Tag Archive for States

Will States Sell Ads Like Nevada to Break Even on Health Exchanges?

By law, the online health insurance marketplaces created under the Affordable Care Act (ACA) must be financially self-sustaining by 2015. Most states are planning to pay for their operation by charging a user fee to insurers that sell their plans on the marketplaces, also known as exchanges. But those costs will likely be passed onto the customer, making health coverage under the ACA a little less affordable.

That gave one state, Nevada, an idea: sell advertising space on the exchange’s website to generate some extra revenue.

The state doesn’t yet know exactly how much money banner or pop-up ads could yield for the exchange, but every advertising dollar means a lower price for the people purchasing coverage. Officials are in the process of drafting a request for proposals and hope to have ads on the exchange site by the middle of 2014. Nevada’s marketplace — like others across the country — launches Oct. 1, 2013.

“If we broaden our revenue base, we will have a viably funded exchange. We want to be sure that we don’t just burden the insurance buyer,” says C.J. Bawden, a spokesperson for Nevada’s marketplace, the Silver State Health Insurance Exchange. “The more we can broaden our base, the more we can hopefully lower those charges and lower the price of insurance.”

For now, Nevada is the only state with definite plans to sell ads on its website. Governing surveyed 16 of the 17 state-based exchanges (Idaho was excluded because of its late start) and only three—Colorado, Hawaii and Vermont—said they were considering selling ads in the future.

As for the federal exchange that will sell insurance plans for the 30-plus states that decided not to set up their own marketplace, officials at the U.S. Department of Health and Human Services (HHS) say it won’t sell ads as a revenue source — but there’s nothing stopping the state-based exchanges from doing so.

So why aren’t more of them following Nevada’s footsteps?

Most likely because of the administrative and publicity headaches that might come with selling ads on a political lightning rod like the ACA’s exchange, says Jennifer Tolbert, director of state health reform at the Kaiser Family Foundation.

“States will want to be really careful about the ads that they allow on the exchanges. I suspect that’s why many states have chosen not to allow ads to be sold,” she says. “But as long as the state is really careful, it could be a good vehicle for revenue.”

That’s an issue already weighing on the minds of Nevada officials. Bawden gives the admittedly outlandish example of one of the state’s legal brothels trying to purchase ad space on the exchange.

“Obviously, that’s something we don’t think taxpayers would appreciate,” he says. “It’s easy to imagine the accompanying headlines.”

To avoid such a scandal, Nevada’s exchange is hoping to attract advertising partners who would further its mission of extending health coverage to uninsured Americans. Dental and vision insurance plans, which could supplement the more traditional medical coverage that will be sold on the marketplace, could be obvious targets. The details will be ironed out after the request for proposals is finalized and responses are received.

The relative smoothness (or bumpiness) of Nevada’s experience could inform other states’ decisions, Tolbert says, but there’s another to-be-determined factor: how much it actually costs to operate an exchange. Right now, with the federal government footing the bill, it’s mostly guesswork, but estimates of exchange operating costs range from $25 million to $60 million or more, according to the Kaiser Family Foundation.

If the exchanges end up being more expensive than states expected or if fewer people enroll in the exchanges than anticipated, that could cause officials to return to the idea of advertisements as a revenue stream.

“If it comes down to a choice between significantly increasing the assessments and looking toward other ways to generate revenue, states could be open to trying something new,” Tolbert says.

The Year Ahead in Health Reform: Dylan Scott’s educated guesses about what to expect from the Affordable Care Act in its first year of full implementation.

