Title of Regulation: 12VAC30-20. Administration of Medical Assistance Services (amending 12VAC30-20-210).

Statutory Authority: § 32.1-325 of the Code of Virginia; 42 USC § 1396 et seq.

Effective Date: October 25, 2012.

Agency Contact: Patricia Taylor, Program Operations Division, Department of Medical Assistance Services, 600 East Broad Street, Richmond, VA 23219, telephone (804) 371-6333, FAX (804) 786-1680, or email patricia.taylor@dmas.virginia.gov.

Summary:

Item 306 AAA of Chapter 781 of the 2009 Acts of Assembly directed the Department of Medical Assistance Services to amend the State Plan for Medical Assistance to clarify that existing family healthcare coverage is a factor in the determination of eligibility under the Health Insurance Premium Payment program. More specifically, cases resulting in a determination that participation is denied based upon the existence of family health care coverage will be denied premium assistance.

The amendments make Medicaid recipients with a family health care coverage for three or more non-Medicaid family members ineligible for participation in the Health Insurance Premium Payment program, update the regulations to conform to the practice of handling high deductible health plans, and clarify some of the current requirements.

Changes since the proposed stage (i) add two exceptions to the family health care coverage exclusion; (ii) clarify that certain otherwise qualifying individuals may elect to receive an amount equal to their average monthly Medicaid costs; and (iii) clarify program participation requirements and termination.

Summary of Public Comments and Agency's Response: No public comments were received by the promulgating agency.

12VAC30-20-210. State method on cost effectiveness of employer-based group health plans.

A. Definitions. The following words and terms when used in these regulations shall have the following meanings unless the context clearly indicates otherwise:

"Average monthly Medicaid cost" means average monthly medical expenditures based upon age, gender, Medicaid enrollment covered group, and geographic region of the state.

"Average monthly wraparound cost" means the average monthly aggregate costs for services not covered by private health insurance but covered under the State Plan for Medical Assistance, also includes copayments, coinsurance, and deductibles.

"Case" means all family members who are eligible for coverage under the group health plan and who are eligible for Medicaid.

"Code" means the Code of Virginia.

"Cost effective" and "cost effectiveness" mean the reduction in Title XIX expenditures, which are likely to be greater than the additional expenditures for premiums and cost-sharing items required under § 1906 of the Social Security Act (the Act), with respect to such enrollment.

"DMAS" means the Department of Medical Assistance Services consistent with Chapter 10 (§ 32.1-323 et seq.) of Title 32.1 of the Code of Virginia.

"DSS" means the Department of Social Services consistent with Chapter 1 (§ 63.2-100 et seq.) of Title 63.2 of the Code of Virginia.

"Family member" means individuals who are related by blood, marriage, or adoption, or legal custody.

"Family health plan" and "family care coverage" means a group health plan that covers three or more individuals. Family health plans that cover three or more non-Medicaid eligible individuals are not eligible for the HIPP premium assistance subsidy.

"Group health plan" means a plan which meets § 5000(b)(1) of the Internal Revenue Code of 1986, and includes continuation coverage pursuant to Title XXII of the Public Health Service Act, § 4980B of the Internal Revenue Code of 1986, or Title VI of the Employee Retirement Income Security Act of 1974. Section 5000(b)(1) of the Internal Revenue Code provides that a group health plan is a plan, including a self-insured plan, of, or contributed to by, an employer (including a self-insured person) or employee association to provide health care (directly or otherwise) to the employees, former employees, or the families of such employees or former employees, or the employer.

"High deductible health plan" means a plan as defined in § 223(c)(2) of Internal Revenue Code of 1986, without regard to whether the plan is purchased in conjunction with a health savings account (as defined under § 223(d) of such Code).

"HIPP" means the Health Insurance Premium Payment Program administered by DMAS consistent with § 1906 of the Act.

"Premium" means that portion of the cost for the group health plan which is the responsibility of the person carrying the group health plan policy the fixed cost of participation in the group health plan; such cost may be shared by the employer and employee or paid in full by either party.

"Premium assistance subsidy" means the portion that DMAS will pay of the family's employee's cost of participating in an employer's health plan to cover the Medicaid eligible members under the employer-sponsored plan if DMAS determines it is cost effective to do so.

"Recipient" means a person who is eligible for Medicaid as determined by the Department of Social Services.

B. Program purpose. The purpose of the HIPP Program shall be [ to ]:

1. [ Enroll To enroll ] recipients who have an available group health plan that is likely to be cost effective;

2. [ Provide To provide ] premium assistance subsidy for payment of the employee share of the premiums and other cost-sharing obligations for items and services otherwise covered under the State Plan for Medical Assistance (the Plan); and

3. [ Treat To treat ] coverage under such employer group health plan as a third party liability consistent with § 1906 of the Social Security Act.

