Tuesday, October 21, 2014

Basic Health Program Funding Methodology Proposed Notice

According to an Oct. 21, 2014, fact sheet sent out by the Centers for Medicare & Medicaid Services (CMS) Media Relations, the Agency issued yesterday a proposed notice establishing the methodology for determining federal funding for the Basic Health Program in program year 2016. The Basic Health Program provides states with the option to establish a health benefits coverage program for lower-income individuals as an alternative to Health Insurance Marketplace coverage under the Affordable Care Act (ACA). This voluntary program enables states to create a health benefits program for residents with incomes that are too high to qualify for Medicaid through Medicaid expansion in the Affordable Care Act, but are in the lower income bracket to be eligible to purchase coverage through the Marketplace. According to the CMS fact sheet, this proposed notice is substantially the same as the final notice for program year 2015, and includes the following key provisions.  
Key Provisions in the Proposed Notice: 
CMS proposes to use the same payment methodology for program year 2016 as established for 2015, along with updated values for several factors. 
  • 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 American Indians and Alaska Natives enrolled in the program.
  • The proposed methodology calculates payment rates based on the premium tax credit amount and the cost-sharing reductions. 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 income that a household would be required to pay 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. 
  •   The proposed methodology gives states the option to use either the 2016 Marketplace premiums or the 2015 premiums projected forward by an estimated trend rate to calculate the Basic Health Program payment rates. States would also have the option to propose a methodology to calculate the difference in health status between the Basic Health Program 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 Basic Health Program) and reconciled once enrollment data is submitted for each quarter. 
The proposed notice can be found here, and will be posted on https://www.federalregister.gov/

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