Exchange enrollment will be (a little) lower than expected. The almost exclusive focus on outreach in the six months or so leading to the exchange openings on Oct. 1 should tell you that even supporters of the law are worried about whether they can get enough people to sign up for coverage. When four in 10 Americans say they don’t know the ACA is still law — and those proportions rise among the low-income people the law is intended to benefit — I think the White House might struggle to reach its goal of 7 million enrollees in the first year. At least five more states will expand Medicaid by 2015. I’m looking to historical precedents on this one. ACA supporters will often point out that nearly half the states didn’t join Medicaid when the program was created in 1965, but almost all of them had within the next few years. I think the prospect of losing another year of 100 percent federal funding for expansion will be too much for at least a handful of states to pass up. The 2014 midterm election complicates this a bit, but there are enough states that were close to expanding this year — Florida, Ohio and Tennessee, to name a few — that it’s easy to see them finishing the job next year. Obamacare will become a little more popular once it’s fully implemented. I’m not expecting conservatives to have a sudden change of heart and embrace the law, but the ACA’s approval and disapproval ratings have hovered in the low 40’s since it was passed, which means that close to 20 percent of people are undecided. That’s a lot of people who could be won over, and 2014 finally brings the most visible parts of the law: the exchanges and the Medicaid expansion. People will actually know other people who are getting health coverage because of Obamacare. I think that starts to turn the tide in the law’s favor.

States to Offer Additional Subsidies on Health Exchanges

At least three states plan to offer additional subsidies next year for health coverage purchased on Obamacare’s health insurance marketplaces, on top of the federal tax subsidies offered as part of the health reform law.

Officials in Massachusetts, New York and Vermont are considering various state-funded subsidy packages, although they differ in their scope and generosity. It is yet another reminder that, while much of the debate over the Affordable Care Act (ACA) centers on states that are refusing to implement the law, some are going beyond what Congress prescribed back in 2010.

New York and Vermont have one thing in common: They both currently offer Medicaid coverage to people above 138 percent of the federal poverty level, the new Medicaid eligibility threshold under the ACA in states that decide to expand the program. So those people above that line who currently receive Medicaid will instead purchase health coverage through the marketplaces, also known as exchanges, starting next year. The additional state subsidies are intended to make sure that being insured isn’t more expensive for that population when they move to the exchange, state officials say.

Massachusetts is slightly different, though the principle is the same: That state’s 2006 health reform law, which served as a model for Obamacare, included more generous subsidies than the federal law. So the state-funded subsidies on the exchange will help offset any difference in cost once the federal subsidies kick in next year.

“The concern for some states is that the subsidies in the exchanges… just aren’t good enough to enable folks to enroll,” says Jennifer Tolbert, who tracks exchange implementation for the Kaiser Family Foundation. “These states are looking at ways to improve the affordability of that coverage so more people will enroll.”

Vermont is planning to provide state-based subsidies to people with incomes between 138 percent and 350 percent of the federal poverty level (the federal subsidies go to 400 percent of the poverty level, roughly $46,000 for an individual) because those people currently qualify for Medicaid. The subsidies would offset the cost of premiums by another 1.5 percent on top of the federal subsidies. About 40,500 Vermonters are expected to receive the additional assistance, at a cost of $2.9 million to the state in 2014.

The state would also pay insurers to reduce both the deductible and out-of-pocket maximums of exchange coverage for those people. For example: someone making between 200 and 250 percent of the poverty level currently has a deductible of $500 for Medicaid, but that would increase to $1,900 for a private plan under the ACA. The state would therefore pay the difference for someone to purchase a plan with a $700 deductible. For someone making between 300 and 350 percent of the poverty line, the state would pay to lower their deductible from $1,900 to $1,500.

“In our state, Medicaid expansion really means Medicaid contraction,” says Mark Larson, commissioner of the department of Vermont Health Access. “When we thought about transition to 2014, we had a question of how do we maintain an affordability standard that we’ve already achieved in Vermont. What we attempted to do was maintain as close to the standard that we already had.”

The proposal in New York would function similarly to Vermont’s plan for premiums, though it would apply to a narrower income bracket. New York currently covers working parents with incomes up to 150 percent of the poverty level under Medicaid, so the state subsidies would apply to people between 138 percent of the poverty level and 150 percent.

Massachusetts extended Medicaid coverage (administered through private managed care plans) to individuals and families making up to 300 percent of the poverty level under its 2006 law; about 200,000 people were insured as a result. The 2006 law’s subsidies for that coverage were more generous than what the ACA will provide next year, however, so the state plans to offer state-funded subsidies to keep the cost of coverage the same for people up to the 300 percent threshold. As in Vermont, the size of the additional subsidies will be based on a sliding scale. State officials expect 150,000 people to qualify for the state subsidies, which are estimated to cost $120 million.

