The Affordable Care Act in Connecticut
What It Is and What It Means For Naturopathic Medicine
written by Shawn M. Carney, ND
We are now at the doorstep to monumental changes in healthcare, as the health insurance exchanges created under the of The Affordable Care Act are in the final stages of development before being opened to the public on October 2013; this has meant a flurry of activity for insurers, regulators, legislators, physicians, hospitals, business owners, professional associations and other interested healthcare stakeholders as compliance for these changes is sought. As a way to address concerns, U.S. Senator Chris Murphy hosted a forum in Hartford on July 2nd regarding this transition and was joined by U.S. Senator Richard Blumenthal and representatives from federal and state agencies involved with the process. They brought up many new features of the law including the creation of accessible marketplaces for plans that meet a qualified minimum level of coverage, reforming industry practices like denials based on pre-existing conditions, incentives for consumer coverage as tax credits and penalties and increased protection under Medicare with expansion of Medicaid. Connecticut is also one of six “Early Innovator” states and has volunteered to develop its own exchange without relying on management from the federal Department of Health and Human Services (“HHS”). This makes the changes happening in Connecticut particularly exciting, as they may forecast the feasibility of implementing similar programs through the rest of the country; and it is not without its rewards, the State has received $117,184,326 in grants for research, planning, information technology development, and implementation of the Affordable Care Act, with the expectation that Connecticut disseminates its design successes to other states in the coming years.
A New Marketplace For Insurance
The Patient Protection and Affordable Care Act of 2010, more commonly referred to as ‘The Affordable Care Act’ (“ACA”), requires the creation of two types of state-based health insurance exchanges, which must be in operation by January 1, 2014. The American Health Benefit Exchanges for individuals will vary state to state and is being called “Access Health CT” in Connecticut, while the Small Business Health Options Program (“SHOP”) Exchanges will be for business owners to offer to employees. Though the federal government will set minimum standards, primarily through HHS, the law makes primary responsibility for governance and operations that of the states. Thus states have considerable flexibility in how they want to implement these programs and if they choose to partner with other states and form regional exchanges, or form multiple exchanges within their state, they are able to do so. However, if HHS discovers that exchanges are not operational by the deadline, then HHS must operate the exchange or find a non-profit entity to do so.
The health insurance exchanges are intended to be more than just clearinghouses from which consumers choose plans, they also aim to improve the quality of these plans while controlling cost. Only “qualified” plans will be allowed to be offered on the exchange and they must meet several criteria. All plans posted on the exchange must include a robust network of doctors and clinics and a minimum “essential health benefits” package which includes: emergency services, hospitalization, maternity and newborn care, mental health, substance abuse, prescription drugs, laboratory services, pediatric coverage and preventative services, as well as chronic disease management, among others. Different levels in the plans vary by the percentage cost of care that they cover, ranging from bronze at 60%, through silver and gold, up to platinum at 90%. Benefit levels are based on “actuarial value”, which is a summary measure of the amount of medical claims paid by the health plan (excluding a member’s point-of-service cost sharing), expressed as a percentage of the total medical claims incurred for a standard population. These statistical calculations are what insurance companies do when assessing risks and premiums, and are used in determining deductible amounts required on different plans. The ACA seeks to set limits on the maximum annual deductible for health plans purchased by small employers so that the annual deductible may not exceed $2000 for single coverage or $4000 for family coverage, though these limits do not apply on the individual market, which has other parameters. One of the enticing features of the exchanges is that “[n]o one will pay more than 9.5 percent of household income on health insurance and many will be capped at just two or three percent”, per the Access Health CT document ‘10 Things You Need to Know About Health Insurance Exchanges’. The State is expecting to meet ambitious goals like this by using competition between the insurance companies in the new marketplace, as well as tax credit incentives, as ways of keeping costs down over time. If enough people join the exchange in a given state, it has better odds of working and staying affordable, hence motivators like premium subsidies and tax credits are only available to people who have gotten health insurance through a qualified plan within the exchange, and not through one of the grandfathered plans that exists outside of the exchange, which don’t have to offer a qualified benefits package. Grandfathered plans, or plans that were in existence prior to the law’s enactment, are exempt from many of the new requirements, including the new rating rules and the requirement to offer a minimum essential benefit package. Other plans, such as large-group or self-insured plans, are also exempt from many of the the new rules.
Reforming the Insurance Industry
Beyond the exchanges, the ACA attempts to alter and reform entrenched health insurance practices both in and out of the exchange. These include guaranteed issue and renewability of coverage, banning premium variation based on health status or gender, prohibiting pre-existing condition exclusions and annual or lifetime limits, requiring coverage of preventative health services without cost-sharing, and many others. Among the changes, is the first-time creation of a mandated external appeals process for people in self-funded plans, so they have the right to an external review.
Another significant change to the health insurance industry comes in the form of increased transparency and accountability. To ensure premium dollars are spent primarily on medical care, the law’s “80/20” rule requires that at least 80% of premium dollars collected by insurance companies for individuals and small employers must be spent on benefits and quality improvement.
Incentives for Participation
Incentives for participation in the healthcare exchanges will come in two forms: tax credits and tax penalties. Lower and middle income individuals and families with income up to four times the Federal Poverty Level (“FPL”) may be eligible for subsidized health insurance. If you earn up to $45,960 a year, or if you are a family of four, for example, earning up to $94,200 a year, you may qualify for a monthly discount. Small businesses that qualify will also benefit from tax credit discounts; however, they receive their credit after filing income taxes in 2015 for the 2014 calendar year. The federal government will start fines for individuals that don’t sign up for health insurance in 2014 at $95 or 1% of income, whichever is greater. This increases over 2015 and 2016 up to $325, or 2% of income, and then to $695, or 2.5% of income, respectively. It should be noted that the exchanges can certify individuals who are exempt from the new requirement and penalty based on economic hardship or having short gaps in coverage. Small businesses with fewer than 50 employees are not required to provide insurance. For those that already have coverage through employers, private insurance, Medicare, Medicaid, Tricare, etc., no action is required and no penalty is accrued.
