Home Final report: premium sharing program implementation recommendations

Reference URL

Rate

To link to this object, paste this link in email, IM or document

To embed this object, paste this HTML in website

Final report: premium sharing program implementation recommendations

View Description

View PDF & Text

PDF
Text

Text Search...

Premium Sharing Program

Implementation Recommendations

Recommended by:

The AHCCCS Premium Sharing

Demonstration Project

Implementation Committee

January 27,1997

FINAL REPORT

PREMIUM SHARING IMPLEMENTATION PROJECT

RECOMMENDATIONS

RECOMMENDED BY:

THE ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM

PREMIUM SHARING DEMONSTRATION PROJECT

IMPLEMENTATION COMMITTEE

Senator Brewer

ator or Patterson

Senator Kennedy

January 27, 1997

FINAL REPORT

PREMIUM SHARING IMPLEMENTATION PROJECT

RECOMMENDATIONS

RECOMMENDED BY:

THE ARIZONA HEALTH CARE COST CONTAINMENT SYSTEM

PREMIUM SHARING DEMONSTRATION PROJECT

IMPLEMENTATION COMMITTEE

January 27,1997

Table of Contents

Background ......................................................................................... 1

Findings .................................................................................................. 4

Recommendations ...................................................................................... 5

Appendices

A. Committee Minutes

B. Laws 1996, Chapter 368 ( HB 2508)

C. Summary of Tobacco Tax Accounts

D. AHCCCS Premium Sharing Proposal Estimated Impact,

WilliamMercer, Inc.

E. Federal Poverty Levels

F. Poverty Levels and Percent of Income Table

House Bill 2508 and Senate Bill 121 9 were introduced during the second regular session of the

Forty- second Legislature ( 1996). When combined into a single plan, the legislation proposed the

creation of a premium sharing program to provide uninsured low income and chronically ill

individuals with access to health care services. Both plans required participants to share the cost

of their premium with the state. The state portion was to be funded using the 1994 voter

approved tobacco tax revenues. Both proposals required Arizona's existing Medicaid providers

( AHCCCS providers) to deliver the health care services.

As introduced, SB 12 19, sponsored by Senator Day, allowed individuals with a chronic illness

who had been classified as MNIMI eligible for the preceding twelve consecutive months and

their eligible family members to continue to receive AHCCCS benefits through participation in a

premium sharing program. The goal of the proposed program was to ensure that individuals who

have a chronic illness maintain continuous access to health care services.

As introduced, HB 2508, sponsored by Representative Knaperek and Representative Weiers,

required most individuals in the MNIMI program to pay a portion of the cost of the premium

paid by the state to entities that provide health care services to MNIMI recipients. Additionally,

since much of the burden for funding the MNIMI program was being removed fiom the state, the

bill proposed that additional persons be made eligible for the program.

Neither HB 2508 nor SB 12 19 passed in their original form. After much discussion, a

compromise was reached. The compromise legislation, amended onto House Bill 2508,

combined the provisions of both bills. Laws 1996, Chapter 368 ( HB 2508) established the

Arizona Health Care Cost Containment System Premium Sharing Demonstration Project

Implementation Committee. The legislation required the Committee to make recommendations

to the Governor and the Legislature regarding the implementation of a premium sharing

demonstration project to begin October 1, 1997. Using the provisions of the original HB 2508

and SB 12 19 as the primary framework, the Committee was directed to make recommendations

for the program including who would be eligible to participate. The Demonstration Project was

to allow eligible persons access to medical services provided by system providers through a cost-sharing

arrangement with the AHCCCS Administration. The Committee was directed to

recommend eligibility criteria based on household income, citizenship, residency, insurance

status, and resources.

Members of the Premium Sharing Demonstration Project Implementation Committee are:

Senator Brewer and Representative Knaperek, co- chairs, and Senator Patterson, Senator

Kennedy, Representative Weiers and Representative Horton. At the first meeting, the

Committee members decided to form two working groups: one to make recommendations

regarding the service package and the other to make recommendations regarding the structure

and administration of the Demonstration Project. The working groups held more than twenty

public hearings. Experts from the public and private sector were invited to actively participate in

the creation of the implementation plan. Individuals representing private organizations, public

agencies and themselves participated in the working group meetings. Participants included

representatives from:

APIPA

APS

Arizona Association of Behavioral Health Programs

Arizona Association of County Health Centers

Arizona Association of Managed Care Plans

Arizona Consortium for Children with Chronic Illness

Arizona Health Care Cost Containment System

Arizona Hospital Association

Arizona Medical Association

Arizona Physicians

Arizona Podiatric Medical Association

Arizona Public Policy Forum on Transplantation

Children's Action Alliance

Children's Health Care Coalition

Department of Administration

Department of Economic Security

Department of Health Services

Department of Insurance

Health Care Group

Legislative Council

March of Dimes

Maricopa County

NFIB

Samaritan Health System

St. Joseph's HospitalIMercyCare

University Medical Center

The Committee and working groups focused on eligibility requirements, contents of the service

package, premium rates and delivery systems. When reviewing eligibility criteria for project

participants, the Committee specifically reviewed incomes at or below 300% of the federal

poverty guidelines. The Committee reviewed a number of service packages including those

provided for state employees, health care group, AHCCCS MN/ MI and AHCCCS Title XIX

mandatory services, the basic benefit package, and benefit packages provided by other states that

have premium sharing programs. When reviewing packages provided by other states, the

Committee noted that some other states had reduced their benefit package after implementing

their premium sharing program. This was done to reduce the individual cost of running the

program, thus allowing more individuals to participate. The various delivery systems the

Committee reviewed were those provided through AHCCCS, the Department of Insurance and

Health Care Group. Additionally, the Committee directed the Arizona Health Care Cost

Containment System Administration to conduct an actuarial study to provide estimates relating

to presentation rates and potential premium sharing costs based on parameters set by the

Committee.

