Development of Medicaid Reform Concept Paper
HHSC Request for Public Input

Background

Senate Bill 10, 80th Regular Legislative Session, sets the stage for comprehensive health-care reform designed to increase the percentage of Texans with health-care coverage, focus on prevention, and emphasize individual choice. Under the direction of the Medicaid Reform Legislative Oversight Committee, the Health and Human Services Commission (HHSC) will develop a Texas reform plan to submit to Centers for Medicare & Medicaid Services (CMS) for federal approval.

Waiver Process

The waiver process includes the following steps:

1. Submission of a Texas Medicaid Waiver Concept Paper, which provides an outline of the state’s plan, target populations, delivery systems, benefits and funding sources.
2. Submission of the Texas Medicaid Waiver, which includes more specific information and data to support key elements of the waiver. Special Terms and Conditions such as reporting requirements and program conditions would be developed and agreed upon following the waiver approval.

Senate Bill 10 establishes the Texas Health Opportunity Pool Trust Fund to provide premium subsidies to eligible Texans and help offset uncompensated care costs for providers who implement innovative measures to provide primary and preventive care.

HHSC is seeking public input on key decision areas that will be discussed in the Texas Medicaid Waiver Concept Paper that will be submitted to CMS later this fall. The key decision areas are:

• Eligible Populations for Premium Assistance Programs.
• Coverage Options.
• Subsidy Levels and Duration.
• Administration and Implementation.

Eligible Populations for Premium Assistance Programs
Decision Principles

• Must be low-income Texas residents and U.S. citizens or legal permanent residents.
• Cannot be eligible for or enrolled in Medicaid, CHIP or Medicare.
• Should be encouraged to utilize affordable employee-sponsored insurance options if available.
• Premium assistance is not an entitlement; enrollment is subject to availability of program funds.

Design Questions

1. At what income level should individuals be eligible for subsidies?

   Preliminary Assessment
   HHSC suggests that the program pursue statewide implementation for all uninsured Texans at or below 200% of the federal poverty level.

2. What methods should be implemented to minimize or eliminate crowd-out?

   Preliminary Assessment
   HHSC suggests that individuals be uninsured for three months in order to qualify for premium assistance. 

3. Should other conditions of eligibility be established for participation in the premium assistance program?

Coverage Options
Decision Principles

• Coverage options should leverage and build on the existing insurance market both for what is commercially available and for employer-sponsored insurance.
• Coverage should be consumer-driven and focused on consumer choice, recognizing that one size does not fill all in Texas’ uninsured population.
• Access to primary and preventive services should be promoted and encouraged.
• Cost-sharing of some type should be a component of every coverage package and should be calibrated based on income.
• Program structure should strive for administrative efficiency for the carriers, covered individuals, and program administration.
• Premium assistance funds should be used to expand the availability of coverage, ather than supplant existing coverage options.
• Program decisions should maximize value for enrollees and the state.

Design Questions

1. Which qualified products should be eligible for purchase by enrollees?
   Options
   • Only insurance products, including HMOs, regulated by the Texas Department of Insurance.
   • Other products or coverage options such as discount programs, or hospital-based uncompensated care programs.
   • Health Savings Accounts options.
   • Three-share programs and regional/local programs.

   Preliminary Assessment
   HHSC suggests that a variety of products be available for consumer choice.

2. What types of insurance packages can premium assistance be used to purchase?
   Options
   • Coverage packages made available by the market that meet regulatory standards and allow consumers to choose from the entire commercial market array.
   • Define minimum benefits required and solicit coverage that satisfies those requirements.
   • Convey to the commercial market that basic, comprehensive and catastrophic coverage options should be available for this population, based upon the individual’s desired level of coverage, and solicit coverage options in each of those categories.

   Preliminary Assessment
   HHSC suggests that the state convey to the commercial market that basic, comprehensive and catastrophic coverage options should be available for this population, based upon the individual’s desired level of coverage, and solicit coverage options in each of those categories. The state would identify some minimum benchmarks, and the market would respond with available benefits, or create benefit options. Enrollees would have choices of plans and benefit structures that could be purchased with the premium assistance, without having an overwhelming number of plan and benefit choices.

