Effective January 1, 2014, expansion to cover all non-elderly individuals at or below 133% FPL. o

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1 Federal Health Care Reform side-by-side with Vermont Implications Draft Reflects known changes as of 10/22/09 [Note: Most of the bill information comes from the NGA side-by-side as of 10/13/09) * Red Reflects comments pertaining to Vermont Senate Finance Committee Senate HELP Committee House Tri-Committee Vermont Implications Issue Medicaid Eligibility Expansion & Maintenance of Effort (MOE) Effective January 1, 2014, expansion to cover all non-elderly individuals at or below 133% FPL. o HELP Committee does not have jurisdiction of Medicaid but assumes expansion to 150% FPL. Beginning 2013, expansion to cover childless adults and children under 133% FPL o Newly eligible adults (parents and childless adults) between % FPL are permitted to choose to enroll in Medicaid or an exchange with federal subsidy. Clawback for individuals who go to exchange. MOE on state eligibility policies for all previously eligible populations upon enactment. o Above 133% - expires when state exchange operational MOE Exemption between January 1, 2011 and January 2014, state exempt from MOE for optional non-pregnant non-disabled above 133% if state certifies a budget deficit in the following state fiscal year. Enhanced match for newly eligible defined as non-elderly, non-pregnant at or below 133% who were not previously eligible. Permits hospitals to make presumptive eligibility determinations for all Medicaid populations. Income eligibility changed to AGI. Vermont has no population that would qualify as newly eligible therefore unable to draw enhanced FMAP. After 2014, policy option to keep Childless adults also eligible for the exchange in some instances. MOE based on state plan or waiver in effect on 6/16/09. Requires states to eliminate asset tests for certain populations after exchange is operational. State s must accept Exchange s determination of Medicaid eligibility. 100% FMAP for expansion populations, including individuals covered by waiver and state-only funds for CY s 2013 and Beginning CY 2015, 90/10 match. Additional FMAP increases regular FMAP by 0.15% points for existing populations to offset add l costs of MOE. Vermont would receive enhanced match for adults under 133% of FPL (could be limited to VHAP, but there is an argument it should be all adults in Medicaid or VHAP). Vermont would receive additional.15% match for all other existing populations. Limited Medicaid populations would have choice to enroll in the Exchange or Medicaid because of MOE requirement. Savings dependent on voluntary take up Because, Vermont already covers the expansion population, VT is not eligible for E- FMAP for individuals who are eligible but not enrolled. Clawback may increase costs. Policy options on where certain groups are covered. MOE begins 2013 through perpetuity prohibiting Vermont to do things that restrict eligibility such as premium increases. New populations have option of enrolling in the exchange. Vermont would receive E-FMAP for newly enrolled VHAP beneficiaries under 133% FPL and.15% match for all other populations. New MCO rules are problematic for OVHA.

2 existing Medicaid waiver programs or to discontinue existing waiver programs for individuals over 133%. These individuals may enroll in Exchange at 100% federal cost. Unclear if this would increase costs to individuals or reduce benefits. Newly eligible adults with incomes between % may choose the Exchange. Clawback needs to be analyzed. More analysis needed on AGI income change to determine impact on eligibility. on Exchange over Medicaid waiver programs. Kids addressed below. CHIP/Medicaid for Kids Medicaid Benefits and Services Kids addressed below. States required to maintain current CHIP eligibility through December 31, No statutory changes to existing federal income eligibility and disregard policies. Parents have the choice to enroll children in the exchange with a state EPSDT wrap. In 2014, states will receive a 23% point increase above current enhanced CHIP FMAP rate for kids with family incomes. Vermont currently provides a wrap to underinsured kids. Increased F-MAP will result in state savings. Newly eligible population eligible only for Sect benchmark benefits. Unclear if VHAP qualifies. Allows Medicaid eligible children to receive hospice services without forgoing any other service. OVHA studying cost implications of requesting this through our waiver MOE on CHIP eligibility based on state plan on 6/16/09; MOE ends when CHIP population can enroll in exchange in Requires that all CHIP-eligible children who newly receive health insurance through the exchange have access to Medicaid s EPSDT benefit or state program that provide similar services. Vermont currently provides a wrap to underinsured kids. More analysis needed to compare coverage. Benchmark benefit package or benchmark equivalent coverage must meet minimum benefits and cost-sharing standards of basic plan offered in the exchange, effective 1/1/13. Unclear if VHAP qualifies. Mandatory coverage (no cost Finance Bill 23% increase in CHIP E- FMAP is approx. 93% E-FMAP for VT which could result in savings/cost reduction for Vermont. Not clear which kids this applies to for us. More analysis needed. After 2013, kids coverage would be provided by the federal exchange, not Dr. Dynasaur. Results in cost-savings. Wrap is required, so benefits remain the same. Unclear if VHAP meets benchmark benefit package requirements. Could increase costs. VT has ESI, but appears it must be optional.

