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Automatic enrollment and state health reform Stan Dorn Senior Research Associate Urban Institute 202.261.5561 State Coverage Initiatives.

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Presentation on theme: "Automatic enrollment and state health reform Stan Dorn Senior Research Associate Urban Institute 202.261.5561 State Coverage Initiatives."— Presentation transcript:

1 Automatic enrollment and state health reform Stan Dorn Senior Research Associate Urban Institute State Coverage Initiatives Program AcademyHealth Baltimore, MD May 22, 2007

2 Urban Institute2 Overview 1.Enrollment models 2.Applying auto-enrollment to state coverage reforms 3.Cross-cutting issues

3 Preliminary topic: Why enrollment matters

4 Urban Institute4 If you build it, will they come?

5 Urban Institute5 Why enrollment matters Necessary to accomplish the goal of coverage expansion Cost offsets with eligible but un-enrolled: when they get sick, they will use services, and the state will pay  Different from ineligible uninsured, whose later illnesses may not become the state’s responsibility Standard enrollment growth creates political vulnerability – for example, see next slide

6 Urban Institute6 PRESS RELEASE The Maine Heritage Policy Center Muskie Survey Shows Dirigo’s Failure and High Cost to Taxpayers Taxpayers are spending $15 million a year to reach 1,800 uninsured Mainers. Portland, ME - The Maine Heritage Policy Center today cited the DirigoChoice Member Survey: A Snapshot of the Program’s Early Adopters, a report prepared by the Muskie School of Public Service, as definitive proof of the failure of the DirigoChoice health insurance product. The survey reveals that only 1,800 or 22.4% of DirigoChoice enrollees were uninsured and that the state is spending nearly $8.00 for every $1.00 of savings to the health care system attributed to providing coverage to those previously uninsured individuals. “DirigoChoice is a costly failure,” said Tarren Bragdon, director of health reform initiatives for the Maine Heritage Policy Center. “It is not significantly covering the uninsured and it is costing the Maine taxpayers millions of dollars a year. Maine taxpayers are paying $15 million a year to cover 1,800 previously uninsured people.” At one year, Mass. healthcare plan falls short By Sally C. Pipes | May 15, 2007 “So one year in, we have a plan that, even if no more concessions to liberal advocates are made, falls 20 percent short of its stated goal.”

7 Part I: Basic enrollment models

8 Urban Institute8 Traditional public benefits model Government’s role  Provide program information – “outreach”  Process applications Individual must  Apply  Provide individual information showing eligibility  Complete the application process

9 Urban Institute9 Implications of traditional model Denies coverage to eligible people who:  Do not apply  Do not complete the process It takes several years for a new program to reach many of its targeted beneficiaries High ongoing administrative costs for state BUT:  Familiarity means less risk, culture shock, uncertainty, mid-course adjustment after initial stumbles  Permits covert caseload controls that lower cost with less risk of successful opposition –  Procedural barriers “prevent waste, fraud and abuse”  Reduced outreach may never come to public attention

10 Urban Institute10 A different model: Auto-enrollment Mechanisms  Default enrollment  Data-driven enrollment  Proactively facilitated enrollment Promise – lessening the historic tension between safeguarding program integrity and simplifying application procedures.  More eligible people get covered  A smaller percentage of ineligible people get covered  Operational administrative costs drop (after infrastructure development)

11 Urban Institute11 Basic principle: Newton’s First Law of Motion “An object at rest tends to stay at rest…”

12 Urban Institute12 Examples of auto-enrollment 1. SCHIP vs. Medicare Part D 2. Retirement savings 3. Medicare Part B 4. Community-based, proactive facilitation of child health enrollment 5. Retention of health coverage in Louisiana

13 Urban Institute13 Example #1: SCHIP vs. Low-Income Subsidies (LIS) for Medicare Part D Source: Selden, et al., 2004 (MEPS data). Effective 10/1/97 Food stamps, after 2 years: 31% take-up

14 Urban Institute14 Example # 1, continued Total enrollment: 74% Source: CMS enrollment data. Calculations by Urban Institute.