“We had a lot of success in our state with our first reform, and we expect that this will maintain the coverage gains that we’ve gotten to date,” says Candace Reddy, Massachusetts’s assistant secretary for health care finance.

Similar proposals were weighed to some degree in Connecticut and Maryland before being discarded. Connecticut Gov. Dannel Malloy proposed sending parents currently enrolled in Medicaid with incomes between 138 and 185 percent of the poverty line to the exchange and then providing premium assistance for their new coverage. But the legislature rejected Malloy’s plan, opting instead to keep those people on Medicaid.

The idea of additional state-funded subsidies was also floated briefly in Maryland, though nothing formal was ever introduced.

“I would say it would be a possible consideration for the future, but we’re locked into what we’re doing for year one,” says Joshua Sharfstein, Maryland Secretary of Health and Mental Hygiene.

The approach Massachusetts, New York and Vermont are taking makes some sense because concerns about the affordability of exchange coverage are very real, says Caroline Pearson, who tracks state ACA implementation for Avalere Health, an independent consulting firm.

According to a recent Avalere analysis, patients with incomes of 350 percent of the poverty level and below who reach the out-of-pocket maximum allowed under the ACA would be considered “underinsured” based on the percentage of their income that they could end up spending on medical costs, even with the available federal subsidies. For example: the study found that people making 300 percent of the poverty level could still spend up to 20 percent of their income on health care, while the underinsured threshold is 10 percent.

Therefore, the additional subsidies that these states are considering could help offset those costs and make it more affordable for people to enroll in the exchanges and purchase coverage, Pearson says.

“The subsidies still leave a bit to be desired. They still leave a lot of out-of-pocket costs,” she says. “It’s a pretty big deal for patients in these states if they get additional subsidies, but the question is: Can they sustain it?”

This story was originally published by GOVERNING.com. Photo courtesy of Shutterstock.

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States Prepare to Launch New Health Law

With the Affordable Care Act set to debut in January, state legislators debated dozens of measures related to the historic health care law—from overhauling insurance laws and designing health “exchanges,” to shoring up anti-fraud protections and increasing the ranks of doctors and nurses.

On top of that, the politically volatile question of Medicaid expansion grabbed headlines, especially in the five states that still haven’t decided whether to expand the program.

“It’s been an IT undertaking of Manhattan Project proportions,” says Matt Salo, director of the National Association of Medicaid Directors.

Salo was referring to the need to mesh Medicaid enrollment with the new health insurance exchanges, but he could have been talking about any of the dozens of technical and administrative changes state officials must make to prepare for the Affordable Care Act (ACA).

For example, state insurance regulators in nearly every state have been racing to approve hundreds of new insurance policies that will be offered on the exchanges starting Oct. 1. Meanwhile, the Medicaid expansion debate has highlighted longstanding problems with the federal-state health program for the poor, prompting many states to make changes.

Alabama Republican Rep. Greg Wren said the ACA “provided a real jolt to our governor and our legislative leadership to look at systemic reforms of our Medicaid program.” The result, Wren said, was the state’s first major Medicaid overhaul, designed to better coordinate patient care and reduce costs.

As of today, 21 states and the District of Columbia have decided to expand Medicaid. In at least five more states – Arizona, Florida, Michigan, New Hampshire and Ohio – governors support expansion but Republican-dominated legislatures continue to debate the issue. In Maine, Republican Gov. Paul LePage is threatening to veto an expansion passed by the majority Democratic legislature.

Under the current eligibility rules, Medicaid mostly covers pregnant women and young children, disabled adults and the elderly. Under the expansion envisioned in the ACA,  it also will cover adults, many of them childless, between the ages of 18 and 65 with incomes up to 138 percent of the federal poverty line—about $15,900 for an individual and $32,500 for a family of four.

Many states plan to extend their use of managed care to cover these new adults, aiming to add more primary care providers to their existing networks of obstetricians, pediatricians and other specialists.

