiscal year limitation. (2) INSUFFICIENT FUNDS. If the Secretary estimates for any fiscal year that the aggregate amounts available for the payment of the expenses of the high risk pool will be less than the actual amount of such expenses, the Secretary shall make such adjustments as are necessary to eliminate such deficit. (3) TERMINATION OF AUTHORITY. (A) IN GENERAL. Except as provided in subparagraph (B), coverage of eligible individuals under a high risk pool in a State shall terminate on January 1, (B) TRANSITION TO EXCHANGE. The Secretary shall develop procedures to provide for the transition of eligible individuals enrolled in health insurance coverage offered through a high risk pool established under this section into qualified health plans offered through an Exchange. Such procedures shall ensure that there is no lapse in coverage with respect to the individual and may extend coverage after the termination of the risk pool involved, if the Secretary determines necessary to avoid such a lapse. (4) LIMITATIONS. The Secretary has the authority to stop taking applications for participation in the program under this section to comply with the funding limitation provided for in paragraph (1). (5) RELATION TO STATE LAWS. The standards established under this section shall supersede any State law or regulation (other than State licensing laws or State laws relating to plan solvency) with respect to qualified high risk pools which are established in accordance with this section. Updated September 23, 2010 Page 7