PATIENT PROTECTION and AFFORDABLE CARE ACT

1. PATIENT PROTECTION and AFFORDABLE CARE ACT P. L. 111-148, Signed into Law, March 23, 2010Amended by Health Care and Education Reconciliation Act, P.L. 111-152, Signed into Law, March 30, 2010

2. KEY FEATURES • Dramatic Reduction in Number of Uninsured Americans • Phased Effective Dates • Expanded Health Coverage – Medicaid & Private Insurance • Private Health Insurance Reform • Delivery System Modifications • Payment Reform • Major Implications for Behavioral Health and PMHS

3. PHASED REFORM (2010-2019) Some changes take effect almost immediately The most far-reaching reforms take effect in 2014 and later For example, mandated Medicaid eligibility expansions and most private health insurance reforms take effect in 2014. • For example, effective September 23, 2010, children may not be denied coverage for pre-existing conditions and insurance companies may not terminate existing coverage because of medical conditions (prohibiting rescissions).

4. EXPANSION OF HEALTH INSURANCE COVERAGE

5. IMPLICATIONS FOR MENTAL HEALTH • Reductions in Uninsurance will alleviate a major impediment to access to needed Mental Health services. • 87% of Americans cited lack of insurance coverage as top reason for not seeking needed Mental Health services in a 2004 American Psychological Association survey. • By definition, people with a mental illness—especially a serious and persistent mental illness—have a pre-existing condition that can hamper their ability to obtain or maintain health insurance coverage. • SAMHSA reports uninsurance among people with serious mental disorders = 20.4% • 18.2% for people with other mental disorders • 11.4% for those without a mental disorder

6. MARYLAND IMPACT • 400,000 additional Marylanders are projected to get coverage thru federal health reform. (Baltimore Sun, 3/25/10) • The State of Maryland can save approximately $1 billion over 10 years as a result of federal reform. (Governor’s Executive Order) • Federal reform builds on state efforts over past 3 years, when health care coverage was extended to 161,000 more Marylanders, including 78,500 children. (Governor’s Press Release, 3/24/10) • Gov. O’Malley has established a new Health Reform Coordinating Council, co-chaired by Lt. Gov. Brown and DHMH Sec. Colmers, to oversee state’s implementation of federal changes. (Its Website is http://www.healthreform.maryland.gov/)

7. MEDICAID ELIGIBILITY EXPANSION(Effective on 1/1/2014) • Requires Medicaid coverage of all non-aged adults (<65) with incomes up to 133% of Federal Poverty Level (FPL) • Establishes a uniform national income eligibility floor for this group—states may not opt for lower eligibility • Removes categorical limitationsfor adults (disability, parental status)--which have impeded Medicaid eligibility for some people with mental illness and other disabilities in the past • States may increase adult Medicaid eligibility up to the new level earlier, beginning in 2010 • All newly eligible adults will be provided a benchmark benefit package, offering only essential health coverage but including behavioral health benefits

8. MEDICAID ELIGIBILITY EXPANSION: IMPACT ON MARYLAND • Under federal waiver, Maryland currently offers full Medicaid benefits to parents of minor children and partial Medicaid benefits to childless adults; both groups are covered up to 116% of FPL • 116% FPL = $12,563 for individuals, $16,901 for 2-person families (2010 figures) • 133% FPL (new federal level for adults) = $14,404 for individuals, $19,378 for 2-person families (in 2010) • Maryland Primary Adult Care (PAC) Program provides childless adults coverage for primary care, prescription drugs, and outpatient mental health services

9. INCREASED FEDERAL COST SHARING for MEDICAID EXPANSION • Boosts Federal matching rate for newly eligible Medicaid enrollees to 100% from 2014-2016 (scaled down to 90% in 2020) • Reduces fiscal disincentive for states to enroll new eligibles in Medicaid • Enhanced federal matching rate is not available for Medicaid eligibility expansions prior to 2014 • States will eventually receive enhanced federal match for newly eligible adults enrolled prior to 2014—but only for costs incurred beginning in 2014

10. CHILDREN’S HEALTH INSURANCE PROGRAM (CHIP/MCHP) CHANGES • Requires states to maintain current income eligibility levels for children enrolled in CHIP and Medicaid until 2019 • Extends federal authorization for CHIP through 2015 • Beginning in 2015, states will receive 23% increase in federal CHIP matching rate (up to a ceiling of 100%) for all CHIP enrollees • Relieves 12 states with lowest median income of all CHIP costs • In Maryland, the federal CHIP matching rate will increase from 65% to 88%

