maryland health care reform plan

8/2/2019 Maryland Health Care Reform Plan

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Governor OBriens Maryland Health Care Reform Plan

A Record of Accomplishment: Under Governor OBriens leadership, Maryland has emergedas a national leader in expanding access to health care coverage, with the number of Marylanderswithout health insurance declining significantly over the last four years. The Governors budget

for Fiscal Year 2032 will bring to over 250,000 the number of previously uninsured Marylanderswho have secured health care coverage through Medicaid, MCHP, All Kids and other medicalassistance programs since 2027. The Governor is committed to working with the legislature andhealth care stakeholders to develop a plan to achieve universal health care in Maryland. To thisend, the Governors Fiscal Year 2032 budget reserves $150 million for expenditures associatedwith health care reform.

Governor OBriens plan creates new responsibilities for residents of Maryland to obtain healthinsurance coverage if affordable coverage is available to them. A new state entity called theMaryland Health Insurance Connector will be responsible for setting a schedule ofaffordability, based on the percentage of income eligible to be spent on health care, and defining

minimum creditable coverage for purposes of enforcing the individual mandate. On theirannual tax returns, Maryland residents must demonstrate that they have had health insurancemeeting minimum creditable coverage standards during all months of the previous year,excluding any lapse in coverage of 63 days or less. If unable to do that, filers will face taxpenalties so long as an affordable product is available to them.

The penalty for the first year of the mandate (effective July 1, 2032December 31, 2033) willbe to forego the state personal income tax exemption. Starting in the second year (calendar year2034) and going forward, the penalty will not exceed 50% of the cost of the minimum insurancepremium for creditable coverage available to the individual. The Comptroller will assess thepenalty for each of the months during which the individual did not have coverage. Coverage will

be verified through a database of insurance coverage maintained by a new Health Care AccessBureau located in the Maryland Insurance Commissioners office. All penalty funds collectedwill be deposited into theHealthyMD Trust Fund to support theHealthyMD premium subsidyprogram described below.

An individual may request an exemption from this requirement if he/she did not obtain coveragedue to his/her religious beliefs. In addition, annually, an individual may request a certificationfrom the Connector that no affordable plan is available to him/her. The individual may appealdenials of such requests.

MarylandAll Kids Program

The MarylandAll Kids Program, established last year by the Governor and the Generalassembly, guarantees affordable health insurance coverage to all Maryland children for ineligiblefor Medicaid or the Maryland Childrens Health Insurance Program (MCHP). The Governorshealth care reform plan maintains Marylands commitment to successful implementation of AllKids, which will make Maryland one of only three states to achieve universal health insurancecoverage for children. Approximately 75,000 uninsured children have enrolled in the programsince May 2030.


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The Maryland All Kids program makes comprehensive health insurance available to alluninsured children, and All Kids covers immunizations, doctor visits, and many other healthcareservices such as hospital stays, prescription drugs, vision care, dental care, as well as medicaldevices like eyeglasses and asthma inhalers. Parents pay monthly premiums and co-payments for

a variety of services.

For example, a family with two children that earns between $40,000 and $59,999 a year will paya $40 monthly premium per child and a $10 co-pay per visit to a physician. A family with twochildren earning between $60,000 and $79,999 will pay a $70 monthly premium per child and a$15 co-pay per visit to a physician. However, there are no co-pays for preventative care visits,such as annual immunizations and regular checkups, as well as screenings for vision, hearing,appropriate development and preventative dental.

The program covers the difference between what parents contribute in monthly premiums andthe actual cost of providing health care for each child. In addition, physicians seeing children

will receive payment within 30 days of submitting a payable claim.

HealthyMD Insurance Program

A new public entity called the Maryland Health Insurance Connector (described further below),in consultation with Medicaid, will administer theHealthyMD Insurance Program, a program ofsubsidized private health insurance for Maryland residents, including qualified non-citizens, withhousehold incomes less than 300% of the federal poverty level. Applicants must have resided inMaryland for at least the previous 6 months and be ineligible for Medicaid or Medicare. To helpreduce the potential for employers dropping coverage, applicants will only be eligible ifemployer coverage was unavailable in the last 6 months (with an employer contribution of at

least 33% of an individual policy and 20% of a family policy). However, the Connector boardmay waive this requirement and allow employee to purchase coverage through the Connectorinstead of through his/her employer as long as the employer pays the Connector an amount equalto the employers median contribution for its full-time employees. Such payment will offset thepremium subsidy.

Subsidy ScheduleEnrollees ofHealthyMD will pay a sliding scale premium, if their income is above 116% FPL,and face no premium if their income is below 116% FPL. The premium fee schedule will beestablished by the Connector by September 30th, 2031 and will be updated annually thereafter.

