Ready, Set …?

 Feds Prepare for Insurance Exchange in Texas 

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Medical Economics Feature – August 2013 

Tex Med. 2013;109(8):49-53.

By Amy Lynn Sorrel 
Associate Editor 

The federal government says it will be ready to launch a health insurance exchange in Texas come Oct 1. That's the date individuals can begin buying and enrolling in plans offered through an Orbitz-style, online marketplace exclusively for health coverage.

But a number of unknowns still linger, particularly for physicians who may hear from health plans eager to build networks for insurance products they wish to sell in the exchange.

Because Gov. Rick Perry chose not to authorize a state-based marketplace, Texas defaulted to a federally run program. Although state insurance regulators will play a part, the Centers for Medicare & Medicaid Services (CMS) already took the reins in getting it off the ground. However, a number of moving parts remain in play, from approving qualified health plans for sale in the exchange, to setting up eligibility and enrollment systems and coordinating connections with the state Medicaid program. A June report by the Government Accountability Office (GAO) says that "much progress has been made, but much remains to be accomplished within a relatively short amount of time," with some activities "behind schedule." 

Still, once up and running, officials expect the exchange to help make a dent in the state's high uninsured rate. Roughly 6 million Texans – a quarter of the population – are uninsured. The Texas Health and Human Services Commission (HHSC) estimates 40 percent of those people are eligible for exchange subsidies authorized by the Patient Protection and Affordable Care Act (PPACA).

For physicians, that could mean more patients walk in the door with health coverage. But the exchange still holds a lot of questions for doctors, TMA officials say.

For starters, it remains to be seen which insurers will participate and how networks and payment rates will be structured.

Some things, on the other hand, will stay the same: Some patients will remain uninsured. In states like Texas, which have chosen not to expand their Medicaid programs, some people will not qualify for financial assistance in the exchange or for Medicaid coverage.

And whether deciding to participate in an exchange network or figuring out patients' share of insurance costs, "physicians are still going to have to decide how or whether to deal with health plans" and carefully evaluate those contracts and relationships, says TMA Medical Economics Specialist Donna Kinney.

 Feds in Charge 

Because PPACA requires most individuals to have health insurance by 2014, the law required states to set up so-called health insurance exchanges – now referred to as marketplaces – as another avenue for purchasing coverage. The marketplaces are scheduled to begin open enrollment periods for individual and small employer coverage in October, for coverage beginning Jan. 1, 2014.

In Texas and other states choosing not to expand Medicaid, people with incomes between 100 percent and 400 percent of the federal poverty level (FPL) are eligible for tax credits or discounts through the exchange to help subsidize their premiums and other cost-sharing such as copays and deductibles. Those with incomes below 100 percent FPL do not qualify for that assistance, nor would they qualify for Medicaid unless they qualify as disabled.

In states that adopted Medicaid expansion, patients with incomes up to 133 percent of FPL would receive Medicaid coverage; those with incomes between 133 percent and 400 percent FPL can get financial help in the exchanges.

Small businesses, which may include physician practices, also are eligible for tax credits to help provide health coverage to their workers.

The health reform law gave states the option of running their own exchanges within federal guidelines, an offer Governor Perry has refused despite earlier legislative efforts to adopt a Texas model.

House Bill 636, introduced during the 2011 legislative session, would have allowed Texas to create and run its own marketplace. That, bill author and physician Rep. John Zerwas, MD (R-Simonton), said at the time, is a better alternative to federal control, given that health insurance reform is such a big piece of the federal health reform legislation. TMA supported the bill, along with the Texas Association of Business, the Texas Association of Health Plans, and the Texas Hospital Association. TMA also advocated that a state-run exchange tailored to the Texas market would be a better avenue for Texas patients and small employers, including physician practices, to obtain affordable health insurance in a transparent manner and with less federal interference. (See "Getting Connected," April 2011 Texas Medicine, pages 37-40.)