15 Urban Institute15 Data-driven enrollment – Medicare Part D, LIS Can apply to SSA Without application, automatically enrolled in drug plan, with LIS, if received Medicaid or SSI the prior year Tremendous accomplishment – largely unheralded

16 Urban Institute16 Example #2: retirement savings Sources: Etheredge, 2003; EBRI, 2005; Laibson (NBER), 2005.

17 Urban Institute17 Example #3: Medicare Part B Sources: NASI, 2006; Remler and Glied, 2003.

18 Urban Institute18 Example #4: Community-based facilitators of child health enrollment Source: Flores, et al., Pediatrics, 12/05.

19 Urban Institute19 Example #5: Retention in Louisiana Source: Summer and Mann, Georgetown University Health Policy Institute (prepared for Commonwealth Fund), June Note: other policy changes included telephone contact, rather than forms, to supplement data.

20 Part II: Applying Auto- Enrollment to State Coverage Reforms

21 Urban Institute21 Potential applications vary with the type of reform 1. Subsidizing low-income workers at small firms 2. Child-focused expansions 3. Expansions that include adults 4. Individual mandate

22 Urban Institute22 Application #1 – subsidizing low- income employees of small firms Low income is the key variable to effectively targeting subsidies to uninsured employees of small business Can’t ask employers to means-test  Privacy  Hassle

23 Urban Institute23 Among micro-firms’ employees, most uninsured workers have low incomes Source: Clemans-Cope and Garrett (Urban Institute) Unpublished estimates based on the February 2001 and 2005 Contingent Work Supplement of the Current Population Survey (CPS) and the March 2001 and 2005 Annual Social and Economic (ASEC) Supplement of the CPS..

24 Urban Institute24 Among small firms’ employees, most uninsured workers have low incomes Source: Clemans-Cope and Garrett..

25 Urban Institute25 How to identify subsidy-eligible workers? Traditional approach – have workers complete application forms Expedited approach #1 – use wages as proxy for income Expedited approach #2 – automatic enrollment, based on state-accessible income data

26 Urban Institute26 Wages vs. income: target efficiency Percentage of workers without health coverage, by wages and income: 2005 Source: Clemans-Cope and Garrett..

27 Urban Institute27 Wages vs. income: effectiveness Distribution of uninsured workers, by wages and income: 2005 Source: Clemans-Cope and Garrett..

28 Urban Institute28 Disadvantages of wage level as key to eligibility Difficulty accessing federal dollars through Medicaid and SCHIP Potential for embarrassment if a low- wage worker has high family income

29 Urban Institute29 Auto-enrollment strategy to identify eligible workers based on income Obtain automated access to income databases  Other means-tested programs  State workforce agency earnings data  State income tax data The mechanism depends on the reform  In a premium support program, use data to identify low-income employees who qualify for premium payments  In a program that gives small firms access to health insurance exchanges or purchasing pools, use data to identify low-income employees who qualify for premium subsidies

30 Urban Institute30 Application #2 – children Key life event strategy Master list strategy Express lane eligibility

31 Urban Institute31 Key life event strategy: two parts 1. Identify uninsured children at key life events 2. Enroll them into coverage

32 Urban Institute32 Key life events: identify uninsured children Key life event defined: life event that most uninsured children experience  Ideally, build on existing mechanisms well-suited to learning insurance status Examples  Annual start of school – school health form  Health care  Hospital-based birth –billing, outstationed E.W.s  Other pediatric care – provider billing  Retroactive coverage gives provider and patient financial incentives to complete enrollment  State income tax forms

33 Urban Institute33 Key life event strategy – enrollment Let family request enrollment (e.g., on child health form for school)  Waive confidentiality  Opt-out mechanism Use state-accessible income data to ascertain potential eligibility Presumptive eligibility, if eligibility seems likely. Is PE allowed for this group only? Unclear  Can’t be less than statewide  Can’t be for subgroup of children  But: PE is never for all – its scope is whoever the qualified entities try to reach