Findines

In Arizona, approximately 600,000 adults and children are without health insurance.

Adults make up the largest uninsured population ( 450,000) and children make up the

remainder ( 1 50,000). October 1996 Flinn Foundation

Since 1989, the number of uninsured Arizonans increased by 33%, out pacing the state's

estimated population growth of 21 %. October 1996 Flinn Foundation

The predominant characteristic of the uninsured is low income, and not lack of

employment. About 85% of Arizona's uninsured adults, and 92% of uninsured children,

live in households with an employed main wage earner. October 1996 Finn Foundation

About 75% of Arizona's 450,000 uninsured adults had been without health insurance for

at least two years at the time of the survey. October 1996 Finn Foundation

Most uninsured persons cite the cost of insurance as the reason they do not have it.

October 1996 Finn Foundation

Roughly 100 million Americans suffer from chronic illnesses such as diabetes, heart

disease or arthritis. Most of the chronically ill ( 84.4 million) are between the ages of 18

and 64. November 12. 1996 Journal of American Medicine

On average, chronically ill patients incur annual medical bills that are more than triple the

medical bills incurred by people without chronic illnesses - $ 3,074 per person compared

to $ 81 7. Chronically ill individuals account for four out of five days spent in hospital

admissions. November 12, 1996 Journal of American Medicine

For 1998, it is projected that most of the uninsured adults and children will live in

households with an income that is less than 200% of the FPL. October 1996 Finn Foundation

Many other states such as Hawaii, Minnesota, New Jersey, Florida, Oregon, Rhode

Island, Vermont, Tennessee, Pennsylvania and Washington have premium sharing

programs that provide health insurance coverage to low income families and require

participants to contribute a portion of the premium. The state subsidizes the remaining

portion of the premium.

1 1998 Projected Uninsured Populations I

% of Federal

Poverty Level

Total

Sources: AHCCCS, C

INTENT

Provide health care insurance to those otherwise unable to afford or to obtain health

insurance.

Recommendations

Children Under 21

I. Administration

Populations Survey, 1993,1994,1995; Current Population Reports, The Bureau of the Census.

Number

60,000

44,000

58,000

24,000

17,000

24,000

271,000

A. Health Care Group shall be the entity responsible for administrative

functions related to the Demonstration Project such as collecting the

participants' premiums, billing, processing, disenrolling members who are

delinquent on their payments and collecting member data.

Adults

7.52

5.56

5.46

7.26

3.05

2.09

3.03

33.99%

Health Care Group ( HCG) has experience in administrating a program with

similar responsibilities and HCG administrators indicated that they are able to

carry out this recommendation.

Number

95,000

51,000

85,000

82,000

57,000

49,000

106,000

525,000

Total

B. The Demonstration Project shall be conducted in the following four counties:

Maricopa, Pima, Pinal and Cochise.

11.97

6.35

10.74

10.32

7.14

6.19

13.30

66.00%

Number

155,000

95,000

129,000

140,000

81,000

66,000

130,000

796,000

HB 2508 requires the Demonstration Project to take place in two urban counties

and two rural counties.

19.49

11.91

16.20

17.59

10.19

8.28

16.33

99.99%

11. Eligibility

A. The Project shall have two components: one for participants who do not have

a chronic illness and one for participants who do have a chronic illness. All

participants shall undergo an income test. To be eligible for the

Demonstration Project, household income for participants who do not have a

chronic illness shall be less than 200% of the FPL; household income for

participants with a chronic illness shall be less than 400% of the FPL.

Chronically ill participants with a household income between 200% and

400% of the FPL shall pay the full cost of their premium. Chronically ill

participants shall be required to have been on the MNMI program for a

period of at least one year after which time they may apply for the

Demonstration Project. The Demonstration Project shall include a cap of

200 persons for the chronically ill population. Once a participant has been

determined to be eligible for the program, the person's family is also

considered eligible.

HB 2508 requires the Committee to establish a premium sharing demonstration

project. Persons who fall below 300% of the FPL may be eligible for the

Demonstration Project. Of the 1998 projected uninsured population, over 65%

( 530,000 individuals) are below 200% of the FPL. Since it is estimated that the

Demonstration Project will serve approximately 12,000 to 14,000 individuals, the

Committee decided to limit participation to persons with an income of less than

200% of the FPL.

Although no state data exists that demonstrates the number of chronically ill

persons in Arizona, national data shows that roughly 100 million Americans

suffer from chronic illnesses such as diabetes, heart disease or arthritis. This

amounts to about 84.4 million individuals; most are between the ages of 18 and

64. Because of the costly nature of chronic illnesses and the devastating effect

they can have on a family's economic standing, the Committee recommends that

the income level be increased to 400% for participants who suffer from a chronic

illness.

B. Income shall be calculated by multiplying by four the applicant's income for

the three months immediately prior to the application for eligibility.

For continuity and ease of administrative operation, the income test process

should be similar to the income test currently being conducted by eligibility

workers. Therefore, the income test calculation shall be similar to the MNIMI

income test.

C. Employment shall not be a requirement for participation.

Since household income is the test of eligibility and not a person's employment

status, employment shall not be a requirement. Recent studies indicate that about

85% of Arizona's uninsured adults, and 92% of Arizona's uninsured children, live

in households with an employed wage earner. October 1996 Flinn Foundation

D. In order to be eligible for the Demonstration Project participants shall not

have access to other health care programs, except community health centers.

