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Health Law in Kentucky

Health Law in Kentucky. October 25, 2011 Anne Hadreas Health Law Fellow Kentucky Equal Justice Center. Session Goals. Overview of the Affordable Care Act Updates on Medicaid Managed Care Brief description of KY’s Medicaid Waiver programs. Outline of the aca. Divided into five sections:

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Health Law in Kentucky

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  1. Health Law in Kentucky October 25, 2011 Anne Hadreas Health Law Fellow Kentucky Equal Justice Center

  2. Session Goals • Overview of the Affordable Care Act • Updates on Medicaid Managed Care • Brief description of KY’s Medicaid Waiver programs

  3. Outline of the aca • Divided into five sections: • Employer-based insurance modifications • Health Benefit Exchanges • Funding for low- and middle-income consumers • Health insurance reforms • “Individual Mandate”

  4. Employment-based insurance • the Act builds upon the existing system that most consumers are used to • Establishes tax incentives for small businesses to purchase health insurance for their employees • Up to 50% of cost of health insurance • Penalties for certain large employers to offer health insurance to their employees

  5. Health benefit exchanges • What they should look like: • Consumer-friendly • Standardized information • Promote competition • Similar to Travelocity or Expedia • Provide buying power • State flexibility but must be approved by 1/1/2013 or the federal government can step in with a federal exchange • Can be separate for individuals and small businesses

  6. Subsidies for consumers • Medicaid Expansion! • Up to 133% FPL ($29,326/year for family of 4) • NO CATEGORIES!!! • Premium Tax Credits • Up to 400% FPL • Operates through federal income tax • No co-pays for preventative services

  7. Subsidies for consumers (continued) Medicare Donut Hole: 50% discount on brand name drugs and 7% for generic after $2,840 in total drug costs. The hole will disappear by 2020. Picture Source: Consumer Reports

  8. Health insurance reforms • Prevent denial of coverage for medical conditions • Prohibit higher premiums for medical conditions • Prevent unfair rescission of coverage • Requires evidence of fraud or intentional misrepresentation • Require higher percentage of spending on care • 80% medical loss ratio (MLR) • Refunds to consumers if requirements not met • Youth coverage on parents’ plan until age 26

  9. Individual mandate • “Requirement to Maintain Minimum Essential Coverage” (26 U.S.C. § 5000A) • Need to have essential minimum coverage or make “shared responsibility payment.” • Penalty gets phased in • Penalty at 2016: $695, per person per year, or 2.5% of income, if higher • Goals: • More preventative care • Spread out the cost and lower premiums

  10. When will everything happen? • Changes will roll out over a decade • Some changes are already in effect

  11. 2010 • New health plans to cover preventative care with no co-pays • Young adults up to age 26 can stay on parents’ plans • Health insurers prohibited from: • Denying coverage to children with pre-existing conditions • Places lifetime limits on coverage • Dropping coverage due to illness • Federal pre-existing condition plan and temporary high risk pool • $250 Medicare donut hole rebate • Initial tax credits for small employers (25 employees or less) that provide health insurance

  12. 2011 • MLR • 75% for KY; 80% in 2012 • Discounts on drugs for Medicare beneficiaries • 10% bump in Medicare payments for primary care providers

  13. 2012 • Increased payments to accountable care organizations (ACOs) • More changes to Medicare! • Payments linked to outcomes • No payments for preventable readmissions (e.g. hospital-acquired infections)

  14. 2013 • Limitations on medical deductions • Medical expenses must equal 10% of income to be deductible. (Currently, it is 7.5%) • Exception: Individuals over 65 can use 7.5% until 2016 • Flexible spending accounts limited to $2,500/year

  15. 2014 (aka the big year) • Minimum Essential Coverage Requirement begins • Exchanges open • Medicaid expands to 133% of FPL • Premium tax credits start • Health insurance regulations begin • Cannot deny new or renewed coverage for medical conditions • No higher rates based on health

  16. 2016-2010 • 2016 • States can band together to sell coverage and create larger markets • 2018 • Tax on “Cadillac plans” begins (over 10,200/year for individuals) • 2020 • Medicare donut hole completely eliminated

