Manatt on Medicaid: Ohio Releases Draft Waiver Request to Implement Major Medicaid Coverage Reforms

Authors: Deborah Bachrach, Partner | Patricia Boozang, Senior Managing Director | Mindy Lipson, Manager

Overview

On April 15, 2016, Ohio released a draft Section 1115 waiver application to implement the Healthy Ohio Program. The Healthy Ohio Program, a five-year demonstration beginning in 2018, would modify features of coverage for Medicaid beneficiaries aged 18 to 64 who are newly eligible under the Affordable Care Act's (ACA) Medicaid expansion or were previously eligible under certain categories of Ohio's Covered Families and Children program. Specifically, the State proposes to cover the following eligibility groups through the demonstration:

The Healthy Ohio Program is intended to:

1. Promote member engagement in health and personal responsibility, including the appropriate use of healthcare services;
2. Increase the use of preventive services by members;
3. Increase provider engagement in member healthy behaviors; and
4. Increase the number of commercially insured.

The proposed coverage vehicle for the Healthy Ohio Program is a high-deductible managed care plan coupled with a "Buckeye Account," similar to a health savings account. Enrollees will primarily use Buckeye Accounts to pay copayments and plan deductibles. While Ohio already operates a Medicaid managed care program for most beneficiaries, the State intends to initiate a new managed care procurement for the Healthy Ohio Program. Current Medicaid beneficiaries covered by the Healthy Ohio Program would transition to new plans upon the start of the demonstration on January 1, 2018.

The Healthy Ohio Program was developed by the Ohio Legislature and included in the State's fiscal years 2016-2017 budget. The Healthy Ohio Program would impose additional obligations on Medicaid beneficiaries, both the expansion adults as well as many previously eligible populations. The new requirements include monthly enrollee contributions for individuals with incomes above 0% of the federal poverty level (FPL), as well as cost sharing, healthy behavior incentives, and work referrals for Healthy Ohio Program enrollees.¹ The State is proposing to implement several provisions of the State statute that the Centers for Medicare and Medicaid Services (CMS) has previously rejected, including conditioning coverage for individuals with incomes below the poverty level on paying monthly contributions/premiums² and locking individuals out of coverage until they repay missed monthly contributions.³ In addition, Ohio is seeking a waiver to impose cost sharing beyond that permissible under Medicaid law.

Prior to passage of legislation authorizing the Healthy Ohio Program, the Kasich Administration proposed reforming the Medicaid program by implementing premiums of up to 2 percent of income for newly eligible adults with incomes above 100% FPL, a waiver feature that CMS has approved in several other states to date. The Ohio Department of Medicaid has indicated that it is aware that certain features of the Healthy Ohio Program proposal have previously been rejected by CMS.

The Ohio Department of Medicaid projects that by 2022, 1,425,610 of 1,841,000 individuals eligible for the demonstration will be enrolled in Medicaid. In its waiver concept paper, the State projects that fewer individuals will be enrolled in the Medicaid program under the Healthy Ohio Program than would otherwise be enrolled without the waiver. Absent the waiver, the State estimates that 1,565,257 individuals in the same eligibility categories would have obtained Medicaid coverage.

Key Waiver Features

Benefits. All Healthy Ohio Program enrollees will receive benefits consistent with Ohio's State Plan. Ohio's alternative benefit plan (ABP) and State Plan benefit package are largely aligned; however, previously eligible adults will be subject to State Plan visit limits for long-term services and supports (LTSS) and mental health benefits. If a previously eligible adult uses more than 90 days of LTSS (the State Plan limit), he or she will be transitioned from the Healthy Ohio Program to the State's fee-for-service Medicaid program. The application is silent on whether individuals who exceed State Plan limits for mental health services will be disenrolled from the Healthy Ohio Program and moved to the fee-for-service program. In addition, the State will transition Healthy Ohio Program enrollees who use more than $300,000 worth of services in a year or $1,000,000 worth of services in a lifetime to the State's fee-for-service or traditional Medicaid managed care program, depending on their eligibility category. While enrollees who hit the annual or lifetime cap will receive the same benefits in the fee-for-service or traditional Medicaid managed care program, they will no longer be subject to the Healthy Ohio Program's monthly contributions. Enrollees who are disenrolled from the Healthy Ohio Program because they reach the $300,000 annual cap will be re-enrolled in the Healthy Ohio Program coverage in the next plan year. All benefits will be covered under Healthy Ohio Program managed care plans, with the exception of a carve-out for home and community-based waiver services.

