Transcript Slide 1

PATIENT PROTECTION
and
AFFORDABLE CARE ACT
P. L. 111-148, Signed into Law, March 23, 2010
Amended by Health Care and Education Reconciliation Act,
P.L. 111-152, Signed into Law, March 30, 2010
KEY FEATURES

Dramatic Reduction in Number of Uninsured Americans

Phased Effective Dates

Expanded Health Coverage – Medicaid & Private Insurance

Private Health Insurance Reform

Delivery System Modifications

Payment Reform

Major Implications for Behavioral Health and PMHS
PHASED REFORM (2010-2019)
 Some changes take effect almost immediately
• For example, effective September 23, 2010, children may
not be denied coverage for pre-existing conditions and
insurance companies may not terminate existing coverage
because of medical conditions (prohibiting rescissions).
 The most far-reaching reforms take effect in 2014 and later
• For example, mandated Medicaid eligibility expansions and
most private health insurance reforms take effect in 2014.
EXPANSION OF
HEALTH INSURANCE COVERAGE
Reduces number of uninsured
Americans by projected 32 million
individuals by 2019 (CBO est.)
94% of non-elderly legal U.S.
residents projected to have
insurance by 2019 (CBO est.)
16 million individuals are projected to be
covered thru expanded Medicaid
eligibility
At present, only 83% are insured
(SAMHSA estimates that 1/3 of this
group will likely have behavioral health
needs)
23 million Americans will remain uninsured,
including 7 million undocumented immigrants.
IMPLICATIONS FOR
MENTAL HEALTH
 Reductions in Uninsurance will alleviate a major impediment to
access to needed Mental Health services.
 87% of Americans cited lack of insurance coverage as top reason for
not seeking needed Mental Health services in a 2004 American
Psychological Association survey.
 By definition, people with a mental illness—especially a serious and
persistent mental illness—have a pre-existing condition that can
hamper their ability to obtain or maintain health insurance coverage.
 SAMHSA reports uninsurance among people with serious mental
disorders = 20.4%
 18.2% for people with other mental disorders
 11.4% for those without a mental disorder
MARYLAND IMPACT
 400,000 additional Marylanders are projected to get coverage thru
federal health reform. (Baltimore Sun, 3/25/10)
 The State of Maryland can save approximately $1 billion over 10
years as a result of federal reform. (Governor’s Executive Order)
 Federal reform builds on state efforts over past 3 years, when health
care coverage was extended to 161,000 more Marylanders, including
78,500 children. (Governor’s Press Release, 3/24/10)
 Gov. O’Malley has established a new Health Reform Coordinating
Council, co-chaired by Lt. Gov. Brown and DHMH Sec. Colmers, to
oversee state’s implementation of federal changes. (Its Website is
http://www.healthreform.maryland.gov/)
MEDICAID ELIGIBILITY EXPANSION
(Effective on 1/1/2014)

Requires Medicaid coverage of all non-aged adults (<65) with
incomes up to 133% of Federal Poverty Level (FPL)

Establishes a uniform national income eligibility floor for this
group—states may not opt for lower eligibility

Removes categorical limitations for adults (disability, parental
status)--which have impeded Medicaid eligibility for some people
with mental illness and other disabilities in the past

States may increase adult Medicaid eligibility up to the new level
earlier, beginning in 2010

All newly eligible adults will be provided a benchmark benefit
package, offering only essential health coverage but including
behavioral health benefits
MEDICAID ELIGIBILITY EXPANSION:
IMPACT ON MARYLAND

Under federal waiver, Maryland currently offers full Medicaid
benefits to parents of minor children and partial Medicaid benefits
to childless adults; both groups are covered up to 116% of FPL
 116% FPL = $12,563 for individuals, $16,901 for
2-person families (2010 figures)
 133% FPL (new federal level for adults) = $14,404 for
individuals, $19,378 for 2-person families (in 2010)
 Maryland Primary Adult Care (PAC) Program provides
childless adults coverage for primary care, prescription
drugs, and outpatient mental health services
INCREASED FEDERAL COST SHARING
for MEDICAID EXPANSION
 Boosts Federal matching rate for newly eligible Medicaid
enrollees to 100% from 2014-2016 (scaled down to 90% in 2020)

Reduces fiscal disincentive for states to enroll new eligibles in
Medicaid

Enhanced federal matching rate is not available for Medicaid
eligibility expansions prior to 2014

States will eventually receive enhanced federal match for
newly eligible adults enrolled prior to 2014—but only for costs
incurred beginning in 2014
CHILDREN’S HEALTH INSURANCE
PROGRAM (CHIP/MCHP) CHANGES
 Requires states to maintain current income eligibility levels for
children enrolled in CHIP and Medicaid until 2019
 Extends federal authorization for CHIP through 2015
 Beginning in 2015, states will receive 23% increase in federal CHIP
matching rate (up to a ceiling of 100%) for all CHIP enrollees

