September 13, 2012

Maryland Health Benefit Exchange Update for the Middle Atlantic Actuarial Club 2012 Annual

Meeting

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The Patient Protection and Affordable Care Act (ACA)• Signature legislation of the Obama Administration making

health insurance coverage a central focus• Relies on the private insurance market and public programs

(Medicaid) to address the issue of access to care• Key Components must work together:

• Guaranteed Issue• Minimum Essential Health Benefits• Individual Mandate• Federal Subsidies• Risk Adjustment

• State-based Health Insurance Exchanges are the focal point for implementing market changes

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Basic Exchange Functions• Creates a new Health Insurance Marketplace for Individuals

and Small Groups (SHOP)• Establish policies and procedures for certifying Qualified

Health Plan (QHPs) from commercial insurance carriers• Makes eligibility determinations for government assistance for

health insurance• Provides Consumer Support through Navigators, Brokers and

Agents, and Online Web Portal• Enrolls Consumers into affordable health care options• Consolidated Billing and Collections in the Small Group Market

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The Affordable Care Act and Maryland• Code of Federal Regulations (CFR) 45 Part 155 – Exchange Establishment

Standards and Other Related Standards Under the Affordable Care Act defines requirements for state-based Exchanges

• Maryland has embraced the ACA and committed itself to create a state-based Exchange

• Health Benefit Exchange Act of 2011• April 12, 2011: Governor O’Malley signed the Maryland Health Benefit

Exchange Act to establish Maryland’s exchange as a public corporate and independent unit of state government

• June 3, 2011: Exchange Board held its first meeting• Health Benefit Exchange Act of 2012

• Senate Bill 238 and House Bill 443: Maryland General Assembly recently passed (April 5, 2012) legislation that outlines the implementation policies and procedures for operating the exchange

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Key Federal and Maryland State Agencies Implementing Health Care Reform and Exchanges• Federal

• Center for Consumer Information and Insurance Oversight (CMS/CCIIO)• Center for Medicaid and CHIP Services (CMS/CMCS)• Internal Revenue Service (IRS)

• Maryland• Governor’s Health Care Reform Coordinating Council• Maryland Health Benefit Exchange

• Board of Trustees• Staff

• Maryland Insurance Administration (MIA)• Maryland Health Care Commission (MHCC)• Department of Health and Mental Hygiene (DHMH)• Department of Human Resources (DHR)

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Seven Guiding Principles the Maryland Exchange1. Accessibility. The Exchange should reduce the number of Marylanders without

health insurance and improve access for all Marylanders.2. Affordability. The affordability of coverage, within the Exchange and within the

state, is essential to improving Maryland’s health care system and economy.3. Sustainability. The Exchange will need to be sustainable in order to succeed in the

long run.4. Stability. The Exchange should promote solutions that respect existing strengths of

our state’s health care system and promote stability within the Exchange.5. Health Equity. The Exchange should work to address longstanding, unjust

disparities in health access and health outcomes in Maryland.6. Flexibility. The Exchange should be nimble and flexible in responding to the quickly

changing insurance market, health care delivery system, and general economic conditions in Maryland, while being sensitive and responsive to consumer demands.

7. Transparency. The Exchange is accountable to the public, and its activities should be transparent, its services easily available, and its information easily understandable by the populations it assists.

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Maryland’s High Level Implementation Approach• Establish a consolidated strategy for Health Care Reform

implementation• Phase I – Modified Adjusted Gross Income (MAGI) Eligibility Determinations for Medicaid

and Advance Premium Tax Credits and Cost Sharing Subsidies (by 2014)• Phase II – All Medicaid programs (by 2015)• Phase III – All Maryland Social Service programs (by 2015)

• Secure Federal Establishment Grants• CCIIO: Planning, Early Innovator, Level One Establishment, Level Two

Establishment• CMCS: Matching Funds

• Establish Policies and Regulations• Stakeholder Advisory Committees• Legislative and Regulatory Processes

• Set-up Exchange IT and Operations• First Exchange Open Enrollment Period – October 2013• Self-Sufficient by 2015

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Federal Funding - $157M• Planning Grant ($1 million):

• Initial Planning and Research

• Early Innovator Grant ($6 million)• IT Model• Sharing resources with other states

• Level One Establishment Grant ($27 million)• IT Development• Operations• Planning/ Administration

• Level Two Establishment Grant ($123 million)• IT Implementation• Operations/ Administration• Consumer Assistance• Outreach & Education

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Maryland Exchange IT Systems

The system is designed as an integration of Commercially Off the Shelf (COTS) products, that are being integrated and configured to meet Federal and State requirements.

This diagram indicates the key building blocks of the solution: Cúram is a software product that has existing and

planned features to support requirements for Eligibility and Enrollment.

Connecture is a software product that has existing and planned features that support requirements for Plan Presentment and Enrollment.

Noridian is leading the integration of the COTS solutions based on the EXACT Service Oriented Architecture (SOA) integration product.

