A new bulletin from the Arkansas Insurance Department includes a rule that will help the Department of Human Services keep costs down for the private option in future years.
The private option uses Medicaid funds to purchase private health insurance plans on the Arkansas Health Insurance Marketplace for low-income Arkansans. This year, Centene (selling under the name Ambetter), one of the carriers offering policies on the Marketplace, used a clever gambit that helped bring in customers but led to higher per-person costs for the private option (the feds pay those costs, but the state will have to help pick up the tab in future years; the state also must stay under per-person caps set by the feds — much more on that in a forthcoming post).
Private option beneficiaries currently can choose from among any Silver level plan available in their area on the Marketplace (plans are divided into metallic levels based on coverage, with Silver medium-level). This year, in 29 counties, Ambetter is offering plans that included dental and vision benefits as part of the comprehensive benefits package, typically with a 50 percent co-pay. Because of the additional benefits, these plans have higher premiums. Those add-ons go beyond the benefits guaranteed by the private option or Medicaid, so the state doesn’t chip in for the co-pays — but the feds, funding the private option, were on the hook for the higher premiums when beneficiaries picked those plans. Remember, private option beneficiaries don’t pay premiums at all, so there’s no reason for them to worry about price. Naturally, they gravitated toward plans that had additional benefits listed, and Ambetter did very well among private option consumers in the three regions of the state in which it was offering plans. Ambetter got more customers by ostensibly offering more stuff, but the federal government is footing the bill.
Ambetter was the only carrier to use this maneuver, which represented an unexpected wrinkle for state officials. The result was higher per-person costs for the private option in 2014.
It may have also led to surprises for beneficiaries. Medicaid rules protect private option beneficiaries from cost-sharing; currently, the private option doesn’t have any cost-sharing for beneficiaries below the poverty line at all. But dental and vision are not guaranteed benefits, so beneficiaries do have to pay their 50 percent co-pay on those benefits in the Ambetter plans. If they didn’t read the fine print, beneficiaries might assume dental and vision were part of the package at no cost to them. Keep in mind, private option beneficiaries are low-income people and for some of them, a 50-percent co-pay would be cost prohibitive.
Here’s the new requirement from AID for plans offered on the Marketplace in 2015:
In addition to federal requirements that at least one silver and at least one gold plan are offered in the individual market, QHPs in the Arkansas individual market are required to include at least one silver-level plan that contains only the EHBs included in the state base-benchmark plan.
Next year, a carrier like Ambetter could still offer a Silver plan with additional benefits, but they have to offer at least one plan that only has the essential health benefits (EHBs) mandated by the law. That’s where DHS will step in with a rule that private option will only use EHB-only plans.
“DHS will need to – and plans to – affirm that the Private Option will only purchase the EHB-only plan,” DHS spokesperson Amy Webb said. “We do not believe we need any additional approvals, as this comports with intended program design.”