3 per Vt session law passed last session. Requires states offer premium assistance and wrap-around benefits to Medicaid beneficiaries who are offered ESI, if it s costeffective. Appears this must be voluntary; ESIA is currently an election of OVHA, not individual. States that cover USPSTF* recommended services and remove cost sharing, receive 1% increase in FMAP for those services. More analysis needed to determine which services Vermont covers and the cost impact on increased FMAP. sharing) for preventive services at regular FMAP. More analysis needed if additional services will be required. Vermont does not have cost-sharing for these services in Medicaid or waiver programs. Eliminates tobacco cessation exclusion from covered outpatient drugs. More analysis needed. Inclusion of Public Health clinics under VFC program Administrative changes needed. Unclear if VHAP meets minimum requirements of basic plan offered in the exchange. Could increase costs. Health Insurance Exchange - Options * U.S. Preventive Services Task Force Requires states establish an exchange for the individual market and in 2010, a Small Business Health Options Program (SHOP) exchange for the small group market. States can apply for a waiver to opt out of the insurance exchange and IRS provisions beginning July 1, Requires coverage to be as comprehensive as the exchange, must address cost-containment, delivery system improvements, and cover the same number of uninsured. Must show 10 year budget neutrality. State would receive the federal funds associated with the exchange subsidies. Catamount Health, with modification, probably qualifies as an exchange product. Unclear if state may wrap or State option to establish a gateway ; can choose to have federal government operate a gate for a minimum of 5 years, or neither. Gateway may operate in more than one state, if permitted by state. Insufficient detail to determine impact on Catamount Health. Create a new national health exchange, operational in May be administered by state Medicaid programs Phases in participation for individuals and employers State option to develop state or regional level exchange with HHS approval, in lieu of national exchange. Individual and small group market is preempted. Catamount Health preempted for new enrollees, existing purchasers are grandfathered. Unclear if existing enrollees are eligible for the Exchange. Increased administrative burden Catamount Health, with modification, probably qualifies as an exchange product States probably can regulate above federal floor Waiver option. Increased administrative burden on Medicaid Catamount Health preempted for new enrollees, existing purchasers are grandfathered. Unclear if existing

4 provide additional subsidies above the federal subsidies. Exchange Subsidies Advance, refundable tax credit payable to the insurer for exchange plan premiums for individuals between % FPL. Requires verification of personal data. Cost sharing subsidy for individuals between % FPL. More analysis needed to determine impact of premium assistance and cost-sharing subsidies on individuals enrolled in CHAP, ESIA, and VHAP (individuals over 100%). Medicaid Reimbursement Rates Authorizes funding for the Medicaid and CHIP Payment and Access Commission (MACPAC) which is charged with reviewing payment policies. Requires more detailed reporting requirements to states. Sliding scale federal subsidy for individuals with AGI not greater than 400% FPL. State may make payments for eligible individuals greater than federal subsidy. Would provide subsidies for individuals between %; increase access in Vermont. More analysis needed to compare AGI to current income eligibility rules. Sliding scale credits for family income between 133% - 400% FPL (AGI) if individual does not have access to affordable ESI. Create affordability credit to be applied to premium and costsharing for Exchange plan. Commissioner may approve and reimburse state Medicaid program to make eligibility determination for credit. Auto-enrollment in Exchange QHBP if determined eligible for and did not opt out or enroll in plan. Would provide subsidies for individuals between %; increase access in Vermont. More analysis needed to compare AGI to current income eligibility rules. Auto-enrollment would simplify enrollment. Mandatory rate increase for primary care providers to 80% of Medicare in 2010, 90% in 2011, 100% in Reimbursement rate increase (compared to 6/16/09 rates) 100% federally financed. The incremental cost for each state (reflecting any increase from rates in effect 6/16/09) will matched at 100% FMAP Beginning 2013, the FMAP for these costs will decline to enrollees are eligible for the Exchange. States probably can regulate exchange products in individual and small group market above federal floor. All Bills More analysis needed to compare subsidies and cost-sharing to CHAP, ESIA, and VHAP. VT matches 2006 Medicaid rates for primary care services ( Evaluation & Management codes). OVHA is currently in the process of reviewing how Medicaid rates compare to Medicare for over 10,000 codes.

5 Medicaid Prescription Drugs Payment Reform Individual Mandate Removes smoking cessation drugs, arbiturates, and benzodiazepines from the Medicaid s exclude list, effective January 1, Increases Medicaid s flat rebate from 15.1% to as much as 23.1%. Increase in basic Medicaid rebate for brand drugs from 11% to 15% of AMP. Makes changes in the definition of FUL. Should result in increased federal funds. Lewin Group estimates savings for Vermont. More analysis needed Establishes Medicaid bundled payment demonstration project for up to 8 states beginning Oct. 1, State option to develop medical homes and improve care coordination and transitional care for chronically ill enrollees. Individual mandate for all citizens and legal residents, effective Tax penalty for non-compliance, based on income, with caps. State option for auto-enrollment for individual and group markets. Individual mandate requiring purchase of qualified health insurance plan Tax penalty if individual does not have qualified insurance Secretary could exempt people. 90%. More analysis needed. FUL pegged at 130% of AMP and revises definition of AMP. Additional rebate for new formulation of existing drugs. Increase minimum rebate from 15.1% to 22.1% Should result in increased federal funds. More analysis needed. Option to pursue ACO demonstrations. 5-year Medical Home pilot project Once market reforms and affordability credits are in effect to ensure access and affordability, individuals responsible for having health insurance with hardship exception. Penalty 2% to 2.5% of MGI According to CBO, changes in drug policies could have positive fiscal impact for VT (between $1M to $5M/yr). JFO/OVHA have not run analysis. JFO/OVHA haven t analyzed fiscal implications. Is there still a problem with the date? House Bill Eliminate provision that prohibits simultaneous participating in ACO & medical home pilots All Bills Individual mandate will likely increase enrollment in Medicaid, VHAP, and Dr. Dynasaur. Take-up rate depends on enforcement and/penalties for noncompliance. Costs depend on policy choices made in Medicaid.