34 Urban Institute34 Key life events – enrollment, cont. Going from PE to ongoing Medicaid/SCHIP  Reduce burdens on family  Use state-available data whenever possible  Pre-populated forms, seeking corrections  Intensive follow-up – educate re using health care and transitioning to ongoing eligibility  MCO role here? Potential trade-offs between savings to state and conflict of interest in choice of plan  Precedent: sponsored enrollment in WA state If no PE –  Enroll if you know they’re eligible  If they’re probably eligible, but you’re not sure? Act as if going from PE to ongoing coverage  Reduce burden on family  Use intensive application assisters

35 Urban Institute35 Key life events – children with incomes too high for subsidies Offer unsubsidized SCHIP Mail card, activated by toll-free call Lower premiums to reflect good risks

36 Urban Institute36 Master list strategy Simple strategy in concept  List #1: all children in the state  List #2: all children in the state with insurance  Compare the lists – identify the uninsured children – then enroll them Compiling list #1 (all children)  State income tax records (if state grants EITC)  School attendance (local records can be more current than state records)  Birth certificate data  Correct with Postal Service move data, records of marriage, death and divorce  Errors and gaps are inevitable

37 Urban Institute37 Master list strategy – Compiling list #2 (all children with insurance) State can learn who gets Medicaid and SCHIP For private coverage – DRA Section 6035 (TPL)  Each state must require insurers to provide information re enrollment of Medicaid beneficiaries  Explicitly applies to group plans under ERISA  CMS developing data-sharing mechanism Use this mechanism to identify all privately insured children, not just Medicaid enrollees  The state law required by DRA can be broadened What about ERISA? Always a question – but:  Congress thinks states can compel information about employee benefits. Otherwise, no Section 6035!

38 Urban Institute38 Master List Strategy: comparing lists, enrolling children Children on list #1 but not list #2 may be uninsured – OR:  May have different address  May be insured but not on list #2 (e.g., private insurer may not have all children in records or the child’s identifiers don’t match because of clerical error)  May not live in state  May not exist Must contact the family to confirm address and uninsurance before providing even PE  After that, enrollment as with Key Life Events

39 Urban Institute39 Express lane eligibility strategy Concept: if another means-tested program has already found a family to have sufficiently low income that the children qualify for Medicaid or SCHIP, enroll the children in Medicaid or SCHIP! But there are obstacles to overcome!

40 Urban Institute40 Most low-income, uninsured children live in families that receive means- tested nutrition assistance Source: Dorn and Kenney, Urban Institute (prepared for Commonwealth Fund), June Notes: (1) Analysis based on 2002 NSAF. (2) NSLP is the National School Lunch Program. (3) Low- Income is at or below 200% of the FPL.

41 Urban Institute41 Obstacle #1: IT Must match, convey, analyze, enter data Inadequate IT infrastructure - Enhanced FMAP via MMIS (90% for start-up, 75% for operations) is denied to “eligibility systems,” by federal regulation from Options  MITA – today’s MMIS - add eligibility data to EHRs  Medicaid transformation grants  Cuts waste, fraud and abuse  $52 million – 100% federal dollars  Applications due 6/15/07

42 Urban Institute42 IT needed to identify the already insured Source: Dorn and Kenney. Health Coverage Among Low-Income Children Whose Families Participated in Means-Tested Nutrition Programs: 2002

43 Urban Institute43 Obstacle #2: methodologies Problem: each program has its own methodology  Generally, Medicaid will determine children to have lower income than will other programs  But not always – e.g.,food stamps, excess shelter cost deduction Upshot: health program must recalculate eligibility

44 Urban Institute44 Overcoming methodology obstacle Pick non-health program with income threshold far below Medicaid’s. E.g.:  Medicaid to 150% FPL (after disregards)  Free school lunch - 130% FPL (gross income) SSA 1902(r)(2) income disregard. E.g.:  Disregard all income above net family income found by food stamp program  FS net income limit = 100% FPL 1115 waiver to disregard methodological differences  Budget neutrality: unspent SCHIP allocations