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MD HIX Implementation TimelineThe diagram below articulates the timeline and development approach Maryland is following in order to be prepared for CMS Certification and to deliver the HIX Solution in time for production operations in Q4, 2013

Implementation & Test

1st QTR ‘12 2nd QTR ‘12 3rd QTR ‘12 4th QTR ‘12 1st QTR ‘13 2nd QTR ‘13 3rd QTR ‘13 4th QTR ‘13

Validate

Planning & Rqmt

Artifacts

NFRD

Architecture Plan

Knowledge Transfer

COTS Demo

Rece

ive

CMS

Certi

ficat

ion

(Con

ditio

nal)

Non-Functional / Technical Requirement Development

Architecture Development

Design Integrated Testing Deployment & Disposition

IT V

endo

r Sta

rts

Com

plet

ed Te

sted

Sys

tem

Sta

rt 2-

path

Spr

int A

ppro

ach

Com

plet

e al

l dev

elop

men

t

Warranty / Maintenance

Com

plet

e Ga

p An

alys

is

Star

t Enr

ollm

ent

End-to-End Testing,

including: Functional and

Technical Testing

Other Requirement Development

Sprint Execution – for requirements required for CMS Certification 1/1/13

Sprint Order

Prioritize Rqmts & activities required

for Certificat

ion on 1/1/13

Certification Process

Deployment to Production

Training

Fix any Production bugs, etc.

DDR

CMS ILC Gate ReviewsFDDR PORR ORR

Core Requirements

Federal Requirements

State RequirementsSP1 SP2 SP3 SP4 SP5

SP6 SP7 SP8

Test

Planning Review Design Review Implement Review

CMS ELC Gate Reviews

Key: DDR – Detail Design Review; FDDR – Final Detail Design Review; PORR – Preliminary Operational Readiness Review; ORR – Operation Readiness Review

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What the Exchange Means to Maryland• Expands access to health insurance for 740,000 Marylanders

currently without health insurance• Provides federal subsidies and tax credits for individuals up to 400%

of FPL to pay for health insurance premiums• Provides $500 million in federal subsidies into the State of Maryland

NEW funds in the Maryland health care system• Provides individuals access to primary care physicians, preventive

services• Lowers uncompensated care costs in the healthcare system resulting

in lower insurance premiums across the state

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Health Care Coverage Projections in Maryland due to the Affordable Care Act

* Hamid Fakhraei, Ph.D., Director of Economic Analysis, The Hilltop Institute, University of Maryland, Baltimore County (UMBC)

*

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Carrier Impact and Qualified Health Plans (QHPs)• Market-wide

• Minimum Essential Health Benefits• Minimum Medical Loss Ratios• Guaranteed Issue• Community Rating• Rating Variation Limitations• Risk Adjustment and Reinsurance

• Exchange Specific• Actuarial Value Metal Bands (Bronze, Silver, Gold, Platinum)• Network Adequacy and Essential Community Providers• Quality and Transparency Data• QHP User Fees• Active Purchasing (potential)

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Qualified Health Plans (QHPs) Contracting

Step 1 Issuer Contracting with the Exchange

(Issuer Level)

Maryland Market Rules

Service Area Requirements

Marketing Standards

Transparency Standards

Quality Data Requirements

Tracking of RELICC Data

Reporting Requirements

Continuity of Care Requirements? 2014 or 2015?

Broker Compensation

Step 2 MIA

Review & Approval (Issuer & Plan level)

SERFFLicensure

SolvencyBenefits, Rates & Forms

Essential Health Benefits

Limitations on Cost Sharing

Actuarial Value/Metal Levels

Discriminatory Benefit Design

Step 3 Exchange

Final Certification(Issuer & Plan level)

HIX

Accreditation

Network Adequacy Data

Essential Community Provider Data

Transparency Data

Step 4 MHCC

Quality & RELICC Data

(Issuer Level – Year 1)

Annual Custom File

HMO/PPO HEDIS Scores

HMO/PPO CAHPS Scores

Dental Plan CAHPS Scores

Vision Plan CAHPS Scores

RELICC Data (Internal use only)

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Consumer Financial Assistance• Eligibility Rules Based on Modified Adjusted Gross Income (MAGI) in

relation to Federal Poverty Level (FPL)

• Calculating actual APTC depends on:• MAGI in relation to FPL• 2nd Lowest Priced Silver Plan

• Potential Issues:• “Churn” and Continuity of Care• Price Stability under Guaranteed Issue (High Risk Pools)

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Sample Monthly Premium Payments by Income Level

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Employer Sponsored Insurance• Employer Group Size Considerations

• Only small groups can purchase on the Exchange through 2017• Maryland defines small group up to 50 employees through 2016• Adopt federal definition of small group of up to 100 employees

after 2016• Tax credits for small groups that purchase in the Exchange starting in

2014• Penalty for larger groups that don’t offer minimum essential coverage

to their employees

• Defined Contribution / Employee Choice Model• Opens up all plans on a metal level to employees• Minimum participation rate• Employers make defined contributions (minimum?)• Rating by average age or individual employee?• Special enrollment• Timing of account set-up and contracting

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Consumer Assistance• Marketing and Consumer Education

• Web Portal• Online Eligibility Determinations• Plan Shopping, Comparison, and Enrollment

• Several Classes of “Assistors”• Navigators• Exchange Call Center• DHMH / DHR Case Workers• Brokers and Agents

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Navigator Program

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Third Party Benefit Administrators• Current Market Role

• Broker Training and Tools• Plan Shopping and Enrollment• Back-Office Financial Administration (Billing, Collections, Reconciliation,

etc)• Other Value Add Benefit Management Services (Life, Disability, Payroll)

• Role in SHOP Exchange• TPA Certification Program• Use Exchange systems• Use their own systems

• Online Marketplace• Back-Office Financial Administration

• Performance Metrics and Service Levels

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Questions?