Buckeye Accounts. All Healthy Ohio Program enrollees will receive a Buckeye Account. The Buckeye Account will be funded by enrollees, the State, and in some cases third parties such as employers, not-for-profit organizations, and managed care plans. The State will require all enrollees, except those who are pregnant or have no income, to pay monthly Buckeye Account contributions, similar to premiums. The contributions will be set at the lesser of 2 percent of household income or $8.25 per month.

Contributing to the Buckeye Account will be a condition of Medicaid eligibility. When enrollees transition from Ohio's current managed care program to Healthy Ohio Program coverage on January 1, 2018, they will have 60 days to make an initial contribution to their Buckeye Accounts; if they do not make their initial contributions, they will be disenrolled from coverage. Thereafter, enrollees who do not make a monthly contribution to their Buckeye Account within a 60-day grace period will be disenrolled from Medicaid. Disenrolled individuals will not be permitted to re-enroll until they have repaid any missed Buckeye Account contributions. Enrollees will incur a debt to the State for the months when they fail to make their Buckeye Account contributions.

Third parties may pay up to 75% of an enrollee's monthly contribution, with no more than half of the enrollee's total required monthly contribution coming from an employer. While managed care plans are permitted to contribute to Buckeye Accounts, such contributions will not count toward an enrollee's required monthly payments and may only be used to pay for wellness programs. Buckeye Account funds contain two types of funds: "core" funds and "non-core" funds:

• Core funds include enrollee contributions, any contributions made by an employer or not-for-profit organization, and healthy incentive points earned by the enrollee (described in more detail below). Core funds may be used for out-of-pocket cost sharing and toward the purchase of items not covered by the enrollee's managed care plan, such as over-the-counter medications.
• Non-core funds include the State's contribution to the Buckeye Account. The State contributes $1000 to the non-core portion of the Buckeye Account each year. Non-core funds must be used toward the enrollee's deductible.

The State will send enrollees monthly Buckeye Account statements so that they can track and manage their accounts. Enrollees may obtain up to $320 in additional funds for the core portion of their Buckeye Accounts by accumulating healthy incentive points. Enrollees are able to earn up to $200 worth of points per year by meeting healthy behavior standards established by the Ohio Department of Medicaid and up to $100 by meeting healthy behavior standards set by their physicians. These standards may include medication adherence or participation in a wellness program. In addition, enrollees may earn $20 in points by setting up an electronic funds transfer from their bank accounts to pay their monthly Buckeye Account contributions; however, the State will relinquish these points upon cancellation of an electronic funds transfer.

Individuals who become ineligible for the Healthy Ohio Program for reasons other than an increase in income beyond Medicaid limits—including individuals who are disenrolled for failure to make monthly contributions—will receive a refund worth the balance of their Buckeye Account contributions and third-party contributions upon leaving the program. Individuals whose income increases above Medicaid limits will be able to carry forward their Buckeye Account balance in a new health savings-like account called a Bridge Account (described in more detail below).

Cost Sharing. Healthy Ohio Program enrollees will be subject to two types of cost sharing: point-of-service copayments at amounts consistent with Medicaid law and a deductible. The Buckeye Account will fund all cost sharing, and enrollees will pay cost sharing using a debit card connected to the account. Copayments will be deducted from the core portion of the Buckeye Account. If an enrollee has used all of his or her core funds, he or she will not be subject to copayments until additional core funds are accumulated. Pregnant women are not subject to copayments.

Enrollees will use the non-core portion of their Buckeye Accounts to pay their plan deductible. If an enrollee uses the entirety of his or her non-core funds, the managed care plan will cover additional services up to $300,000 in a year or $1,000,000 in a lifetime, at which point the enrollee will be transitioned out of the Healthy Ohio Plan as described above.

Buckeye Account Incentives. All enrollees will be permitted to roll over a portion of any remaining Buckeye Account funds to the next plan year; however, the types of funds eligible for rollover will vary based on whether the enrollee has met preventive care standards. Enrollees who obtain all recommended preventive services will be able to roll over the full balance of the core and non-core portions of their Buckeye Accounts. Enrollees who do not meet preventive care standards will only be able to roll over the balance of their monthly contributions and any third-party contributions; they will not be permitted to roll over any healthy incentive points or non-core (i.e., State) contributions. Regardless of whether an enrollee has obtained recommended preventive services, any rollover core funds may be used to reduce or eliminate Buckeye Account contributions in the next plan year. In total, an enrollee may never accumulate more than $10,000 in a Buckeye Account.

Ohio is also proposing to establish "Bridge Accounts" for enrollees whose income increases beyond Medicaid limits and thereafter enroll in coverage through the Marketplace or an employer-sponsored insurance plan. A Bridge Account will contain the full remaining balance of an individual's Buckeye Account. Individuals who enroll in coverage through the Marketplace will be permitted to use their Bridge Accounts for premiums and cost sharing, while individuals who enroll in employer-sponsored coverage will be able to use their Bridge Accounts only for cost sharing. If at any point an individual moves from Marketplace or employer-sponsored coverage back to the Healthy Ohio Program, the balance of his or her Bridge Account will transfer to a Buckeye Account.