Since the goal of the Demonstration Project is to provide health care coverage to

the working poor and to individuals who otherwise have no access to coverage,

persons who are eligible for other government subsidized health care programs,

except public community health centers which are available to all individuals

regardless of income, shall be ineligible for the Demonstration Project.

E. Eligibility shall be determined according to presumptive eligibility criteria

which means information collected by the applicant is presumed to be

accurate and truthful, with minimal verification. Participants who falsify

information in order to qualify for the program shall be responsible for all

fraudulent claims and immediately disqualified from the program.

Participants shall be obligated to provide specific information in order to

determine eligibility, however, an overly administrative and extensive eligibility

process could be costly and burdensome.

F. Eligibility may be conducted at the following locations:

1) County sites;

2) DES locations;

3) Community Health Clinics ( conducted by DES workers).

Since the counties, DES and the community health clinics currently conduct some type

of eligibility process, they have the expertise and experience for conducting eligibility.

According to the county, approximately 45,000 applicants for state and county health

programs are denied eligibility each year; fifty percent are denied because they are

over income. Many of these individuals may qualify and may be interested in

participating in the Demonstration Project.

G. Participants shall demonstrate that they have gone " bare" ( had no health care

coverage) for a period of at least six months in order to be eligible for the

Demonstration Project, except for AHCCCS members who apply for the

Demonstration Project. Additionally, criteria shall be established specifying

alternative " bare" periods according to the participant's circumstance.

HB 2508 requires an individual to go bare for a minimum of six months before

becoming eligible for the Demonstration Program. Criteria shall be established

determining the necessary bare period according to the participant's condition.

Moving the AHCCCS recipient to the Demonstration Project without a break in health

care coverage provides continuity of care, encourages self- sufficiency and empowers

the participant to improve employment opportunities. Furthermore, flexibility of the

" bare" period shall be offered according to the participant's special circumstances.

H. Participants shall undergo a financial evaluation every twelve months to

determine program eligibility and a financial review after six months.

A twelve month eligibility period was justified with a six month eligibility review.

This will assist in minimizing the administrative costs while assuring those eligible

remain in the program and those ineligible are removed or pay the full premium.

I. Participants who voluntarily leave the Demonstration Project shall not be

eligible to re- enroll for a period of 12 months.

To prevent individuals from joining the program only when they are sick and leaving

when they are well, a waiting period must exist. This will attract people who desire

ongoing health care coverage regardless of their current medical condition.

J. An enrollment cap shall be placed on the Demonstration Project.

Enrollment shall be limited during the Demonstration Project phase so that annual

premium expenditures by the state for the project do not exceed the annual

appropriation to the program.

111. Quality Review

A. AHCCCS shall conduct the quality review process and shall determine whether

the counties' eligibility determinations are accurate and timely.

AHCCCS currently conducts quality review and this review process could be extended

to each entity performing eligibility determinations for the Demonstration Project. In

addition, since AHCCCS health plans are the insurers for this program, AHCCCS'

quality of care review could be extended to this program.

B. An evaluation of the Demonstration Program shall be conducted by Legislative

Council.

The final version of HB 2508 did not contain language addressing how the program is

to be evaluated. A suggested process is as follows:

1. The AHCCCS Administration shall prepare an annual report of the progress and

problems incurred relating to the program start- up, administration and

expenditures for the Joint Legislative Committee for the Arizona Health Care

Cost Containment System ( a statutory legislative committee).

2. During each year of the Demonstration Project, the Legislature should direct the

Legislative Council to report on program effectiveness, efficacy, participant

satisfaction, enrollment information, expenditures, and progress in reducing the

number of uninsured people in Arizona.

Legislative Council has been an active participant in the development of the

Demonstration Project and has told the Committee it would be willing to take on these

program evaluation responsibilities.

IV. Service Package Recommendations

A. Demonstration Project participants shall be provided with the same benefit

package offered to the medically needy population with the following exceptions:

1) Transplants shall be excluded, except for those who are chronically ill.

2) Limited behavioral health services shall be provided with a maximum of

thirty days of inpatient behavioral health services annually; and

3) Participants shall be charged a copayment for each visit to the doctor.

After completion of the initial phase of the Demonstration Project the Committee

shall review the possibility of adding additional services such as transplants.

The Working Group reviewed in detail the benefits provided through AHCCCS,

Health Care Group, the state employees benefit packages and the Basic Benefit Plan.

After much discussion, the working group recommends that the Demonstration Project

benefit package be based on the IvINIMI services package with some exceptions.

B. The AHCCCS health care delivery system and existing providers shall be used

for the method of providing health care services.

The working group debated the benefits of using an established program as opposed to

creating a new program to deliver services. In order to provide a comprehensive

package to the largest number of people while maintaining administrative costs, the

program should use an already established program to deliver its services. Thus, the

AHCCCS health care delivery system was selected.

One problem with using Health Care Group is that to provide services to Health Care

Group, a health plan must be a contractor with AHCCCS. The number of health plans

contracting with AHCCCS ( 14 providers/ 457,798 participants) is much larger than in

Health Care Group ( 4 providers/ 32,900 participants). Concern was raised as to

whether or not the existing Health Care Group providers could cover an additional

12,000 - 14,000 individuals. In some rural areas, in particular, very few individuals

currently participate in Health Care Group. Additionally, Health Care Group does not

provide coverage for many pre- existing conditions until a person has been in the

program for twelve months. Pregnancy- related care is not covered during the first ten

months of enrollment. The working group strongly recommends that pregnancy-related

care be provided immediately upon enrollment and that exclusion of pre-existing

conditions be carefully reviewed.

The Basic Health Plan is a guide that details the minimum components that must be

included in a benefit package offered in Arizona. It does not have a dedicated delivery

system like AHCCCS or Health Care Group.

