Press Release: June 30, 2017
MassHealth Reforms To 370,000 People Called “Harmful” To Low-Income and To Working Poor
On June 20, 2017 the Baker Administration asked the FY 2018 legislative Conference Committee to add dozens of outside sections to the budget as part of a MassHealth Reform Package. The changes requested by the Governor in state law were designed to generate $114.6 million in savings for FY 18, plus $200 million in medical assessments on employers. The plan would also produce $88.5 million in savings for FY 19.by removing 140,000 people from the MassHealth program to ConnectorCare insurance.
The Administration’s plan was offered as a package in the closing weeks of the fiscal year, just as lawmakers huddled in a budget Conference Committee. The reform plan was presented as a combination of health insurance “transitions” for 370,000 low-income people, and as a revenue package imposing a two year fee on employers whose workers are on MassHealth. The combination was designed to attract lawmakers who were looking to close a projected FY 18 state budget deficit of several hundred million dollars.
According to the Administration, their plan would save $76.5 million in FY 18 by barring non-disabled adults from being eligible for MassHealth if they had access to affordable employer sponsored health insurance (ESI). .Employers would have to submit a Health Insurance Responsibility Disclosure which would describe their health plan offering, and list all employee eligibility status. This would require federal approval. The goal of this initiative is to maximize premium assistance for ESI, where cost-effective, and to maximize the “up-take of MassHealth’s premium assistance program; ensuring that more MassHealth-eligible employees enroll in or remain on their ESI, with premium assistance and cost-sharing subsidies from MassHealth.”
The plan also estimates $38.1 million savings in FY 18 by encouraging “more coordinated, cost effective care through the use of integrated and limited network products in MassHealth.” This also will require federal approval. As part of the Accountable Care Organization (ACO) plan, consumers will have access to “llimited networks” of providers, and “a narrower network” for enrollees in the Primary Care Clinician (PCC) plan
The proposal also eliminates non-emergency transportation services to medical appointments for CarePlus members, except transportation to and from substance use treatment services. This transportation cutback requires federal approval.
The Administration proposed to make changes to the MassHealth pharmacy benefit to obtain lower drug prices and enhance rebates. This requires a state law change and federal approval. MassHealth would use “tools widely used by commercial plans for selecting preferred and covered drugs (e.g., establish a closed formulary). MassHealth would also procure a more limited specialty pharmacy network.
Starting in January of 2019, the Administration hopes to save 488.3 million in FY 19 by “transitioning” 140,000 non-disabled adults with incomes over 100% of the federal poverty level (FPL) from MassHealth to the ConnectorCare program. This requires state law change and federal approval. MassHealth says “this will allow the Commonwealth to maximize available federal subsidies,: and will “improve continuity of coverage and reduce churn between MassHealth and Connector coverage, allowing individuals whose incomes often fluctuate to stay on the Connector as long as their income remains above 100% FPL.
Another 230,000 non-disabled parents and caretakers with incomes less than 100% of the FPL will be “transitoned” from MassHealth Standard to CarePlus, starting January 1, 2019, assuming federal approval. Parents and caretakers determined disabled would remain on MassHealth Standard.
The plan would also eliminate redundant insurance coverage by requiring individuals who are currently eligible for both MassHealth Limited and ConnectorCare to receive their coverage solely through the ConnectorCare program. This will require a state law change and federal approval).
In a deal brokered with members of the business community, the Administration proposes by January 1, 2018 to reinstate a temporary employer contribution towards the cost of public coverage for employed individuals, using a 2-tiered approach that builds off of the existing employer medical assistance contribution (EMAC). This employer contribution is time limited and will sunset at the end of calendar year 2019. Collections under both tiers would be administered by the Department of Unemployment Assistance, the agency responsible for administering the existing EMAC.
Tier 1 is broad based, raising the current EMAC rate from 0.34% to 0.51% of annual wages, up to the annual wage cap of $15,000. It applies to all employers currently subject to EMAC—those with 6 or more employees. The maximum per-employee contribution rate would rise from $51 to 77. This would generate $75M in new fees annually.
Tier 2 introduces a new targeted payment that would require employers to pay an additional 5% of annual wages for each non-disabled employee on public coverage, up to the annual wage cap of $15,000. It applies to all employers currently subject to EMAC with non-disabled employees on MassHealth (not in premium assistance) or subsidized Connector coverage (ConnectorCare). Tier 2 would result in a much larger new revenue source: an annual maximum per employee contribution rate of $750 would create an estimated $125 million in FY18 under this tier. This estimate is dependent upon the actual number of individuals on public coverage. These EMAC changes require a state law change. According to the Governor’s fact sheet, the Tier 1 and Tier 2 will bring in a total of $200 million in new revenue in FY 18.
