1. The Affordable Care Act Health Exchanges, Consumer Assistance, and An Evolving Model for Public & Private Insurance Junaid HusainOffice: 281.296.1986Website: www.cardonoutreach.com Vice President of FinanceMobile: 617.875.9459E-Mail: jhusain@cardonoutreach.com Healthcare Financial Mgmt. Assoc. – Madison Mini Conference Madison, WI October 30, 2013

2. © 2013 Cardon Outreach | 2 Prevailing ACA Issues

3. © 2012 Cardon Outreach | 3 Marketplace is Open (Kind of…) Prevailing ACA Issues

4. © 2013 Cardon Outreach | 4 Major access and enrollment delays (i.e., Week-1, only 36,000 accessed enrollment page vs. 9.5MM attempts, 0.4% success). Forcing consumers to create accounts versus enabling window- shopping (i.e., inefficient bottleneck). Inaccurate data has complicated enrollment (i.e., duplicate enrollments, spouses reported as children, missing data fields, suspect eligibility determinations, subsidy errors, etc.). Integration problems with Federal Data Services Hub (i.e., IRS, SSA, Homeland Security, etc.). Less-than-adequate pre-testing of Healthcare.gov website. IT vendor questions regarding design, efficiency, preparedness, technology obsolescence, etc. Marketplace Challenges Prevailing ACA Issues

5. © 2013 Cardon Outreach | 5 Despite glitches, overwhelming interest for Federal Marketplace (i.e., 5X est. traffic, 250,000 simultaneous users). 17 state/fed partnership exchanges faring better than FFE—simpler design, clear language, user-friendly, etc. 700,000 applications filled through federal and state exchanges— official metrics pending in November (but how many enrollments?). State exchanges report as many as one-third of applicants are “young invincibles” (i.e., <30 yrs. old). Federal Marketplace adjusting to higher than expected demand— i.e., expanding band width, more techs, more call-center reps, etc. Early Marketplace Successes Prevailing ACA Issues

6. © 2012 Cardon Outreach | 6 Gov’t Shutdown & Debt Dénouement Prevailing ACA Issues Context: This summer, HHS scaled back income verification requirements on the Marketplace. Instead of auditing every applicant, states would audit a statistically significant number of people who reported incomes that were strikingly different than what federal records showed. Deal: As part of debt/shutdown resolution, two ACA concessions agreed upon: Concession #1: HHS Secretary Sebelius must submit a report by January 1 st, 2014 detailing procedures employed by the Marketplace to verify eligibility for credits and cost-sharing reductions. Concession #2: HHS Inspector General must submit a report by July 1 st, 2014 regarding the effectiveness of procedures and safeguards for preventing the submission of inaccurate or fraudulent information by consumers. Bottom-Line: Not a material change to income verification rules, rather an enhancement of accountability structures.

7. © 2012 Cardon Outreach | 7 Communicating with Marketplace Consumers Prevailing ACA Issues Current CMS Opinion Contact individual consumers about enrolling in a Marketplace plan only if they’ve asked you to -- or if they’ve contacted you first. No phone calls, emails, letters, and social media messages without a consumer’s permission. Interpretation CMS is okay with proactive calls providing “outreach & education”. However, CMS is unenthusiastic about Navigators and CACs providing “enrollment assistance” over the phone. Must be in-person. Over-the-phone enrollment assistance a possibility in 2014+. Provider Implications: Providers proactively engaged with marketplace consumers should emphasize outreach & education—but actual in-person assistance is a requirement for now.

8. © 2012 Cardon Outreach | 8 Presumptive Eligibility (PE) Prevailing ACA Issues Hospital Option: Starting in 2014, ACA gives hospitals the ability to provide temporary enrollment in Medicaid until the regular application is reviewed. An individual or family can be temporarily enrolled in Medicaid or CHIP immediately if it appears they are eligible. Required info: Name Household size Estimated monthly income Providers are paid the regular Medicaid rate for any services provided, even if the applicant is later found to be ineligible. The Hospital Option is available to providers in all states, regardless of the states’ Medicaid expansion status.

