Early this morning Rep. Tom Price was confirmed by the U.S. Senate as the next Secretary for Health and Human Services. As the new Secretary of HHS, Price hopes to usher in a radical new era of federal health policy that focuses on consumer-driven decisions in the purchase of health care services.
To understand what we mean, look no further than the Healthy Indiana Plan 2.0. which was designed by Trump’s nominee for Director of the Center for Medicare and Medicaid, Seema Verma.
The Health Indiana Plan 2.0 was the successor to the Healthy Indiana Plan (HIP) which was implemented in 2008 under Governor Mitch Daniels. HIP is known as the “nation’s first consumer-driven health plan for Medicaid Beneficiaries” and began as a voluntary extension of Medicaid eligibility to childless adults with incomes up to 100 percent of the Federal Poverty Threshold.
In 2015, HIP 2.0 was implemented which further expanded eligibility to childless adults up to 138 percent of FPL. This category of beneficiary (distinct from other enrollment groups like disabled, children and pregnant women) are enrolled in high deductible plans which are paired with a prefunded Personal Wellness and Responsibility (POWER) account which is modeled after health savings accounts. The major features of HIP 2.0 are:
-
Medicaid expansion populations are enrolled in one of four Medicaid Managed Care Organizations – Anthem, MDWise, MHS and Carewise.
-
The plans available are HIP Plus which is available to all members that make a monthly contribution to their POWER account; HIP Basic which requires co-payment from members who fall below 100 percent FPL and who have failed to make POWER account contributions; HIP Link offers premium assistance to help members pay for their qualified employer health insurance plans
-
Providers are reimbursed at Medicare rates to encourage network adequacy
-
MCOs must provide access to a primary medical provider within 30 miles of their residence and a vision and dental provider within 60 miles of their residence.
-
All members are subject to a $8 co-payment for the first inappropriate visit to the ER and a $25 co-payment for each subsequent inappropriate visit to the ER
-
No retroactive coverage so the state is not required to pay medical bills before an individual becomes eligible for coverage
-
Benefit package and coverage system designed to align with plans offered on commercial market
-
No coverage for non-emergency transportation
-
Coverage for HIP Plus begins only after individuals make payment. Individuals below 100 percent FPL must wait 60 days after applying to begin coverage.
HIP 2.0 has been consider a success in the context of its primary goal to make low income Hoosiers more value conscious in their consumption of health care services. Anthem, the largest of the HIP MCOs reported the following utilization trends in July 2016:
-
Emergency Room utilization dropped 30 percent among HIP 2.0 Plus members as compared to traditional Medicaid
-
ER use among HIP 2.0 Plus members is 21 percent lower that HIP 2.0 Basic members
-
Inpatient utilization dropped 58 percent when compared to traditional Medicaid
Keep in mind that Indiana’s HIP 2.0 was developed with CMS during the Obama administration and represented a compromise between long standing federal objections to cost-sharing and other requirements. For example, the original HIP 2.0 proposal included a work requirement for beneficiaries. CMS objected and that part of the program was replaced with a job training referral system for beneficiaries.
Last month, no doubt hoping to get a spot at the front of what will be a long line for states seeking more flexibility through Medicaid waivers, Indiana submitted an application for an extension of HIP 2.0 with a few modifications:
-
Improved smoking cessation programs
-
Enhanced coverage– including waiver of IMD exclusion to permit more inpatient care – for Substance Abuse Disorder and Behavioral Health
-
More flexibility for MCOs to treat chronic conditions
-
Greater incentives to encourage beneficiaries to use the “Gateway to Work” program created out of the HIP 2.0 compromise with CMS
Under a Trump administration, with former Indiana Governor Mike Pence in the Vice President’s chair and Tom Price as Secretary of HHS, providers and patients can expect HIP 2.0 “plus some” to be the default approach toward Medicaid reform. If the Indiana model spreads with the encouragement of the Trump administration a few conclusions are easy to draw:
-
Notwithstanding the application of Medicare rates, inpatient hospitals will be clear losers as utilization drops
-
SUD and Behavioral Health providers and managed care organizations are likely beneficiaries of a system that emphasizes intervention and prevention
As Seema Verma moves through the confirmation process, we should have even more clarity on the future of Medicaid. Stay tuned.
Call with questions. We are open 24/7/365 - just like the US Senate
Emily Evans
Managing Director
Health Policy
@HedgeyeEEvans
