The feds want to give $8 million to Vermont for a new health care plan for uninsured patients with medical problems. There’s only one problem: The state can’t accept the money unless it creates a new insurance plan.
It will take several months to get the new plan for “high risk” patients up and running, and so Vermonters who are eligible for the coverage — patients who have a health condition and have been uninsured for six months — will have to wait a little longer.
The state is, in effect, being penalized under the new federal rules, according to David Corriell, the governor’s spokesman, in part because Vermont has several programs for uninsured residents already.
Though the state is working with the U.S. Department of Health and Human Services to comply with the Affordable Care Act, Corriell anticipates it will likely be a difficult process. “There’s going to be a bumpy road matching up what states are doing with what the feds are requiring states to do,” Corriell said.
The state’s health care regulatory agency is scrambling to pull a plan together because the deadline for complying with the new federal law has come and gone. BISHCA, the Banking, Insurance, Securities and Health Care Administration, was supposed to have it in place by July 1.
On Wednesday, Christine Oliver, deputy commissioner of BISHCA, said the Department of Health and Human Services granted the state an extension.
So why did the state miss the deadline? BISHCA officials had hoped to use the money to expand Catamount Health to a new “high-risk pool” of patients (in other words, people who are already sick and don’t have insurance), but because of federal and state restrictions, they couldn’t make it work.
“Their preliminary guidance about flexibility wasn’t as flexible as we’d hoped,” Oliver said. “We had to change plans.”
Lawmakers passed legislation last session allowing BISHCA to make changes to Catamount under the new federal rules as long as they didn’t increase the state’s health care costs.
Oliver told lawmakers at a Joint Fiscal Committee meeting this week that folding the federal and state programs together would not be “budget neutral,” and it would create an administrative burden because BISHCA would have to track patients who received the federal dollars separately.
Oliver said her agency is working with Blue Cross Blue Shield of Vermont to create a new insurance plan specifically for the “high-risk” patients who qualify under federal rules. She hopes to have an application system in place for patients by September or October.
SUBHEAD: Federal reform sets stage for bureaucratic redundancy in Vermont
For decades, many health insurers have denied coverage to American patients who have contracted illnesses in the past. If a patient has ever had cancer or an asthma attack, for example, she is deemed to have what the industry euphemistically calls a “pre-existing condition.”
This week, as part of the Affordable Care Act, the federal government launched a special coverage plan for such patients, called the Pre-existing Condition Insurance Plan, if they have been uninsured for six months or more.
The Department of Health and Human Services will distribute $5 billion to states for the plan over the next three years. Vermont’s cut of the pie is $8 million through fiscal year 2014.
The federal government is offering the plan directly to residents in 21 states. Vermont is one of 29 states that chose to offer its own plan to patients who qualify under the federal law. The law targets states that don’t already have rules in place requiring insurers to guarantee all residents access to coverage. Unlike most states, Vermont has had a “guaranteed issuance” provision in place since 1994, though the statute doesn’t preclude certain exclusionary factors such as pre-existing condition clauses and the cost of premiums.
BISHCA’s program, administered through Blue Cross Blue Shield, will be modeled after Catamount Health, but the payment system and eligibility guidelines will be different, Oliver said.
The new plan, specifically designed for the “high-risk pool,” will offer coverage to residents who have been without insurance for six months, and no one would be denied coverage because of a pre-existing condition. The premiums would be identical to those set under Catamount Health ($442 for an individual; $1,238 for a family), but the state would not offer a subsidy.
Under the current Catamount rules, patients must have been uninsured for 12 months in order to be eligible, or have some other extenuating circumstance, such as a divorce, a death in the family or a recent layoff.
Pre-existing conditions – like cancer – aren’t covered. There is a special program under Catamount, however, for chronic health conditions such as asthma and diabetes.
Oliver said Health and Human Services won’t allow the state to provide coverage under Catamount.
“Our original plan was to say, let’s open up Catamount to be in line with this and reduce the waiting period to six months and get rid of pre-existing conditions,” Oliver said. “We estimate that would cost about $2.3 million (a year). So if you ran that over the next three years, that would come pretty close to the amount the feds are giving us.”
But if the new rules were applied fairly – to all Catamount and VHAP patients whose pre-existing conditions were excluded – expanding the program would be more costly.
“The feds would not be able to pick up that amount, so that wouldn’t be budget neutral for the state because we would want to pick up that cost and not have two different sets of people,” Oliver said.
How many people will a high risk plan cover in Vermont? That’s anyone’s guess right now.
The new plan could serve as few as four high risk patients or as many as 100, though ideally, Oliver said, it would serve several thousand. “We just don’t know,” Oliver said. “Part of it is going to depend on how you identify or how you determine high risk individuals or pre-existing conditions that would make you eligible for this pool.”
The $8 million spread over a three year period will be used to reimburse claims to BlueCross BlueShield that exceed the amount of money the insurer collects in premiums. BCBS may also receive an additional 10 percent for administrative costs, Oliver said.
Health and Human Services will also be distributing $1 million to states for enhancing or creating a process for reviewing hospital rates, Oliver said. Though BISHCA already has a “robust” rate review system already, her department hopes to improve it with the federal funding.