45 Urban Institute45 Will federal government say yes? Uncharted terrain - but Bush Administration supported Express Lane in context of Frist-Bingaman bill (S. 1049) CMS already provides more aggressive Express Lane eligibility for seniors with Medicare Part D  Auto-enrollment from MSP into LIS, even though:  6 states waive asset test for MSP, and LIS has asset test  18 states disregard in-kind income for MSP  10 states define household to include resident grandchildren  Statutory standard: “Substantially the same”

46 Urban Institute46 Proposed legislation Express lane becomes state option  Children and adults Enhanced FMAP for IT connections between health agencies and others More access to federal data Context:  SCHIP reauthorization

47 Urban Institute47 Application #3: state expansions to cover adults Same basic strategies as with children Key life events  File W-4 forms for withholding when start job  State income tax forms  Seek health care  Enroll as with children, except no PE Master list comparison – same Express lane?  Less “warm and fuzzy”

48 Urban Institute48 Most poor, uninsured parents live in families that receive means-tested nutrition assistance or child health coverage Source: Dorn and Kenney. Note: Poor parents have the following characteristics: their income is at or below the FPL; they are ages 18 to 64; and they live with a stepchild, biological child, or adopted child under age 18.

49 Urban Institute49 Health Coverage Among Poor Parents Whose Families Participated in Means-Tested Nutrition Programs or Whose Children Received Medicaid, 2002 Source: Dorn and Kenney. High-impact, efficient intervention via SPA

50 Urban Institute50 Application #4 – How auto-enrollment can help individual mandates Mandates are not self-executing  In 2004, 14.6% of drivers had no auto insurance, even though almost all states required it Auto-enrollment can help these laws work  Automatically enrolled into coverage at key life junctures or based on master list comparison  Premium based on income, determined by data (correctable by individual)  If premiums are not paid, collect on income tax form Auto-enrollment can soften the framing  Everyone is enrolled – (don’t say “mandate”)  We’re just making sure everyone is enrolled and paying premiums, based on income – not punitive

51 Urban Institute51 If you don’t like individual mandates: Auto-enrollment can be an alternative  Default enrollment, with opt-out  “Instead of mandating coverage for everyone, let’s use the same kind of default enrollment system that Medicare has used for years to reach almost all seniors” Successful auto-enrollment can avoid mandates. State policy can operate in two phases:  Phase 1 – default enrollment, with opt-outs  Phase 2 - If by date X, less than Y% of the population is covered, then everyone is insured – no opt-outs

52 Urban Institute52 “Applications? We don’t need no stinkin’ applications!” The Auto-Enrollment motto:

53 Part III: Cross-cutting issues

54 Urban Institute54 Issues 1. Citizenship and immigration status documents 2. Data adequacy 3. Privacy and data security 4. Default enrollment and service utilization 5. Premium payment 6. Risk of error

55 Urban Institute55 Citizenship and immigration status Current law: limited options under Titles XIX, XXI  Use automated data sources for citizenship if possible: birth and school records, etc.  SAVE to confirm satisfactory immigration status, based on A number or I number  Presumptive eligibility for non-citizen children, then confirm immigration status during PE period  Intensive application assistance for likely eligibles Intense pressure to improve automated systems  Real ID  Employer verification Good chance of statutory change this year

56 Urban Institute56 Data: current, accurate and complete? SWA data – quarterly wages, new hires  Gaps: other states, federal employees, unearned income, self-employment, contractor income State income tax for $ outside SWA data: but old Strategies  Combine recent employment earnings data with prior- year tax data re other income  If in prior years, person had no other income or unchanging levels of other income, use prior year tax data  If in prior years, person had changing levels of such income, ask person for information  Estimate, inform consumer, ask consumer to correct  When asking for info, use phone calls, not forms