Relieves 12 states with lowest median income of all CHIP
costs

In Maryland, the federal CHIP matching rate will increase
from 65% to 88%
CLOSING THE MEDICARE
PART D “DONUT HOLE”
 Expands Medicare Part D coverage for prescription drugs (by closing the
“donut hole,” where beneficiaries pay 100% of drug costs)

Provides $250 rebate for those with expenses in donut hole in 2010

Beginning in 2011, beneficiaries with expenses in donut hole will
receive 50% discount on brand name drugs

Closes donut hole by 2020 – phases down donut hole coinsurance
rate from 100% to 25% (equal to Part D coverage below donut hole)

People with dementia and serious mental illness are more likely to
incur expenses in the donut hole

State of Maryland already offers some financial relief to Medicare
beneficiaries with expenses in donut hole range
MORE MEDICARE CHANGES
 Effective 1/1/2011, eliminates cost sharing for preventive services under
Medicare
 Provides for an annual physical exam at no cost to beneficiaries
 Provides 10% increase in Medicare payments to primary care physicians
from 2011 to 2015

Phases out 14% payment differential for Medicare Advantage plans
(private managed care plans which typically offer added benefits not
available to other Medicare beneficiaries)
 This will lead to reduction in extra services and/or increase in
premiums for Medicare Advantage enrollees
EXPANDED PRIVATE
HEALTH INSURANCE COVERAGE
 Unmarried young adults can be covered under parents’ policy
up to age 26, effective September 23, 2010

Maryland already provides for such coverage up to age 25
 Makes tax credits available for small employers (with 25 or less
employees and average annual wages of < $50,000) to subsidize
employers’ health insurance expenditures—effective in CY 2010


For tax years 2010-2013, provides tax credits of up to 35% of
employer’s contribution; in 2014, allowable credit will increase
to 50% for most small employers
Amount of credits will vary by firm size and average wage—full
credit available to employers with 10 employees or less and
average wage of < $25,000
AFFORDABLE PRIVATE INSURANCE
COVERAGE through
HEALTH BENEFITS EXCHANGES

In 2014, sets up state-based Health Benefit Exchanges for those without
coverage from employers or public entitlements, as well as those
employed by small businesses (100 employees or less)

Policies available through Exchanges must cover Mental Health and
Substance Abuse services, at parity with other benefits

Exchanges enable consumers to “comparison shop” among
standardized benefit plans
 Four standard benefit packages – Bronze, Silver, Gold, Platinum

Facilitates individuals’ and small employers’ securing of affordable
coverage

Fosters competition among insurers based on quality and price
LARGE EMPLOYER INSURANCE
MANDATE

Mandates coverage by employers with more than 50 employees
or payment of penalty

Mandate becomes effective if at least one employee receives a
premium credit to subsidize coverage thru Health Benefit
Exchange
 Effectiveness of this indirect “trigger” uncertain

Employer penalty for non-coverage = $2,000 annually per fulltime employee
 Likely impact of this penalty also unclear
SUBSIDIZED PRIVATE
HEALTH INSURANCE COVERAGE
(Effective in 2014)
 Subsidizes insurance coverage for people with income of 133-400% of
FPL through premium tax credits to purchase insurance through
Health Benefit Exchanges
 Range of annual income for qualifying single individuals = $14,404$43,320 (2010 levels)
 Range of annual income for qualifying families of 4 = $29,326$88,200 (2010 levels)
 Amount of credit varies on a sliding scale related to income
 Provides sliding-scale subsidies to limit cost-sharing (e.g.,
copayments and deductibles) for those with incomes
between 133% and 400% of FPL
INTERIM COVERAGE for UNINSURED
with PRE-EXISTING CONDITIONS
(2010-2014)
 Beginning in June 2010, sets up a temporary National HighRisk Pool to offer subsidized coverage to adults with
pre-existing conditions who have been uninsured for 6 months
or more
 Makes available $5 billion to reimburse federal and state
expenditures related to Risk Pool between 2010 and 2014—
Maryland’s projected share totals $85 million
 Maryland already has its own high-risk pool—the Maryland
Health Insurance Program, which is likely to continue to
operate in tandem with Federal Pool
 Federal High Risk Pool coverage will terminate when
Exchanges become operational in January 2014
INDIVIDUAL MANDATE for HEALTH
INSURANCE COVERAGE
 Beginning in 2014, requires all Americans to obtain health insurance
coverage (with certain exemptions, including lack of available
affordable coverage)
 Analogous to state mandates for auto insurance coverage
 Penalty for non-coverage comes in form of federal tax
 Penalty begins in 2014 at $95 for individuals (maximum of $285 for
families) or 1.0% of taxable household income, whichever is greater
 In 2016, penalty increases to $695 for individuals (maximum of $2,085
for families) or 2.5% of taxable income, whichever is greater
 Young adults (age 30 or under) may purchase catastrophic
(“young immortals”) coverage to satisfy mandate
TAXES on HIGH-COST PRIVATE
HEALTH INSURANCE

