The Health Insurance Premium Payment Program in 2019

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Medicaid Health Insurance Premium Payment (HIPP) helps to maintain Medicaid as a payer of last resort by using federal and state funds to purchase private health insurance for individuals otherwise eligible for Medicaid.  Support for HIPP has generally waxed and waned since established in the early 1990s.

In recent years, HIPP requirements have changed and reforms have dramatically altered the healthcare landscape.  Federal and state support for HIPP is strengthening.  Many states are using innovation waivers to design HIPP programs that apply to a much broader range of income-eligible individuals/families, at greater cost savings to the state.  After several decades, HIPP is quickly re-emerging as a formidable core cost containment tool for state Medicaid programs.

There has been an uptick in HIPP activity in 2019 through executive action, legislation, regulation, State Plan Amendment (SPA) and waiver activity detailed below.  Largely, these activities are used as a means to grow and expand an existing HIPP program or to establish a new one.

 HIPP Focus States in 2019.

  • Pennsylvania. Established via a 1906 Waiver, Pennsylvania has quietly grown their voluntary HIPP program to include 28,654 enrollees with a cost savings of $94.5M in FY 2018-19.  Pennsylvania now operates the largest HIPP program in the nation.
  • Massachusetts. In SFY2018, Governor Baker successfully established a new Health Insurance Responsibility Disclose (HIRD) form, collecting employer-sponsored insurance (ESI) information directly from employers.  The new data began flowing into the mandatory HIPP program in 2019 to assist with the identification of potential HIPP members.  In 2019, the Commonwealth also began engaging members directly leveraging behavioral science backed content and communication channels to maintain eligibility in HIPP. The HIPP program has grown to 24,000+ members.  It is expected to continue to grow under the aforementioned changes.
  • Rhode Island.  Last year, the Rhode Island legislature passed a law directing the Executive Office of Health and Human Services (EOHHS) to expand the voluntary HIPP program “Rite Share” beyond parents, children, and pregnant women to include childless adults.  EOHHS promulgated new regulations, expanding HIPP, effective 07/17/19.  Rhode Island has approximately 5% of Medicaid enrollees enrolled in HIPP.  The program is known for being extremely cost effective and is expected to significantly expand under the new rules.
  • Virginia. This year, amendments to the 2018-20 biennium budget includes language requiring that the Department of Medical Assistance Services (DMAS) apply mandatory HIPP to the Medicaid expansion population.  The current HIPP programs in Virginia are voluntary, with a modest 1,500 enrollees.  The new law provides DMAS with a high degree of latitude to implement the new requirement, including contracting.[1]  The Commonwealth also issued proposed regulations to bring the HIPP program under the Medicaid managed care model.
  • Indiana Helps Bridge Transition from Medicaid to Commercial Insurance. In July 2019, Indiana submitted an amendment to their Section 1115 Healthy Indiana Plan Waiver.  The amendment will allow the State to establish “Workforce Bridge Accounts” which will provide qualifying outgoing HIPP participants the ability to continue to use up the $1,000 of public funds for premiums, deductibles, and copayments and coinsurance for 12 months during their transition to commercial coverage.  The proposal is intended to create a smoother transition to commercial coverage from Medicaid.[2]
  • Utah to Establish New HIPP. Early this year, Utah issued public notice on its new Section 1115 demonstration waiver, which was spurred by legislation focused on “amendments to Medicaid expansion-related policies.  The proposal pending before CMS will establish a mandatory premium assistance program for adults with and without dependent children including the Medicaid expansion population.  Failure to enroll where cost effective will result in ineligibility for Medicaid.
  • Kentucky Creates New HIPP. In June 2019, Kentucky Department of Medicaid Services adopted regulations[3] establishing a mandatory HIPP program for Medicaid eligibles with access to cost effective HIPP who have been employed with access to ESI for at least 12 months.  Dubbed Kentucky Health, the program will be administered by the TPL branch office.  Prior to the rule, KI-HIPP was a voluntary HIPP program for all those eligible for Medicaid with access to cost effective ESI.
  • Nebraska Redesigns HIPP for Medicaid Managed Care. In 2018, Nebraska voters approved Medicaid expansion. As part of the rollout, the state sought to modify its current managed care program by establishing the Heritage Health Adult Program (HHA) via Section 1115 Waiver.  As part of HHA, HIPP will become mandatory effective 10/01/20. The Nebraska Department of Health and Human Services hired consultants in July 2019 to create a roadmap for improving systems, processes, and operational effectiveness of the HIPP programs.  Regulations were adopted July 2019 to support the new program[4].