To make this EMAC more palatable to the business community, the Administration’s plan modifies the unemployment insurance schedule, setting employer rates on Schedule “D” for 2018 and Schedule “E” for 2019. Without these changes, employers would be subject to Schedule “F” beginning in 2018 which would trigger higher contributions from employers. Employers would pay a total of $334 million less than they would under the current schedule. This is designed to “offset the increases to EMAC, effective 1/1/18 This unemployment insurance change requires a state law change.
And finally, the Governor’s plan offers several initiatives that address the cost of health insurance coverage for employers and their employees in the commercial insurance market. The plan would change state law to impose a five-year moratorium on insurance mandates. “New health insurance coverage mandates for specific services can be costly, unpredictable and an administrative burden to implement,” the Governor’s plan says. The plan will increase the required premium differential for tiered network plans from the current 14% to 28%. “Tiered products provide employers with an affordable option for coverage. Increasing the premium differential will promote and incentivize participation in such products,” the Administration notes.
The Governor wants to change state law to promote “robust transparency tools” for employers and consumers. The state will provide consumer-friendly cost information on the actual prices for common medical procedures and services by an individual provider, “which enables both employers and consumers to make more informed choices about where they receive care.” The raeofmr plan will increase access to lower-cost providers by expanding the ‘scope of practice’ for optometrists, podiatrists and advanced practice registered nurses (APRN) and creating a new mid-level provider – dental therapists. Such changes will require a state law change.
To push this reform package forward, the Executive Office of Health and Human Services created a “Coalition for Coverage and Care,” which appeared to be mostly large businesses, health care companies, and labor groups.
Health Advocates See “Harmful Cuts” In Governor’s Plan
Within a day or two after release of the Governor’s plan, health care advocates raised their concerns about the impact of the plan on low income consumers, and the working poor. In a document called “Unpacking the MassHealth Reform Package: How It Hurts the Working Poor and other MassHealth Beneficiaries,” the Massachusetts Law Reform Institute (MLRI) and Health Care for All outlined their issues.
“The package doesn’t just address the employer assessment; it proposes new and harmful cuts in MassHealth eligibility affecting primarily low income parents as well as childless adults. The proposal also includes benefit cuts that could affect everyone on MassHealth including children, the elderly and people with disabilities.
According to MLRI, Many parents and other non-disabled adults with access to employer sponsored insurance (ESI) will no longer be eligible for MassHealth and are likely to become uninsured. The proposal precludes non-disabled adults with access to ESI from being eligible for MassHealth if the employee share of the ESI premium is less than 9.69% of family income (2017). They will be disqualified from all MassHealth coverage, including Premium Assistance.
Under the proposal, this will affect low income parents as well as childless adults with income under the poverty level ($16,240 for a family of two). The Administration has not reported how many will lose MassHealth, but most are likely to be parents. At MassHealth income levels (133% of poverty currently, and 100% of poverty proposed), no premium contribution is considered affordable, much less premiums of 9.69% of income. In addition, the private ESI coverage almost always includes substantial deductibles and co-pays. MassHealth members have no deductibles, and minimal copays. MLRI says that is not aware of any other state Medicaid program that has proposed a restriction of this kind for the core Medicaid population of low income working parents.
“There is a better way to promote ESI and support work: MassHealth Premium Assistance. Premium Assistance enables the working poor to afford ESI and still have MassHealth protections, and saves the state money by making MassHealth secondary to the private coverage.
100,000 low income parents and 40,000 childless adults will lose MassHealth if the upper income limit is reduced from 133% to 100% of the poverty level, MLRI explains. “The Baker Administration describes this as a transition from MassHealth to ConnectorCare, but not all of those losing MassHealth will qualify for ConnectorCare because of its rules about tax filing status and what it considers other available coverage (like being enrolled in the VA health system).”
For those who do transition to ConnectorCare, its coverage is less comprehensive and more costly than MassHealth. ConnectorCare has no dental benefits or long term services and supports, and it has much higher copays than MassHealth. Currently, ConnectorCare offers at least one option with no premium contribution for those under 133% of poverty, but no state law or regulation prevents it from assessing a premium in the future.
At 100% of poverty, a parent of one child working full time at a minimum wage job will no longer qualify for MassHealth. In ConnectorCare, she loses out on work incentive programs like Transitional Medicaid and work supports like Premium Assistance if she gets a job with higher pay or access to ESI. Given the current efforts to repeal and replace the ACA, no one can know what ConnectorCare will look like –or whether it will even exist—tomorrow. No savings are expected in FY 2018 from this change; it is premature to make this change now.