57 Urban Institute57 Shape eligibility rules with data in mind Avoid eligibility rules impervious to data  Month-to-month eligibility based on current income  Asset requirements (some data on assets, not easy) Easier to grant eligibility based on data if:  Continuous eligibility, regardless of changes  Data-derived facts establish eligibility  Prior-year tax data, with exceptions:  Recent quarterly employment wages  Let applicant show more recent income lower  Require consumer reports of recent income much higher than tax records, perhaps at end of eligibility period  Bold precedent: means-testing Medicare Part B premiums  For 2009, generally use 2007 income (on tax returns)  If 2007 income tax data unavailable by 10/15/08, use 2006 income data and reconcile when 2007 data become available  If 2008 income is much lower, beneficiary can claim bigger subsidy  Otherwise, income in 2008 and 2009 doesn’t matter!

58 Urban Institute58 Privacy and data security What does the law require? What is the right thing to do?

59 Urban Institute59 Isn’t data protected by statute? State law  Changes may be needed to access data held by other state agencies  Check privacy statutes Federal statutes limit access to national data  In some cases, federal law change may be needed – e.g., national New Hires Data Base  In some cases, consumers can consent to disclosure  State-federal interagency agreements generally needed

60 Urban Institute60 Federal law data duties, per CMS “Administrative, technical, and physical safeguards to ensure [data] integrity and confidentiality” “Protect against unauthorized uses or disclosures of the information” “Security plan that outlines how software and data security will be maintained” Internal and external “risk assessment,” including biennial “review … of physical and data security operating procedures and personnel practices” Train staff Bind vendors in contracts that include remedies Process to report violations to state and federal officials

61 Urban Institute61 The right thing to do, per EPIC* Lawful, fair, and legitimate data collection. Accurate, complete, and timely data. State reason for data request and prohibit use for other purposes. Require consent for use of information inconsistent with the purpose of which it was collected. Procedures to stop unauthorized access, use, modification, or disclosure of data. Transparency of data practices, including notice of databases and the identity and location of the data controller. Individual Participation: requires access to, correction of, and sometimes destruction of personal information. Accountability: requires legal rights to ensure compliance. *Electronic Privacy Information Center

62 Urban Institute62 The right thing to do, per GAO Access controls (only authorized individuals access data) Configuration management (only authorized software) Segregation of duties (detects inappropriate actions) Continuity of operations planning, in case of disruption Agency-wide information security program System to report breaches Dedicated, secure computer lines to transmit data; Anomaly detection (notifies officials when user accesses something unusual) Public Key Infrastructure (PKI)

63 Urban Institute63 Do default enrollees get care? Extra dimension to problem if capitation Not necessarily huge problem: default enrollees into Medicare Part D fill the most prescriptions Potential remedies  Consumer education  Health plan incentives  Partial withhold of some capitated payments until some services are provided  Award future default enrollment shares based on prior performance with default enrollees Monitor with encounter data, compare default to other enrollment

64 Urban Institute64 Premium payment Automate premium collection  Create incentive – lower premium if automate collection  Modes of automation  Paycheck withholding (change state W-4 form to help)  Automatic credit card payments Will low-income people be asked to pay more than they can afford under default enrollment?  For families, cost burdens and damage to credit rating  Risks to state: admin. costs (collection, churning, etc.)  If neither use services nor pay premiums for a defined period (e.g., 90 days) = opt-out, no penalty or liability  Or require affirmative act to start coverage (e.g., call toll-free number)

65 Urban Institute65 The risk of error E.g.: withholding Medicare Part D premiums from social security checks Lessons  Test IT systems “end to end” before use  Systems to fix problems, track trends, report to officials for policy changes  Single “rapid response” agency  Traditional “notice of action” to beneficiaries  Monitor “warning lights,” like disenrollments

66 Urban Institute66 Summary For new state initiatives to succeed, enrollment and retention methods must be effective The more you ask people to do, the fewer people will do it If you want new initiatives to cover as many eligible individuals as possible, use default enrollment, data-driven enrollment, and proactively facilitated assistance to eliminate or greatly reduce the need for consumers to complete forms


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