C. AHCCCS contract providers who choose to deliver services to the Demonstration

Project participants shall develop a marketing plan to promote the program.

In order to enhance the enrollment and encourage marketability of the Demonstration

Project and to provide coverage to a maximum number of participants, providers who

serve the program participants must develop a marketing plan to promote the program.

This will ensure the program is publicized and healthy individuals are given the

opportunity to participate.

D. Pregnancy should not be considered a " pre- existing condition" for the purpose of

refusing services. There should be some flexibility when determining pre- existing

conditions.

Pregnancy- related care should be provided as early as possible. Thus, any plan that is

selected should provide such care from the time an individual enrolls in the program.

The working group expressed concerns about coverage for persons with pre- existing

conditions. While not identifying those that should be covered immediately, the group

felt that if some conditions were excluded from coverage, at the very least there should

be some flexibility for exceptions. Chronically ill individuals and individuals who are

receiving services through AHCCCS were two groups that were mentioned as

" exceptions" to the rule.

E. Participants shall enroll all family members who are not currently insured and

who have not been insured for the preceding six months.

In order to encourage healthy people to enroll in the Demonstration Project rather than

to wait until one person in the family becomes ill and dependant on health care

services, the whole household shall be required to enroll, except that a family member

who is employed and receives health insurance through his or her employer may

continue to be insured through the employer.

V. Premiums

A. The AHCCCS Administration shall establish the total premium costs and shall

determine the premium that each enrollee shall pay based on the enrollee's gross

income and household size. The premium shall not exceed four percent of the

enrollee's household gross income, except for the chronically ill between 200 and

400 percent of the federal poverty level.

HB 2508 required AHCCCS to contract with an actuary to assist the Committee in

developing premium rates. As a result, AHCCCS contracted with William Mercer Inc. to

analyze the Demonstration Project given the current parameters and the target population.

Mercer has developed preliminary rates ( see appendix C) for the Demonstration Project.

Therefore, the rates for the Demonstration Project shall resemble the rates developed

and presented to the working group on December 1 1, 1996.

After reviewing the various incomes and different household sizes the working group

engaged in a long discussion of affordability and recommended that the premium rate for

the enrollee not exceed 4% of the participant's gross income.

VI. Legislation

A. Legislation is currently being drafted.

Appendix A

Committee Minutes

ARIZONA HOUSE OF REPRESENTATITV'ES

Forty- second Legislature - Second Regular Session

AHCCCS PREMIUM SHARING DEMONSTRATION PROJECT

IMPLEMENTATION COMMITTEE

Minutes of Meeting

Thursday, January 9, 1997

House Hearing Room 3 - 9: 00 a. m.

TAPE 1, SIDE A

Cochair Knaperek caIled the meeting to order at 9: 20 a. m. and the secretary called the roll.

Members Present

Senator Kennedy

Senator Patterson

Representative Horton

Representative Weiers

Representative Knaperek, Cochair

Members Absent

Senator Brewer, Cochair

Saeakers Present

Shirley Anderson, Special Assistant to the House Majority Whip

Steve Schramm, William M. Mercer, Inc.

Irene Jacobs, Senior Program Associate, Children's Action Alliance

Cochair Knaperek read names of others present to testify, but who did not speak, see Page 8)

Andy Rinde, Executive Director, Arizona Association of Community Health Centers

Guest List ( Attachment 1)

Cochair Knaperek thanked Members and staff for their work on the Subcommittee, and she thanked

everyone who participated in the process for their dedication. She asked Shirley Anderson to review

the final draft of the Subcommittee's recommendations ( Attachment 2).

PRESENTATIONS

Shirley Anderson. S~ eciaAl ssistant to the Maioritv Whia. House of Representatives, presented the

recommendations of the Subcommittee. A brief explanation or the rationale or background for the

recommendation was also noted.

AHCCCS Premium Sharing Demonstration

Project Implementation Committee

1/ 9/ 97

I. Administration

A. Health Care Group shall be the entity responsible for administrative functions related

to the Premium Sharing Program such as collecting the participants' premiums,

billing, processing, dis- enrolling members who are delinquent on their payments and

collecting member data.

B. The demonstration project shall be conducted in the following four counties:

Maricopa, Pima, Pinal and Cochise.

11. Eligibility

A. The program shall have two components: one for participants who do not have a

chronic illness and one for participants who do have a chronic illness. All

participants shall undergo an income test. To be eligible for the premium sharing

program, household income for participants who do not have a chronic illness shall

be less than 200 percent of the FPL; household income for participants with a chronic

illness shall be less than 400 percent of the FPL. Chronically ill participants with a

household income between 200 percent and 400 percent of the FPL shall pay the full

cost of their premium. Chronically ill participants shall be required to have been on

the MNM program for a period of at least one year after which they may apply for

the premium sharing program. The demonstration project shall include a cap of 200

persons for the chronically ill population. Once a participant has been determined

to be eligible for the program, the person's family is also considered eligible.

Senator Patterson asked how chronic illness is defined in the draft bill.

Ms. Anderson defined chronic illness as a nonacute condition, not caused by alcohol, drug or

chemical addition, that if not treated has a reasonable medical possibility of causing a life-threatening

situation or death.

Senator Patterson questioned who will be authorized to make the determination that an individual

has a chronic illness.

Cochair Knaperek noted that in H. B. 2508 ( AHCCCS; premium sharing demonstration program),

Chapter 368, Laws of 1996, applicants were defined as those already enrolled in the MNIMI

program. For purposes of the draft legislation, the definition read by Ms. Anderson is the one that

will be used. ,

Senator Patterson asked whether this applied to anyone who has been in the MNMI program for one

year.

Cochair Knaperek replied that the Subcommittee's recommendation is that AHCCCS would

determine eligibility.