6 Employer Responsibilities (Including states as employers) Public Option Tax credit for small employer for contributions to purchase coverage for employees based on employer size. Small employer defined as no more than 25 FTEs and average annual wages no more than $40,000. No employer requirement to provide health coverage. Employers whose workers receive a tax credit in exchange must contribute to costs of coverage Effective 1/1/2013, employers with no more than 50 employees who do not offer coverage must reimburse federal gov t for each FTE receiving tax credit in the exchange Medicaid eligible employee could leave ESI. Employer not required to contribute. No Public Option State option to establish a non- Medicaid public plan for individuals % FPL. States would receive funding equivalent to 85% of the subsidies and tax credits the populations would receive. Must have premium assistance. Requires employers with 25 or more employees to offer adequate insurance coverage and contribute at least 60% to the cost of monthly premiums. Employers charged $750 annually for each FTE and $375 annually for each part-time employee without coverage. Create small business health options program credit giving certain employers a payment for providing health insurance to employees (requirement: <50 FTEs, average wage <$50K, and pay > 60% of premium). Create temporary reinsurance program for employment based plans for cost of providing health benefits to retirees 55 and older (plus spouses and dependents). Established by 90 days after enactment and ends when gateway established. Establishes public plan. Offered through Gateways Administered by HHS Secretary negotiates premiums and provider reimbursement rates, with payment rates not to exceed average local payment rates. Provider participation voluntary. Plan follows same rules in the state as private insurers for defining benefits, setting premiums, and protecting consumers. Employers must provide coverage for workers or contribute funds on behalf of uncovered workers. Employers with payroll above $500K subject to noncompliance penalty of 2% - 8%, depending on payroll size. Exempts employers with payroll less than $500K. Tax credit of 50% of the amount paid by a small employer for employee health insurance. Phase out for employers with 10 to 25 employees and for businesses with average wages of $20K to $40K. State receipt of federal funding under the Public Health Services Act is contingent upon a state s compliance with Division A of the House Bill (health benefits provisions. State s also must assure that political subdivisions are in compliance. Establishes public option. Subject to the same rules and requirements as other insurance products sold in the Exchange relating to guarantee issue and renewability, insurance rating rules, network adequacy, and transparency of information. Provider opt out. Rate negotiation with providers. Senate HELP Bill Vermont already has an employer assessment on employers who do not offer health insurance. This fee raises over $7M/yr for the Catamount Fund. What impact could this have on employers on top of federal tax? House Tri-Committee Vermont already has an employer assessment on employers who do not offer health insurance. This fee raises over $7M/yr for the Catamount Fund. What impact could this have on employers in conjunction with federal penalties? Will enforcement be at the state level or federal level?

7 Disproportionate Share Hospitals (DSH) Transparency of Manufacture Payments to Prescribers, Free Samples, & Physician ownership PBM Transparency Other Establishes trigger to reduce state DHS allotment. State DSH amount reduced 50% when state uninsured rate decreases by 50% (25% for low DSH). Establishes formula for further reductions with decline in insurance rate. Uses Census Bureau data and base year. Requires disclosure of free samples to HHS. Unclear if this information is public. Requires disclosure of physician ownership of facilities. Information is public. Requires manufacturers of pharmaceuticals, biologics, and medical devices to report payments to prescribers. Limited preemption of state law. Vermont currently does not require free samples to be disclosed. Possible preemption on this issue. Limited preemption of Vermont s disclosure law. Includes PBM transparency requirements. More analysis needed to determine impact on Vermont s transparency law. Requires states follow new statutory transparency rules when applying for 1115 demonstration waivers and state plan amendments Authorizes funding for obesity demonstration program. Reduces federal DSH payments Requires manufacturers of pharmaceuticals, biologics, and medical devices to report payments to prescribers. Limited preemption of state law. Welch to offer amendment to ban payments. Limited preemption of Vermont s disclosure law. Defines reimbursable Graduate Medical Education (GME) costs including reporting requirements. VT s low uninsured rate could make it easier to hit trigger to reduce DSH allotment. DSH reduction could negatively impact VT Hospitals House version is closer to Vermont law. More analysis needed on preemption provisions to choose a preferred option.