Highlight on Illinois: Exchange rates rise in the Land of Lincoln

Illinois residents purchasing individual health insurance plans through the Patient Protection and Affordable Care (ACA) (P.L. 111-148) could pay rate increases in 2017 as high as 55 percent, according to rate information released by the Illinois Department of Insurance (DOI). The agency submitted rate increases to the federal government ranging from 43 percent to 55 percent, depending on the type of plan—bronze, silver, gold.

Filings

The submitted rates are not final. Although the DOI has submitted the 2017 rate filings to CMS, the rates will not be finalized by federal CMS until October, 2016. Additionally, network and premium information will not be available until that time. The DOI announced that the rate information was published as early as possible to allow Illinois families to make better-informed decisions regarding health care coverage. The DOI acknowledged the rate increases as “a very difficult outcome for consumers.”

Rates

The average rate increase across all ratings areas for the lowest bronze plan is 44 percent. The rate change is lowest in Kane, Du Page, Will, and Kankakee counties, where the rate change is a 10 to 25 percent increase. Counties like Lake and Cook have a 40 to 60 percent increase, whereas counties including La Salle and McLean have a 20 to 40 percent increase for their lowest bronze plans.

The average rate increase across all ratings areas for the lowest silver plan is 45 percent. Counties like Cook and Kendall saw a 40 to 60 percent increase, whereas counties like Du Page, Sangamon, and McLean saw increases of 25 to 40 percent. The average rate increase across all ratings areas for the second lowest silver plan is 43 percent.

The highest average rate increase across all ratings areas is for the lowest gold plan—an increase of 55 percent. Although several counties do not have gold plan offerings, rate increases in some counties, including Peoria County, are as high as 60 to 70 percent. Rate increases for the lowest gold plan in counties like Cook, McLean and Sangamon are 40 to 60 percent.

In practical application, the new rates mean that a 21-year-old nonsmoker who purchases the lowest-priced silver plan in Cook County in 2017 could pay a premium of $221.13 a month—an increase from $152.42 a month in 2016. In Lake and McHenry counties the increases are more dramatic for the same consumer, $268.03 a month in 2017, up from $212.23 a month. However, for some, the rate increase is not as massive as it seems because 75 percent of Illinois exchange enrollees receive tax credits to offset premium costs.

Cause

The DOI attributed the rate increases to several factors, including the federal government’s failure to make payments to insurers promised as part of the ACA and an overall increase in medical and pharmaceutical costs. Additionally, the DOI pointed to the fact that, until 2017, policyholders are permitted to keep non-ACA compliant plans, a factor that the DOI said has harmed insurers’ risk pools and placed upward pressure on plan costs.

Illinois Saves Big on Psychiatric Drug Restrictions, But at What Cost?

With approximately 25 percent of the state’s already-constrained budget consisting of Medicaid spending, Illinois has been desperately searching for places to make cuts in the program. One of those places is prescription drugs prescribed for mental health, including antidepressants, antipsychotics and attention-deficit disorder drugs. Nationwide, nearly a fifth of Medicaid prescription drug spending goes to behavioral health drugs, making the program the largest payer in the country for mental health treatment. In addition to capping Medicaid beneficiaries’ prescriptions to four per month, the state has chosen 17 brand name psychiatric medications that must receive prior authorization from the state’s Medicaid program. To receive authorization, the prescribing physician must explain why cheaper alternative drugs are not sufficient to meet the beneficiary’s medical needs.

There is no question that the prior authorization requirement has cut program spending on psychiatric drugs, considering that Illinois’ budget for such drugs was reduced by $112 million last year after implementation of the requirement. State Medicaid officials consulted with experts before imposing the requirement and found that often, generic drugs with the same or similar active ingredients were acceptable substitutes for expensive brand name drugs. For instance, both the popular antidepressant Lexapro and its generic version contain identical active ingredients. The main difference: A month’s supply of Lexapro costs $110 and  the generic, citalopram, costs $7.

