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From Health Law Daily, October 22, 2015

Basic Health Program funding methodology basically unchanged

By Kayla R. Bryant, J.D.

The proposed methodology for basic health program (BHP) calculation for 2017 and 2018 is nearly the same as the methodology for 2016, with updates for some variables. The BHP allows states an alternative for offering coverage for populations with incomes between 133 percent of the federal poverty level (FPL) and 200 percent FPL. This funding methodology determines the amount that the government would have paid in cost-sharing reduction payments and premium tax credits if the covered individuals had been enrolled in qualified health plans (QHPs) on the marketplaces established by the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The federal BHP is then 95 percent of this value (Proposed Rule, 80 FR 63936, October 22, 2015).

Program. States were provided with the option to establish a BHP by Section 1331 of the ACA. This allows states a flexible option for providing coverage for individuals who are (1) non-elderly, (2) with household incomes between 133 and 200 percent FPL, and are (3) not otherwise eligible for Medicaid, the Children’s Health Insurance Program (CHIP), or affordable employer-sponsored coverage. This coverage option is also available for those who are lawfully present non-citizens ineligible for Medicaid with income below these levels. According to the proposed rule, states may use the BHP to coordinate standard plans with Medicaid managed care plans or lower premiums and cost-sharing requirements.

Methodology. HHS’ original BHP final rule (79 FR 14112) directed how the program would be established, covering state and federal administration standards, eligibility and enrollment, benefits, requirements, and oversight. This rule did not include the payment methodology, but established that once the methodology was published it would only be modified on a prospective basis with limited exceptions. The ACA established that the rates would be expressed as an amount per eligible BHP enrollee for each month of enrollment, and that payment rates could vary by class. States approved to implement a BHP must provide the following enrollment data:

  • personal identifier;
  • date of birth;
  • county of residence;
  • Indian status;
  • family size;
  • household income;
  • number of people in the household enrolled in BHP;
  • family identifier;
  • months of coverage;
  • plan information; and
  • other data CMS deems necessary to calculate the proper payment.

HHS will use this data to calculate the tax credits and cost-sharing reductions that would have been provided for BHP enrollees as consistently as possible. The final methodology will be certified by the CMS Actuary in conjunction with the Treasury’s Office of Tax Analysis. Although this methodology is essentially the same as the current BHP methodology and HHS proposes to establish this methodology for two years, it may specify a different methodology for 2018 and will update the values of some factors for that year.

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