– America’s Health Insurance Plans (AHIP) recently issued an amicus brief in support of states covering MMCO’s health insurance tax.
The national payer organization has also been lobbying for Alzheimer’s solutions, seeking better long-term care options and stronger support for caregivers from the federal government.
The amici, which includes Blue Cross Blue Shield Association (BCBSA), say that the tax will hurt Medicaid managed care organization (MMCO) rates because states are currently not obligated to cover the tax in their MCO contracts.
“The ruling effectively allows states to avoid reflecting one particular expense—the health insurance provider fee (HIPF)—in their rates when contracting with Medicaid MCOs,” the brief states.
The health insurance provider fee—which is more frequently referred to as the health insurance tax (HIT)—is a tax mandated by the Affordable Care Act. It is supposed to cover federal and state marketplace costs but has found enemies among employers, providers, healthcare payers, Democrats, and Republicans alike. After a year’s hiatus in 2019, the fee is expected to rise to $15.5 billion, an increase of $1.2 billion.
“The tax results in increased health insurance premiums for low-income and middle-income workers, seniors, and small businesses, and adversely impacts state Medicaid MCO budgets. The HIPF has made health care less affordable for those most in need of relief, and it should be repealed,” the brief bluntly explains, before saying that the potential damage to capitation rates in particular drives their opposition.
While state and local governments do not have to pay the HIT, MMCOs do. It is required that capitated payments be actuarially sound which, according to AHIP, means that the states’ rates must cover the HIT. However, with states being exempt from the HIT, the contracts could not be actuarially sound.
To rectify this, the American Academy of Actuaries and the Actuarial Standards Board created an adjustment to the actuarial process to address non-deductible taxes, like the HIT, that are paid out of capitation rates. HHS supported the actuaries’ adjustment by issuing a rate development guide related to the move.
In 2015, six states sued, saying that they were being pressured to pay the fee or receive less in Medicaid funding.
The district court determined that the two statutes could not coexist and concluded that states should pay the HIT.
“In exempting state and local governments (and certain nonprofits) from paying the HIPF, Congress continued to give the states that same choice,” AHIP and BCBSA argued.
“They can avoid exposure to the HIPF by directly financing and administering coverage for their Medicaid-eligible populations (or by only using HIPF-exempt non-profit MCOs). However, if the states choose to continue to use higher quality, more cost-effective options by partnering with Medicaid MCOs (including those Medicaid MCOs that are subject to the HIPF), those states remain subject to the statutory obligation to pay actuarially sound rates for those services.”
The district court’s primary objection, the brief reminds, had to do with HHS empowering the American Academy of Actuaries and the Actuarial Standards Board to determine whether or not a state would receive a cut in Medicaid funding, in effect placing them in charge of a portion of the federal budget.
However, the requirement for actuaries to determine the soundness of a contract preceded the actuaries’ adjustment. It finds precedent in major Congressional legislation prior to this, the brief argues.
The district court’s decision, in contrast, effectively denied the need for actuarial soundness by permitting contracts to continue in a state that could not be actuarially certified.
The brief says that, if the court’s decision is upheld, it would lead to a 1.6 percent increase in premiums per Medicaid beneficiary and, if states did not cover the HIT, would hurt MMCO budgets as well.
“Congress cannot have intended its exemption of states from the HIPF to result in fiscally confiscatory capitation rates for Medicaid MCOs, or to so profoundly alter the pre-ACA market-based incentives intended to promote these kinds of mutually advantageous public-private partnerships in the delivery of Medicaid services,” the brief concludes.
AHIP has been involved legislatively in other areas as well recently.
The organization released a statement submitted to the Senate Finance Committee as the committee discussed Alzheimer’s disease, urging it to increase funding and access to long-term care coverage and calling on the Senate and healthcare payers alike to support caregivers.
“As our population continues to age rapidly, we must urgently address funding for long-term services and supports and ensuring an adequate caregiver workforce,” the payer organization emphasized.
The organization pointed out the federal government’s integral role in reforming Alzheimer’s care and caregiver support, since most Alzheimer’s patients receive public payer healthcare coverage under Medicare and 27 percent are dual eligibles, receiving federal assistance from both Medicare and Medicaid.
AHIP suggested starting an educational campaign on long-term care coverage.
Employers should receive tax incentives for covering long-term care, AHIP added, such as allowing them to use cafeteria plans or FSAs to cover long-term care, offering tax-free premium payments through retirement plans, or allowing employees to apply their health savings account (HSA) funds toward long-term care solutions.
Eligibility aging-in-place solutions should be expanded so that seniors can start living autonomously before the current eligible standards start taking effect.
Seniors should also be protected against long-term care inflation.
The statement also reassured the Senate of health plan’s strategies to support Alzheimer’s patients’ caregivers.
Recent studies show that 45 percent of employees serve in a caregiving capacity. As a result, in the past year Cigna, Aetna, and other payers have announced new methods to support caregivers from extending coverage for professional caregivers to restructuring the payers’ collaborative care models to be more caregiver-friendly.
As the national payer organization lobbies in both the court and in Congress, it underscores the integral part payers play in directing the nation’s healthcare both in law and in practice.