To boost the ranks of primary care providers, more than a dozen states enacted laws this year expanding the so-called “scope of practice” for nurse practitioners. These nurses with advanced degrees are trained to provide the same care as primary care doctors, but are prevented from doing so by state medical licensing restrictions. The new laws put nurse practitioners on an even footing with primary care doctors.

States also expanded licensing of retail health clinics, which typically see patients in drug stores or big-box retail stores, and enacted reciprocal licensing laws that allow doctors in neighboring states to care for out-of-state patients in rural areas through the use of telemedicine technology.

Even in states that choose not to broaden Medicaid under ACA, 2014 is likely to bring a substantial increase in state Medicaid rolls: The Congressional Budget Office predicts that millions of Americans who already qualify for Medicaid will enroll for the first time once national ad campaigns publicize the new health law’s individual insurance requirement.

Texas, for example, has firmly opposed Medicaid expansion under the ACA, but the state is expecting 555,000 people to sign up for Medicaid in the next nine years, growth that may cost the state nearly $4 billion.

Nationwide, the total cost of covering a projected 5.7 million people who are already eligible for the program but have never enrolled is estimated at $68 billion for states and $152 billion for the federal government, according to a study by the Kaiser Family Foundation and the Urban Institute.

Meanwhile, some GOP governors and lawmakers who are reluctant to expand Medicaid under the ACA are mulling alternative ways to expand coverage. One plan, referred to as “the Arkansas model,” would cover newly eligible adults through private insurance policies available on the health insurance exchanges. But the federal government has yet to approve that approach.

The health insurance exchanges will be online marketplaces where uninsured people can compare insurance policies, find out whether they qualify for either Medicaid or federal tax subsidies, and purchase insurance. The ACA allows states to either run their own health insurance exchanges, partner with the federal government, or let Washington run an exchange for them.

Insurance regulators in nearly every state began qualifying participating insurance companies and the policies they plan to offer starting in April. The process must be completed by July 31.

So far, California, Colorado, Maryland, Oregon, Rhode Island, Vermont and Washington have made public the names of the companies that have applied and their proposed policy prices. In every state, the new rates for individual and family policies on the exchange are expected to be higher than existing individual insurance policies. But because of new insurance company requirements in the ACA, the benefits for exchange plans in 2014 will be broader and there will be no caps on claims, making it difficult to compare them to today’s policies.

Stateline’s Legislative Review looks at policy and politics in the states since legislatures began their work in January. The five-part series will include analytical articles, infographics and interactives.

Every year, unscrupulous health care providers squander billions of state dollars by overbilling, filing claims for services that were never provided, or otherwise cheating the system. With millions of newly eligible beneficiaries and billions of federal dollars coming into state Medicaid programs next year, the authors of the ACA reasoned that opportunities for criminal activity would surge unless states increased fraud prevention efforts.

In addition to federal requirements, lawmakers in several states voted for additional anti-fraud measures this year. “Fraud fighters have to keep investing in new tactics and technology to stay one step ahead of the bad guys,” said Megan Comlossy, health expert with the NCSL.

Under the ACA, states are required to ramp up background checks on new health care providers and immediately suspend claims payments when there is a “credible allegation” of fraud. Arkansas, Florida, Iowa and Texas enacted laws defining what type of evidence is needed to make such a credible allegation.

The federal health law also calls on states to report doctors and other providers they have kicked out of their Medicaid programs. The list will be kept in a national database that includes the names of providers who have been terminated from Medicare. The database is intended to prevent crooked health care providers from simply moving from state to state or from Medicare to Medicaid.

In addition, the law provides federal money to states that invest in new technology designed to spot criminal activity before claims are paid. Arkansas, Colorado, Massachusetts and Texas this year approved new laws calling for investment in so-called “predictive modeling” software similar to what credit companies use to reveal patterns of illegal activity, according to NCSL.

Whether states can stop more criminals from siphoning money from Medicaid remains to be seen. The same goes for state efforts to attract more primary care providers to serve the newly insured and educational campaigns aimed at convincing low-income adults to sign up for tax credits.