  17. What this means for ky • 920,000 – Persons with pre-existing health conditions that who cannot be denied coverage • 261,000 – Eligible beneficiaries for Medicaid with expansion to 133% of FPL • 221,000 – Families who will receive tax credits for health insurance • 51,500 – Small businesses who will receive tax credits for employees health care coverage • 129,000 – Benefitting from the elimination of Medicare donut hole • 16,800- Young adults who may be covered until age 26 on parent’s health insurance • 63,200 – Support for early retirees

  18. ACA Litigation • Appellate cases • Individual mandate is unconstitutional but severable • 11thCircuit - Florida v. HHS (26 states joined) • Everything constitutional under Commerce Clause • 6th Circuit - Thomas More v. Obama • Dismissed for lack of standing • 3rd Circuit - NJ Physicians v. Pres. of U.S. • 4th Circuit -Virginia v. Sebelius; Liberty Univ. v. Geithner (AIA prohibits suit) • 9th Circuit - Baldwin v. Sebelius • Will be heard by SCOTUS in Spring 2012

  19. Aca conclusion • 32 million more people estimated to covered • Current system is confusing and complicated • A lot of details are still being worked out

  20. Take a breath

  21. Medicaid managed care for kentucky

  22. What is managed care? • One health plan that coordinates all or most of an individual’s care • Aim is to control costs • Plans are called “managed care organizations” or “MCOs”

  23. What are the pros to managed care? • Money savings • State pays a set amount per person ahead of time • Easier to budget • Coordinated care • Better alignment of physical and mental health • Chronic disease management • Incentive is to encourage preventative care

  24. What are the potential problems? • Cutting care saves money • Incentive to make it more difficult to get more expensive services, medications • Lower reimbursement rates for providers • Reduces access to care

  25. How will this work in KY? • Change from fee-for-service model • Should receive same services as before, with potential for additional services • Who is covered? Everyone, EXCEPT: • Passport region • Nursing homes • Waiver programs (e.g. Michelle P., SLC) • Only Medicare Savings Plans • Spend-down • Time-limited Medicaid • Qualified Medicare Beneficiaries (QMBs), specified low income Medicare beneficiaries (SLMBs) or qualified Disabled Working Individuals (QDWIs) • A few other groups

  26. How will this work for KY? • What services will the MCOs cover? • All Medicaid services for these beneficiaries, EXCEPT: • Non-emergency transportation • School-health services • First Steps • HANDS • Medical, behavioral and (some) dental

  27. Who are the MCOs? • Coventry Care of Kentucky • In seven other states • www.coventrycaresky.com • 1-855-300-5528 • Kentucky Spirit Health Plan • Subsidiary of Centene • Will have office in KY • www.kentuckyspirithealth.com • 1-866-643-3153 • WellCare of Kentucky • Large company serving over 2 million Americans • www.kentucky.wellcare.com • 1-877-389-9457

  28. Picking a MCO • Provider networks will differ • Look at your clients’ PCP, specialists, pharmacy, hospital • Medicaidmc.ky.gov • Toll-free hotline: 1-855-446-1245 • Beneficiaries will have chances to change later

  29. Timeline • 7/7/2011: Governor signed contract with MCOs • 7/2011-10/2011: MCOs establish networks • Mid-Aug., 2011: Beneficiaries received auto-assignment • 10/5/2011: New initial change deadline • 11/1/2011: New implementation date • 11/2011-1/2012: Change period (90 days) • Open enrollment yearly during recertification period

  30. What if there is a problem? • Internal grievances • State fair hearings • Do not need to exhaust internal remedies • Impact litigation

  31. homestretch

  32. medicaid waiver programs and demonstration projects • Alter normal Medicaid rules for flexibility • Must be cost neutral • Section 1115 Research & Demonstration Projects: policy innovations • Section 1915(b): Managed Care/Freedom of Choice Waivers • Section 1915(c): Home and Community-Based Services Waivers

  33. Ky programs • Managed Care • Passport (KY Health Care Partnership) • Non-Emergency Transportation System • Brain Injury Waivers (general and long-term care) • Home and Community-Based Services (seniors) • Model Waiver II (respiratory services) • Michelle P. • Supports for Community Living

  34. Questions? • www.kyequaljustice.org • ahadreas@kyequaljustice.org • (859) 233-0323 • And dancing!

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