In fact, the federal government will operate insurance marketplaces in half of the states. States have the option to take over beginning in 2015. But Texas has no plans to do that, according to the governor's office.

"To this point, we have not seen any flexibility from the [federal government] on anything having to do with health care reform, and these exchanges are no different," spokeswoman Lucy Nashed said.

Tick Tock 

Unlike state-run exchanges, the federal government will handle everything from running and marketing the website, educating consumers, and setting up a federal call center to determining eligibility for subsidies and approving which plans can participate.

U.S. Health and Human Services Secretary Kathleen Sebelius told the House Ways and Means Committee in April that the exchanges will be ready in time for open enrollment on Oct. 1, and officials have maintained that confidence despite the recent GAO report.

Secretary Sebelius also asked Congress for another $1.5 billion to run the exchanges in 2014, on top of the $1 billion allocated under PPACA for implementation in 2013.

CMS, which oversees the exchanges through the Center for Consumer Information and Insurance Oversight (CCIIO), did not respond to Texas Medicine's interview requests.

During a May webinar hosted by the National Institute for Healthcare Management Foundation, CMS representatives acknowledged lingering concerns surrounding the government's operational readiness, and the exchanges' ability to foster competition and provide affordable coverage to the uninsured.

But they said the process has progressed from policymaking to an operational mode, hitting their deadlines along the way for creating a streamlined application and setting up the technology for the enrollment process and exchanging information with states, among other tasks.

Officials also said they regularly communicate with states about the status of so-called qualified health plans approved for sale in the insurance marketplace. Carriers had until early May to submit their applications, and CCIIO expects to finalize a list of qualified health plans for federally run exchanges in September.

TMA is tracking the issue and in late May asked the Texas Department of Insurance (TDI) to find out how many and which plans were eligible for the exchange.

Qualified health plans must meet federal standards for providing a package of essential health benefits (EHBs) in 10 categories of care: 

  1. Ambulatory services,
  2. Emergency care,
  3. Hospitalization,
  4. Maternity and newborn care,
  5. Mental and behavioral health treatment,
  6. Prescription drugs,
  7. Rehabilitation,
  8. Laboratory services,
  9. Preventive and wellness services and chronic disease management, and
  10. Pediatric care.  

Texas defaulted to the Blue Cross and Blue Shield BestChoice PPO as a benchmark for what constitutes an EHBs package.

Carriers also must certify they have adequate networks, and federal officials say they are carefully monitoring insurers' service areas to make sure patients have sufficient access to care and choice.

State Plays a Role 

Even though the federal government largely runs the show, Texas state agencies still play a role when it comes to linking the exchange to Medicaid and regulating insurers.

Federal law requires that the state Medicaid program and the Children's Health Insurance Program (CHIP) establish mechanisms for connecting with the exchange and coordinating eligibility. It also requires a single, streamlined application for coverage, whether that ends up being through Medicaid, CHIP, or the exchange.

Those changes translated to technical adjustments at the state level so applications can easily flow between the exchange and HHSC to get patients to the right place for coverage, says Stephanie Goodman, the agency's spokesperson. States also had to adjust their methodologies for calculating patients' income to a single federal standard so eligibility for the various programs is determined consistently and no one falls through the cracks.

"Those are big system changes happening now," Ms. Goodman said.

Some have the potential to create efficiencies. But given what she described as aggressive timelines to adapt, problems may lurk.

"On the Medicaid side, our goal is to determine whether someone is Medicaid eligible as quickly as possible," Ms. Goodman said. Yet it remains unclear just how HHSC will receive information from the exchange to do that. And even though CMS unveiled a shortened, more streamlined application intended to simplify the process, "the way it looks now, it could mean we don't have enough information."

Physicians, however, have access to the same system to verify Medicaid eligibility, she adds.

As for insurance regulation, state officials say there are additional federal components health plans must comply with for approval to participate in the exchange.

