North Carolina could use Sec 1331 of the ACA with the federal exchange

My white paper on health reform in North Carolina suggested that the state should run its own health exchange, move ahead with the Basic Health Plan option under section 1331 of the ACA, and expand insurance coverage via a “private” option using the section 1331 vehicle.

I have been asked whether North Carolina could develop a Basic Health Plan under Section 1331 using the federally run exchange? The short answer is yes; I confirmed this informally with several persons who work in the Obama Administration.

North Carolina could develop a BHP even if we don’t run our exchange. Further, a waiver is not needed to create a Basic Health Plan option that is allowed in Section 1331 of the ACA starting in 2015 for persons between 133%-200% of poverty (the waiver referred to in my white paper would be if we expanded insurance coverage via a private option, and not traditional Medicaid; essentially extending the BHP concept to 0% of poverty). The Basic Health Plan (BHP) allows a state to take 95% of the insurance and cost sharing subsidies that residents would qualify for individually, and bundle them together in a variety of ways. For example, persons in the BHP could be auto-enrolled into the lowest-cost private exchange plan in their county, expanding coverage. In addition to traditional insurance, organizations that were going to become Medicaid ACOs under the extand Medicaid reform plan could also bid for BHP individuals. The BHP could thus encourage competition in a state that has very little in the exchange, as well as to help accelerate the type of thinking that will be necessary for the regionalized Medicaid reform that seems likely to represent the way North Carolina will move.

While I think we should expand coverage to fill in the “coverage gap” using private insurance as the vehicle, developing a BHP for persons between 133-200% of poverty would be a reasonable step that could increase competition and expand insurance coverage in this income group next year.

NC DHHS “High Level Overview” Medicaid Reform

North Carolina’s Department of Health and Human Services rolled out a “high level overview” of Medicaid reform recommendations to the N.C. Medicaid Advisory Commission this afternoon. The Commission will provide feedback, and then N.C. DHHS makes a proposal to the North Carolina General Assembly by March 17, 2014. A few quick thoughts before I am off to teach (realizing the meeting is still underway):

  • Care will be provided by Medicaid Accountable Care Organizations (ACOs), with the structure of such not being clear, but the goal being movement towards integrated delivery networks being fully at risk to share savings/loses with the State. In early years, the risk to providers is less and walks up over time. Key questions: who can be ACOs? How many will there be per region of the State? Why is Community Care North Carolina not mentioned? There is lots of rhetoric about building upon what now works in North Carolina, but they leave out the most obvious current player in Medicaid in the state.
  • By 2018, 80% of Medicaid beneficiaries are to be covered by Medicaid ACOs. The most important question here is who are the 20% not covered by then? If they are primarily the long term disabled and the dual eligibles, I think this is doable. Keep in mind that over half of the Medicaid beneficiaries in N.C. are children and after adding adults you are up to 75% of the total. I think they are essentially saying they will put all of Medicaid into ACOs that are not dually eligible for Medicare or long term disabled by 2018, and then address long term care separately (see below).
  • They suggest consolidating mental health and intellectual development and disability services into 4 Local Management Entities (LME). Note there are 7 Medicaid regions, so provision of mental health and some of the specialized long term care services would be more broadly organized?….a big issue is integration of this care with Medicaid ACOs; this will be very hard and very important.
  • On Long Term Care, they call for a broad strategic process, and “assessing the viability of a risk-based, managed LTSS delivery model that spans all LTSS services.” They are smart to leave themselves a way out on this…I don’t think a fully at risk approach to this group (dual eligibles) is really possible given the breadth of the long term care needs they have and who they are. However, the conversation they describe about rationalizing the long term care delivery system is worth having. Keep in mind that Medicaid is the default nursing home insurance program in the state and nation and has been so for 40 years. I give them credit for getting straight that Medicaid is not one monolithic program, and separating out the long term care services and supports issue for a separate discussion. This is key to good Medicaid policy.