However, psychiatric providers are quick to point out that despite having the same active ingredient, the differing inactive chemicals can make a difference. The inactive ingredients can be responsible for the onset of undesirable side effects, some that can interfere with treatment of the base condition. One pharmacy technician cited additional symptoms of depression, weight gain, and sexual dysfunction as side effects she had seen in patients who switched to the generic antidepressant. She expressed concern about switching patients to other drugs in order to build a case for the Medicaid program that the patient actually should be on the brand name drug; she stated that one such patient was even hospitalized as a result.

Her concerns are shared by other mental health advocates such as the Community Behavioral Healthcare Association, which issued a letter to the state citing other problematic cases. One issue it raised is the relationship between the approved generic antipsychotics and serious metabolic conditions including diabetes and high cholesterol.

Studies by the publications Psychiatric Services and Health Affairs support these concerns. Information obtained by psychiatric doctors showed that many patients unable to obtain the appropriate drugs suffered adverse events including suicide, hospitalization and homelessness. One study revealed that nearly half of Medicaid patients being treated for mental disorders had trouble obtaining medication; nearly 25 percent of those patients ended up ceasing medication as a result.

Illinois officials defend their decision to implement the prior authorization requirement for these drugs. Evidence supports their conclusions that many of these drugs are over-prescribed, and that the need to obtain authorization will force doctors to give serious thought as to their reason for prescribing the expensive brand names over the generic versions. The authorization requirement does not prevent physicians from prescribing the brand name drugs to their patients; it just requires them to provide a legitimate explanation. Although critics see the process merely as more bureaucratic red tape.

Thirteen States, Including IL, FL, CA, See Opportunity to Make Medicaid Cuts

Amid the Obama Administration’s encouragement for states to expand their Medicaid rolls per the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148), 13 states have implemented cuts to the program or are preparing to implement reductions in provider payments and benefits offered to Medicaid recipients. Some states may have seen June’s Supreme Court decision, requiring that states be allowed to opt-out of PPACA’s Medicaid expansion scheme, as an opportunity to scale back their Medicaid programs.

Eligibility Requirements

While the decision did not specifically state so, some state level officials have interpreted the lifting of the Medicaid expansion requirement as the lifting of the PPACA-imposed prohibition from altering their Medicaid eligibility requirements. Wisconsin has already changed its policy to deny Medicaid coverage to non-pregnant adults who are both offered affordable employer-sponsored coverage and have an income that exceeds 133 percent of the federal poverty level (FPL). Some adult recipients must also be responsible for paying new or increased monthly premiums. Wisconsin officials estimate these changes will save the state around $28.1 million.

Other states that have made changes to their eligibility requirements since the PPACA decision or are preparing to do so include the following:

  • Hawaii–Non-pregnant adults will no longer be eligible for Medicaid if their income exceeds 133 percent of the FPL (the limit was formerly 200 percent of FPL).
  • Illinois–Parents’ income must not exceed 133 percent of FPL (formerly 185 percent of FPL).
  • Connecticut–Plans to limit adult coverage to those with less than $10,000 in assets, not including one car and a home, and to calculate income for adult children aged 19 – 25 living at home by including their parents’ assets and income.
  • Maine–Plans to reduce parental eligibility to 100 percent of the FPL (currently 200 percent of FPL) and to do away with coverage for 19 and 20-year olds.

Drug Benefits

Currently, 16 states limit the monthly amount of drugs that recipients can obtain through their Medicaid programs. Four states have increased prescription drug copays and/or imposed monthly caps since the PPACA decision was issued:

  • Alabama–With the exception of long-term care patients and HIV and psychiatric drugs, Medicaid beneficiaries were limited to one brand name drug through July 31. Now, beneficiaries are limited to four brand-name drugs monthly.
  • California–Implemented $1 and $3 copays for specific drugs.
  • Illinois–Program recipients are now limited to four prescriptions monthly, in addition to being subject to increased copays. Recipients may seek state approval to receive more than four drugs.
  • South Dakota–Beneficiaries must now pay copays of $1 for generic drugs and $3.30 for brand name drugs.