 

There are several other key policies influencing the HIPP conversation across the nation.

Trump Administration and Signals from CMS.  This Trump Administration’s interest in HIPP was evident from the start.  In March 2017, Health and Human Services (HHS) Secretary sent a letter to state governors encouraging them to explore Federal waivers.  The letter committed CMS to providing states with a high degree of flexibility in waiver design and specified special consideration would be given to policies that facilitate enrollment in affordable ESI for working age, non-pregnant, non-disabled adults[5].  Further evidence was revealed during the Congressional debates over the failed Medicaid per capita caps.  HIPP costs were excluded from per capita costs to incent continuation of existing and foster new HIPP programs.  CMS has also put forth additional guidance to streamline and improve the demonstration, waiver and state plan amendment processes while also indicating their intention to grant states as much flexibility as possible.  It is believed the current Administration will respond favorably to HIPP waivers.

Medicaid Expansion.  A number of states have rolled out Medicaid expansion in 2019, including Virginia and Maine. States such as Utah, Idaho, and Nebraska are in the process of implementing expansion ballot measures, which are expected to be implemented in 2020.  States may consider establishing a HIPP program or enhancing an existing program alongside Medicaid expansion to ensure that expansion is not a vehicle to provide coverage for people who already had coverage, but dropped the coverage to enroll solely in Medicaid.

Transitions to Medicaid Managed Care.   Several states have abandoned their respective HIPP program during large-scale transitions to Medicaid managed care.  In 2016, the New Hampshire legislature created a HIPP Commission to evaluate the effectiveness and future of the State’s HIPP program.  The Commission made several recommendations to transition HIPP under MMC, but the State decided to eliminate HIPP alongside the rollout of the New Hampshire Granite Advantage Health Program.  All 81 HIPP members were transitioned from HIPP to the new [traditional] MMC plan.  A similar path taken in Louisiana in 2015-16, eliminated HIPP shortly after Medicaid expansion and during the transition to Medicaid managed care.  These states, and states that do not have a HIPP program, run the risk of operating more costly Medicaid programs due to large numbers of Medicaid members with access to ESI, with no means to leverage the employer contributions.

Medicaid Work Requirements.  Medicaid work requirements are only active in Indiana.  As of October 2019, 17 states submitted Section 1115 waivers to establish Medicaid  requirements. Nine of those waivers are still pending before CMS.  Five waivers are approved, but the respective states have yet to implement the requirements.  Several states face significant legal challenges.  Medicaid work requirements programs were set aside by court rulings in Arkansas, Kentucky, and New Hampshire. The premise of work requirements is the idea that “abled-bodied” Medicaid eligible adults should work. Work requirements link certain employment, education, and vocational requirements as a condition of Medicaid eligibility and aim to promote employment among able-bodied Medicaid-eligible adults.  The aim of a Medicaid work requirement program is to increase working Medicaid members.  By that very nature, its likely to expand access to ESI.  Alternatively, most states offer Medicaid members vocation, education, and employment services.  As states aspire to link Medicaid members with work opportunities, they may wish to consider establishing an advance HIPP program to complement the efforts.

 Corporate Responsibility Fees.  The Governor of Massachusetts, in his FY2018 budget, established a two-tier “corporate responsibility fee” or tax against qualifying employers with employees on MassHealth.  Following, both the Governors of New Jersey and Rhode Island proposed similar taxes in their FY2020 budget.  The intent is to encourage employers to provide health benefits and reduce reliance on government subsidized and taxpayer-funded healthcare programs.  One of the criticisms of the fee is that an employer cannot force an employee to accept ESI.  People have a choice.  Many choose Medicaid.  Employers do not always feel it is fair to penalize them for their employees’ choices.  This is an issue that can be addressed with the right kind of HIPP program.  While the legislation failed to advance, it did create consideration for HIPP in the New Jersey Medicaid program and reinforced the need to expand Rhode Island’s HIPP.

[1] Virginia 2018-20 Biennium Budget Amendments H.B.1700 https://legiscan.com/VA/research/HB1700/2019

[2] Indiana, Pending Healthy Indiana Plan Section 1115 Waiver Amendments https://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Waivers/1115/downloads/in/in-healthy-indiana-plan-support-20-pa6.pdf

[3] 907 KAR 5:005

[4] Title 461 NAC Chapter 30

[5] Secretary of Health and Human Services Letter to Nation’s Governors, (March 14, 2017). https://www.hhs.gov/sites/default/files/sec-price-admin-verma-ltr.pdf

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