Why Medicaid Should Urgently Consider Health Insurance Premium Assistance

August 24, 2020 HMS

Kaiser Health News reports that in March 2020, for the first time in three years, Medicaid saw a marked increase in enrollment. Based on the latest available data from the Centers for Medicare and Medicaid Services, enrollment numbers continued to increase steadily from the onset of the COVID-19 pandemic — from 71 million in February to 72.3 million in April.

This trend is expected to continue as the pandemic rages on and its full economic impact is felt. New research published by the Urban Institute estimates that nearly 10 million Americans will have lost employer-sponsored health insurance between April and December 2020 — nearly 3 million of whom are projected to enroll in Medicaid.

A Safety Net in COBRA

Many newly unemployed individuals have the option — albeit an often cost prohibitive one — to continue their employer-sponsored coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA). Amid today’s crisis especially, COBRA may be an appealing option from both a cost containment and population health perspective. The program allows otherwise Medicaid-eligible individuals to receive uninterrupted access to care from the providers they have come to know and trust under their employer’s health plan, while enabling Medicaid to stretch its limited resources.

Weighing the Costs of Premium Assistance

Because COBRA requires now-unemployed individuals to cover their full health plan premium, including the employer’s former share plus an administrative fee, it may not be a viable option for many who stand to benefit. To help, Medicaid may choose to institute a Health Insurance Premium Payment (HIPP) program to subsidize the cost of COBRA or even other insurance to which Medicaid-eligible individuals may have access.

The current crisis aside, Medicaid programs are urged to consider HIPP when it is considered cost-effective to do so — generally, when the cost of paying the premium for the employer plan is less than the projected cost of medical assistance under Medicaid.

HIPP programs have become increasingly popular in recent years and have proven to be a highly effective cost avoidance measure. Pennsylvania, for example, has been progressively growing its HIPP program since it was established in 1994. In fiscal year 2003, the program yielded $76.3 million in savings. By fiscal year 2018-19, it had saved $94.5 million.

Protecting the Medicaid Safety Net

With the Urban Institute forecasting state tax revenue shortfalls of approximately $200 billion between fiscal years 2020 and 2021, sector stakeholders — from industry to government — must explore all avenues to preserve healthcare dollars for states and their vulnerable residents. Implementing a HIPP program that, at a minimum, subsidizes COBRA coverage for the newly unemployed can help to offset potentially high long-term costs, protect Medicaid as the payer of last resort and make limited state funds available to those truly in need.

Best Practices for Implementing a HIPP Program

The following are a few best practices to help you get your HIPP program up and running and ensure its long-term sustainability.

  1. Capture COBRA coverage. In this generational and historic public health crisis, minimally subsidize COBRA coverage for your new Medicaid eligibles.
  2. Mandate enrollment. HIPP should be made mandatory for all eligible enrollees, as long as it is cost effective to Medicaid.
  3. Ensure reliable data. Leverage both new hire and state wage files to ascertain HIPP eligibility through an automated verification process, while conducting monthly verifications via HIPAA-compliant 270/271 electronic transactions.
  4. Facilitate broad-based cooperation. Consider measures to promote member engagement and employer compliance, such as rewards, financial incentives and/or penalties.
  5. Engage and inform HIPP members. Delivering personalized, relevant and timely information through the channels most likely to reach and engage HIPP members can improve enrollment while distinguishing legitimate outreaches from COVID-19 related scams.
  6. Leverage programmatic flexibilities. While traditional HIPP programs reimburse members directly, making premium payments to employers can accelerate enrollment and enhance program integrity.

HMS is committed to advocating for policies and practices that protect the integrity of the Medicaid program and create a more sustainable environment for all system stakeholders. Stay connected with us for more COVID-19 third-party liability and payment integrity strategies and resources on our blog.

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