HEALTH LAW IN KENTUCKYOctober 25, 2011

Anne Hadreas

Health Law Fellow

Kentucky Equal Justice Center

SESSION GOALS

1. Overview of the Affordable Care Act2. Updates on Medicaid Managed Care3. Brief description of KY’s Medicaid

Waiver programs

OUTLINE OF THE ACA Divided into five sections:

Employer-based insurance modifications

Health Benefit ExchangesFunding for low- and middle-income

consumersHealth insurance reforms“Individual Mandate”

EMPLOYMENT-BASED INSURANCE

the Act builds upon the existing system that most consumers are used to

Establishes tax incentives for small businesses to purchase health insurance for their employees Up to 50% of cost of health insurance

Penalties for certain large employers to offer health insurance to their employees

HEALTH BENEFIT EXCHANGES

What they should look like:Consumer-friendlyStandardized informationPromote competitionSimilar to Travelocity or Expedia

Provide buying power State flexibility but must be approved by

1/1/2013 or the federal government can step in with a federal exchange

Can be separate for individuals and small businesses

SUBSIDIES FOR CONSUMERS

Medicaid Expansion! Up to 133% FPL

($29,326/year for family of 4)

NO CATEGORIES!!! Premium Tax Credits

Up to 400% FPL Operates through

federal income tax No co-pays for

preventative services

SUBSIDIES FOR CONSUMERS (CONTINUED)

Medicare Donut Hole: 50% discount on brand name drugs and 7% for generic after $2,840 in total drug costs. The hole will disappear by 2020.

Picture Source: Consumer Reports

HEALTH INSURANCE REFORMS

Prevent denial of coverage for medical conditionsProhibit higher premiums for medical

conditions Prevent unfair rescission of coverage

Requires evidence of fraud or intentional misrepresentation

Require higher percentage of spending on care80% medical loss ratio (MLR)Refunds to consumers if requirements not

met Youth coverage on parents’ plan until

age 26

INDIVIDUAL MANDATE

“Requirement to Maintain Minimum Essential Coverage” (26 U.S.C. § 5000A)

Need to have essential minimum coverage or make “shared responsibility payment.”Penalty gets phased inPenalty at 2016: $695, per person per year,

or 2.5% of income, if higher Goals:

More preventative careSpread out the cost and lower premiums

WHEN WILL EVERYTHING HAPPEN?

Changes will roll out over a decade Some changes are already in effect

2010 New health plans to cover preventative care

with no co-pays Young adults up to age 26 can stay on parents’

plans Health insurers prohibited from:

Denying coverage to children with pre-existing conditions

Places lifetime limits on coverage Dropping coverage due to illness

Federal pre-existing condition plan and temporary high risk pool

$250 Medicare donut hole rebate Initial tax credits for small employers (25

employees or less) that provide health insurance

2011 MLR

75% for KY; 80% in 2012 Discounts on drugs for Medicare

beneficiaries 10% bump in Medicare payments for

primary care providers

2012

Increased payments to accountable care organizations (ACOs)

More changes to Medicare!Payments linked to outcomesNo payments for preventable readmissions

(e.g. hospital-acquired infections)

2013 Limitations on medical deductions

Medical expenses must equal 10% of income to be deductible. (Currently, it is 7.5%) Exception: Individuals over 65 can use 7.5% until

2016

Flexible spending accounts limited to $2,500/year

2014 (AKA THE BIG YEAR) Minimum Essential Coverage

Requirement begins Exchanges open Medicaid expands to 133% of FPL Premium tax credits start Health insurance regulations begin

Cannot deny new or renewed coverage for medical conditions

No higher rates based on health

2016-2010 2016

States can band together to sell coverage and create larger markets

2018Tax on “Cadillac plans” begins (over

10,200/year for individuals)

2020Medicare donut hole completely eliminated

WHAT THIS MEANS FOR KY

920,000 – Persons with pre-existing health conditions that who cannot be denied coverage

261,000 – Eligible beneficiaries for Medicaid with expansion to 133% of FPL

221,000 – Families who will receive tax credits for health insurance

51,500 – Small businesses who will receive tax credits for employees health care coverage

129,000 – Benefitting from the elimination of Medicare donut hole

16,800 - Young adults who may be covered until age 26 on parent’s health insurance

63,200 – Support for early retirees

ACA LITIGATION Appellate cases

Individual mandate is unconstitutional but severable 11th Circuit - Florida v. HHS (26 states joined)

Everything constitutional under Commerce Clause 6th Circuit - Thomas More v. Obama

Dismissed for lack of standing 3rd Circuit - NJ Physicians v. Pres. of U.S. 4th Circuit -Virginia v. Sebelius; Liberty Univ. v.