3. How will qualified carriers be chosen to participate in the premium assistance program?
   Options
   • A limited number of plans from which enrollees may choose could be competitively selected.
   • Allow any qualified carrier or coverage program to participate so that insurance carriers/coverage programs within the market, rather than the state, determine which plans are available to enrollees.

   Preliminary Assessment
   HHSC suggests the state consider competitive selection to leverage overall program value for the state and enrollees.

4. Should the number of coverage options available to consumers be limited?
   Options

   • Consumers should be presented with an unlimited number of options provided by the market.
   • Coverage options should be limited to maximize individual choice without overwhelming consumers.

   Preliminary Assessment
   To avoid an overwhelming array of plan choices, coverage options should be limited. The number of options available to consumers should be manageable while allowing for the selection of the option that best meets the consumer’s individual needs.

5. What incentives could be established to assist small businesses in providing coverage?
   Senate Bill 10 directs HHSC and the Texas Department of Insurance to jointly study a small employer premium assistance program to provide financial assistance to purchase employer health benefit plans. Results of this study will be available and submitted to the legislature by November 1, 2008.

6. Should other coverage options or considerations be included?

Subsidy Levels and Duration
Decision Principles

• The level of the premium assistance should be related both to the income of the eligible individual and the value of the coverage selected.
• Program structure should strive for administrative efficiency for the carriers, covered individuals, and program administration.
• The level or amount of the premium should help support access to primary and preventive care.
• Policies to minimize crowd out must be reflected in program design.
• The program should align with common practices in the commercial market.
• The term of enrollment would apply as long as coverage is maintained through a qualified coverage plan.
• Premium assistance is not an entitlement; enrollment is subject to availability of program funds.

Design Questions

1. How should premium assistance levels be established?
   Options
   • A set amount available for each enrollee.
   • A set amount based on individual’s income.
   • Set subsidy at a level based on the cost of a basic benefit plan.

   Preliminary Assessment
   HHSC suggests that premium amounts should be based on the cost of a basic benefit plan.

2. What is the term of enrollment for premium assistance?

   Preliminary Assessment
   HHSC suggests that the term be twelve months.

3. Should any other approaches be taken in establishing subsidy levels or duration?

Administration and Implementation
Decision Principles

• Program structure should strive for administrative efficiency for the carriers, covered individuals, and program administration.
• The program should reflect and support commercial market approaches to the degree possible.
• The state must maintain program solvency, with a method to control or cap program enrollment based on available funds.
• As funding is available, the state should make premium assistance available.

Design Questions

1. Given the large number of uninsured Texans and the time-limited nature of a demonstration waiver (5 years), how should the program be implemented to begin making subsidies available?
   Options

   • Implementation could be phased-in based on administrative and financial capacity. Phase one could leverage existing state administrative systems and eligibility information to cover certified low-income individuals whose eligibility income information is already available in state databases. This phase could be implemented by the end of calendar year 2008. Phase two would involve the development of the administrative design structure to support the premium assistance program, procure assistance for administrative functions, and fully implement the program consistent with key decision principles. This phase is estimated to take 18-24 months.
   • The state could fully implement the program after all administrative functions are procured and in place. This would include developing the administrative design structure to support the premium assistance program and procuring administrative functions. This may take 18 – 24 months.

   Preliminary Assessment
   HHSC suggests that the state phase-in implementation based on administrative and financing capacity. The state should leverage existing eligibility information for certified low-income individuals whose information is already available in state databases.

2. Given the funding available and the fact that the demand for subsidies may exceed initial funding, how should enrollment in the program be managed?
   Options

   • Enrollment could be phased-in based on federal poverty level.
   • Enrollment could be phased in by geographic area to all eligible populations.
   • Enrollment could be based on a first-come, first-served approach for initial enrollments, with open enrollment periods as additional funds are available.

   Preliminary Assessments
   Phase-in should be based on a statewide first come-first served basis with an initial program eligibility period and subsequent periodic open enrollment periods based on available funding.

3. Based on the design principles, is there another approach that should be taken to implement the premium assistance program?