Saturday, August 8, 2015

The 10-day cancellations and the rocky transition off of the private option

Posted By on Sat, Aug 8, 2015 at 5:22 PM

Many or most of those losing Medicaid coverage because they didn't manage to respond in 10 days to an income verification letter (or tried to but didn't get processed in time by the state Department of Human Services) are in fact Medicaid eligible

But some of the people who have had coverage terminated really have moved out of private option eligibility because their income has increased. It is absolutely the obligation of the state to identify during the renewal process those who are no longer eligible and, once verified, transition them out of the program. People who are no longer eligible, of course, should not continue in the program. 

But what happens to those people? Once upon a time, Arkansas promised that the private option policy would do a better job than traditional Medicaid programs of offering a smooth transition for people transitioning out to purchase private plans. Unfortunately, the wave of coverage terminations has made for a rocky start. Those who have lost coverage because of the 10-day rule have gotten no information or assistance about their options to purchase Marketplace plans. 

The way that the private option and Obamacare are designed, someone who transitions out of the program then has options for extremely generous subsidies to purchase a private plan on the Arkansas Health Insurance Marketplace. In fact, a beneficiary could choose to purchase the same, or very similar, plan that she had via the private option. Imagine a private option beneficiary named Jane makes $15,000 a year. She gets a promotion and starts making $18,000 a year. That would bump her out of eligibility, but thanks to Obamacare subsidies, she could purchase a plan with very low premiums and reduced cost-sharing (a Silver level plan in Pulaski County would be $50-60 a month for Jane). Ideally, there would be no break in coverage at all. 

The problem is that transitioning from public plans to private plans (or back) can be confusing, and there's a danger of people getting lost in the shuffle, ending up with gaps in coverage, trying to navigate changes in plans or providers, etc. This is known as "churn" in health wonk circles, and can cause real problems with access to care. When the state applied back in 2013 for a waiver of federal rules in order to implement the private option, improving problems associated with churn was an explicit promise. According to the state's waiver application, the private option would "reduc[e] disruption across the continuum of coverage upon income fluctuation." State officials argued that giving people the same private plans available to others on the Marketplace, as opposed to placing them in the Medicaid program, would make for a smoother process as income changed and they moved back and forth. The experiment would aim to "promot[e] continuity of coverage for individuals (and in the longer run, families), improving access to providers, smoothing the 'seams' across the continuum of coverage."

The early returns on the state's first renewal process don't look promising on this front. Almost 50,000 Arkansans have been dropped from coverage altogether, precisely the sort of gap in coverage the state aimed to prevent with the private option. Let's focus for a moment on those who actually have had their income increase beyond the eligibility line. If the state determines that someone is no longer income eligible, DHS sends a letter informing the beneficiary of options on the Marketplace, and also passes along the beneficiary's data to healthcare.gov, the federal hub where these new consumers will shop for subsidized insurance. But here's the problem: the state never did an eligibility determination at all for those who were dropped for failure to respond in time to the 10-day letter. Therefore, according to DHS officials, even that minimal transition process wouldn't be initiated for these beneficiaries. They just get a cancellation. 

Gov. Asa Hutchinson told Times reporter Benji Hardy that the state was making efforts to link people transitioning out of the private option with information about options on the Marketplace, but for those kicked off via the 10-day letter, that's just not so. Remember, just a tiny sliver of beneficiaries have actually been found to be ineligible via this process (less than 2,000 — and only a portion of those were income-ineligible as opposed to people that moved out of state, died, etc.). Only they would receive information about Marketplace options and have their file passed on to healthcare.gov to streamline the process.
 
The way the state's income verification system was designed, DHS has no idea how many of the 50,000 facing termination of coverage for failing to respond to the letter are actually Medicaid-eligible according to the data that triggered the letters in the first place, and how many have increases in income that could indicate they are no longer eligible and need to look into new coverage options. DHS has no way of knowing who's who. If they had collected that data, they could have passed along detailed information about alternative coverage options to beneficiaries they suspected of phasing out (to be clear, they can't rule someone income ineligible without giving the beneficiary an opportunity to verify income, but they could attempt to begin an outreach process regarding future options). 

Regardless of where or whether one assigns blame for this turn of events, the results are unfortunate. Some portion (again, no one knows how many) of those losing coverage are legitimately no longer eligible, but they are getting no detailed information about what to do next. And the process of signing up on healthcare.gov, particularly outside of the normal enrollment period, can be confusing. They are eligible for a "special enrollment" period — they can enroll in private coverage on the Marketplace even though it's late in the year. Most are likely eligible for generous subsidies. But how many are aware of all of this? How many know relevant deadlines to avoid a gap in coverage? Remember, many of them have health insurance for the first time in years, or the first time in their adult lives. 

Here, by the way, is precisely where federally funded Obamacare guides would come in handy—trained guides working with community organizations to do outreach and to help consumers navigate this confusing process. But, oops, the state banned funding for guides. These are the moments when that decision hurts.  

I'm a broken record on this, but this is yet another area where slapping a 10-day response window on the income-verification letters just doesn't make sense for the first round of renewals of a massive new program that gave tens of thousands of people health insurance for the first time. A bigger window (which is actually a federal requirement for renewals) could have given more time for state agencies, community organizations, insurance companies, brokers, and others to do the kind of outreach necessary to avoid bumps in the road from "churn."

A significant number of beneficiaries phasing out and moving to the Marketplace was always going to be a part of this renewal process. The state pledged in pursuing the private option experiment that it would create a smooth transition for these folks. It's got a long way to go. 

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