AHCCCS Premium Sharing Demonstration

Project Implementation Committee

1 / 9/ 97

In response to Representative Horton's request, staff distributed copies of the definition of chronic

illness ( Attachment 3).

B. Income shall be calculated by multiplying by four the applicant's income for the

three months immediately prior to the application for eligibility.

C. Employment shall not be a requirement for participation.

Cochair Knaperek pointed out that studies indicate that about 85 percent of Arizona's uninsured

adults live in households with an employed wage earner.

D. In order to be eligible for the demonstration project, participants shall not have access

to other health care programs.

E. Eligibility shall be determined according to presumptive eligibility criteria which

means information collected by the applicant is presumed to be accurate and truthful,

with minimal verification. Participants who falsifjr information in order to quality

for the program shall be responsible for all fraudulent claims and immediately

disqualified from the program.

F. Eligibility may be conducted at the following locations:

1) County sites;

2) DES locations;

3) Community Health Clinics ( conducted by Department of Economic Security

workers.

G. Participants shall demonstrate that they have gone " bare" ( had no health care

coverage) for a period of at least twelve months in order to be eligible for the

demonstration project except for AHCCCS members who transfer to the Premium

Sharing Program. Additionally, criteria shall be established specifying alternative

" bare'' periods according . to the participant's circumstance.

Cochair Knaperek objected to the twelve- month period. She said it was her understanding that the

Subcommittee's recommendation was for a period of six months.

Representative Horton also expressed her belief that the period was for six, not twelve, months.

Cochair Knaperek questioned whether there will be a drastic change to the premium amount if the

period is changed to twelve months.

Steve Schrarnm. William M. Mercer. Inc, responded to Cochair Knaperek's query. He opined that

the premium will not change drastically.

AHCCCS Premium Sharing Demonstration

Project Implementation Committee

1/ 9/ 97

Senator Patterson asked for an explanation of the Mercer calculation. Mr. Schrarnm said that the

process is based on the risk of the targeted population, and focuses on the program design,

population, benefit package, and service delivery network. He said that the concept was to come up

with a package that would be considered affordable, given the Committee's parameters.

Senator Patterson expressed concern about lowering the time period. He pointed out that the danger

of going to a lower time period is that it will include a larger number of people who would have

bought insurance in any circumstances.

Cochair Knaperek stated that the main concern is affordability. She said that the Subcommittee's

recommendation was for six months, and she would like to continue with that time period.

Representative Weirs concurred that it was his impression that the time period was six months. He

noted that the premise has always been six months.

H. Participants shall undergo a financial evaluation every twelve months to determine

program eligibility and a financial review after six months.

I. Participants who voluntarily leave the Premium Sharing Program shall not be eligible

t re- enroll for a period of 12 months.

J. An enrollment cap shall be placed on the demonstration project.

111. Quality Review

A. AHCCCS shall conduct the quality review process and shall determine whether the

counties' eligibility determinations are accurate and timely.

B. An evaluation of the Premium Sharing Demonstration Program shall be conducted

by Legislative Council.

IV. Service Package Recommendations

A. Premium sharing participants shall be provided with the same benefit package

offered to the medically needy population with the following exceptions:

1) Transplants shall be excluded:

2) Limited behavioral health services shall be provided with a maximum of 10

days of inpatient behavioral health services annually; and

3) Participants shall be charged a copayment for each visit to the doctor.

After completion of the initial phase of the demonstration project the committee shall

review the possibility of adding additional services such as transplants.

Cochair Knaperek recommended that language should be added to IV. A. l) as follows: " except for

the chronically ill portion of the Premium Sharing Demonstration Project."

AHCCCS Premium Sharing Demonstration

Project Implementation Committee

1/ 9/ 97

Representative Horton strongly recommended that language relating to behavioral health services

be changed from a maximum of 10 days to a maximum of 30 days.

Mr. Schramm revealed that transplants could be potentially costly. Changing the time period to 30

days could be costly as well. He advised that AHCCCS performs 40- 50 transplants annually. If the

needy population is included in this program, it will result in a greater number of transplants.

Representative Horton expressed concern about the MNIMI population.

Senator Patterson stated that the issue of who will pay for transplants is a matter of public policy.

He said that transplants are generally a life- saving matter. He said he believes that transplants should

be included.

Representative Horton reiterated her belief that the time period should be changed from 10 to 30

days. She suggested that a co- payment for in- patient medical services can somewhat offset the extra

cost of increasing the time period. She maintained that extending to 30 days could save lives.

Representative Weirs expressed opposition to increasing the time period. He said that a difference

of 20 days will result in a 200 percent increase in cost.

Mr. Schramm noted that the impact will be a $ 5- 1 0 per member cost per month.

Representative Horton moved that language be changed to 30 days. Representative Horton and

Senator ~ e n n ewde~ re in favor of the change; Representative Weirs and Senator Patterson expressed

opposition to the motion. Cochair Knaperek refrained from casting her vote at this time.

B. The AHCCCS health care delivery system and existing providers shall be used for

the method of providing health care services.

C. AHCCCS contract providers who choose to deliver services to the demonstration

project participants shall develop a marketing plan to promote the program.

D. Pregnancy shall not be considered a " pre- existing condition" for the purpose of

refusing services. There should be some flexibility when determining pre- existing

conditions.

E. Participants shall be required to enroll their whole family; enrolling only one child

or one family member shall not be permitted.

Discussion ensued on whether there should be a requirement for the whole family to be enrolled.

Mr. Schramm said that the whole- family enrollment concept was to insure that there was a

reasonable cross section of risk. This would spread the risk across the entire family.

