Overview and Analysis of KeyDirigo Health Components

A perspective prepared by Consumers for Affordable Health Care with

modifications from the Governor’s Office of Health

Policy and Finance October 2003

Dirigo Health Board of Directors

Advisory Council

Dirigo Health Insurance

• Private carriers(subsidized health care to 300% FPL)

• Bad Debt and Charity Care

Recovery

Appoints

Approves

Governor’s Office of Health Policy and Finance

Commission to Study Maine’s Hospitals

Public Purchasers Steering Committee (state employees, Corrections, MEA, MMA, MaineCare)

Advisory Council on Health Systems Development

• Insurance Regulation - Rate justification small group - Actuarially validated rate filing – large group• Require physician electronic billing

• CON• Annual Public Health needs/data•MaineCare expansion

Maine Health Data Organization

DPFR DHS

Maine Quality Forum

DIRIGO HEALTH Health Reform for Maine

State Health Planning Document

Legislature Governor

Task Force on Veterans’ Health Services

Dept. of Defense, Veterans and Emergency Mgt.

Overview

Dirigo Health is Maine’s new voluntary health plan

• Individual and small business participation and payments are voluntary

• Businesses and individuals can keep their current coverage if they so choose

• Existing insurance products will still be available

Conceptual framework for Dirigo

• Create Partnership Between Dirigo Health and Small Businesses– Dirigo Health will arrange health coverage for small

businesses and participating insurer(s), and provide a range of other benefits to members

– A portion of membership payments for low-income workers will be directed to MaineCare via interagency transfer

– Insurers receive payment from Dirigo Health or MaineCare– Providers receive commercial reimbursement rates for all

Dirigo members

• Extend Health Premium Assistance– Current MaineCare eligibility expanded to higher income people

• Provide Workers and Families With Choice– Adds option of receiving same assistance through qualified private

insurers

How Dirigo Health Works

MAINECARE

SMALL FIRM WORKERS,INDIVIDUALS

DIRIGO HEALTHPLANS

DIRIGOHEALTH

Low Income

ModerateIncome

HighIncome

Payments

Transfer

Premiums

Prem-iums

BDCC Recovery

Assis

tance

Dirigo will expand access to coverage with a focus on:

• Small Businesses (an “eligible business” means a business with at least 2 but not more than 50 workers including municipalities w/ 2 - 50 employees)

• Self-employed (includes sole proprietorships)• Individuals Without Access to Job-based

Coverage (from an Eligible Business)• Dirigo Health Board may include large public or

private employers in the future

Criteria for Voluntary Participation by Small Business

• At least 75% participation of eligible employees working at least 30 hrs./wk. with no other coverage;

• Eligible employee is an employee of an eligible business who works at least 20 hrs./wk. but does not include temps or subs or employees working 26 or fewer wks. per yr.;

• 60% ceiling on employer’s contribution toward combined premium for full-time worker;

• Employer share is prorated for part-time workers who work 20 or more hrs./wk. but less than full-time status.

Individual Eligibility for Dirigo Health Insurance

• Individuals without access to job-based coverage from an eligible employer (i.e., 2 - 50 employees);

• Dirigo Health Board may prohibit coverage to an individual whose current employer dropped coverage within past 12 months;

• Self-employed individuals;

• Unemployed individuals qualify for coverage;

• Exceptions may be established by Dirigo Health Board

Benefit Package • Not provided in statute; Dirigo Board decides• Governor’s May 5, 2003 materials described

benefit package as follows:– Comprehensive– No lifetime maximum– Low deductibles (estimated at $250 - $500)– Out-of-pocket maximums: $1250/individual and

$2500/family– Preventive coverage includes wellness care, nutrition

counseling, smoking cessation, wellness education, cardiac rehab and routine vision

• Dental and eyeglasses are not covered, but may be ridered

Dirigo Health Ends “Premium Lockout”

• Unlike traditional private insurance, Dirigo Health allows eligible employees and individuals at certain income levels to pay on a sliding scale basis and receive full coverage;