"But the creation of these exchanges doesn't change the fact that states still regulate insurance," said Katrina Daniel, TDI associate commissioner of life, accident, and health insurance. "If a plan is offered inside or outside the exchange in Texas, it's still going to be regulated by the state. Where state regulations apply, if there is a violation, we will be the entity to enforce that."

That means even after federal approval of a qualified health plan, TDI staff reviews all policies sold in Texas to make sure they comply with state insurance laws and continues to hold carriers accountable to complying with state rules related to network adequacy, premium charges or "rate review," and prompt payment, among others.

Federal regulations also include minimum standards for network adequacy and rate review, for example. Given what TMA officials describe as Texas' problematic history with a general network adequacy standard, the association in 2012 asked HHS to set more specific network adequacy standards that, among other things, require insurers to prove they have sufficient networks before offering plans in the exchanges.

Although the federal minimum standards did not change, if states have a more stringent standard, that higher standard prevails. "In states with sufficient network adequacy reviews, CMS will use a state's reviews as part of its evaluation," says federal guidance.

Ms. Daniel says the bar in Texas is "fairly high, so I think the federal government will accept that as a standard for plans."

As for rate review, TDI says it plans to continue to assess premium rate increases as it has in the past to determine whether a proposed increase is just, fair, reasonable, and adequate under state insurance laws. But the federal government has the discretion to decide whether a state's rate review process is "effective."

"If they don't think your state process meets federal standard, they will assume that regulatory responsibility," Ms. Daniel said.

Who's In? 

Insurers, too, are dealing with challenges, from sifting through last-minute federal guidance and building networks to balancing a potentially high-risk population of enrollees with affordable pricing. Most of the federal rules were not final until March of this year.

"Clearly, this is a very complex piece of legislation, and any time a new program of this magnitude affects this many consumers, we can anticipate there are going to be some struggles. But the [federal government] has rolled out other programs that are equally complex before," said Dan McCoy, MD, chief medical officer for Blue Cross and Blue Shield of Texas, which applied to participate in the exchange. "We are making the assumption the exchanges will open on time – and we have no indication that's not true – and we are working diligently internally to make sure we are ready to meet the requirements and to participate."

That started with a letter campaign in August 2012 that continues to solicit participation from physicians across the state in what he describes as a low-cost, high-quality network.

But Dr. McCoy, also a member of the TMA Board of Trustees, emphasized that physician participation in exchange plans is optional, and "accepting or declining that invitation in no way impacts participation in other [Blues] networks." Nor would physicians who do decide to join have to go through additional credentialing if they already participate in other Blues PPO or HMO networks.

The carrier plans to offer a similar selection of HMO and PPO products both in and outside of the exchange, he says, in addition to participating in the so called "metallic" cost-sharing plans federal rules created to give patients affordable options.   

  • In a "bronze" plan, insurers pay for 60 percent of benefits; patients, 40 percent.
  • In a "silver" plan, insurers pay for 70 percent of benefits; patients, 30 percent.
  • In a "gold" plan, insurers pay for 80 percent of benefits; patients, 20 percent.
  • In a "platinum" plan, insurers pay for 90 percent of benefits; patients, 10 percent.           

Federal approval of the Texas Blues' exchange network is pending. But with participation from physicians across Texas' 254 counties, Dr. McCoy said his company "feels comfortable" the exchange network is adequate.

Once approved, the company will decide the services needed in a particular area and then move on to pricing premiums and developing fee schedules, likely in late summer. Like with any insurance products, the company says it will base premium prices on underlying medical costs and services, and physicians will be paid based on their specialty and the type of policy.

A big factor in pricing will be what Lee Green of Scott & White Health Plan described as "pent-up demand" within a previously uninsured population. The health plan also applied to participate in Texas' exchange with its network of 3,000 physicians and hospitals in Central and West Texas, where it currently operates.

When a significant number of people suddenly gain coverage after being uninsured for years with a potential host of untreated chronic diseases, "that could create quite a spike in demand for services and utilization beginning as early as Jan. 1, 2014," and some sticker shock, said Mr. Green, the plan's vice president of sales and marketing. "Pricing will be higher than it is today," although subsidies will offset some of that.