AHCCCS Premium Sharing Demonstration

Project Implementation Committee

1/ 9/ 97

Senator Patterson raised the question of the family where some members were already insured

through their workplace. He asked if they would be required to drop their coverage.

Cochair Knaperek agreed that this is a She said this issue needs further discussion.

Mr. Schramm mentioned that in this low- income group, people are making decisions based on their

income status.

Cochair Knaperek suggested that language be included that individuals in the family who do not

have insurance and have been bare for six months can be covered. She asked Mr. Schramm what

the cost impact would be if this language is added. Mr. Schramm said that he would need to look

at the whole package and re- evaluate before answering that.

Senator Kennedy stated that she cannot vote for the recommendations at this time. She submitted

that she would like to have further information and said she will wait until Mr. Schramrn re-evaluates

the whole package. She stated her intention to write a Minority Report on the areas that

were discussed but not answered today.

V. Premiums

A. The AHCCCS administration shall establish the total premium costs and shall

determine the premium that each enrollee shall pay based on the enrollee's gross

income and household size. The premium shall not exceed four percent of the

enrollee's household gross income.

Senator Patterson expressed his concern about premiums being based on the enrollee's gross income.

He said that a pay raise would mean an increase in premiums, and he questioned whether the

individual would be motivated to work and to do well if the pay increase results in a premium

increase.

Discussion insued on premium rates.

TAPE 1, SIDE B

Mr. Schramm reviewed Appendix C, AHCCCS Premium Sharing Proposal Estimated Impact,

prepared by William Mercer, Inc. The goal of the program is based on quantifying the risk of the

proposed program, based on approach, environment, process, and preliminary estimates.

Quantifling the risk is defrned by program design, population, benefit package, and service delivery

network.

Cochair Knaperek raised the subject of Proposition 203, health programs and AHCCCS eligibility.

Mr. Schramm s ~ thdat P roposition 203 will have a significant impact on the program. It will greatly

reduce the eligibility population and significantly decrease the estimates of the cost of this program.

AHCCCS Premium Sharing Demonstration

Project Implementation Committee

1 / 9/ 97

In response to Senator Patterson's comments about the penetration of the market for this product by

low- income people, Cochair Knaperek divulged that a survey by Legislative Council indicated that

there is a definite need for this insurance, and that people would pay for this it. She noted that the

legislation contains a monitoring clause and also a marketing plan.

Cochair Knaperek remarked that if Members can agree on the recommendations, the Committee can

work on the bill over time to make any necessary changes. She said this legislation is an integral

part of providing health care to a notch group, and takes care of the truly working poor. She urged

Members to approve the recommendations.

Ms. Anderson asked for clarification of items discussed:

Item IV. A. 2) -- changing behavioral health services fiom 10 days to 30 days

Cochair Knaperek recommended changing the ten days to thirty days

Item 1V. E -- requiring enrollment of whole family

Cochair Knaperek said she believes there is consensus for the proposed language

that family members who are not enrolled in a health plan and who have been bare

for six months can be included. Senator Patterson clarified that other family

members who had insurance coverage need not be included.

Discussion ensued on eligibility, based on household income. The proposal specifies that household

income for participants who do not have a chronic illness shall be less than 200 percent of the federal

poverty level ( FPL); those with chronic illness shall be less than 400 percent of the FPL. Questions

were raised about changing the percent amount and on eligibility.

Representative -& lorton objected that there has not been discussions on this issue; therefore, no

changes should be recommended at this time.

Ms. Anderson raised the question of where Proposition 203 fits into all this. She said it was not

discussed in Subcommittee.

Representative Horton said she believes that the proposed legislation is a good expenditure of the

tobacco tax money. It provides health care to people who otherwise would not be able to obtain

health care. She recommended that this language be included in the intent and purpose of the

package.

Cochair Knaperek concurred that this language should be stated in an intent clause in the

recommendations package.

Cochair Knaperek asked for a vote on the recommendations as amended. The motion passed

unanimously.

AHCCCS Premium Sharing Demonstration

Project Implementation Committee

1/ 9/ 97

Representative Weirs thanked everyone who worked on drafting the recommendations. He

expressed his sincere appreciation to Ms. Anderson and Ms. Cindy Kappler, Deputy Chief of Staff,

for their input.

Irene Jacobs. Senior Program Associate. Children's Action Alliance, distributed a fact sheet about

health insurance and Arizona's children ( Attachment 4). She expressed support for the

recommendations, and she encouraged Members to work in tandem with Proposition 203. She said

she supports the concept of a low fee.

Cochair Knaperek announced that she had a Request to Speak form from the following person who

is in favor of the recommendations:

Laurie Lange, Vice President, Government Relations, Arizona Hospital and Healthcare

Association

Andv Rinde. Executive Director. Arizona Association of Communitv Health Centers, testified on

behalf of the Association. He congratulated the Committee on its recommendations, and he thanked

Members for the opportunity of participating in the process. He said the Association strongly

supports consideration of Proposition 203 in conjunction with the proposed legislation. He said he

is pleased with agreement reached concerning the six- month eligibility issue. He expressed support

that the enrollment requirement for whole- family participation was changed. He said he is concerned

about the way the rural counties were chosen, and said he thinks it should be done on a more

scientific basis. He said he hoped to see employers participating in the program and paying part of

their share of the premiums. Mr. Rinde said he is looking forward to working closely with Members

of the Committee in implementing the legislation.

Cochair Knaperek announced that she had a Request to Speak form from the following person who

is in favor of the recommendations:

Debi Wells, Executive Administrator, Policy Ofice, Arizona Health Care Cost Containment

System ( AHCCCS)

Cochair Knaperek expressed her appreciation to Debi Wells for her assistance in this process.

Without objection, the meeting adjourned at 10: 55 a. m.