EOHHS will have broad authority to terminate many current MassHealth benefits affecting the elderly and people with disabilities.MLRI says. Since 2006, the legislature has required EOHHS to obtain legislative approval before it eliminates “optional” MassHealth benefits like prescription drugs, dental, vision, and home and community based supports. Under the proposal, EOHHS will be free to restructure prescription drug benefits and will have additional temporary authority to restructure or terminate any and all other optional benefits. Reducing benefits will harm not just non-disabled adults but all MassHealth members including children, people with disabilities, and the elderly. More safeguards are needed to protect access to care.
In addition, MLRI says, 230,000 low income parents will lose MassHealth Standard and receive the less-generous CarePlus coverage intended for childless adults. The ACA allowed states that expanded Medicaid to childless adults to offer fewer benefits than the benefits in traditional Medicaid provided to pregnant women, children, the elderly, people with disabilities and low income parents. In the CarePlus program for childless adults, parents will lose access to important benefits unless they can establish a medical condition that entitles them to regain MassHealth Standard. Parents will also be at risk of more benefit cuts in CarePlus than in MassHealth Standard. Under proposals to repeal and reform the ACA, state “alternative benefit programs” for childless adults may not even have to cover essential benefits like mental health and substance abuse services in the future.
Mass Home Care Responds to MassHealth “Reforms”
One day after the Administration submitted its list of MassHealth reforms to the state legislature, Mass Home Care sent a letter to legislative leaders on Beacon Hill, raising concerns over the impact of these “reforms” on one class of the working poor: home care aides who serve the elderly and disabled.
Here is the text of that letter:
“Mass Home Care wishes to share the following comments regarding the emergency MassHealth sustainability bill filed yesterday by the Governor, seeking legislative approval as part of the FY 18 budget. We have reviewed the legislation and a fact sheet that accompanied the bill.
First, our review of the bill suggests that there are some positive concepts, such as providing access to lower cost services by expanding the “scope of practice” for professionals like optometrists, advanced practice RNs, and mid level practitioners like dental therapists. Mass Home Care supports any reforms that will give low income people greater access to dental care, optometry, or podiatry, as examples of problematic health care services today.
The sustainability bill does raise a couple of areas of critical concern that we feel should be addressed:
- Overly broad control over MassHealth benefits: on two prior occasions, the Administration has proposed language that would permit the Executive branch to make sweeping changes to MassHealth benefits and services. The General Court has not complied with these requests, and sought to maintain more control by the General Court over the scope and range of services available to the Commonwealth’s low income population. In sections 55 and 56 of the sustainability bill, the Administration seeks broad authority to restructure pharmacy benefits for MassHealth members, and to restructure or eliminate “optional benefits” under MassHealth, by filing a report 30 days in advance to the Ways and Means committees, with anticipated fiscal impacts. We continue to maintain that any significant changes to MassHealth pharmacy or optional services should follow the standard route of filing legislation, public hearings, and the three reading process. Some of these proposals may have value and merit, but the legislative process in place to review such proposals has served as a protection to beneficiaries, allowing full vetting of all proposals to change the health care benefits these elderly and disabled members rely upon, and has maintained important checks and balances between Executive and Legislative branches of state government.
- Fiscal Impact on EMAC fees: Section 49 of the emergency legislation would impose an Employer Medical Assistance Contribution (EMAC) starting January, 2018, based on a 5% tax on annual wages. We estimate that roughly 45% of the home care aide workforce (6,800 employees) are enrolled in MassHealth. We have reviewed fiscal impact estimates which suggest the EMAC could impose a new employer mandate onto the home care aide and home health aide industries in the range of $5.5 million in the first year. Mass Home Care believes that employers—to the fullest extent possible—should offer affordable health insurance to their employees. Our ASAP member agencies offer such health care as a standard work benefit, but in the home care aide (homemaker) industry, for example, both wages and benefits are limited by the funds made available by the state. For years we have advocated for sustainable wages and benefits. But any agency whose primary source of funding is from the Commonwealth, cannot sustain a mandate like the EMAC, unless the Commonwealth pays for it. Such agencies either need a waiver from the EMAC provisions, or acknowledgement that EMAC costs are a legitimate expense that must be considered as part of the biennial rate setting process pursuant to Ch. 257. The emergency legislation should be amended to provide an exemption for agencies like home care aide employers that are dependent on state appropriation for their workforce wages, and language that assures that any EMAC fees required shall be an expense considered by EOHHS as part of the rate setting process.