Earlier this week, we examined a major shift involving states’ proposals to impose work requirements for Medicaid recipients through Section 1115 waivers. The move, which was announced by the Trump Administration on January 11, would affect nearly 70 million low-income people receiving benefits.
According to CMS, ten states – Arizona, Arkansas, Indiana, Kansas, Kentucky, Maine, New Hampshire, North Carolina, Utah, and Wisconsin – have already sent in proposals to add work requirements for Medicaid. On January 12, Kentucky became the first to gain CMS approval. Mississippi has also submitted a waiver proposal to CMS, but it has not yet been certified as complete.
According to the Kaiser Family Foundation, 60% of non-elderly Medicaid recipients are already working full time or part time, and a majority of the remaining 40% are not working due to illness/disability, school attendance, or caregiving.
Kentucky Medicaid background
In 2014, Kentucky expanded its Medicaid program to all newly eligible adults with an income below 134% of the federal poverty level. According to Health Management Associates (HMA), despite high enrollment numbers, the state reported that health metrics were low – under 10% of beneficiaries received an annual wellness or physical exam during the first year of implementation. As of December 2017, Kentucky had 1.26 million members in managed care.
What makes Kentucky HEALTH unique?
Kentucky’s program includes a number of changes that would impact Medicaid expansion enrollees, as well as the traditional non-disabled Medicaid enrollees. The most notable changes are:
- Requiring members to pay a premium or fee for continuing coverage. The amount owed would be based on family income and would fall somewhere between $1 per month or 4% of household income.
- Changing coverage to not be effective until a member makes their first premium payment. Members below 100% of the FPL would not be subject to this.
- Cancelling coverage (above 100% of the FPL) when members fail to make a premium payment within the 60-day grace period. This would also bar them from reenrolling in coverage for 6 months unless they pay both past due and current premiums, as well as take a financial or health literacy course.
- Requiring 20 hours per week of employment activities, also referred to as ‘community engagement,’ as a condition of eligibility (certain membership is excluded from this).
- Adding a high-deductible health savings account (HSA) to existing capitated managed care coverage. These HSA accounts would promote making health conscience decisions, but would still be funded by the state.
- Disenrolling members who do not report income or employment changes, make false statements related to work, or not renew in a timely manner. These members will be barred from reenrolling for 6 months unless they pay both past due and current premiums, as well as take a financial or health literacy course.
Supporters of the program see these changes as a way to acclimate a population to paying monthly premiums for coverage, with the end goal of preparing them to enter a commercial (individual or employer sponsored) insurance market. Detractors of this program feel that with the changes outlined above, the uninsured rate will rise, and it could have a negative impact on the general health of an already fragile population.
Potential for challenges
As new programs are implemented, or existing requirements change, stakeholders – specifically the Managed Care Organizations (MCOs) – need to adapt in order to succeed. With new regulations come increased administrative burden, and that usually equates to a need for more resources. Policy makers were looking to find a balance between launching an innovative public health program, while allowing MCOs to build a sustainable market. Kentucky acknowledged this, and in their amendment to the initial waiver, certain provisions were simplified. One example was the work requirement, which was changed from a being a graduated value to a flat value.
Despite the best efforts of policy makers, some of the new regulations are still a challenge to the more traditional Medicaid payer organizations. These organizations are familiar with servicing a population of people based solely on receiving everything they need from the government. This essentially meant that if they received the member’s information, they enrolled them in coverage, and once a month they would receive a remittance of what the government deemed it would pay for that member’s continued coverage.
In this new landscape, certain members of the population would not immediately be effective in coverage, and would be responsible for paying a portion of that monthly premium. This means generating monthly invoices, collecting monthly premiums, and in the event of non-payment, ending health insurance coverage. While a commercial health insurance entity is familiar with these processes, they pose challenges to a more traditional Medicaid health insurance entity. Also, with what we learned from the ACA in terms of volatility, both commercial and Medicaid-based insurance entities could struggle with abrupt regulation or policy changes.
Softheon is one of the few technology partners that have proven their products are compatible with Medicaid expansion efforts, including what’s seen as the basis for the Kentucky HEALTH program, the Healthy Indiana Program (HIP) 2.0. Our SaaS, BPaaS platform has successfully managed the payment collection, bill generation, delinquency tracking, and state integration for the HIP 2.0 program for their health insurance partners since 2014.
As a proven leader, Softheon is positioned to provide both the technology and the knowledge that will allow an MCO to be successful in this exciting new market. To learn more, contact Hamoon Hadavand by phone at (202) 615-9222 or email firstname.lastname@example.org
The views and opinions expressed by the authors on this blog website and those providing comments are theirs alone, and do not reflect the opinions of Softheon, Inc. Please direct any questions or comments to email@example.com.
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