Joanne Bell, Committee Secretary

( Attachments and tape on file in the Office of the Chief Clerk.)

AHCCCS Premium Sharing Demonstration

Project Implementation Committee

1/ 9/ 97

Minutes of

AECCCS PREMIUM SHARING DEMONSTRATION PROJECT

IMPLEMENTATION COMMIITEE

DATE: October 17,1996

TIME: 10: OO a. m.

PLACE: House Hearing Room # 3

Members Present Members Absent

Representative Horton None

Representative Weiers

Representative Knaperek, Cochair Staff Present

Senator Kennedy

Senator Patterson Shirley Anderson, Poiicy Advisor, House

Senatar Brewer, Cochair Cindy Kapler, Deputy Chief of Staff, House

Kitty Boots, Health Research Analyst, Senate

Representative Knaperek called the meeting to order at 10: 10 a. m.

Recommendations of the Working Groups

Ms. Anderson distributed a list of the recommendations of the Premium Sharing Working Groups

and the reasons behind them entitled Recommendbtions to the AHCCCS Premium Sharing

Demonstration Project Implementation Committee ( filed with original minutes).

L Administration

A. Health Care Group shall be the entity responsible for administrative

functions related to the Premium Sharing Program such as collecting the

premiums, billing, processing and member data.

In response to Senator Brewer, Representative Knaperek stated she thought the costs to

administer this recommendation were absorbable.

Colleen Schroeder, Administrator, Health Care Group, stated the exact cost for

implementation would be quite minimal, using the current billing and collections process. She

added it will simply require 40- 60 hours for programmatic changes to develop another data base.

- AH CCCS PREMIUM SHARING DEMONSTRATION PROJECT IMPLEMENTATION COMMITTEE

October 17,1996

Page 2

The majority of the Committee agreed to recommendation I. A.

A. Participants shall undergo an income test; household income shall be less

than 200% of the Federal Poverty Level ( FPL). The chronically ill shall meet

a higher income test of 300% of the FPL.

Senator Kennedy asked if this recommendation would keep an individual from working who

wants to work and expressed concern that this should be addressed separately. Representative

Weiers stressed the importance of establishing guidelines for FPL requirements at this meeting so

that AHCCCS ( Arizona Health Care Cost Containment System) can prepare a cost analysis.

Ms. Anderson stated the issue is not employment, but rather an income test. She explained there

will be one income qualifying test for individuals who are not chronically ill at 200% of the FPL

and one for the chronically ill at 300% of the FPL. She distributed a handout entitled 1996

Poverry Level Guidelines ( filed with original minutes), listing the income guidelines published in

the Federal Register.

Representative Knaperek stated the working groups have been discussing the possibility of

allowing those whose income is greater than 200% of the FPL, and who still want to stay in the

Premium Sharing Project, to pay the full amount. Senator Kennedy suggested that at some point

the Committee needs to separately review insurance coverage guidelines for the chronically ill.

In response to Representative Horton, Ms. Anderson stated the information on the FPL handout

was from April of 1996.

Senator Kennedy inquired, hypothetically, if a chronically ill person, at 300% of the FPL, making

$ 60,000 per year, would be ineligible to work Ms Anderson stated under those circumstances

the person would not qualify for the Project Representative Knaperek stressed that the

Committee had not come to any conclusions yet regarding chronically ill and hrther discussion

was necessary. Ms. Anderson stated the working groups have discussed, but have not made a

recommendation, allowing a person who is over the income level to qualify for the Project by

paying 100% of the premium.

Representative Knaperek emphasized the recommendations of the working groups do not

represent everything and are simply one step in the process.

Representative Horton agreed the area does need to be addressed. Representative Weiers offered

three hypothetical solutions to the scenario Senator Kennedy proposed: 1) continue to be

chronically ill with no insurance, 2) quit working and qualify for the Project; or 3) set up a

- .-

AHCCCS PREMIUM SHARING DEMONSTRATION

C PROJECT IMPLEMENTATION COMMITTEE

October 17,1996

Page 2

The majority of the Committee agreed to recommendation I. A.

11. Eligibility

A. Participants shall undergo an income test; household income shall be less

than 200% of the Federal Poverty Level ( FPL). The chronically ill shall meet

a higher income test of 300% of the FPL.

Senator Kennedy asked if this recommendation would keep an individual from working who

wants to work and expressed concern that this should be addressed separately. Representative

Weiers stressed the importance of establishing guidelines for FPL requirements at this meeting so

that AHCCCS ( Arizona Health Care Cost Containment System) can prepare a cost analysis.

Ms. Anderson stated the issue is not employment, but rather an income test. She explained there

will be one income qualifling test for individuals who are not chronically ill at 200% of the FPL

and one for the chronically ill at 300% of the FPL. She distributed a handout entitled 1996

Poverry Level Guidelines ( filed with original minutes), listing the income guidelines published in

the Federal Register.

Representative Knaperek stated the working groups have been discussing the possibility of

allowing those whose income is greater than 200% of the FPL, and who still want to stay in the

Premium Sharing Project, to pay the full amount. Senator Kennedy suggested that at some point

the Committee needs to separately review insurance coverage guidelines for the chronically ill.

In response to Representative Horton, Ms. Anderson stated the information on the FPL handout

was fiom April of 1996.

Senator Kennedy inquired, hypothetically, if a chronically ill person, at 300% of the FPL, making

$ 60,000 per year, would be ineligible to work Ms Anderson stated under those circumstances

the person would not qualify for the Project Representative Knaperek stressed that the

Committee had not come to any conclusions yet regard~ ngc hronically ill and hrther discussion

was necessary. Ms. Anderson stated the working groups have discussed, but have not made a

recommendation, allowing a person who is over the income level to qualifl for the Project by

paying 100% of the premium.