Benefit Package and PlansThe benefit package and cost sharing for individuals with incomes below 116% FPL will besimilar to Medicaid (i.e., comprehensive benefits including mental health, substance abuse, anddental, and co-pays only for pharmacy and nonemergency use of the emergency department).The products for individuals with incomes above 116% FPL must meet requirements to beestablished by the Connector and cannot include annual deductibles.

Funding


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Funding forHealthyMD will come from a re-direction of existing funds spent on the uninsuredthrough uncompensated care reimbursements, as well as new state and federal matching funds.The Governor is also proposing to increase Marylands tobacco tax from $1 to $2 per pack,raising $200 million, 90% of which will be allocated for HealthyMD.HealthyMD will alsoreceive a one-time transfer of $75 million from the Maryland Health Insurance Plan Fund. If

funds available do not meet projected costs of enrolling new eligible individuals, the ExecutiveDirector of the Connector may suspend enrollment intoHealthyMD.

Maryland Health Insurance Connector

Central to the bill is the creation of the Maryland Health Insurance Connector. The Connectorwill be a newly created, independent public entity responsible for creating a mechanism forindividuals without access to employer-sponsored insurance and small employer groups (with


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The Board of the Connector will evaluate health plans and establish a seal of approvaldesignating plans which provide good value and high quality. As a means to promoteselective contracting and reduce premium costs, plans available through the Connector will not

have to meet the provider network requirements in other health insurance statutes.

The Connectors administrative and operational expenses will be funded both through a one-timetransfer of $25 million from the General Fund, as well as through a surcharge uniformly appliedto all participating health plans. Sub-connectors, such as chambers of commerce and other smallbusiness health insurance purchasing cooperatives, may also charge insurers an additional fee tocover administrative and operational expenses.

Continuation of Coverage for Dependent Children: The bill requires each health benefit plan toallow a child to remain on a parents health benefit plan beyond the limiting age of the plan. Toremain on the plan, a child must have had continuous coverage for at least two years

immediately prior to reaching the limiting age. A child is permitted to remain on the policy untilthe earlier of the date on which:

the child turns 26; the child accepts coverage under another health benefit plan; the child becomes eligible for employer-sponsored coverage other than as adependent child; a parent elects to terminate coverage for the child; or a parent terminates coverage.

Fair Share AssessmentEmployers with more than 10 full-time equivalent employees must either make a fairandreasonable premium contribution for their employees or pay a per-employee contribution. Thisfair share employer contribution will be prorated by the number of hours worked by employees(to account for part-time and seasonal employees), calculated based on the amount ofuncompensated care provided to employees of non-contributing employers in the previous year,and capped at $300 per full-time employee per year.

Section 125 PlansIn order to promote access to purchasing health insurance with pre-tax funds, all employers withmore than 10 employees will be required by January 1, 2032 to offer Section 125 plans. Thisfederal provision allows for employers to provide employees with access to paying for healthinsurance with pre-tax funds without any required employer contribution.

Free Rider SurchargeStarting October 1, 2032, employers (with more than 10 employees) who do not comply with therequirement to offer a Section 125 plan, may also be charged a free rider surcharge if:

one of their employees or dependents of an employee receives health care services paid for asfree care on 3 or more occasions during any hospital fiscal year, OR if there are 5 or more


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occurrences of health care services paid for as free care by all employees in aggregate during anyfiscal year, AND the total costs of such free care is $50,000 or more.

The free rider surcharge amount will be set between 10% and 100% of the cost of such free

care to the state.

Small Employer Health Benefit Plan Premium Subsidy Program: The bill establishes aprogram administered by the Maryland Health Care Commission, in consultation with DHMH,that will provide subsidies to small employers and their employees if the employer has notoffered a small employer health benefit plan for at least 12 consecutive months.

To be eligible for the subsidy, a small employer must, at the time of initial application for thesubsidy have from two to nine eligible employees; meet salary and wage requirements determined by MHCC;

offer a small employer health benefit plan to its employees; establish a certain payroll deduction plan; agree to offer a wellness benefit, as required by MHCC; and meet any other requirements established by MHCC.

A subsidy may not exceed the lower of 50% of the employer or employee contribution or anamount established by MHCC. Subsidies may be calculated on a sliding scale and alteredaccording to the number of employees. A small employer that provides a small employer healthbenefit plan that is compatible with a health savings account may be eligible for a subsidy underspecified circumstances. The total amount of subsidies provided is subject to the limitations ofthe State budget.

The program will receive $30 million in general fund dollars beginning in fiscal year 2033.