Imposes federal excise taxes on high cost (“Cadillac”) private
health plans

Tax is applicable to value of health plans in excess of $10,200
for individuals and $27,500 for families

Effective in 2018
PRIVATE HEALTH INSURANCE
REFORMS
(Effective 2014, except as noted)

Guaranteed Issue: Insurers must insure all individuals who want to
purchase coverage regardless of prior Medical History

Insurers may not deny coverage because of Pre-existing Conditions
 Effective 2010 for children
 Effective 2014 for adults

Guaranteed Renewability: Insurers may not reject renewals because
of changes in health status while insured
PRIVATE HEALTH INSURANCE
REFORMS (continued)

Prohibits Rescissions (reduction or termination of coverage
because of illness or medical condition developed while
insured), effective 2010

Terminations only allowed for fraud or misrepresentation
of facts

Prohibits Lifetime Limits on Basic Coverage (effective 2010)

Prohibits Annual Limits on Basic Coverage (effective 2014)
 Restricts Annual Limits beginning in 2010
PRIVATE HEALTH INSURANCE
REFORMS (continued)
 Beginning in plan year 2010, sets percentage limits on insurers’
outlays for non-health-related expenses (e.g., administration and
profits)

Insurers must report on Medical Loss Ratio (percentage of
premiums spent on actual health care expenses)

In large group markets, if Loss Ratio is less than 85%,
Insurer must provide rebates to consumers (effective
1/1/2011)

In individual and small group markets, rebates must be paid
if Loss Ratio is less than 80%
PRIVATE HEALTH INSURANCE
REFORMS
(Continued—Effective 2014)
 Prohibits Premium Differentials related to:
 Health Status or Utilization
 Gender
 Occupation
 Permits Premium Differentials related to:
 Family Size
 Geographic Area
 Age (no more than 3:1)
 Tobacco Use (no more than 1.5 to 1)
 Limits Waiting Periods for Coverage to 90 Days
CHANGES in the HEALTH CARE
DELIVERY SYSTEM
 Increases financial aid to students opting for Primary
Care
 Increases funding for Safety Net providers (Community
Health Centers and National Health Service Corps) by
$11 billion over 5 years, almost doubling their capacity,
beginning in FY 2011
 Establishes new programs to support School-Based
Health Centers (including behavioral health services) and
Nurse-Managed Health Centers, effective FY 2011
 Establishes and funds “Navigators” to assist people in
obtaining coverage and negotiating health care system
PAYMENT REFORM
 Reduces Uncompensated Care and need for Cross-Subsidization
because of reduction in number of uninsured

Will necessitate changes in Maryland’s all-payor hospital rate system
 Effective immediately in 2010, establishes federal process for annual
review of proposed private health insurance premium rate increases



Requires plans to justify proposed increases to HHS Secretary and
relevant state authorities prior to implementation of increases
Requires states to report on trends in premium increases
Requires states to recommend whether certain plans should be
excluded from the Exchanges because of excessive or unjustified
premium increases
 Increases historically low Medicaid primary care provider payments
to 100% of Medicare rates during 2013 and 2014, with full federal
financing of payment rate increases
IMPACT OF NEW LAW
ON BEHAVIORAL HEALTH
 As noted earlier, Medicaid and private insurance coverage
expansions will reduce major impediment to access to Mental
Health services
 87% of Americans cited lack of insurance coverage as top
reason for not seeking needed Mental Health services
 Timely access to Behavioral Health services will expand with
broadened coverage, fostering early intervention and primary
prevention
 Pressures on State Mental Health agencies as payors-of-lastresort likely to decrease because of reduction in number of
uninsured
IMPLICATIONS OF NEW LAW FOR
MENTAL HEALTH
 Expanded access to Primary Care is likely to:



Reinforce the need for better coordination of somatic and
psychiatric care
Reduce high physical comorbidity rates and 25-year average
mortality differential among people with mental illness
Ease overcrowding in hospital Emergency Rooms, enabling them to
more effectively intervene in true emergencies
 Federal mandate for Behavioral Health coverage by health insurance
plans available through Health Benefits Exchanges may be first
step to federal mandate for such coverage by all insurers—thereby
extending the reach of federal Mental Health Parity mandates