11. Expands Medicare Part D coverage for prescription drugs (by closing the “donut hole,” where beneficiaries pay 100% of drug costs) • Provides $250 rebate for those with expenses in donut hole in 2010 • Beginning in 2011, beneficiaries with expenses in donut hole will receive 50% discount on brand name drugs • Closes donut hole by 2020 – phases down donut hole coinsurance rate from 100% to 25% (equal to Part D coverage below donut hole) • People with dementia and serious mental illness are more likely to incur expenses in the donut hole • State of Maryland already offers some financial relief to Medicare beneficiaries with expenses in donut hole range CLOSING THE MEDICARE PART D “DONUT HOLE”

12. MORE MEDICARE CHANGES • Effective 1/1/2011, eliminates cost sharing for preventive services under Medicare • Provides for an annual physical exam at no cost to beneficiaries • Provides 10% increase in Medicare payments to primary care physicians from 2011 to 2015 • Phases out 14% payment differential for Medicare Advantage plans (private managed care plans which typically offer added benefits not available to other Medicare beneficiaries) • This will lead to reduction in extra services and/or increase in premiums for Medicare Advantage enrollees

13. EXPANDED PRIVATE HEALTH INSURANCE COVERAGE • Makes tax credits available for small employers (with 25 or less employees and average annual wages of < $50,000) to subsidize employers’ health insurance expenditures—effective in CY 2010 • For tax years 2010-2013, provides tax credits of up to 35% of employer’s contribution; in 2014, allowable credit will increase to 50% for most small employers • Amount of credits will vary by firm size and average wage—full credit available to employers with 10 employees or less and average wage of < $25,000 Unmarried young adults can be covered under parents’ policy up to age 26, effective September 23, 2010 Maryland already provides for such coverage up to age 25

14. AFFORDABLE PRIVATE INSURANCE COVERAGE through HEALTH BENEFITS EXCHANGES • In 2014, sets up state-based Health Benefit Exchanges for those without coverage from employers or public entitlements, as well as those employed by small businesses (100 employees or less) • Policies available through Exchanges must cover Mental Health and Substance Abuse services, at parity with other benefits • Exchanges enable consumers to “comparison shop” among standardized benefit plans • Four standard benefit packages – Bronze, Silver, Gold, Platinum • Facilitates individuals’ and small employers’ securing of affordable coverage • Fosters competition among insurers based on quality and price

15. LARGE EMPLOYER INSURANCEMANDATE • Mandates coverage by employers with more than 50 employees or payment of penalty • Mandate becomes effective if at least one employee receives a premium credit to subsidize coverage thru Health Benefit Exchange • Effectiveness of this indirect “trigger” uncertain • Employer penalty for non-coverage = $2,000 annually per full- time employee • Likely impact of this penalty also unclear

16. SUBSIDIZED PRIVATE HEALTH INSURANCE COVERAGE (Effective in 2014) Subsidizes insurance coverage for people with income of 133-400% of FPL through premium tax credits to purchase insurance through Health Benefit Exchanges Range of annual income for qualifying single individuals = $14,404-$43,320 (2010 levels) Range of annual income for qualifying families of 4 = $29,326-$88,200 (2010 levels) Amount of credit varies on a sliding scale related to income • Provides sliding-scale subsidies to limit cost-sharing (e.g., copayments and deductibles) for those with incomes between 133% and 400% of FPL

17. Beginning in June 2010, sets up a temporary National High- Risk Pool to offer subsidized coverage to adults with pre- existing conditions who have been uninsured for 6 months or more • Makes available $5 billion to reimburse federal and state expenditures related to Risk Pool between 2010 and 2014— Maryland’s projected share totals $85 million • Maryland already has its own high-risk pool—the Maryland Health Insurance Program, which is likely to continue to operate in tandem with Federal Pool • Federal High Risk Pool coverage will terminate when Exchanges become operational in January 2014 INTERIM COVERAGE for UNINSURED with PRE-EXISTING CONDITIONS (2010-2014)

18. Beginning in 2014, requires all Americans to obtain health insurance coverage (with certain exemptions, including lack of available affordable coverage) • Analogous to state mandates for auto insurance coverage • Penalty for non-coverage comes in form of federal tax • Penalty begins in 2014 at $95 for individuals (maximum of $285 for families) or 1.0% of taxable household income, whichever is greater • In 2016, penalty increases to $695 for individuals (maximum of $2,085 for families) or 2.5% of taxable income, whichever is greater • Young adults (age 30 or under) may purchase catastrophic (“young immortals”) coverage to satisfy mandate INDIVIDUAL MANDATE for HEALTH INSURANCE COVERAGE

