Indiana Proposes New Eligibility Requirements in Waiver Extension Application

By Patricia M. Boozang, Senior Managing Director | Mindy Lipson, Senior Manager | Nina V. Punukollu, Consultant

Indiana is seeking a three-year extension of its Healthy Indiana Plan (HIP) 2.0 Section 1115 demonstration. Through HIP 2.0, which the Centers for Medicare and Medicaid Services (CMS) approved in January 2015, Indiana expanded its Medicaid program under the Affordable Care Act (ACA). The demonstration, which is set to terminate in January 2018, currently covers more than 400,000 expansion adults ages 19 to 64, Section 1931 parents and caretakers, and Transitional Medical Assistance (TMA) enrollees with incomes up to 138% of the federal poverty level (FPL). In January 2017, Indiana submitted a waiver extension application to CMS, and on May 25, 2017, the State submitted an amendment to the application. Through these applications, Indiana is seeking to tighten eligibility requirements and modify features of coverage for the HIP 2.0 population.

Nationally, states seeking to tailor their Medicaid programs to include program features intended to promote personal responsibility have viewed HIP 2.0 as a model, both because of its coverage mechanism and the flexibility Indiana obtained from CMS. HIP 2.0 provides coverage through high-deductible Medicaid managed care plans. A $2,500 deductible under the plan is paid through an enrollee “POWER account,” a health savings-like account funded with a combination of enrollee contributions, Medicaid funds and, in some instances, contributions from employers, providers or other third parties.

Under the HIP 2.0 demonstration, Indiana was the first state to obtain CMS approval to:

• Charge premiums (in the form of POWER account contributions) to new adults with incomes as low as 0% FPL;
• Impose a six-month “lockout” period for members of the new adults group with incomes above 100% FPL who do not pay POWER account contributions within a 60-day grace period;
• Impose copays of up to $25 for repeated nonemergency use of the emergency department (ED); and
• Waive retroactive coverage under an expansion demonstration.

Through its waiver extension, Indiana is requesting approval to implement two significant provisions that CMS has not previously approved in state Medicaid programs:¹

• Premiums (in the form of POWER account contributions) equal to 3% of household income for tobacco users.
• Participation in work-related activities as a condition of Medicaid eligibility. (State officials added this provision to the extension request as part of the May amendment.)

Indiana’s actuary projects that two features proposed as part of the extension would decrease HIP 2.0 enrollment. Specifically, the actuary projects that by the end of the demonstration, approximately 9,500 individuals would lose HIP 2.0 coverage because of the work requirement. In addition, implementation of HIP open enrollment periods (described in more detail below) is projected to result in a 1% decline in demonstration enrollment.

A summary of features proposed in the HIP 2.0 waiver extension request follows.

POWER Account Contributions. Currently, HIP 2.0 enrollees are expected to pay monthly premiums in the form of contributions to their POWER accounts set at 2% of monthly income for all enrollees with incomes above 5% FPL. Individuals with incomes above 100% FPL who fail to pay their contributions within a 60-day grace period are disenrolled from coverage and are not permitted to re-enroll for six months. Individuals with incomes at or below 100% FPL who fail to make their contributions in a timely manner are transitioned to a less generous benefit package. Indiana is proposing to transition to a tiered premium structure, where all enrollees within a given income band would be charged the same amount; proposed premium tiers are below 2% of income for the vast majority of enrollees. Indiana also seeks to increase monthly POWER account contributions for tobacco users to 3% of income beginning in their second year of eligibility.

Cost Sharing. Indiana seeks to retain its waiver permitting a $25 copay for repeated nonemergency use of the ED for the entire extension period.

Benefits. Indiana seeks to continue its waiver of the Medicaid requirement to provide non-emergency medical transportation (NEMT).²

Healthy Behavior Incentives. Indiana is proposing a new “HIP healthy incentive initiative” focused on tobacco cessation, substance use disorder (SUD) treatment, chronic disease management and employment. The State would encourage Medicaid managed care plans to offer incentives of up to $300 per year for HIP 2.0 enrollees who participate in targeted interventions, such as a tobacco cessation program, and meet “outcomes-based” goals.

Work Requirements. Indiana is seeking to implement work requirements as a condition of eligibility for HIP 2.0. If approved, enrollees would be required to: work for an average of 20 hours per week for at least eight months of their 12-month eligibility period; be enrolled in education on a full- or part-time basis; or participate in the State’s Gateway to Work program (e.g., employment, job skills training, vocational training, caregiving, volunteering and accredited homeschooling) for a minimum number of hours per week. Those who do not comply with work requirements would be disenrolled from coverage and would not be permitted to re-enroll until they meet the work requirement for one month. Populations exempt from the work requirement would include enrollees over age 60, pregnant women, individuals obtaining SUD treatment, medically frail individuals, primary caregivers of a dependent, individuals with short-term incapacitation, and individuals who were recently incarcerated. The State intends to phase in the work requirement over the course of 2019 and begin assessing compliance with the work requirement in the final year of the demonstration, which starts in February 2020.

HIP Open Enrollment Period. Indiana is seeking to implement a “HIP open enrollment” period, in which enrollees who do not submit required renewal documentation could be locked out of coverage for six months. This provision would only apply in cases where the State is unable to conduct an ex parte renewal.

90-Day Prior Claims Payment for Parents and Caretakers. Indiana is requesting that CMS continue the State’s current waiver of the Medicaid requirement to provide retroactive coverage, and eliminate the current requirement that the State run a “transition program” to pay 90 days’ claims prior to the eligibility effective date for a subset of Section 1931 parents and caretakers.

SUD Reforms. Indiana is proposing a number of reforms to its SUD coverage and delivery systems. The State would expand its SUD benefit package for all Medicaid and CHIP beneficiaries receiving full benefits, including those covered both under and outside of the HIP 2.0 demonstration. New “enhanced” SUD benefits would include inpatient detoxification services, residential SUD treatment services, and addiction recovery management services. In addition, the State is seeking a waiver of the Institutions for Mental Disease (IMD) exclusion so that it can obtain federal matching funds for up to 30 days of services delivered at IMDs to 21- through 64-year-olds.

Employer-Sponsored Insurance (ESI) Premium Assistance. As part of HIP 2.0, Indiana has been implementing HIP Employer Link, an ESI premium assistance program. Citing that only 60 individuals are enrolled in this coverage and the high degree of administrative complexity required to administer the program, Indiana is proposing to eliminate HIP Employer Link. Currently enrolled individuals would move to HIP 2.0 managed care plans.

Moving Forward

With the consistent national interest surrounding the HIP 2.0 demonstration, particularly given CMS Administrator Verma’s role in shaping the program, stakeholders will be closely watching the progress of Indiana’s waiver extension application. Similar to other states that have recently released waiver requests, Indiana is seeking new flexibility from the Trump administration. Indiana is joining five other states—Arizona, Arkansas, Kentucky, Maine and Wisconsin— that have released waiver proposals including work requirements.

_{¹ Hereinafter, the term “waiver extension” encompasses both the January waiver extension submission and the May amendment to the extension application.}

_{² Medically frail expansion adults, 19- and 20-year-old dependents, low-income parents and caretakers previously eligible for Medicaid, and individuals eligible for TMA are exempt from the NEMT waiver.}