Connecticut is also being particularly creative in ways to increase participation. This is the only state that plans on opening retail stores to aid in getting consumers educated and enrolled. They have also developed a program called “Navigators”, run by organizations around the state and managed by the Office of the Healthcare Advocate, which aims to help people select and enroll in plans on the exchange.
Increased Protection Under Medicare and Expansion of Medicaid
The ACA is also improving Medicare and expanding Medicaid services. The law eliminates cost sharing for preventative services under Medicare coverage and also begins to close the prescription drug Medicare Part D coverage gap on prescriptions, informally called “the donut hole”. People who fall within the donut hole should be receiving a $250 rebate within three months of reaching the coverage gap, to help with payments. HHS began mailing rebate checks in 2010 and by the year 2020, the donut hole will be completely phased out. As of this writing, Connecticut residents have received more than $53 million in help with their prescription drug costs under ACA. Meanwhile, all Connecticut citizens in households under a certain income level – up to $15,400 for a single person or $31,809 for a family of four – will be eligible for Medicaid. States are receiving 100% federal funding for the first three years to support this expanded coverage, phasing to 90% federal funding in subsequent years.
Access Health CT
Access Health CT was created by the Connecticut Legislature in 2011 and is a quasi-public agency established to satisfy requirements of the ACA. Its mission is to increase the number of insured residents in the state, promote health, lower costs, and eliminate health disparities. It will try to achieve these goals through accessible online and community-based enrollment experiences throughout the State. Access Health CT is operating with an initial grant from HHS under the ACA, which mandates that the state’s exchange must be self-sustaining by January 2015. In December 2012, Access Health CT asked all insurers in the state to notify them if they intended to participate. Nine carriers (five medical and four dental) submitted requests to be included and are working towards being included as enrollment options later this year.
ACA and Naturopathic Medicine
There is a specific section in the new law, section 2706, which serves as a ‘nondiscrimination provision’. It states that “… a health insurance issuer offering group or individual health insurance coverage shall not discriminate with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider’s license …”. Though this section does not require that a health insurance issuer contract with any and all providers or work with practitioners in unlicensed states, it does mandate that insurers be consistent in the services they reimburse for; they are not allowed to cover a service when provided by one class of licensed providers and then deny coverage for a different class of providers performing the same billable service.
This has vast implications for naturopathic physicians in licensed states that have not been allowed to bill health insurance companies and has many naturopathic physicians and advocates around the country excited; however the ACA also has new relevance for insurance-billable states like Connecticut. The American Association of Naturopathic Physicians (“AANP”) has been working hard to organize members and has made this the focus of several statewide conference calls and a webinar. The ACA has opened the door in these states to allow insurance coverage when it wasn’t available before. It also mandates things like “network adequacy”, which means a significant amount of practitioners must be in-network on a given plan, something which should be enforced by state’s Insurance Department. Furthermore, since the state Insurance Departments are responsible implementing the 2706 non-discrimination division, it is well worth healthcare stakeholders like naturopathic physicians meeting with these departments and commissioners to help assure proper representation and favorable interpretation in the new landscape. This is vital in licensed states where there has been no insurance coverage; however, it is also important in states like Connecticut, where insurance coverage has existed, because another change the ACA brings is reeling the self-funded ERISA plans under the control of Insurance Commissioner. Historically, self-funded plans, or plans that are merely managed by a health insurance company but are being financed directly by a large corporation, have been a kind of ‘pseudo-insurance’ and not been under the jurisdiction of the state Insurance Department. According to the AANP, the ACA is the first legislation which changes this and makes them answerable to state mandates, including enforcing coverage for naturopathic physicians under these plans, which have historically denied reimbursement.
The ACA is an ambitious attempt to increase healthcare coverage for people throughout the country and improve the quality of products offered by health insurance companies; however, its success is not certain. To be self-sufficient, exchanges like Access Health CT will have to retain many consumers, but if penalties do not outweigh the added costs of the insurance, doubtlessly, some people won’t sign up. Also, if the exchanges have monthly premiums that are high and tax credits that are not significant, the “Affordable” Care Act may not be too affordable. Case in point, at the July 2nd meeting, when a clinic director commented to the panel that some monthly premiums listed on the calculator are over $1000, specifically for household sizes 7 or greater with annual earnings over $132,000, Senator Murphy tried to soften the blow by stating that the figures on the calculator don’t include the tax credit. But this consolation may not go far, as Christie Hager, the Regional Director of HHS for New England, had stated earlier that day she expects over 47,000 Connecticut residents to get rebates averaging $160. Most readers would probably agree that this is not a significant incentive on a $1,045 monthly bill. Another question asked at the meeting without a sufficient answer was regarding specialists, and how well the different ones are being covered in the various plans. Since this remains to be seen, it would be prudent for all specialists, including naturopathic physicians, and their patients, to be supporting the state associations in efforts to engage regulators and insurance companies, so that bridges of communication are created and potential problems are alleviated before the new law comes to its next state of fruition.
Dr. Shawn M. Carney is a naturopathic physician licensed in both Connecticut and Vermont. He is on the Board of Directors with the Connecticut Naturopathic Physicians Association and practices in Newtown, CT.