C. Application required. A completed HIPP application must be submitted to DMAS to be evaluated for HIPP program eligibility; if HIPP program eligibility is established, DMAS shall then evaluate the group health plan for cost effectiveness. The HIPP application consists of the forms prescribed by DMAS and any necessary information as required by the program to evaluate eligibility and perform a cost-effectiveness evaluation.

D. Recipient eligibility. DMAS shall obtain specific information on all group health plans available to the recipients in the case including, but not limited to, the effective date of coverage, the services covered by the plan, the deductibles and copayments required by the plan, the exclusions to the plan, and the amount of the premium. Coverage that is not comprehensive shall be denied premium assistance. Cases that result in a determination that the applicant is not eligible for the HIPP program shall be denied premium assistance and shall not undergo further review as described in subsection E of this section. All family members who are eligible for coverage under the group health plan and who are eligible for Medicaid shall be eligible for consideration for HIPP, except [ those who meet ] any one or more of the factors identified in subdivisions 1 through 7 of this subsection. below. The agency will consider recipients in this subsection for consideration for HIPP when extraordinary circumstances indicate the group health plan might be cost effective.

1. The recipient is Medicaid eligible due to "spend-down";.

2. The recipient is currently enrolled in the employer sponsored health plan and is only retroactively eligible for Medicaid;.

3. The recipient is in a nursing home or has a deduction from patient pay responsibility to cover the insurance premium; or.

4. The recipient is eligible for Medicare Part B, but is not enrolled in Part B.

5. The recipient's family has, or would have, family healthcare coverage for three or more members who are not Medicaid eligible. [ Exceptions to the family health care coverage exclusion are as follows:

a. The family meets Family Access to Medical Insurance Security (FAMIS) eligibility criteria but due to existing group health insurance cannot enroll in FAMIS for the non-Medicaid family members enrolled in the health care plan; or

b. Medicaid eligibility is based upon family income (Medicaid family unit) and the family members enrolled in the health care plan are not Medicaid eligible due to Medicaid age restrictions (aged 19 or older). ]

6. Medicare eligibility. Medicaid recipients eligible for, or enrolled in, Medicare Part A and/or Part B who are also covered by an employer group health plan are not eligible for HIPP.

7. High Deductible Health Plans (HDHPs) are defined in § 223(c)(2) of the Internal Revenue Code of 1986. HDHPs are not cost effective for the HIPP program and shall be denied premium assistance and shall not undergo further review as described in subsection E of this section. The annual deductible amount for a HDHP is defined by the Department of Treasury and is updated annually.

D. Application required. A completed HIPP application must be submitted to DMAS to be evaluated for eligibility and cost effectiveness. The HIPP application consists of the forms prescribed by DMAS and any necessary information as required by the program to evaluate eligibility and perform a cost-effectiveness evaluation.

E. Cost-effectiveness evaluation. If the Medicaid eligible(s) is enrolled in the health plan and is not excluded from HIPP program participation under the criteria described in subsection D of this section, DMAS shall conduct the premium cost-effectiveness evaluation based upon the following methodology:

1. Recipient information. DMAS shall obtain demographic information on each recipient in each case including, but not limited to, Medicaid enrollment covered group, age, gender, and geographic region of residence in the state.

2. DMAS shall compute the average monthly Medicaid cost for each Medicaid enrollee on the group health insurance plan and compare the total cost to the employee's responsibility for the health insurance cost.

3. Wraparound cost. DMAS shall total the average monthly wraparound cost for each Medicaid enrollee on the HIPP case and subtract the amount from the average monthly Medicaid cost for the cost-effectiveness evaluation.

4. Administrative cost. DMAS shall total the administrative costs of the HIPP program and estimate an average administrative cost. DMAS shall subtract the administrative cost from the average monthly Medicaid cost for the cost-effectiveness evaluation.

5. Determination of premium cost effectiveness. DMAS shall determine that a group health plan is likely to be cost effective if subdivision a is less than subdivision b below:

a. The employee's responsibility for the group health plan premium.

b. The total of the average monthly Medicaid costs less the wraparound costs for each Medicaid enrollee covered by the group health plan and the administrative cost.

6. [ For individuals who otherwise meet all HIPP eligibility criteria in subdivision 5 of this subsection, such individuals may elect to have ] DMAS [ may ] reimburse [ them ] up to the amount determined in subdivision 5 b of this subsection, if subdivision 5 a of this subsection is not less than subdivision 5 b of this subsection.

F. Payments. When DMAS determines that a group health plan is likely to be cost effective based on the DMAS established methodology, DMAS shall provide for the payment of premiums premium assistance subsidy and other cost-sharing obligations for items and services otherwise covered under the Plan, except for the nominal cost sharing amounts permitted under § 1916.