Geithner (AIA prohibits suit) 9th Circuit - Baldwin v. Sebelius

Will be heard by SCOTUS in Spring 2012

ACA CONCLUSION 32 million more people estimated to

covered Current system is confusing and

complicated A lot of details are still being worked out

TAKE A BREATH

MEDICAID MANAGED CARE FOR KENTUCKY

WHAT IS MANAGED CARE? One health plan that coordinates all or

most of an individual’s care Aim is to control costs Plans are called “managed care

organizations” or “MCOs”

WHAT ARE THE PROS TO MANAGED CARE?

Money savingsState pays a set amount per person ahead

of timeEasier to budget

Coordinated careBetter alignment of physical and mental

healthChronic disease management Incentive is to encourage preventative care

WHAT ARE THE POTENTIAL PROBLEMS?

Cutting care saves money

Incentive to make it more difficult to get more expensive services, medications

Lower reimbursement rates for providers Reduces access to

care

HOW WILL THIS WORK IN KY?

Change from fee-for-service model

Should receive same services as before, with potential for additional services

Who is covered? Everyone, EXCEPT: Passport region Nursing homes Waiver programs (e.g. Michelle P., SLC) Only Medicare Savings Plans Spend-down Time-limited Medicaid Qualified Medicare Beneficiaries (QMBs), specified low

income Medicare beneficiaries (SLMBs) or qualified Disabled Working Individuals (QDWIs)

A few other groups

HOW WILL THIS WORK FOR KY?

What services will the MCOs cover?All Medicaid services for these beneficiaries,

EXCEPT: Non-emergency transportation School-health services First Steps HANDS

Medical, behavioral and (some) dental

WHO ARE THE MCOS? Coventry Care of Kentucky

In seven other states www.coventrycaresky.com 1-855-300-5528

Kentucky Spirit Health Plan Subsidiary of Centene Will have office in KY www.kentuckyspirithealth.com 1-866-643-3153

WellCare of Kentucky Large company serving over 2 million Americans www.kentucky.wellcare.com 1-877-389-9457

PICKING A MCO

Provider networks will differ Look at your clients’ PCP, specialists,

pharmacy, hospital Medicaidmc.ky.gov Toll-free hotline: 1-855-446-1245 Beneficiaries will have chances to

change later

TIMELINE 7/7/2011: Governor signed contract with

MCOs 7/2011-10/2011: MCOs establish

networks Mid-Aug., 2011: Beneficiaries received

auto-assignment 10/5/2011: New initial change deadline 11/1/2011: New implementation date 11/2011-1/2012: Change period (90

days) Open enrollment yearly during

recertification period

WHAT IF THERE IS A PROBLEM?

Internal grievances State fair hearings

Do not need to exhaust internal remedies Impact litigation

HOMESTRETCH

MEDICAID WAIVER PROGRAMS AND DEMONSTRATION PROJECTS

Alter normal Medicaid rules for flexibility Must be cost neutral Section 1115 Research & Demonstration

Projects: policy innovations Section 1915(b): Managed

Care/Freedom of Choice Waivers Section 1915(c): Home and Community-

Based Services Waivers

KY PROGRAMS Managed Care Passport (KY Health Care Partnership) Non-Emergency Transportation System Brain Injury Waivers (general and long-

term care) Home and Community-Based Services

(seniors) Model Waiver II (respiratory services) Michelle P. Supports for Community Living

QUESTIONS? www.kyequaljustice.org ahadreas@kyequaljustice.org (859) 233-0323 And dancing!