One thing is certain: Though most state legislative sessions will be over by July, the work of implementing the ACA will go on for years.

This article originally appeared on Stateline, a nonpartisan, nonprofit news service of the Pew Center on the States that provides daily reporting and analysis on trends in state policy.

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Medicaid Fraud: Is it Worth States’ Time to Fight it?

Medicaid fraud has been a big problem for years, and as states ramp up for the Affordable Care Act’s Medicaid expansion deadline in 2014, it could become an even bigger one. More enrollees plus more providers equals more fraud potential. When estimates place the amount of Medicaid waste in 2012 at $19 billion for the feds and $11 billion in 2010 for the states, we’re talking real money. Can states really put a lid on fraud? And, more important, is it worth the cost to do so?

The first question can be answered by the Centers for Medicare & Medicaid Services, which recently compiled a list of “noteworthy picks,” or on-the-ground state policies that had succeeded at eliminating fraud. The answer to the second is a bit trickier. But the numbers from three states — California, Florida and New Jersey — suggest fraud prevention pays.

Let’s start with California. Lauded for its prevention measures, the state conducts a “Medi-Cal Payment Error Study” once a year to find patterns that would suggest fraud or waste. Bruce Lim, deputy director of audits and investigations for the Department of Health Care Services, calls the study “our road map.” It focuses on fee-for-service providers, and in 2009, the error study “showed about $1 billion in potential overpayments, which could include administrative and other errors,” Lim says. “Of that $1 billion, there is about $228 million in potential fraud.

“[We are] trying to stop the bleeding instead of the usual pay-and-chase model,” he says. The numbers suggest the state’s strategy is working. In fiscal 2011-2012, fraud prevention had a $445 million “positive impact” in areas such as overpayment prevention ($106 million), cost avoidance ($28 million), cost savings ($47 million) and recovery ($102 million). With a department budget of $75 million, that computes to a return on investment of about 6:1. Lim thinks he can do even better: “I know that with newer technologies and data mining we can do more.”

Florida’s approach is less high tech and more gumshoe. State officials conduct random, unannounced site visits for all kinds of providers, both before contracting with them and after. In one six-month period, officials visited 244 active providers and administered 175 sanctions. Overall, in fiscal 2010-2011 audit recoveries and cost avoidance amounts totaled $90.1 million, yielding an ROI of 6.8:1. “The value [of fraud prevention] is extraordinary,” says Kelly Bennett, Florida’s Medicaid fraud and abuse liaison. “Because we are out there visiting providers, we believe we increase compliance, which equates to cost savings.”

New Jersey has an initiative with the cool, spy-like moniker “Operation X.” The program tries to prevent individuals who have previously engaged in unethical or fraudulent practices from collecting Medicaid in the first place. The office matches information from a federal exclusion database against state wage and labor roles, says Mark Anderson, director of the Medicaid Fraud Division. “The feds give us access to their database, and we see if any of their folks have gotten any money whatsoever in New Jersey. Once matched, we assign an investigator to determine if that person worked at any place with Medicaid funding or services. If so, we seek to recover money from that individual and the places he or she worked, and if he or she was a provider, we try to recover the money.”

This one practice nets anywhere from 50 to 200 leads per month, Anderson says, and about 10 to 12 percent of those get investigated. Most cases settle; in total, Operation X sought or collected $970,000 between June 2009 and June 2011. That goes toward New Jersey’s fraud prevention bottom line, which in fiscal year 2011 totaled about $502 million in recovered and avoided payments on office costs of about $8 million, an ROI of about 6.3:1.

So does fraud prevention pay? As these three states show, it certainly can. The takeaway, however, may be in how its done.

This story was originally written and published by Governing magazine.

Veterans Access Federal Benefits, Save States Millions

One man’s effort in Washington state to help veterans find federal benefits has grown into independent efforts by dozens of states. Repurposing an existing reporting tool, states are not only connecting veterans to better benefits, but also saving millions in Medicaid costs. 

