Featured Health Business Daily Story, Nov. 16, 2017

States’ Medicaid Reforms Add Work Requirements, Boost Cost Sharing

Reprinted from HEALTH PLAN WEEK, the most reliable source of objective business, financial and regulatory news of the health insurance industry. Subscribe today!

By Carina Belles, Editor of AIS’s Medicare and Medicaid Market Data (MMM)
October 23, 2017Volume 27Issue 37

Several states have submitted new or amended 1115 Demonstration Waiver requests that would allow them to implement alternative models of Medicaid delivery to improve member outcomes (and therefore cut costs) by integrating primary care, behavioral health services and long-term care. Other states are seeking conservative reforms such as limited eligibility, benefit designs that mirror employer-sponsored coverage and work requirements. Here’s a look at reforms in the works among states with notable 1115 demonstration waivers recently approved or still pending.

(1) Alabama’s Medicaid waiver would establish Regional Care Organizations (RCOs) to act as managed care entities with a localized focus on care management. The waiver was approved Feb. 9, 2016. The RCOs were set to launch Oct. 1, 2017, with the goal of becoming capitated full-risk managed care plans. However, citing uncertain funding sources beyond 2018, the state decided not to go forward with the program, and is working to design a new initiative more in line with Trump administration guidelines. Blue Cross Blue Shield of Alabama and Alabama Community Care Inc., a regional network of hospital and provider groups, were set to participate.

(2) Arkansas’ Arkansas Works program offers subsidized premiums on private health insurance provided by a participating employer or purchased on the state exchange to the state’s Medicaid eligibles with annual incomes of up to 138% of the federal poverty level (FPL). Depending on the member’s household income, the state may pay all or most of the monthly premium. The proposal, which has been pending since June 30, 2017, would limit eligibility to those living at 100% of the FPL or lower; eliminate subsidized premiums for employer-sponsored health plans; and implement work requirements for all members aged 19-49.

(3) Illinois created a strategy to integrate behavioral health into its Medicaid delivery system by offering several new benefits to all Medicaid recipients, including assistance with housing and employment searches, transitional services for incarcerated individuals, residential treatment programs for mental illness and substance abuse and in-home services for families of children with mental health needs. The proposal has been pending since Oct. 20, 2016.

(4) Indiana seeks to modify its Medicaid expansion program, the Healthy Indiana Plan (HIP) 2.0, with several new requirements, under an application that has been pending since July 20, 2017. It would make the voluntary Gateway to Work program a requirement for all able-bodied adults receiving benefits through HIP who are not working or in school at least 20 hours per week. The program also would require HIP beneficiaries at 22% or greater of the FPL to pay 2% of their monthly income to a Personal Wellness and Responsibility (POWER) account, similar to a Health Savings Account.

Health Plan Week

(5) Kentucky is seeking approval for a five-year demonstration project, Kentucky HEALTH. Its application has been pending since Sept. 8, 2016, with modifications proposed July 3, 2017. The demonstration would seek to cut down on costs and improve health outcomes by encouraging its nondisabled adult population to become more accountable for their care. The new requirements include work or educational activities of at least 20 hours per week as a condition of eligibility; disenrollment from the program if changes in employment or income are not reported in a timely manner; and monthly member premiums implemented on a sliding scale based on income.

(6) Maine intends to revamp its Medicaid program, MaineCare, by expanding on the state’s previous efforts to implement work requirements for nondisabled adults. Under the proposed demonstration, potential Medicaid beneficiaries aged 19-24 would have to work or pursue education at least 20 hours per week, perform community service for at least 24 hours per month, demonstrate proof of job search or participate in job readiness programs. They also would pay a monthly premium based on income, starting at 50% of the FPL. The application has been pending since Aug. 2, 2017.

(7) Massachusetts wants to see its Medicaid program become more aligned with commercial insurance markets, according to its waiver amendment request, which has been pending since Sept. 8, 2017. By January 2019, the state hopes to have all nondisabled adults with incomes over 100% of the FPL enrolled in Qualified Health Plans (QHPs) through the state’s exchange. It also would create a commercial-style closed formulary that allows the state to deny coverage of select drugs, with at least one drug available per therapeutic class; exclude drugs that have limited evidence of clinical value, such as newer brand-name drugs; and pursue its own pharmacy network, with an emphasis on limiting specialty pharmacies. These reforms were proposed in part to discourage consumers from seeking out MassHealth coverage due to its open formulary.

(8) New Jersey will maintain its current Medicaid managed care and CHIP program, FamilyCare, while improving integration of managed long term services and supports and behavioral health services for all Medicaid beneficiaries. The approved amendment extends the original FamilyCare 1115 Waiver through June 30, 2022. Changes include expanded benefits for members receiving long-term care services while living at home and for children with intellectual and developmental disabilities.

(9) North Carolina proposed to redesign its Medicaid program, shifting coverage to managed care plans called Prepaid Health Plans (PHPs), which could include commercial plans and provider-sponsored entities. PHPs will receive monthly capitated payments from the state and contract directly with local providers. The state aims to launch the program in 2019, according to its final proposal, which the state released in August 2017. Approval is pending and no insurers are set to participate yet.

(10) Wisconsin intends to implement new restrictions on the childless adult population that became eligible for Medicaid after expansion, as well as create health and employment incentive programs. The application, pending since June 15, 2017, calls for small monthly premiums for members at 50% or higher than the FPL; reduction in premium payments by up to 50% if beneficiaries engage in approved healthy behavior activities; use of a drug screening program as a condition of eligibility; and a 48-month maximum eligibility period for enrollees who do not meet certain employment rules.


Get timely, objective business, financial and regulatory news of the health insurance industry each week with your own subscription to AIS's Health Plan Week. Learn more and subscribe today!

Copyright © 2017 Managed Markets Insight & Technology, LLC. All Rights Reserved.

It's quick and easy to sign up for FREE access to AISHealth.com!

Why do I need to register?