• Dirigo Health provides sliding scale subsidies for those individuals with household incomes between 200% - 300% FPL;– 200% FPL = $30,528/yr. for a family of 3 – 300% FPL means $45,780/yr. for a family of 3;

• Enables individuals to contribute toward their coverage;• MaineCare (Medicaid) remains available to cover adults

without children and disabled persons to 125% FPL and parents and children to 200% FPL

DH May Contribute to Coverage of Individuals Working For Large Employers

• Dirigo Health may provide subsidies for the purchase of employer sponsored coverage paid by the employee after the first year of operation;

• The employee who works for an employer with greater than 50 workers may qualify if s/he:– Is not eligible for MaineCare– Has a household income below 300% FPL (family of 3

= $45,780)• These subsidies would offset the employee’s contribution

in order to participate in the large employer’s plan

Dirigo Health Gives Individuals & Small

Businesses Coverage Choices

• Insurers will continue to offer individual and small group products

• Dirigo Health is simply one more option for individuals and small businesses to buy

• May enable small businesses to provide better coverage at a lower cost

Cost Containment is part of Dirigo Health

• One-year moratorium on new CON projects (Executive Order, May 1, 2003) but allows CON projects already in pipeline on May 1st to go through usual review

• Sets a statewide Capital Investment Fund that limits capital expenditures and equipment purchases on an annual basis

• Extends CON to ambulatory surgical centers for capital expenses greater than $2.4 million and equipment costs greater than $1.2 million

• Reduces uncompensated care costs

• Asks hospitals to put a voluntary 3% limit on operating margins and 3.5% on cost increases (begins 9/13/03)

• Asks doctors and health care practitioners to voluntarily limit their net revenue to 3% (begins 9/13/03)

• Asks health insurance carriers to put a voluntary 3% limit on underwriting gains (begins 9/13/03)

• Requires electronic claims submission by 2005 w/ loans and assistance to providers

Funding Sources• $53 million in federal fiscal relief in year one;• Voluntary contributions (individuals and small businesses)• Federal matching dollars for MaineCare eligibles• In year two and subsequent years, 4% “savings offset

payment” (“SOP”) on health carriers, excess loss carriers and third party administrators to recover a portion of their premiums currently devoted to uncompensated care and use it to provide subsidies under DHI

• SOP is commensurate with savings achieved under Dirigo Health; SOP is capped at 4%;

Provider Reimbursement Rates

• Market rates

• Dirigo Health contracts with private health carriers that will administer claims and pay private market rates to health care providers

Quality Improvement

• Maine Quality Forum (within Dirigo Health) coordinates data and quality initiatives

• Four primary functions:1) Collect/disseminate evidence-based research;2) Provide consumers with useable information to compare

provider performance;3) Consumer education to promote informed decisions and

healthy lifestyles; and4) Technology assessments to inform CON and State

Health Plan.

State Health Plan

• Established by Governor’s Office

• Requires an annual statewide health expenditure budget report to set priorities within the SHP

• Biannual State Health Plan - required report to the public that assesses progress toward meeting SHP goals

• Sets a statewide limit on CON spending

• Addresses major cost drivers & major threats to public health and safety

• Strategies to address major cost drivers and public health goals

• Annual Public Health Report - required

Price Disclosure

• Provide consumers with information about price and quality

• Requires publication of lists of average charge and disclosure of accepted payments at hospitals and physician’s and other provider’s offices

• Focus on commonly performed services

Commission to Study Maine Community Hospitals

• 9 person commission appointed by Governor• Report and legislation by Nov. 1, 2004• Collect and evaluate data regarding statewide

hospital spending, funding mechanisms and reimbursement

• Study facility and equipment needs, financing options and capital needs

• Study roles of community hospitals in relation to other providers; develops a blueprint for the future of Maine’s hospitals

Strengthens Oversight of Insurance Costs

• Extends rate review process that is now applied to individual products to small group products

• Increases accountability to the public

• Makes rate information available to the public

• Standardizes carrier definitions of profit and underwriting gains

• Requires large group carriers to file actuarial certification with rate filings