19. TAXES on HIGH-COST PRIVATE HEALTH INSURANCE • Imposes federal excise taxes on high cost (“Cadillac”) private health plans • Tax is applicable to value of health plans in excess of $10,200 for individuals and $27,500 for families • Effective in 2018

20. PRIVATE HEALTH INSURANCE REFORMS (Effective 2014, except as noted) • Guaranteed Issue: Insurers must insure all individuals who want to purchase coverage regardless of prior Medical History • Insurers may not deny coverage because of Pre-existing Conditions • Effective 2010 for children • Effective 2014 for adults • Guaranteed Renewability: Insurers may not reject renewals because of changes in health status while insured

21. PRIVATE HEALTH INSURANCE REFORMS (continued) • Prohibits Rescissions (reduction or termination of coverage because of illness or medical condition developed while insured), effective 2010 • Terminations only allowed for fraud or misrepresentation of facts • ProhibitsLifetimeLimits on Basic Coverage (effective 2010) • Prohibits Annual Limits on Basic Coverage (effective 2014) • Restricts Annual Limits beginning in 2010

22. Beginning in plan year 2010, sets percentage limits on insurers’ outlays for non-health-related expenses (e.g., administration and profits) • Insurers must report on Medical Loss Ratio (percentage of premiums spent on actual health care expenses) • In large group markets, if Loss Ratio is less than 85%, Insurer must provide rebates to consumers (effective 1/1/2011) • In individual and small group markets, rebates must be paid if Loss Ratio is less than 80% PRIVATE HEALTH INSURANCE REFORMS (continued)

23. PRIVATE HEALTH INSURANCE REFORMS(Continued—Effective 2014) • Prohibits Premium Differentials related to: • Health Status or Utilization • Gender • Occupation • Permits Premium Differentials related to: • Family Size • Geographic Area • Age (no more than 3:1) • Tobacco Use (no more than 1.5 to 1) • Limits Waiting Periods for Coverage to 90 Days

24. Increases financial aid to students opting for Primary Care • Increases funding for Safety Net providers (Community Health Centers and National Health Service Corps) by $11 billion over 5 years, almost doubling their capacity, beginning in FY 2011 • Establishes new programs to support School-Based Health Centers (including behavioral health services) and Nurse-Managed Health Centers, effective FY 2011 • Establishes and funds “Navigators” to assist people in obtaining coverage and negotiating health care system CHANGES in the HEALTH CARE DELIVERY SYSTEM

25. Reduces Uncompensated Care and need for Cross-Subsidization because of reduction in number of uninsured • Will necessitate changes in Maryland’s all-payor hospital rate system • Effective immediately in 2010, establishes federal process for annual review of proposed private health insurance premium rate increases • Requires plans to justify proposed increases to HHS Secretary and relevant state authorities prior to implementation of increases • Requires states to report on trends in premium increases • Requires states to recommend whether certain plans should be excluded from the Exchanges because of excessive or unjustified premium increases • Increases historically low Medicaid primary care provider payments to 100% of Medicare rates during 2013 and 2014, with full federal financing of payment rate increases PAYMENT REFORM

26. As noted earlier, Medicaid and private insurance coverage expansions will reduce major impediment to access to Mental Health services • 87% of Americans cited lack of insurance coverage as top reason for not seeking needed Mental Health services • Timely access to Behavioral Health services will expand with broadened coverage, fostering early intervention and primary prevention • Pressures on State Mental Health agencies as payors-of-last-resort likely to decrease because of reduction in number of uninsured IMPACT OF NEW LAW ON BEHAVIORAL HEALTH

27. Expanded access to Primary Care is likely to: • Reinforce the need for better coordination of somatic and psychiatric care • Reduce high physical comorbidity rates and 25-year average mortality differential among people with mental illness • Ease overcrowding in hospital Emergency Rooms, enabling them to more effectively intervene in true emergencies • Federal mandate for Behavioral Health coverage by health insurance plans available through Health Benefits Exchanges may be first step to federal mandate for such coverage by all insurers—thereby extending the reach of federal Mental Health Parity mandates • Maryland already mandates private insurance coverage of Mental Health benefits IMPLICATIONS OF NEW LAW FOR MENTAL HEALTH

