Attending to Benefit Design

States are just beginning to think about benefit design for the newly covered populations in Medicaid and the health insurance exchange (exchange). Last week, I participated in a day longdiscussion on this emerging health reform implementation issue convened by the Center for Health Care Strategies, Inc. (CHCS), with support from the Robert Wood Johnson Foundation.
Participants of this small-group discussion included state executive branch officials from Kansas, New York, Pennsylvania, Tennessee and Virginia, a representative from the Centers for Medicaid and Medicare Services, representatives from CHCS, Kaiser Family Foundation, NAIC, NGA, NASHP and other national organizations, and industry experts with deep actuarial and benefit design knowledge. Some of the key questions discussed included:

• What are the health needs of the Medicaid expansion and exchange populations who are currently uninsured? CHCS presented findings from their recent report analyzing potential enrollment, care needs, and costs in selected states with experience covering low-income childless adults. States commented that generally the most complex needs and the lowest income populations enrolled first, but then when initial health needs were met and a broader population enrolled, per capita costs came down. States reported that the low-income adult population exceeded their projections in terms of its initial take up rates. States also reported significant churning in their experience with covering low-income childless adults and were interested in forthcoming analysis by the State Health Access Data Assistance Center (SHADAC) about the potential income volatility of this population.

• What choices will states make about benefits offered in health insurance exchanges and in Medicaid? Kaiser Family Foundation provided an analysis of the benefit requirements under the Deficit Reduction Act and the Affordable Care Act. Notably, some benefits required in the exchange’s essential benefit package are somewhat uncommon in existing employer coverage, such as rehabilitative and habilitative care. Participants discussed the pros and cons of designing similar benefits for Medicaid and exchange populations. Some state officials offered that it may be best to offer a traditional Medicaid benefit package while others suggested a more commercial-like benchmark plan. State participants also discussed whether benefits should be tailored to particular populations (e.g., people with chronic conditions, or people with significant mental health needs) and the long term costs associated with more substantial Medicaid-like benefit packages. One participant wondered if it would be advantageous or even possible to include some long term care benefits in the benchmark plans.

• What tools exist for aligning benefits across the Medicaid expansion and the exchange? A health plan that participated in the meeting intended to offer products both in Medicaid and the Exchange and offer similar benefit packages across both, however differences in provider rates and networks by payer will continue to complicate this approach. States without managed care infrastructure to align benefits through plans may also need to consider care coordination and provider network alignment to smooth transitions. Participants also offered that risk adjustment is a significant tool that states can use to help balance out the risk and costs across the different payers.

CHCS is working on next steps, including a full summary of benefit design issues and a technical assistance strategy for helping states work through Medicaid expansion benefit design issues. For more information about CHCS’ work in this area, please visit CHCS’ website or contact, Chad Shearer, Senior Program Officer, CHCS.
What is your state doing to attend to benefit design for the Medicaid expansion or exchange populations? Tell us at State Refor(u)m.