Washington state’s Public Assistance Reporting Information System (PARIS) allowed them to identify war veterans who were enrolled in Medicaid but not taking advantage of federal veterans’ benefits. The state then notified them of the benefits to which they were entitled, and moved them off of state Medicaid and onto federal program.

Since 2004, Washington state has saved more than $30 million using this system, while helping veterans get access to more comprehensive care.

History of PARIS

PARIS, a 20-year-old system operated by the U.S. Department of Health and Human Services’ Administration for Children and Families, was originally intended to help states identify Medicaid recipients who were cheating the system by applying for benefits in multiple states.

In 2002, Bill Allman, then an employee of the Washington Department of Social and Health Services, began looking for a way to see if the veterans he was helping were eligible for federal veterans’ benefits.

The information he was looking for was in PARIS. Using the system in a way no one had thought to try before, Allman, now the president of PARIS, realized savings for his state and greater benefits for the veterans he was helping. Allman launched the Veterans Benefit Enhancement Project, now a core component of PARIS. He now advises more than 30 states looking to realize the same savings he found for the state of Washington.

“Medicaid dollars, particularly long-term medicaid dollars, are going up at the rate of 200 to 250 percent,” Allman said. “By 2015, it will go up by 300 percent.”

As Medicaid costs rise and an increasing number of veterans are unable to pay back their long-term care Medicaid loans, the state is often forced to put liens on veterans’ homes. There’s no reason for veterans to be put in a position like that, Allman said, especially when they may not need to be on Medicaid in the first place. “When we tell them about the benefits they’re entitled to, they always say the same thing,” Allman said. “They say, ‘Why did no one tell me about this before?'”

Following the PARIS mandate

All states are now required to participate in PARIS, per a 2010 mandate from the Centers for Medicare and Medicaid Services. Naturally, states want to get the most out of the system they are required to use, by following Allman’s lead. “I want every state to do this,” Allman said. With the Affordable Care Act, Allman pointed out, states will need to offer health care options to all citizens anyway, so it would be in the states’ best interest to shift some of the support to the federal level.

Officials in more than 30 states are now in various stages of implementing the Veterans Benefit Enhancement Project.

California ran a pilot program from 2009 to 2011. Limited to a handful of counties, the pilot  focused on veterans classified as 100 percent disabled, saving the state $1.6 million. A report on the pilot deemed the program cost-efficient and suggested that it be expanded.

One of the biggest challenges in California was dealing with large sets of overlapping data. While more than 16,000 matches were initially identified as potentially eligible to be moved to federal benefits, duplicates and other complications reduced that number to just 4,000. Of those, just 990 veterans were contacted to gather further information on their eligibility. In the end, just 24 veterans were taken off Medi-Cal and moved to federal benefits. The savings to the state were significant, however, and the veterans also benefitted as they could now pay living expenses with VA benefits, which never need to be repaid.

The program continues to be effective in California, but Manuel Urbina of the California Department of Health and Human Services Medi-Cal Eligibility Division said the state needs dedicated personnel in order to expand implementation. “For this to be successful,” Urbina said, “the state experience has been that you need people to do dedicated case management. … The return on investment equation is there. We didn’t invest hardly anything, and we got this large return, so the potential is there.”

Additional outreach needed

What the Veterans Benefit Enhancement Project does is very basic, Allman said. The program is simply identifying veterans who would benefit from federal funding and then educating them. The problem for states is identifying who those veterans are. A report by the U.S. Government Accountability Office (GAO) found that 62 percent of veterans may be eligible for enhanced monthly VA benefits, but only 22 percent of veterans receive those benefits. The GAO recommended that the VA conduct more focused outreach to educate veterans in order to address the disparity.

“It bothers me that states don’t do outreach on their own or that the VA doesn’t do some kind of national campaign to help veterans understand what the benefits are,” Allman said. “So I think it’s up to the states to do the outreach for the VA.” Being a veteran himself, and passionate about helping people, Allman said that the money states can save through this program has always been a secondary consideration to him. He concedes, however, that the potential savings is compelling motivation for states to educate their veterans and consider adopting his system.

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