That demand also could put pressure on the health care delivery system, Mr. Green adds.

Aetna and UnitedHealthcare have not said whether they would participate in Texas' exchange specifically, but in general the plans have announced they are evaluating selected states.

Staying Vigilant 

Many of these issues add up to a certain level of unpredictability for physicians, as well. That means doctors must remain vigilant when evaluating contracting issues, patients' coverage, and health plans' conduct, TMA officials say.

Participation in an exchange plan is voluntary, so physicians must independently choose whether to opt in, says TMA Vice President for Medical Economics Lee Spangler.

He also cautions that physicians must look closely at exchange contracts. Some insurers, for example, may amend existing contracts to include exchange products using their current networks, while others may develop brand new networks and contract offers. Also, Medicaid managed care companies may offer commercial exchange plans, as well, and may apply Medicaid payment rates to commercial fee schedules.

"Physicians need to pay attention to what they are signing and scrutinize contracts to determine whether Medicaid rates would apply to commercial fee schedules for plans offered in the exchange and whether those rates would be sufficient to cover their business costs," he said.

A pair of TMA-backed bills that became law will help physicians with that process. Under Senate Bill 822, TMA's "silent PPO" legislation, health plans must give physicians the opportunity to evaluate their fee schedules separately and can no longer share or sell physicians' contracted discounts without permission. Similarly, Senate Bill 1221 requires plans to notify doctors in advance if they apply their discounted fees under Medicaid or CHIP to commercial products.

Ms. Kinney adds that patients' cost-sharing under exchange plans will vary, too. And it may not be readily apparent whether a patient is covered by an exchange policy versus other commercial products.

The Blues' Dr. McCoy said patients with an exchange policy "will carry identification indicating they are covered by one of our products, and physicians will still be able to interact with the same customer service [channels] related to the rest of our products."

But federal exchange regulations give patients a three-month grace period to pay their premiums and allow health plans to hold claims during that time if patients don't end up paying. Health plans also must look to the federal government to receive subsidy payments patients are eligible for. 

The American Medical Association's 2012 comments on the proposed rules warned HHS officials that the grace-period provisions "unfairly shift this burden to physicians and other health care providers and puts them in the position of potentially providing health care to patients for two months without payment" and could create "a major disincentive for physicians who are considering participating in qualified health plan networks."

Barring any changes to the rules – which did not come about – AMA urged HHS to ensure that exchanges require participating health plans "to provide accurate, binding, and real-time notification to physicians and other health care providers" when patients fall into the grace period so doctors are aware that claims submitted on their behalf may be halted or denied.

Neither CMS nor TDI responded to Texas Medicine's inquiries as to whether or how they would hold health plans accountable for paying physicians for services rendered during that window.

For now, TMA officials say the rules mean physicians participating in exchange plans must stay on top of verifying the status of patients' eligibility for health care services.

 Amy Lynn Sorrel can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email. 

 SIDEBAR 

 The Exchange and the Uninsured 

A portion of the roughly 6 million uninsured Texans (24 percent of the state's population) are expected to gain access to health insurance coverage through the newly established exchange marketplace. Here is a look at how the subsidies under the Patient Protection and Affordable Care Act and other provisions of the federal health reform law could impact the state's uninsured rate. These numbers are based on 2013 data from the Texas Health and Human Services Commission.* 

                                                                          Estimated No. (% of Uninsured) 

Eligible for exchange subsidies                                   2,432,000   (40)
Income too high for subsidies                                        608,000   (10)
Currently Medicaid eligible but not enrolled                    790,000  (13)
Adults eligible for Medicaid expansion                       1,398,000  (23)
Undocumented immigrants                                             851,000  (14)

Total uninsured in Texas:                                             6,080,000 

*Figures may not add up due to rounding.
Texas is not participating in Medicaid expansion. Some of this expansion-eligible population may be eligible for exchange subsidies. 


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