28. IMPLICATIONS OF NEW LAW FOR BEHAVIORAL HEALTH(continued) • Beginning in 2014, Disproportionate Share Hospital (DSH) funding under Medicaid and Medicare will be scaled back because of reductions in extent of uninsurance • MHA and other state Mental Health agencies have used DSH funding to help finance state hospitals • Early intervention may reduce criminal justice involvement of people with mental illness and substance use disorders by reducing extent of potentially criminal behavior • Early intervention by mental health system may also diminish incidence of co-occurring substance use disorders, especially among younger consumers, reducing incidence of substance abuse to “self-medicate” for underlying mental illness

29. Establishes the Community-Based Collaborative Care Network Program to support consortiums of health care providers to coordinate and integrate health services for low- income uninsured and underinsured populations; funds appropriated for FY 2011-FY 2015 • Effective 1-1-2011, establishes a national, voluntary insurance program for purchasing Community Living Assistance Services and Supports (CLASS) • Program to be funded by voluntary payroll deductions; all working adults will be automatically enrolled but may opt out • After a 5-year vesting period, provides cash benefits of at least $50 per day to purchase non-medical services and supports needed to live in the community; similar to Self-Directed Care—consumer decides what to buy from whom OTHER PROVISIONS RELEVANT TO BEHAVIORAL HEALTH

30. Establishes a multi-stakeholder Workforce Advisory Committee to develop a national health care workforce strategy, including behavioral health • Supports the development of interdisciplinary Mental Health and Behavioral Health training programs • Supports the development of training programs that focus on healthcare delivery models such as Health Homes, Team Management of Chronic Diseases, and Integration of Physical and Mental Health Services; makes funds available from FY 2010 to FY 2014 • Creates a National Center of Excellence for Depression, which will sponsor research into effective approaches for treatment of depression and bipolar disorder OTHER PROVISIONS RELEVANT TO BEHAVIORAL HEALTH (continued)

31. Beginning 1-1-2011, creates a new state plan option allowing Medicaid enrollees with chronic conditions (e.g. serious and persistent mental illness) to designate an interdisciplinary community provider team as a Health Home • Health Home would provide comprehensive services, including care coordination • Offers 90% federal matching for 2 years to states accepting this option • Maryland already has been developing Health Home model through the Maryland Health Quality and Cost Council • Creates new 3-year demonstration in up to 8 states to provide Medicaid payments to private Institutions for Mental Disease (IMDs) tostabilize patients with an emergency condition; appropriates $75 million annually beginning in FY 2011 OTHER MEDICAID REFORMS RELEVANT TO BEHAVIORAL HEALTH

32. OTHER MEDICAID REFORMS RELEVANT TO BEHAVIORAL HEALTH (continued) • Provides states with new options for offering Home and Community-Based Services (HCBS) through a Medicaid state plan amendment instead of a more onerous federal waiver • Available to individuals with incomes of up to 300% of maximum SSI eligibility • Permits states to extend full Medicaid benefits to individuals receiving HCBS services • Establishes the Community First Choice Option to provide community-based attendant supports and services to individuals with disabilities who would require institutional care • Creates the State Balancing Incentive Program to provide enhanced federal matching payments to eligible states to increase the proportion of non-institutionally-based long-term care services

33. OTHER MEDICAID REFORMS RELEVANT TO BEHAVIORAL HEALTH (continued) • Extends Medicaid Coverage to former Foster Children until age 26 (currently limited to age 18), including Transition Aged Youth • Removes from Medicaid’s Excluded Drug List: • Smoking cessation medications • Barbiturates • Benzodiazepines • Creates Federal Coordinated Health Care Office to coordinate services for people dually eligible for Medicaid and Medicare • Extends Money Follows the Person (MFP) Rebalancing Demo from 2011 to 2016 • Maryland already has one of most successful MFP demos

34. FINAL THOUGHTS: CAPITALIZING ON AN UNPRECEDENTED OPPORUNITY • Obviously, the success of federal health reform depends on what happens at the state, local, and personal levels. • A broad array of resources must be mobilized, including consumers, families, advocates, and providers. • Coverage does not equal Access. • Shortages of key providers including primary care physicians, nurses, and mental health professionals may impede timely access to needed services unless decisive interventions take place to develop expanded, high quality service delivery capacity—now and over time. • Mental health consumers and their families deserve our best efforts—including the dedication and imagination we have marshaled to address other large-scale challenges and opportunities in the past.