The Health Connector is holding steady as they prepare for full implementation of the Affordable Care Act (ACA). Yesterday, the Connector Board voted on the draft 2013 Affordability Schedule, approved plans for the FY2014 Commonwealth Care renewal, and officially launched the 2014 Seal of Approval process.

Materials from the meeting are here, and our detailed report is after the break.

2014 Seal of Approval Launch
As Jean Yang, put it, “The 2014 Seal of Approval is six years in the making.” The 2014 Seal of Approval (SoA) process, which will serve as the Affordable Care Act (ACA)-required Qualified Health Plan (QHP) certification mechanism, builds on what the Connector has learned through experience. All eyes will continue to be on Massachusetts to model successful implementation of the ACA standards.

The Health Connector will release its 2014 SoA Request for Response (RFR) today that includes the following components.

• QHP certification standards: Plans must be licensed by the Division of Insurance (DOI) and accredited by NCQA or URAC. The Connector will leverage and build upon existing DOI processes for evaluating plan design, rates, network adequacy, and marketing, quality and transparency of coverage. Service area requirements will be developed by the Connector.
• Exchange Product Portfolio: The Connector will continue to offer standardize plans in addition to new non-standardized plans, including tiered networks, as well as the ACA-required catastrophic plan for residents under 30 years old and those exempt from the individual mandate. There will also be a revitalized effort to expand small businesses offerings. All plans will continue to be subject to Connector review and approval.
• Dental Plan Requirements: Pediatric dental coverage is a component of Essential Health Benefits (EHB), which can be met by offering standalone dental plans on the Exchange. As stated by Connector staff, offering standalone dental plans is not only important for compliance with the ACA, it will also help address unmet need for dental coverage. The Connector plans to release a standalone dental RFR concurrently with the overall SoA RFR that includes requirements for standardized plans designs, options for child-only and lower cost coverage, rating methodologies, and certification.
• Subsidized Coverage (the “QHP wrap”): In an effort to preserve affordability for members at or below 300% of the federal poverty level (FPL), most of whom currently receive coverage through Commonwealth Care, the Connector plans to “wrap” or supplement federal Advanced Premium Tax Credits (APTCs) and Cost-Sharing Reductions (CSRs) to bring consumer costs close to Commonwealth Care levels. The Connector plans to only offer this population a subset of plans available through the Connector that offer the lowest premiums. According to Connector staff, the use of competition in this way serves as the foundation for the federal government’s preliminary commitment to help fund the wrap. The goal is to make the QHP wrap look and feel as much like Commonwealth Care as possible, but the details are very different. Member transition to this new program – in terms of providing understandable information, minimizing coverage gaps, and utilizing navigators and other assisters – will be vitally important.
• Operational requirements and administrative fees: In conjunction with the state’s larger effort to control health care costs, all carriers selling plans through the Connector must commit to pursuing alternative payment methods. On the operational front, the Connector is pursuing a streamlined and standardized system for carriers to submit plan information and integrate these systems with the new Health Information Exchange-Integrated Eligibility System (HIX-IES). Last, but certainly not least, the Connector must be self-sustaining by 2015 in order to continue to be an ACA-compliant Exchange. As such, the Connector will use economies of scale and administrative fees to ensure their long-term sustainability.

For simplicity’s sake, the above summary just skims the surface of the very complex policy, program, and funding decisions the Connector needs to make in the next several months. For more details, see this thorough slide deck provided by Connector staff.

Draft 2013 Affordability Schedule
As discussed at previous Connector Board meetings, the policy recommendation is for Massachusetts to maintain the state individual mandate in addition to the federal individual mandate. The Affordability Schedule is a key component of the state individual mandate, which requires adult Massachusetts residents to purchase coverage if it is affordable to them. To date, the state has used premium dollar amounts by income bucket to determine affordability, and the Affordability Schedule for people below 300% FPL has been aligned with Commonwealth Care base premiums.

The Connector aims to maintain progressivity of the state Affordability Schedule while moving towards a percentage-based system in 2014. As Governor’s FY2014 budget proposal commits to providing state subsidies on top of federal premium tax credits (QHP wrap) to align with current Commonwealth Care premiums, the Connector proposed no changes to the maximum allowable premium contributions in the for people below 300% FPL. For people with incomes above 300% FPL, the Connector recommended small adjustments to income buckets and affordability standards, with a cap of 10% of income at the highest income levels in the schedule. The Board voted to release the draft 2013 Affordability Schedule for public comment.

FY2014 Commonwealth Care Renewal
Fiscal Year 2014, which runs from July 1, 2013 through June 30, 2014, presents interesting challenges for program planning. It is a “split” fiscal year – the first half of FY2014 is “business as usual,” while ACA-related changes are effective beginning in the second half of the fiscal year. Therefore, the Connector proposed to extend their current contract with Commonwealth Care Managed Care Organizations (MCOs) through December 31, 2013. Each MCO will be asked to accept their FY2013 base capitation rate, with a 1.4% adjustment for inflation, during the renewal period.

There will be no change in the rules for new Plan Type 1 members, who currently have limited choice of the two lowest cost plans. However, MCOs will have the option to propose a discount on their capitation rates for Plan Types 2 and 3 members only, as long as the discount does not come in below the rate of the lowest cost plan. Should an MCO propose a discount, their members’ premiums will be adjusted accordingly, without changing the base enrollee premiums. Because of the short plan year, members’ maximum out-of-pocket limits (referred to as MOOPs) will be reduced. As in previous years, Commonwealth Care members will have the opportunity to switch plans during open enrollment will occur in June for plans effective July 1, 2013. However, this population will need to transition to new coverage options provided under the ACA for coverage effective January 1, 2014.

The next Connector Board meeting is scheduled for Thursday, February 28th from 9:00am-12:00pm at 1 Ashburton Place, 21st floor.