A good deal of my white paper Don Taylor NC Health Reform Proposal 1 14 14 on health reform in North Carolina is reasonably consistent with this general approach. The missing piece from what N.C. DHHS proposed today is any way to expand insurance coverage in the State. There is a great deal of rhetoric coming out of the meeting already about the “provider community in North Carolina” stepping up to move towards at risk provision of care to the Medicaid population for the good of the State. Fair enough. I suspect that the large integrated delivery systems are ready to go, in part because if they don’t then outside managed care companies will come in and do so. However, I suspect a big part of the discussion from the provider side (writ large) going forward will be that they are ready to step up if the State is ready to expand insurance coverage. That will quickly become the predominant question.

update: revised a bit for clarity.

N.C. Medicaid Reform Advisory Group

The North Carolina Medicaid Reform Advisory Group, created by last Summer’s Budget, will meet on Wed February 26, 2014:

At this meeting, DHHS will share with the advisory group an initial Medicaid reform proposal. The public is invited to observe the presentation and discussion between the advisory group and DHHS.

I have been thinking that the Medicaid Reform Advisory Group would submit a plan, but looking back at the text (see pp. 162-63) of the budget I see that is not the case. DHHS submits the plan, and the Medicaid Reform Advisory Group has been created to advise DHHS:

SECTION 12H.1.(e) Advisory Group. – There is established the North Carolina Medicaid Reform Advisory Group (Advisory Group) in order to advise the Department of Health and Human Services in its development of its detailed plan to reform Medicaid. The Advisory Group shall meet in order to (i) provide stakeholder input in a public forum and (ii) ensure the transparency of the process of developing the reform proposal. The Advisory Group shall meet at the call of the chair.

The meeting next Wednesday is framed as a discussion between DHHS and the Medicaid Reform Advisory Group (that has two sitting members of the General Assembly, and 3 persons appointed by the Governor). Here is the Medicaid Reform web page, with links to info from past meetings. This is the white paper Don Taylor NC Health Reform Proposal 1 14 14 that I put out in January on Medicaid/health reform in North Carolina.

It seems as though the meeting next week will provide a strong signal about the direction and scope of the reform that North Carolina’s executive branch has in mind for this year.

Randomly Assign Medicaid and Study?

My friend and Duke colleague Chris Conover suggests that states caught in the coverage gap due to their decision to not expand Medicaid (people too poor for exchange subsidies, but not eligible for Medicaid; WSJ says ~20-25% of the uninsured in North Carolina fall into this category) should consider a replication of the Oregon Medicaid experiment in which people were randomly assigned to Medicaid. States could then study the results.

There is merit to the idea in a State whose political leadership is uncertain about Medicaid expansion, and especially when some invoke the Oregon study as a reason to not expand Medicaid (I am not going to rehash that debate now). If multiple States undertook such an experiment,it would provide a great deal more evidence about the impact of coverage expansions, particularly given the idiosyncratic attributes of States. If North Carolina did this, we would need to very carefully design the study; for example, the Oregon study actually only included residents of Portland, as Chris notes in his piece, and we would need to make sure we invested enough resources in the study to provide definitive answers. North Carolina would especially need to make sure we could understand how such an experiment worked in both rural and urban areas.

My suggestion that North Carolina expand insurance coverage using a Basic Health Plan under Section 1331 of the ACA could certainly have an experimental component built into it. In fact, North Carolina could seek authority to do a BHP along side a Medicaid waiver, and randomly assign those below 100% of poverty to traditional Medicaid, or the private insurance/provider option that I proposed in the BHP. The comparison would then be to determine if the private coverage option differed from traditional Medicaid in terms of outcomes.

My white paper Don Taylor NC Health Reform Proposal 1 14 14 goes beyond health insurance expansion and calls for a demonstration/test of an alternative medical malpractice and patient safety approach among those newly covered, and efforts to expand the supply of health care providers by lessening regulation and expanding the practice authority of non-physician providers are also included. We should seek comprehensive reform efforts, and not only focus on coverage expansion.

The ACA has quite a lot of flexibility built into it for States, and the Obama administration has shown a willingness to allow States to experiment with different models and approaches. States like North Carolina have tremendous political leverage that we are now wasting. There are many potential approaches and models. North Carolina needs to pick one and move ahead with a coverage expansion that informs overall system reform, and commit to evaluating and learning from the results.