Representative Knaperek emphasized the recommendations of the working groups do not

represent everything and are simply one step in the process.

Representative Horton agreed the area does need to be addressed. Representative Weiers offered

three hypothetical solutions to the scenario Senator Kennedy proposed: 1) continue to be

chronically ill with no insurance, 2) quit working and qualify for the Project, or 3) set up a

October 17,1996

Page 3

AHCCCS PREMIUM SHARING DEMONSTRATION

PROJECT IMPLEMENTATION COMMITTEE

program to meet the means test of 300% of FPL and pay full premium. He stated he would

support the third option because a chronically ilJ person will not be able to maintain employment

and therefore would become eligible for AHCCCS at 100% subsidy.

Representative Knaperek asked the members if they were in agreement with the 200% of FPL

level. Representative Horton recommended either 200% or 250%.

Representative Weiers moved the 200% recommendation as the cap for the Program.

Passed by a showing of hands.

Representative Knaperek questioned if child support payments should be considered in

determining household income. Representative Weiers stated they should. Senator Kennedy

stated child support is not an income. Representative Knaperek asked for an example of when

child support is not counted as income.

Senator Kennedy questioned if child support is counted as income on tax returns. Ms. Anderson

state she was not sure but noted it is considered part of income for AHCCCS eligibility.

Debi Wells, Executive Administrator, Policy Office at AHCCCS, stated AHCCCS counts all

monies a family receives as income and there are offsets to income as eligibility is determined.

Representative Knaperek stated she preferred using the income criteria AHCCCS uses because

the alternative is setting up a whole new system and there are more important issues to deal with.

Representative Horton stated she did not remember discussing the child support issue in the work

groups and stressed it was important to keep it simple.

Representative Knaperek moved that the Committee follow the guidelines that AHCCCS

uses in determining household income. Motion passed by a showing of hands.

Senator Kennedy voiced objection to voting on the recommendation before hearing from

AHCCCS. Representative Knaperek stated the majority of the Committee supports using the

AHCCCS guidelines.

B. Employment shall not be a requirement for participation.

Ms. Anderson stated the sentence explaining the reason for this recommendation is worded

incorrectly on the handout. She explained the money coming into the household shall be the

income for determining eligibility, but it does not matter where the money comes from. The

question " are you employed" will not be asked.

The majority of the Committee agreed to recommendation ILB.

AHCCCS PREMIUM SHARING DEMONSTRATION

PROJECT IMPLEMENTATION COMMITTEE

October 17, 1996

Page 4

C. Participants shall undergo a resource test; resources shall be limited to one

home and two vehicles. If the participant pays the full premium, no resource

test is required.

Senator Brewer expressed concern with allowing anyone to participate in the Project and the

burden it would place on it. Representative Knaperek stated AHCCCS will provide criteria to the

Committee on who should be eligible and what circumstances would require payment of the full

premium and emphasized the work groups only considered the chronically ill who cannot

presently obtain insurance. Senator Brewer stated her concern is with the services provided, not

payment of premiums.

Representative Knaperek explained the State is absorbing costs already and this project allows

people to work, pay taxes, and pay premiums. She added the Committee must make a decision

regarding the resource test.

Senator Patterson maintained that because theoretically a person with a million dollar home, a

Lexus and a Jaguar could comply with the recommended resource test, it would be more rational

to eliminate it. Representatives Knaperek and Weiers agreed.

Representative Knaperek suggested if it is decided that a resource test is not necessary, an

evaluation component should start immediately with the implementation of the project and a

resource test could be added at a later time, if necessary.

Representative Weiers requested that the application still include the questions to facilitate data

collection but not be used to disqualifi. someone based on their amount of resources.

Senator Patterson stated if the Committee decided to include a resource test, he would be

comfortable with a net asset value test.

The majority of the Committee agreed to eliminate recommendation 1I. C.

D. Eligibility shall be determined according to presumptive eligibility criteria

which means information collected by the applicant is presumed to be

accurate and truthful, with minimal verification. Participants who falsify

information in order to qualify for the program shall be responsible for all

fraudulent claims and immediately disqualified from the program.

Senator Patterson expressed concern this recommendation represented " zero tolerance" and

might be too severe. Representative Knaperek stated if someone falsifies their information, it

might result in the elimination of someone else who truly qualifies for the project. She stressed

the intent is to provide services for those who really need them.

AHCCCS PREMIUM SHARING DEMONSTRATION

PROJECT IMPLEMENTATION COMMITTEE

October 17, 1996

Page 4

C. Participants shall undergo a resource test; resources shall be limited to one

home and two vehicles. If the participant pays the full premium, no resource

test is required.

Senator Brewer expressed concern with allowing anyone to participate in the Project and the

burden it would place on it. Representative Knaperek stated AHCCCS will provide criteria to the

Committee on who should be eligible and what circumstances would require payment of the full

premium and emphasized the work groups only considered the chronically ill who cannot

presently obtain insurance. Senator Brewer stated her concern is with the services provided, not

payment of premiums.

Representative Knaperek explained the State is absorbing costs already and this project allows

people to work, pay taxes, and pay premiums. She added the Committee must make a decision

regarding the resource test.

Senator Patterson maintained that because theoretically a person with a million dollar home, a

Lexus and a Jaguar could comply with the recommended resource test, it would be more rational

to eliminate it. Representatives Knaperek and Weiers agreed.

Representative Knaperek suggested if it is decided that a resource test is not necessary, an

evaluation component should start immediately with the implementation of the project and a

resource test could be added at a later time, if necessary.

Representative Weiers requested that the application still include the questions to facilitate data

collection but not be used to disqualify someone based on their amount of resources.