States are at the center of major health care reforms to be implemented on Jan. 1, 2014, that are expected to result in large numbers of previously uninsured Americans receiving health insurance. Those reforms include the development of new marketplaces, or exchanges, in which individuals and small businesses will be able to purchase insurance and Medicaid will be available to an expanded pool of recipients in those states that choose to expand the Medicaid program.
Starting in 2014, the Affordable Care Act (ACA) requires most individuals to obtain health insurance and prohibits insurance companies from denying individual applicants based on pre-existing conditions. To help meet the expected increase in demand for insurance, and to enable consumers to compare private plans, exchanges will serve as the focal point for the purchase of health insurance.
The ACA also sets a floor for minimum coverage that most private small group and individual plans, as well as Medicaid benchmark plans, must cover that is equal in scope to that of a typical employer plan, a limitation in the ACA statute. This minimum coverage is known as the essential health benefits or “EHB” package, and it includes the category of services known as rehabilitative and habilitative services and devices. This category of mandated benefits was intended by Congress to include orthotics and prosthetics. In fact, the Department of Health and Human Services (HHS) said in its Essential Health Benefits Bulletin issued in December of 2011 that orthotics and prosthetics are routinely covered by insurance plans.
However, rather than define a single federal EHB package, the HHS has left the responsibility to each state to determine its own EHB package, within parameters set by the ACA and the EHB regulations. This means there will still be significant variation in what benefits plans cover and in the amount, duration, and scope of benefits covered. One limitation that the HHS has determined cannot be used by exchange health plans includes specific dollar limits in benefits, including O&P benefits.
Finally, the ACA gives states the option to expand Medicaid eligibility to help cover their uninsured adults. The ACA allows states to offer to this new eligibility group Medicaid Alternative Benefit Plans (ABPs), as opposed to traditional Medicaid state benefit packages. The Medicaid ABPs must cover, at a minimum, essential health benefits and can use their state’s EHB package as a benchmark for their alternative benefit plans under Medicaid. If a state’s EHB package covers orthotics and prosthetics, then, presumably, the state’s alternative benefit plan under Medicaid would cover O&P benefits as well, which might not be the case in traditional Medicaid since orthotics and prosthetics are considered optional benefits under traditional Medicaid law.
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The bottom line on O&P coverage in both private insurance plans sold under the exchanges and the new Medicaid benchmark plans is that each state will be different, but there are favorable indications that O&P benefits will be covered, at least to some extent. O&P consumers and the providers who serve them should remain vigilant at the state level to ensure that O&P benefits are not omitted from coverage.
State exchange activity
Open enrollment through health insurance exchanges is scheduled to begin Oct. 1. Issuers can sell certified small group and individual plans on the exchanges as long as those plans are deemed qualified health plans. Each state can choose to create its own state-based exchange, a partnership exchange with the federal government, or can default into a federally operated exchange.
• In a state-based exchange, the state performs all exchange functions, with HHS oversight, assistance and guidance.
• For states that choose not to run — or are not prepared to operate — a state-based exchange, HHS is obligated to create a federally facilitated exchange (FFE). HHS will perform most or all exchange functions for FFEs, except where states opt to partner with HHS, as described below.
• In the “hybrid” model, known as state partnership exchanges, the state may perform plan management functions, consumer assistance functions, or both, and HHS will perform the remaining functions. States essentially assume control over portions of an FFE that can transition into a state-based exchange over time.
Seventeen states and the District of Columbia have elected to develop a fully state-based exchange; seven states are planning for a partnership exchange, and 26 have defaulted into a federal exchange. HHS has granted conditional approval to states that developed blueprints meeting initial requirements for a state-based or partnership exchange.
Peter W. Thomas
As long as a state meets the milestones outlined in its conditional approval determination, it will maintain its conditional approval status until it demonstrates the ability to perform all required exchange activities. Nearly all states, and the District of Columbia, that have chosen a state-based or partnership exchange are in conditional approval status.
EHB benchmark plans
States had until Dec. 26, 2012 to select a benchmark plan. Each state could have chosen as its benchmark plan:
• One of the three largest (by enrollment) small group health plan options functioning in the state;
• One of the three largest state employee health plan options;
• The federal employee health benefits plan functioning in the state; or
• The largest commercial HMO plan sold in the state.
If states did not choose a plan, they defaulted to the first option, the largest small group plan functioning in the state.
The states or HHS have supplemented those benchmark plans, making those plans EHB benchmark plans, which serve as reference plans for qualified health plans operating in the small group and individual markets. The EHB benchmark benefits include state mandates (such as state O&P parity laws) and, therefore, will cover orthoses and prostheses in states with such laws if they were enacted before Dec. 31, 2011. Coverage of the costs by the federal government via federal subsidies to individuals to purchase insurance, will last for 2 years before those subsidies are phased out. The state will then have to decide whether to fund its benefit mandates or repeal those state mandated benefit laws.
Forty-six states either chose or defaulted into the largest small group plan functioning in the state. This means that state benefit mandates will be subsidized by the federal government for the first 2 years of implementation. Two states chose to adopt the EHB package offered by their state employee health benefits plan, and three states chose to adopt the EHB package of the state’s largest commercial HMO.
Medicaid expansion activity
The ACA expands Medicaid eligibility to all adults below 133% of the federal poverty line. Currently, Medicaid eligibility varies widely by state but is usually reserved for children and individuals who meet much lower income requirements. Often, states also require the presence of a qualifying health condition; for example, individuals who are low income and also have a certain disability. The expansion population under the ACA would include all low income adults, regardless of their health status.
The federal government would fund the entire cost of the newly eligible population for 3 years, and this federal funding would remain at 90% in the future. In other words, after the initial period where the federal government pays all Medicaid expenses for the expanded population, the state would be required to fund $1 for the new population for every $9 it receives from the federal government in matching funds. The Supreme Court’s ACA ruling in June 2012 has given states the option to opt out of the Medicaid expansion without losing the federal matching funding for its existing Medicaid population.
Currently, there is no deadline by which a state must inform CMS of its intention regarding Medicaid expansion. States can choose to expand Medicaid, and then later decide to drop the coverage. As with all changes to the Medicaid state plan, a state would indicate its intention to adopt the new coverage group by submitting a Medicaid state plan amendment. If a state later chooses to discontinue coverage for the expanded group, it would submit another state plan amendment to CMS requesting approval to discontinue such coverage.
Although states have flexibility to start or stop the expansion, the federal matching rates are tied to specific calendar years. States will receive 100% support in 2014, 2015 and 2016, 95% in 2017, 94% in 2018, 93% in 2019 and 90% in 2020, remaining at that level thereafter (unless Congress changes the law). The federal matching rates are only eligible for states that expand Medicaid to cover individuals at or below 133% of the federal poverty level.
Assuming O&P care is covered under the essential benefits package and under the Medicaid expansion in a particular state, the fact is that more people will have access to orthotics and prosthetics coverage after Jan. 1, 2014. Putting aside whether the federal government can afford this expansion in the insured population, and what impact this expansion will have on O&P providers — both very serious issues — it is clear the Affordable Care Act will have a dramatic effect on the ranks of uninsured and underinsured Americans in the coming year. — by Peter W. Thomas, general counsel, NAAOP; Theresa Morgan, legislative director and Frank Hood, legislative intern, Powers Pyles Sutter & Verville, PC.