Other Cuts

In addition to budget-saving measures surrounding prescription drug benefits and program eligibility, states have implemented a variety of other cost reductions since the June decision, including provider payment cuts, emergency room copays, and reductions in coverage. Among those cuts are the following:

    • Alabama–Physician and dentist reimbursement has been reduced by 10 percent. The frequency of routine eye exams has been reduced to one every three years, and eyeglass coverage has been completely eliminated.
    • California–Payment rates have been frozen for nursing facilities while private hospital reimbursement has been reduced by $150 million. Clinical laboratory reimbursement has been lowered by 10 percent.
    • Colorado–Copays and enrollment fees, to be determined by family income, have been added to the Children’s Health Insurance Program. Nursing home reimbursement rates have been reduced by 1.5 percent, and orthodontics coverage has been limited.
    • Florida–Reimbursement rates have been lowered by 1.3 percent for nursing facilities and 5.6 percent for hospitals. Florida is planning to reduce the allowable number of home health visits for non-pregnant adults to three per day maximum, emergency room visits to six per year maximum, and primary care visits to a maximum of two monthly, pending federal approval.
    • Illinois–Reduced reimbursement to non-safety net hospitals by 3.5 percent and to non-physician, non-dentist providers by 2.7 percent. Routine dental care and chiropractic services are no longer covered. Beneficiaries who visit an emergency room for non-emergency purposes now incur a $3.65 copay.
    • Louisiana–Payments have been reduced by 3.7 percent to dialysis centers and dentists, 3.4 percent to non-primary care physicians, and 1.9 percent to mental health providers.
    • Maine–Services obtained at ambulatory surgery centers and sexually transmitted disease clinics will no longer be covered. With the exception of pregnant women, smoking cessation products will also not be covered.
    • Maryland–Payments to hospitals have been lowered by 1 percent and by 2 percent for nursing facilities.
    • New Hampshire–Hospital reimbursement has been reduced by $160 million.
    • South Dakota–Coverage for non-emergency adult dental services has been limited to $1,000 per year.

 

IL State Retirees Must Now Chip In on Health Insurance Coverage

Last week, Illinois Governor Pat Quinn signed a bill requiring retired state employees, including judges and legislators, to pay a premium toward their health care insurance. This is part of the plan for the financially-troubled state to unburden itself from part of the $800,000 health care insurance bill it pays annually, while still providing former employees with quality coverage.

This legislation puts an end to years of free health care coverage for some 78,000 retired state workers, who were not required to pay premiums after a requisite number of years of service to the public. Compared to other states’ retirement benefit plans, Illinois has had one of the most generous, offering no premium health care to university and state employees after 20 years of service, judges after six years, and legislators after four years.

With the estimated budget of retiree coverage for next year approaching $1 billion, bipartisan lawmakers recognized the urgent need to rein in spending. According to Republican Senate Minority Leader Christine Radogno, the pre-existing plan is “unsustainable and tax payers are on the hook for programs they cannot afford.” Democratic Senator Jeff Schoenberg agreed that retiree-paid premiums are “absolutely necessary to protect the quality and affordability of health insurance” for retirees.

Governor Quinn acknowledged that the state made a promise to state employees to provide quality health care in their retirement, but that quality must be balanced with insurance costs “and based on actual retirement income.” He also recognized a duty to Illinois taxpayers “to ensure these plans are cost-efficient and put Illinois on the path to fiscal stability.”

The amount of each retiree’s pension will dictate the amount he or she will have to pay in health insurance premiums, with seven tiers of pension amounts established. Higher pension amounts will correspond with higher premium amounts although the rates will not be determined until labor negotiations and legislative oversight panel approval have occurred.

Public employee unions have opposed the bill, claiming that the state is going back on promises made to retirees while simultaneously giving tax breaks to large corporations such as Sears Holdings and CME Group. Virginia Yates, president of the retirees’ chapter of the American Federation of State, County and Municipal Employees criticized the move, stating, “The Governor saying his action ‘preserves health benefits’ is political doubletalk, and his claim that our health coverage is ‘free’ is false. [Many retirees] already pay $3,000 a year or more in copays, deductibles and premiums.”