More on the flexibility of Basic Health Plan

Andrew Sprung has a well done, longish piece on the future of the ACA that quoted me (accurately) at length, based on an interview we did after the release of the Coburn, Burr Hatch health reform plan.

Andrew has a follow up piece focusing on my comments about trying to expand health insurance coverage in the South, and my proposed use of section 1331 (Basic Health Plan) of the ACA, that figures prominently in my white paper on health reform in North Carolina Don Taylor NC Health Reform Proposal 1 14 14.

The essence of my suggestion is to create a Basic Health Plan option for persons from 0-200% of poverty in North Carolina, who could purchase private health coverage from a traditional insurer such as BCBS NC, or directly from integrated delivery systems like UNC, Duke or ECU and/or Community Care North Carolina (CCNC), in lieu of a traditional Medicaid expansion. It is a plan to expand health insurance coverage for relatively low income people using private insurance as the coverage vehicle instead of Medicaid.

Andrew makes a good point that more left leaning states could try to use a BHP in the opposite direction (he suggests seek a waiver up to 400% of FPL and have it be a choice on an exchange; I’m not sure it would be granted out of worries that it would destabilize the exchange, but who knows, in a strong exchange why not have another, lower cost option?). The existence of the Basic Health Plan option and the more expansive exchange waiver options that begin in 2017 points out that for all the rhetoric of top-down health reform, state flexibility is a feature, and not a bug of the ACA. Vermont has long said they intend to seek “single payer” for their state in 2017 (I put it in quotes because what they really intend to do is use multiple payers to put together true universal coverage in the State), but perhaps the BHP means they could start moving in that direction sooner. On balance, I suspect the Southern States have more leverage than do the eager adopters to try something different, since their default is not expanding Medicaid and this is not a good outcome from the Administrations perspective. It also highlights the vast differences in the politics of health reform and the ACA across states–politicians in Vermont want to use the language of single payer, while many in the South are averse to an increased role for Medicaid.

How N.C. Could Expand Insurance Coverage via the Basic Health Plan

In my white paper on health reform in North Carolina, I suggested that we could use authority granted under Section 1331 of the ACA to develop a Basic Health Plan (BHP) through which we could greatly expand health insurance coverage for persons between 0 and 200% of poverty . This BHP could achieve health insurance expansion without adding persons to the traditional Medicaid program, and newly covered persons could enroll in plans offered on the state’s Health Insurance Exchange. Several clarifying points, responding to questions I have received, and due to my looking more closely at the final rules for BHP (more on proposed financing of BHP).

