Policy & Regulation News

CMS Issues Proposed 2017-2018 Basic Health Program Notice

By Jacqueline DiChiara

- The Centers for Medicare & Medicaid Services (CMS) is releasing newly proposed methodology, to be published today. CMS will be accepting both electronic and non-electronic commentary shortly.

Basic Health Program Affordable Care Act

Yet another of many payment rules, the 53-page long proposed rule, CMS-2396-PN, states that numerous methodology and data sources are needed to determine federal payment amounts for program years 2017 and 2018 among those states electing to establish a Basic Health Program (BHP) under the Affordable Care Act (ACA).

Such actions, says CMS, will help grant health benefits coverage to economically disadvantaged individuals otherwise eligible to purchase coverage through Affordable Insurance Marketplaces.

Provisions of CMS’s proposed methodology include a discussion of Federal BHP Payment Rate Cells, specific variables used in payment equations, and adjustments for American Indians and Alaska Natives.

Section 1331 of the ACA provides states with a revised BHP coverage option those for individuals who do not qualify for such programs as Medicaid, and Children’s Health Insurance Program (CHIP), says CMS within an October 21 fact sheet. Such individuals generally earn between 133 percent and 200 percent of the federal poverty level, CMS maintains.

Benefits will include at least the 10 essential health benefits specified within the ACA, says CMS, with states having the ability to add benefits according to their own option. BHPs have been established within two states: New York and Minnesota.

"The monthly premium and cost sharing charged to eligible individuals will not exceed what an eligible individual would have paid if he or she were to receive coverage from a qualified health plan through the Marketplace, including advance payment of premium tax credits and cost-sharing reductions; a state can lower premiums and other out of pocket costs at its option," says CMS. 

"A state that operates a BHP will receive federal funding equal to 95 percent of the amount of the premium tax credit and the cost sharing reductions that would have otherwise been provided to (or on behalf of) eligible individuals if these individuals enrolled in qualified health plans through the Marketplace in the same benefit year," CMS states. 

CMS says within its BHP final rule, it was specified the BHP Payment Notice process would include the annual publication of both a proposed and final BHP Payment Notice, the former of which describes proposed methodology. Such includes how Sylvia M. Burwell, Secretary of the Department of Health & Human Services (HHS), considers various ACA factors.

The final notice, published in February’s Federal Registry, will include the following year’s federal BHP payment rates and final BHP funding methodology, says CMS. Once published, modifications will be made on a prospective basis with limited exceptions, CMS maintains.

“We are proposing that the payment methodology be for 2 years because after 2 years of publishing single year methodologies, few year-to-year changes are needed at this point," CMS explains.

"If we find, based on additional data that is generated from 2015 operations, that we would like to further analyze enrollment data for another year before finalizing the methodology for 2018, we will only finalize for 2017 and then either finalize later or repropose our payment methodology for 2018,” adds CMS.

If it ain’t broke, don’t fix it?

As RevCycleIntelligence.com reported, CMS’s proposed 2016 BHP rules were quite similar to those released prior. In March of 2014, when the final rule for the Basic Health Program was initially released, CMS established state and federal administration program standards, such as cost-sharing requirements. Such rules neatly aligned with statutes to help streamline administration matters and best advance coordination efforts among other health insurance programs.

Many updates to the 2016 program nonetheless appear quite similar to CMS’s 2017 and 2018 updates, including adjustments to enrolled American Indians and Alaska Natives, and the determination of total monthly payment rates for BHP enrollees according to various rate cells such as age range, geographic area, income range, and household size. Other similarities include the Premium Tax Credit Formula (PTCF), which remains unchanged from the current method, says CMS.

CMS included an option for states to include a retrospective population health status adjustment within its 2015 and 2016 payment methodologies. This same option is proposed within CMS’s 2017 and 2018 payment methodology, as well.

CMS anticipates issuing a final notice by February of next year. This timeframe, says CMS, allows states more time to implement needed adjustments.  As one of many proposed payment initiatives from CMS, perhaps the old adage, “If it ain’t broke, don’t fix it,” rings true once again.

4 key provisions in the proposed notice

Primary provisions of CMS's proposed notice are as follows:

  • The proposed methodology calculates monthly payment rates for each state for various rate cells, which are defined by age, geographic area (county), income, household size, and the number of persons in a household enrolled in the program. The proposal also makes adjustments for members of Federally recognized tribes enrolled in the program.
  • The proposed methodology calculates payment rates based on the premium tax credit amount and the cost-sharing reductions for the applicable benefit year. The premium tax credit is calculated by estimating the average premium tax credit that persons would have received for each rate cell, which is the difference between the second lowest cost silver plan premium available and the amount of annual income that a household would be required to pay in premiums if the members of the household were enrolled in the second lowest cost silver plan in the Marketplace. Cost-sharing reductions are calculated by estimating the average advance cost-sharing reductions payment that would have been provided to persons for each rate cell for the benefit year.
  • The proposed methodology gives states the option to use either the 2017 and 2018 Marketplace premiums or the 2016 or 2017 premiums projected forward by an estimated trend rate to calculate the BHP payment rates for program years 2017 and 2018, respectively. States would also have the option to propose a methodology to calculate the difference in health status between the BHP [population] and persons enrolled in the individual Marketplace.
  • The proposed methodology calculates payments quarterly. Payments will be based on the last quarter of enrollment (or estimated enrollment for states that implement a new BHP) and reconciled once enrollment data is submitted for each quarter.