Waiver of Retroactive Eligibility. The State requests a waiver of the Medicaid requirement to provide three months' retroactive eligibility to all new Medicaid enrollees, including pregnant women and individuals with no income. If this waiver is approved, individuals determined eligible for the Healthy Ohio Program will not be enrolled in coverage until the first day of the month when they make their first Buckeye Account contribution and they will not be able to seek Medicaid reimbursement for medical expenses prior to their effective date of coverage. Ohio proposes that pregnant women and individuals with no income be enrolled in coverage the first day of the month of their eligibility determination.

Work Referrals. The State will offer Healthy Ohio Program enrollees working fewer than 20 hours per week an optional referral to a workforce development agency. An enrollee's decision regarding whether to follow up on the referral will not affect his or her Medicaid eligibility.

Moving Forward

Ohio's 1115 waiver proposal is uncharted territory for CMS with respect to the large number of Medicaid beneficiaries covered, its contribution requirements and coverage model, and its administrative complexity. The Healthy Ohio Program waiver request has the potential to dramatically alter coverage for a broad group of adult Medicaid beneficiaries in the State, including both newly eligible adults as well as those previously eligible under several mandatory and optional eligibility categories. While the Healthy Ohio Program is partially modeled after the approved Healthy Indiana Plan 2.0 waiver, which also uses high-deductible managed care plans and health savings-like accounts to cover newly and previously eligible adults, Ohio is seeking certain coverage features that are more restrictive than those in Indiana. Namely, Ohio is requesting that payment of monthly contributions be a condition of eligibility for individuals at all income levels, while Indiana and other states implementing alternative Medicaid expansions have only received approval to disenroll individuals for failure to pay monthly premiums or contributions if their income is above 100% FPL.

Similar to Indiana, Ohio is looking to impose rigid re-enrollment criteria for individuals who are disenrolled from coverage for failure to make timely monthly contributions. While Indiana prohibits disenrolled individuals with incomes over 100% FPL from regaining coverage for six months, Ohio is proposing an indefinite "lock-out," requiring individuals in all eligibility categories and at all income levels to repay their missed contributions before being eligible to re-enroll in Medicaid. This approach is also more restrictive than that being implemented in Montana's 1115 expansion waiver, where disenrolled individuals with incomes above 100% FPL may re-enroll in coverage upon payment of premiums owed or upon a quarterly debt assessment against their State taxes.

Ohio proposes charging cost sharing for populations that are exempt from cost sharing under Medicaid law and waiving prohibitions against cost sharing for certain services. To date, Indiana is the only state to receive a cost-sharing waiver in an expansion demonstration. Specifically, Indiana obtained approval to impose copayments beyond Medicaid limits for repeated nonemergency use of the emergency department.

Ohio's waiver application is also worth watching because of its administrative complexity, which is especially noteworthy given that the State's Medicaid agency will be responsible for implementing a program that it did not design. In comments to the Toledo Blade, a spokesman for the Ohio Department of Medicaid noted, "This is not our proposal …. We are required by law to do this." Ohio's application includes many features that are notoriously complex to implement, including two types of health savings-like accounts and the potential for frequent disenrollments and re-enrollments related to payment of monthly contributions. Policymakers and advocates nationwide will be closely watching the outcome of CMS and Ohio's negotiations, and, ultimately, the State Medicaid agency's implementation of the Healthy Ohio Program.

_{¹Pregnant women will be exempt from monthly contributions.}

_{²To date, CMS has not permitted any state to disenroll from coverage newly eligible individuals with incomes at or below 100% FPL for failure to pay premiums or other monthly contributions. Indiana, Iowa, Montana, and Pennsylvania have obtained approval to disenroll from coverage newly eligible individuals with incomes above 100% FPL for failure to pay premiums or other monthly contributions.}

_{³No state has obtained CMS approval to lock newly eligible individuals out of coverage indefinitely until they have repaid all back premiums or monthly contributions. In Indiana, individuals with incomes above 100% who fail to pay monthly contributions within a 60-day grace period are disenrolled and are not permitted to re-enroll in coverage for six months; however, to re-enroll in coverage, they do not need to repay missed contributions. In Montana, individuals with incomes above 100% who fail to pay monthly premiums are disenrolled from coverage after a 90-day grace period; they may re-enroll upon payment of back premiums or on a quarterly basis upon a Department of Revenue debt assessment.}