Maryland already mandates private insurance coverage of Mental
Health benefits
IMPLICATIONS OF NEW LAW FOR
BEHAVIORAL HEALTH
(continued)
 Beginning in 2014, Disproportionate Share Hospital (DSH) funding
under Medicaid and Medicare will be scaled back because of
reductions in extent of uninsurance

MHA and other state Mental Health agencies have used DSH
funding to help finance state hospitals
 Early intervention may reduce criminal justice involvement of people
with mental illness and substance use disorders by reducing extent of
potentially criminal behavior
 Early intervention by mental health system may also diminish
incidence of co-occurring substance use disorders, especially
among younger consumers, reducing incidence of substance abuse to
“self-medicate” for underlying mental illness
OTHER PROVISIONS RELEVANT TO
BEHAVIORAL HEALTH
 Establishes the Community-Based Collaborative Care
Network Program to support consortiums of health care
providers to coordinate and integrate health services for lowincome uninsured and underinsured populations; funds
appropriated for FY 2011-FY 2015
 Effective 1-1-2011, establishes a national, voluntary insurance
program for purchasing Community Living Assistance
Services and Supports (CLASS)
 Program to be funded by voluntary payroll deductions; all
working adults will be automatically enrolled but may opt out
 After a 5-year vesting period, provides cash benefits of at
least $50 per day to purchase non-medical services and
supports needed to live in the community; similar to SelfDirected Care—consumer decides what to buy from whom
OTHER PROVISIONS RELEVANT TO
BEHAVIORAL HEALTH (continued)
 Establishes a multi-stakeholder Workforce Advisory Committee to
develop a national health care workforce strategy, including
behavioral health
 Supports the development of interdisciplinary Mental Health and
Behavioral Health training programs
 Supports the development of training programs that focus on
health care delivery models such as Health Homes, Team
Management of Chronic Diseases, and Integration of Physical and
Mental Health Services; makes funds available from FY 2010 to FY
2014
 Creates a National Center of Excellence for Depression, which will
sponsor research into effective approaches for treatment of
depression and bipolar disorder
OTHER MEDICAID REFORMS
RELEVANT TO BEHAVIORAL HEALTH
 Beginning 1-1-2011, creates a new state plan option allowing
Medicaid enrollees with chronic conditions (e.g. serious and
persistent mental illness) to designate an interdisciplinary
community provider team as a Health Home
 Health Home would provide comprehensive services, including
care coordination
 Offers 90% federal matching for 2 years to states accepting this
option
 Maryland already has been developing Health Home model
through the Maryland Health Quality and Cost Council
 Creates new 3-year demonstration in up to 8 states to provide
Medicaid payments to private Institutions for Mental Disease
(IMDs) to stabilize patients with an emergency condition;
appropriates $75 million annually beginning in FY 2011
OTHER MEDICAID REFORMS RELEVANT TO
BEHAVIORAL HEALTH (continued)
 Provides states with new options for offering Home and
Community-Based Services (HCBS) through a Medicaid state
plan amendment instead of a more onerous federal waiver


Available to individuals with incomes of up to 300% of
maximum SSI eligibility
Permits states to extend full Medicaid benefits to individuals
receiving HCBS services
 Establishes the Community First Choice Option to provide
community-based attendant supports and services to individuals
with disabilities who would require institutional care
 Creates the State Balancing Incentive Program to provide
enhanced federal matching payments to eligible states to increase
the proportion of non-institutionally-based long-term care services
OTHER MEDICAID REFORMS RELEVANT TO
BEHAVIORAL HEALTH (continued)
 Extends Medicaid Coverage to former Foster Children until age
26 (currently limited to age 18), including Transition Aged Youth
 Removes from Medicaid’s Excluded Drug List:



Smoking cessation medications
Barbiturates
Benzodiazepines
 Creates Federal Coordinated Health Care Office to coordinate
services for people dually eligible for Medicaid and Medicare
 Extends Money Follows the Person (MFP) Rebalancing Demo
from 2011 to 2016

Maryland already has one of most successful MFP demos
FINAL THOUGHTS: CAPITALIZING ON
AN UNPRECEDENTED OPPORUNITY
 Obviously, the success of federal health reform depends on what
happens at the state, local, and personal levels.

A broad array of resources must be mobilized, including consumers,
families, advocates, and providers.
 Coverage does not equal Access.

Shortages of key providers including primary care physicians, nurses,
and mental health professionals may impede timely access to needed
services unless decisive interventions take place to develop
expanded, high quality service delivery capacity—now and over time.
 Mental health consumers and their families deserve our best
efforts—including the dedication and imagination we have marshaled to
address other large-scale challenges and opportunities in the past.