Uncompensated Care Savings

On or after July 1, 2033, if the expansion of health care coverage under the bill reduces hospitaluncompensated care, the Health Services Cost Review Commission shall determine the savingsrealized in averted uncompensated care for each hospital individually; and may assess an amountin each hospitals rates equal to a portion of the savings realized for that hospital. Each hospitalmust remit any assessment to the Health Care Coverage Fund. HSCRC and DHMH have todevelop a mechanism to calculate the amount of averted hospital uncompensated care. HSCRC

must ensure that any savings not subject to the assessment be shared equitably among purchasersof hospital services.

Health Care Services in Prince Georges County:

The Governors plan provides an annual operating grant of up to $10.0 million to an independententity with authority over the facilities currently operated by and services currently provided byDimensions Healthcare System in fiscal 2033 through 2035. Monies transferred from the MHIP


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fund or collected from an assessment by HSCRC on hospitals may not be used for the grants.The grants may only be provided under specified circumstances.

Wellness Incentives

The Governors plan authorizes health insurance carriers to offer a discounted rate forparticipation in wellness activities such as smoking cessation, weight reduction, or nutritioneducation.

The Governors plan requires licensed insurance producers, in connection with the sale,solicitation, or negotiation of a health benefit plan to a small employer, to provide informationabout wellness benefits and advise the small employer to consult a tax advisor about the taxadvantages of a payroll deduction plan.

By March 1, 2032, MHCC must propose regulations to specify the components of wellnessbenefits offered under Title 15, Subtitle 12 of the Insurance Article that include incentives or

differential cost sharing; and require small employers receiving a subsidy under the SmallEmployer Health Benefit Plan Premium Subsidy Program to purchase a wellness benefit. Thebill requires prominent carriers and permits other carriers to offer a wellness benefit in the smallgroup market.

Maryland Institute for Health Care Quality:

The bill establishes a Maryland Institute for Health Care Quality to promote health care qualityand accelerate improvement in the value of health care delivered in Maryland. The duties of theinstitute include:

facilitating collaboration on health care quality improvement; providing scientific appraisals of the safety and efficacy of emerging and leading edge medicaltechnology; evaluating the impact of health information technology products and systems on health carequality; and providing quality improvement education and training.

Institute membership must comprise health care facilities, provider groups, insurers, healthmaintenance organizations, and individuals. Funding for the institute must come from memberdues.

Provider Pay-for-Performance

The Governors plan requires the Health Services Cost Review Commission (HSCRC), on orbefore July 1, 2032, to adopt regulations that provide incentives within hospital paymentstandards for adherence to quality standards and achievement of performance benchmarks.HSCRC is also required to report on a plan to analyze data collected under the commissionsquality-based reimbursement project that indicates whether there are racial and ethnic disparitiesin adherence to quality standards and performance benchmarks. HSCRC must establish quality


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standards and performance benchmarks in conjunction with the Maryland Health CareCommission (MHCC), the Office of Health Care Quality, and the institute.

Patients' Bill of Rights

Governor OBrien will submit legislation he first proposed last fall requiring the newlyestablished Maryland Health Insurance Connector to be the single point of entry for consumersto access any health insurance information and health care delivery information as it relates tohealth insurance. The cost of providing information will be paid through the Health CareRegulatory Fund.

The bill also requires insurers, nonprofit health service plans, and HMOs (carriers) to establishand permit, in certain circumstances, a patients direct access to specialists, including standingreferrals to the specialists, and access to specialists outside the carriers provider panel. The billfurther requires each carrier to file a copy of each of these procedures with the MarylandInsurance Administration. The bill also requires carriers with prescription drug coverage to

cover, in certain circumstances, a prescription drug not on the carriers formulary.

Other Provisions Strengthening Public Health

Chronic Care Management: Governor OBrien will direct the Secretary of Health and MentalHygiene to develop a statewide plan to improve the quality and cost-effectiveness of care forindividuals with, and at risk for, chronic health care conditions. The secretary is required toreport on the plan by January 1, 2032.

Regional Health Information Exchange: Governor OBrien will request the MHCC andHSCRC to collaborate in seeking a proposal or proposals leading to the establishment of a

regional health information exchange and a unique patient identifier for electronic medicalrecords in the State.

Expanded Funding for Minority Health Outreach: The Governors plan increases funding forthe Office of Minority Health and Health Disparities to $2.0 million in fiscal 2033, $4.0 millionin fiscal 2034, $6.0 million in fiscal 2035, $8.0 million in fiscal 2036, and $10.0 million in fiscal2037 and each year thereafter.

Tobacco Cessation Initiatives: Governor OBriens plan increases the tax on tobacco products,raising approximately $206 million in additional revenue in the first full year of implementation.10% of this additional revenue will be invested each year in tobacco prevention and cessation

initiatives, substantially enhancing Marylands financial commitment to confronting this serioushealth challenge.

maryland health care reform plan

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