9. © 2012 Cardon Outreach | 9 PE Implementation Prevailing ACA Issues CFR 42 Sec. 435.1102 (a) (vi) Do not delegate the authority to determine presumptive eligibility to another entity. Implication: Under the strictest interpretation of CMS rules, third- party vendors cannot perform PE on behalf of a hospital. However, Two Possible Solutions: 1.Medicaid agency could deem third-party vendor a “qualified entity” under 42 CFR 435.1101. 2.Third-party vendor facilitates back-end mechanics of PE determination (i.e., screening, information gathering, application preparation, etc.), but final PE decision is rendered by hospital. Long-Term Solution: CMS has recently become aware of this issue and is reviewing. Official opinion not expected till early-mid 2014. Provider Implication: Until an official opinion is rendered from CMS, hospitals should proceed with their PE policies based on their risk tolerance.

10. © 2012 Cardon Outreach | 10 CFR 156.270 - Termination of Coverage Prevailing ACA Issues Non-Payment of QHP Premiums A QHP issuer must establish a standard policy for the termination of coverage of enrollees due to non-payment of plan premiums. A QHP issuer must provide a grace period of three consecutive months. During the grace period, the QHP issuer must: Pay all claims for services rendered to the enrollee during Month-1 of grace period and may pend claims for Months 2-3 of grace period. Notify HHS of such non-payment. Notify providers of the possibility for denied claims when an enrollee is in the second and third months of the grace period. Provider Implications: Providers may unexpectedly be liable for claims in Months 2-3 of grace period, unless resolved by resumption of premium payment.

11. © 2012 Cardon Outreach | 11 Payment of QHP Premiums by Hospitals Prevailing ACA Issues Legal & Business Considerations 1.Violation of federal anti-kickback rules—quid pro quo for a patient to sign up for a particular plan with a network that includes one hospital, especially if the plan and hospital are integrated. 2.QHP recipients already receiving taxpayer-funded subsidies. 3.Promotion of adverse risk selection, weighing down health plans with the costliest and sickest patients. 4.Possible confidentiality issues, or violation of the Health Insurance Portability and Accountability Act's (HIPAA) privacy rules. Office of Inspector General (OIG) Currently, no official OIG opinion on payment of QHP premiums. Should providers force the opinion? Two considerations: 1. Opinion is legally binding for the requestor. 2. Stare decisis (precedent).

12. © 2012 Cardon Outreach | 12 Payment of QHP Premiums by Hospitals Prevailing ACA Issues Current CMS Opinion No official opinion from CMS, but they are aware of the issue. The earliest an official opinion could be rendered is 2014. Possible Legal Framework Providers could set up an arm’s reach third-party independent foundation or charity. Entity would have separate accounting and managerial infrastructure from the parent provider entity (i.e., set up as a 501(c)(3) entity under the tax code). The 501(c)(3) organization could distribute QHP premiums, without undue influence from the parent entity. Provider Implications: Hospitals, health systems, and trade associations must stay engaged with CMS, HHS, and their elected representatives to advance this issue.

13. © 2013 Cardon Outreach | 13 ACA 2014 & Beyond

14. © 2013 Cardon Outreach | 14 CBO Estimates of Exchange Participation Source: Congressional Budget Office, “Understanding CBO’s Medicaid Coverage Projections under the Affordable Care Act”, Jessica Banthin, June 23, 2013. ACA 2014 & Beyond

15. © 2013 Cardon Outreach | 15 The Medicaid “Donut Hole” ACA 2014 & Beyond

16. © 2013 Cardon Outreach | 16 ACA 2014 & Beyond Quantifying the Donut Hole

17. © 2013 Cardon Outreach | 17 Churn: Involuntary movement from one health plan or system to another. – Adds complexity. – Increases administrative costs. – Disrupts coverage/ continuity of care. – Reduces incentives to invest in long-term wellness efforts. – Interferes with quality measurement efforts. Historic Medicaid/CHIP concern; but becomes a bigger issue with ACA implementation in 2014. – Inevitable consequence of multiple health insurance markets and subsidy systems. Goal: Mitigate and manage churn, but difficult to completely eliminate. ACA 2014 & Beyond Member “Churn” is a Concern

18. © 2013 Cardon Outreach | 18 The Churn Problem and the Exchanges Medicaid Ineligible for any assistance Exchange Subsidies 6.9M 19.5M 3.0M The Urban Institute estimates that 29M will change eligibility status per year – equal to 31% of estimated 95.9M Medicaid and exchange subsidy recipients Source: M. Buettgens, A. Nichols, and S. Dorn, “Churning Under the ACA and State Policy Options for Mitigation,” Urban Institute, June 2012. ACA 2014 & Beyond