1. Effective date of premiums premium assistance subsidy. Payment of premiums premium assistance subsidy shall become effective on the first day of the month following the month in which DMAS makes the cost effectiveness determination receives a complete HIPP application or the first day of the month in which the group health plan coverage becomes effective, whichever is later. Payments shall be made to either the employer, the insurance company or to the individual who is carrying the group health plan coverage.

2. Termination date of premiums. Payment of premiums shall end:

a. On the last day of the month in which eligibility for Medicaid ends;

b. The last day of the month in which the recipient loses eligibility for coverage in the group health plan; or

c. The last day of the month in which adequate notice has been given (consistent with federal requirements) that DMAS has redetermined that the group health plan is no longer cost effective, whichever comes later.

3. Non-Medicaid eligible family members. Payment of premiums for non-Medicaid eligible family members may be made when their enrollment in the group health plan is required in order for the recipient to obtain the group health plan coverage. Such payments shall be treated as payments for Medicaid benefits for the recipient. 2. No payments for deductibles, coinsurances, and other cost-sharing obligations for non-Medicaid eligible family members shall be made by DMAS.

4. Evidence of enrollment required. A person to whom DMAS is paying the group health plan premium shall, as a condition of receiving such payment, provide to DSS or DMAS, upon request, written evidence of the payment of the group health plan premium for the group health plan which DMAS determined to be cost effective 3. Documentation required for premium assistance subsidy reimbursement. A person to whom DMAS is paying an employer group health plan premium assistance subsidy shall, as a condition of receiving such payment, provide documentation as prescribed by DMAS of the payment of the employer group health plan premium for the group health plan that DMAS determined to be cost effective.

F. Guidelines for determining cost effectiveness.

1. Enrollment limitations. DMAS shall take into account that a recipient may only be eligible to enroll in the group health plan at limited times and only if other non-Medicaid eligible family members are also enrolled in the plan simultaneously.

2. Plans provided at no cost. Group health plans for which there is no premium to the person carrying the policy shall be considered to be cost effective.

3. Non-Medicaid eligible family members. When non-Medicaid eligible family members must enroll in a group health plan in order for the recipient to be enrolled, DMAS shall consider only the premiums of non-Medicaid eligible family members in determining the cost effectiveness of the group health plan.

4. DMAS shall make the cost effectiveness determination based on the following methodology:

a. Recipient and group health plan information. DMAS shall obtain demographic information on each recipient in the case, including, but not limited to: federal program designation, age, sex, geographic location. DMAS [or DSS] shall obtain specific information on all group health plans available to the recipients in the case, including, but not limited to, the effective date of coverage, the services covered by the plan, the exclusions to the plan, and the amount of the premium.

b. Average estimated Medicaid expenditures. DMAS shall estimate the average Medicaid expenditures for a 12-month period for each recipient in the case based on the expenditures for persons similar to the recipient in demographic and eligibility characteristics. Expenditures shall be adjusted accordingly for inflation and scheduled provider reimbursement rate increases. Average estimated Medicaid expenditures shall be updated periodically.

c. Medicaid expenditures covered by the group health plan. DMAS shall compute the percentage of expenditures for group health plan services against the expenditures for the same Medicaid services and then adjust the average estimated Medicaid expenditures by this percentage for each recipient in the case. These adjusted expenditures shall be added to obtain a total for the case.

d. Group health plan allowance. DMAS shall multiply an allowance factor by the Medicaid expenditures covered by the group health plan to produce the estimated group health plan allowance. The allowance factor shall be based on a state specific factor, a national factor or a group health plan specific factor.

e. Covered expense amount. DMAS shall multiply an average group health plan payment rate by the group health plan allowance to produce an estimated covered expense amount. The average group health plan payment rate shall be based on a state specific rate, national rate or group health plan specific rate.

f. Administrative cost. DMAS shall total the administrative costs of the HIPP program and estimate an average administrative cost per recipient. DMAS shall add to the administrative cost any pre-enrollment costs required in order for the recipient to enroll in the group health plan.

G. Determination of cost effectiveness. DMAS shall determine that a group health plan is likely to be cost effective if subdivision 1 of this subsection is less than subdivision 2 of this subsection:

1. The difference between the group health plan allowance and the covered expense amount, added to the premium and the administrative cost; and

2. The Medicaid expenditures covered by the group health plan.

If subdivision 1 of this subsection is not less than subdivision 2 of this subsection, DMAS shall adjust the amount in subdivision 2 of this subsection using past medical utilization data on the recipient, provided by the Medicaid claims system or by the recipient, to account for any higher than average expected Medicaid expenditures. DMAS shall determine that a group health plan is likely to be cost effective if subdivision 1 of this subsection is less than subdivision 2 of this subsection once this adjustment has been made.