  • In my white paper Don Taylor NC Health Reform Proposal 1 14 14, I proposed that North Carolina should set up its own exchange. However, the BHP option under Section 1331 can be implemented even with a federally run exchange, I have learned.
  • The BHP allows for persons who are not eligible for Medicaid, but who make less than 200% of poverty to receive coverage via a BHP. Under the initial ACA, this would have meant persons from 133%-200% of the federal poverty level (FPL), but in North Carolina we have not expanded Medicaid, so that means all childless adults, for example, from 0-200% FPL meet this definition (as do parents with a job from 49%-200% of FPL, and those without one from 39%-200% FPL).
  • The financing that a state would receive for a BHP is 95% of the premium tax credits and 95% of the cost share subsidies for the second lowest cost silver plan in an individual’s geographic area, to which individuals would be entitled based on their income. Even though premium tax credits are not available to persons making less than 100% of the FPL, the BHP financing rule put out of December 23, 2013 identifies income cells for calculation of how much premium money states may receive per capita, for a BHP. The figures include persons from 0-50% FPL, as well as 51-100% (see p. 77404, in Federal Register, first column). This means that North Carolina could develop a BHP for those not eligible for Medicaid without seeking a Medicaid waiver (I said in my white paper we’d need one. Update: a few writing with reasons why they think a waiver would be needed below 100% poverty; it is possible. The key is to develop an idea and then ask HHS; they want to get to yes). The premium amount that could be paid by the household is capped at 2.0% of modified adjusted gross income from 0-133% of poverty; essentially extending the exchange rules downward to 0% for purposes of the BHP; see top p. 77408). However, if the State wanted to move beyond the newly covered–for example, seek to move those currently covered by Medicaid into a BHP down the road, I am fairly certain this would require a Medicaid waiver.
  • Offerors of BHP coverage to individuals can include a private insurance company (like BCBS NC, Coventry, or any other), or a network of providers (for example, CCNC working in conjunction with other providers to deliver the full benefit package, or a large integrated delivery system like UNC Health Care, ECU/Vidant, Duke Health System, Carolinas Medical, etc; See page 59128, right column in Federal Register). Providers or insurers would not have to offer coverage in all counties, allowing a geographically relevant approach.
  • States are eligible for planning grants to assist with implementation issues related to the ACA and health exchanges. Simply taking such a grant does not mean you have to follow through with a BHP, or set up an exchange, but some may feel that taking a planning grant is a politically charged signal they do not wish to send. North Carolina could create a non governmental health reform planning group that could receive such financing, and these monies could be used to answer the questions that the executive branch, legislative branch and stakeholders in North Carolina would have about a BHP and/or other reform activities. This would help provide good information to drive our decisions.
  • There are several aspects of what I propose that dovetail nicely with the reform plan proposed by Senator Burr on January 27, 2014. First, his proposal of a per capita Medicaid cap for those below 100% of poverty (to grow at CPI + 1% point) is reminiscent of the BHP providing 95% of the premium and cost share subsidies that would flow to individuals one at a time, meaning the federal government would spend less if we did a BHP than they would by default if each BHP person otherwise got covered. Further, this is proposing to expand coverage via private insurance or private providers taking on the insurance function, and not the traditional Medicaid program. Finally, Senator Burr proposed allowing States to auto-enroll persons (sec 204, page 4) who are eligible for a tax credit (in his proposal from 100%-300% of poverty) into the lowest cost plan in their county, with them having a right to change plans if they wish. Auto-enrollment is a great idea that Senator Burr pioneered with his 2009 Patients’ Choice Act, and I suggested in my white paper that North Carolina should seek auto-enroll authority within our BHP.
  • What are the downsides of a BHP? The BHP likely does not make sense for a State with an exchange (whether state or federal run) that has lots of competition and relatively low premiums, because you would worry about destabilizing the exchange. North Carolina has low competition (only BCBS NC sells in all 100 counties, and only one other insurer sells at all) and relatively high premiums, so the BHP may be the most realistic means of jump starting competition and choice in the State.

North Carolina could enroll 350,000-500,000 North Carolinians into private insurance in 2015 or 2016 by using the flexibility provided in section 1331 of the ACA to create a Basic Health Plan, and it is an approach that I think we should strongly consider.

Health Reform Ideas for North Carolina

I am releasing a white paper with some health reform ideas for North Carolina (pdf Don Taylor NC Health Reform Proposal 1 14 14). The North Carolina Medicaid Advisory Commission is discussing options that will culminate in their recommendation from the North Carolina Dept of Health and Human Services to the General Assembly on March 17, 2014.

I propose three main ideas:

  • Expand health insurance coverage while reforming Medicaid by seeking both a Medicaid waiver and developing a Basic Health Plan option under section 1331 of the ACA
  • Reform the State’s Medical Malpractice system while addressing patient safety, using Medicaid and the Basic Health Plan as a pilot population; I think the “Michigan Model” holds the most promise
  • Increase the Supply of Health Care Providers by Safely Reduction Regulation; essentially expanding the practice scope of non-physician providers to increase the effective care delivery supply

In the longer run, I suggest North Carolina consider

  • Seeking a more comprehensive waiver that would allow the full cost of the dual eligible population to be federalized, with State savings put towards insurance coverage expansions
  • Seek permission to pilot a competitive bidding demonstration in Medicare Advantage plans sold in North Carolina, two to three years after a Basic Health Plan is up and running in a North Carolina run health insurance exchange

I will spend time over the next few weeks blogging about these and other ideas that emerge (the N.C. Medicaid Advisory Commission meets tomorrow, 9am-4:30pm at the State Library, 109 Jones St., Raleigh, NC). Note that the white paper is a pdf that has hyperlinks to sources (mostly blog posts) in lieu of more traditional citations.