GAO eyes PCIP woes, exchange construction effortsNews added by National Underwriter on May 31, 2013
National Underwriter

National Underwriter

Joined: April 22, 2011

(continued)
By Allison Bell

The Center for Consumer Information and Insurance Oversight (CCIIO) has run out of the cash needed to pay claims from one Patient Protection and Affordable Care Act (PPACA) benefits program and is struggling to ration the cash it has to pay claims for another PPACA benefits program.

Stanley Czerwinski, a director at the U.S. Government Accountability Office (GAO), talks about management of the two programs -- the Early Retiree Reinsurance Program (ERRP) and the Pre-existing Condition Insurance Plan (PCIP) program -- in a report prepared for Sen. Orrin Hatch, R-Utah.

In a separate report, John Dicken, another GAO director, has told Sen. Charles Grassley, R-Iowa, that state PPACA exchange builders have been worried about lack of detailed, final information about a federal "data services hub" that is supposed to help states determine whether consumers are eligible for public health programs, or for help with paying for commercial health coverage.

PCIP and ERRP

Starting in 2014, PPACA is supposed to require insurers to issue individual health coverage without taking personal health information into account.

PPACA will prohibit insurers from using health factors other than age when pricing individual coverage, and insurers will be able to charge the oldest insureds who are not yet eligible for Medicare only three times as much as they charge the youngest adult insureds.

To provide temporary help before the PPACA individual health insurance requirements took effect, PPACA drafters created the ERRP system, to encourage employers to keep health plans for retirees ages 55 to 64 in place. Congress provided $5 billion in funding for early retiree health plan subsidies. ERRP managers were supposed to use $300 million of the allocation for administrative expenses and $4.7 billion for employer plan reimbursement claims.

Congress also provided $5 billion in funding for PCIP (pronounced "P-sip").

PCIP was supposed to provide health coverage for uninsured people with serious health problems who could not qualify to buy private health coverage. PCIP enrollees are supposed to pay premiums comparable to what healthy people in their states pay for individual commercial coverage.

PCIP managers can use up to $500 million of their budget allocation for administrative expenses.

What happened to ERRP and PCIP

Although ERRP funding was supposed to last until the end of 2013, program managers at CCIIO had to suspend enrollment in the program by May 2011 because expenses were running so high, Czerwinski said.

ERRP managers ran out of the $4.7 billion in funding for ERRP claims in September 2012, and, at that time, they had 5,699 open claims for reimbursement.

The employers that submitted the reimbursement claims have asked for a total of $2.5 billion in payments, Czerwinski said.
CCIIO is trying to pay some of the claims using money recovered from employers that received too much money when CCIIO paid earlier ERRP claims.

CCIIO has paid about $54 million in backlogged ERRP claims using recovery money and hopes to collect another $21 million through claim recoveries, Czerwinski said.

Meanwhile, Czerwinski said, PCIP has proved to have lower enrollment levels than originally expected but higher average claims per enrollee.

Before PCIP started up, Medicare actuaries predicted that the program would have 375,000 enrollees by the end of 2010.

Actual enrollment was only about 49,000 at the end of 2011, and it increased to about 103,000 at the end of December 2012, Czerwinski said.

But managers of state and federal PCIP programs had spent a total of $782 million, or about $16,000 per enrollee, between the time the programs started in 2010 and the end of 2011.

Managers spent about $1.8 billion, or $18,000 per enrollee, on claims in 2012.

Spending has been increasing month to month, and it increased 35 percent between December 2012 and January 2013, Czerwinski said.

Government Employees Health Association Inc. (GEHA), a nonprofit private company that is running PCIP programs for states that do not want to run their own PCIP programs, has been working to cut costs through well-publicized efforts to cut off new enrollment in the program and lower provider reimbursement rates to 100 percent of the Medicare reimbursement rate.

Czerwinski noted that GEHA has also worked with a private company -- a unit of UnitedHealth Group Inc. (NYSE:UNH) -- to try to cut claims costs by negotiating new reimbursement deals with providers.

"While the extent of this rate reduction varies by state, officials said that there has been about a 20 percent reduction on average," Czerwinski said. "To further reduce rates, GEHA also worked with United Healthcare to approach approximately the top 100 hospitals in terms of PCIP utilization to attempt to renegotiate federally run PCIP hospital facility fees to the same rate as Medicare. According to officials, about one quarter of the hospitals approached agreed to the renegotiation."

Exchange builders

In the report on the PPACA exchange builders, Dicken talks about what GAO officials learned after interviewing officials in Iowa, Minnesota, Nevada, New York, Oregon, Rhode Island and the District of Columbia.

Iowa is depending on the U.S. Department of Health and Human Services (HHS), the parent of CCIIO, to provide exchange services for its residents.

The other jurisdictions are building their own exchanges.

Officials in all of the jurisdictions that are building their own exchanges say they will be ready to start enrolling consumers in "qualified health plans" (QHPs) by the Oct. 1, 2013, PPACA deadline, Dicken said.

Officials said the most difficult aspect of setting an exchange is modernizing information technology systems enough to support the kind of flexible, easy-to-integrate eligibility and enrollment systems that PPACA requires, officials said.

"For example, similar to other states in our review, Oregon operates multiple enrollment and eligibility systems, whereby only a limited amount of enrollee information is accessible and reusable across multiple programs," officials said. "In addition, Oregon has multiple interfaces between these programs to support integrated business processes, making systems complex, inflexible, and expensive to maintain."

New York is building its own, one-of-a-kind exchange data system, but Oregon is building a system in a commercial framework and trying to make that system available to other states, officials said.

Officials in six states said tough PPACA deadlines and "lack of clear federal requirements related to the federal data services hub" are challenges.

Most state officials interviewed said getting multiple programs to use a streamlined, coordinated eligibility and enrollment system could take years to fully implement.

State officials fear that the lack of final, complete federal data services hub spec could increase costs, by forcing states to make expensive changes after IT system development is already under way, Dicken said.

Federal officials have said they are trying to help by making hub information available through webinars, conferences and other forums, Dicken said.

Originally published on LifeHealthPro.com
Pages: 12
The views expressed here are those of the author and not necessarily those of ProducersWEB.
Reprinting or reposting this article without prior consent of Producersweb.com is strictly prohibited.
If you have questions, please visit our terms and conditions
Post Press Release