3. Redetermination. DMAS shall redetermine the cost effectiveness of the group health plan periodically, not to exceed every 12 months. DMAS shall also redetermine the cost effectiveness of the group health plan whenever there is a change to the recipient and group health plan information that was used in determining the cost effectiveness of the group health plan. When only part of the household loses Medicaid eligibility, DMAS shall redetermine the cost effectiveness to ascertain whether payment of the group health plan premiums continue to be cost effective.

4. Multiple group health plans. When a recipient is eligible for more than one group health plan, DMAS shall perform the cost effectiveness determination on the group health plan in which the recipient is enrolled. If the recipient is not enrolled in a group health plan, DMAS shall perform the cost effectiveness determination on each group health plan available to the recipient.

G. Program participation requirements. Participants must comply with [ the following ] program requirements as prescribed by DMAS for continued enrollment in HIPP. Failure to comply shall result in termination from the program.

1. Submission of documentation of premium expense within specified time frame in accordance with DMAS established policy.

2. Changes that impact the cost-effectiveness evaluation must be reported within 10 days.

3. Completion of annual redetermination.

4. Completion of consent forms. Participants may be required to complete a consent form to release information necessary for HIPP participation and program requirements as required by DMAS.

[ 5. Participants terminated for noncompliance under subdivision 1 or 2 of this subsection shall be barred from reapplying to the HIPP program for three months from the date of cancellation. ]

H. HIPP redetermination. DMAS shall redetermine the cost effectiveness of the group health plan periodically, [ and ] at least every 12 months. DMAS shall also redetermine cost effectiveness when changes occur with the [ recipient recipient's ] average Medicaid cost and/or with the group health plan information that was used in determining the cost effectiveness. When only part of the household loses Medicaid eligibility, DMAS shall redetermine the cost effectiveness to ascertain whether payment of the premium assistance subsidy of the group health plan continues to be cost effective.

I. Program termination. Participation in the HIPP program shall be terminated for failure to comply with or meet program requirements. Termination will be effective the last day of the month in which advance notice has been given (consistent with [ federal regulations) 42 CFR 431.211)].

1. [ Participation In addition to the reasons listed in subsection G of this section, participation ] shall be terminated for:

[ a. Failure to submit documentation of payment of premiums (noncompliance);

b. Failure to provide information required for reevaluation of cost effectiveness (noncompliance);

c. a. ] Loss of Medicaid eligibility for all household members;

[ d. b. ] Medicaid household member no longer covered by employer health plan; or

[ e. c. ] Employer group health plan is determined to be not cost effective.

[ 2. Participants terminated for noncompliance under subdivisions 1 a and 1 b of this subsection, shall be barred from reapplying to the HIPP program for three months from the date of cancellation.

3. 2. ] Termination date of premiums. Payment of premium assistance subsidy shall end on whichever of the following occurs the earliest:

a. On the last day of the month in which eligibility for Medicaid ends;

b. The last day of the month in which the recipient loses eligibility for coverage in the group health plan;

c. The last day of the month in which adequate notice has been given (consistent with federal requirements) that DMAS has determined that the group health plan is no longer cost effective; or

d. The last day of the month in which adequate notice has been given (consistent with federal requirements) that HIPP participation requirements have not been met.

H. J. Third party liability. When recipients are enrolled in group health plans, these plans shall become the first sources of health care benefits, up to the limits of such plans, prior to the availability of Title XIX benefits.

I. K. Appeal rights. Recipients shall be given the opportunity to appeal adverse agency decisions consistent with agency regulations for client appeals (12VAC30-110).

J. L. Provider requirements. Providers shall be required to accept the greater of the group health plan's reimbursement rate or the Medicaid rate as payment in full and shall be prohibited from charging the recipient or Medicaid amounts that would result in aggregate payments greater than the Medicaid rate as required by 42 CFR 447.20.

FORMS (12VAC30-20)

[ Health Insurance Premium Payment (HIPP)/HIPP For Kids Program Application and Instructions (rev. 9/10).

Employer Insurance Verification (rev. 10/10).

Re-evaluation Employer Insurance Verification (rev. 10/10).

Health Insurance Premium Payment HIPP for Kids (HFK) Program - Cost Sharing of Co-Pays, Deductibles and Co-insurance (undated).

Health Insurance Premium Payment Programs Application/Renewal, DMAS 500 and Employer Insurance Verification Form, DMAS-502 (rev. 2/2012).

Health Insurance Premium Payment (HIPP) and HIPP for Kids Program - Consent for Authorization for Release of Information - Family Member Eligibility Release (undated).

Health Insurance Premium Payment Program - Change Form (undated).

Health Insurance Premium Payment Program (HIPP) for Kids - Change Form (eff. 9/2010). ]