Bridging the Gap: Oregon’s Proposal to Ease Coverage Transitions at the End of Public Health Emergency
By Megan Houston, Rachel Schwab, and Rachel Swindle
The continuous coverage requirement that paused eligibility redeterminations for Medicaid enrollees will expire at the end of the federal COVID-19 public health emergency (PHE), which could take place as early as mid-January 2023. When redeterminations commence, approximately 8.2 million Medicaid enrollees are projected to lose eligibility.
To minimize coverage and care disruptions, many states have been preparing for this massive shift in coverage. Oregon is taking action to create a soft landing for these enrollees. Earlier this year, the state established a task force to develop a plan to maintain coverage for the population transitioning off of Medicaid. In September, that task force published a report with preliminary recommendations for creating a “Bridge Program” by using Section 1331 of the Affordable Care Act (ACA), which authorizes state-based Basic Health Programs (BHP).
Background
Problems Posed by Churning Between Coverage Programs
Most Medicaid enrollees who lose eligibility at the end of the PHE will be eligible for other coverage, such as employer-sponsored insurance or ACA Marketplace plans, but transitions will not be seamless. Pre-pandemic, only 3 percent of people losing Medicaid successfully enrolled in a Marketplace plan within 12 months. Coverage programs, like the Marketplace and Medicaid, often do not operate in coordination, especially in states that rely on the federally facilitated Marketplace. Different enrollment rules, procedures, and timelines can cause gaps in coverage, and differences between Medicaid managed care plans and commercial insurance can lead to disruptions in needed care. During the COVID-19 PHE, continuous coverage in Medicaid was associated with lower rates of delayed care and less trouble paying medical bills. The return of Medicaid redeterminations will mean more consumers will “churn” in and out of Medicaid, placing gains in coverage and population health at risk.
The Affordable Care Act’s “Basic Health Program”
Under the ACA, states have an option to provide coverage—with the help of federal funding—to lower income consumers that is closer in kind to Medicaid than traditional Marketplace plans. For individuals losing Medicaid, the BHP can provide a smoother transition to new coverage.
The ACA’s Marketplaces provide coverage options and premium and cost-sharing subsidies to individuals and families who do not otherwise have access to affordable health coverage. Section 1331 of the ACA enables states to establish an additional coverage option alongside the Marketplaces through a BHP. Under Section 1331, states can set up programs to cover individuals with household incomes between 138-200 percent of the federal poverty level (FPL) who are ineligible for other minimum essential coverage, as well as non-citizens with lawfully present status with incomes up to 200 percent FPL who are ineligible for Medicaid due to their immigration status.
Building on the BHP: Oregon’s “Bridge Program” Proposal
A Phased Approach to Churn Concerns
Oregon’s task force has recommended a phased implementation approach to the Bridge Program through a new state BHP:
Phase 1 would require an amendment to the state’s 1115 Medicaid waiver to allow consumers with incomes between 138-200 percent FPL to stay enrolled in the state’s Medicaid program while the Bridge Program is securing federal approval and getting up and running.
Phase 2, occurring no later than December 31, 2024, would be introduced once the Bridge Program is fully implemented. During this phase, people with eligible incomes who lose Medicaid during an eligibility redetermination would be moved to the Bridge Program on a rolling basis.
Phase 3 fully opens up enrollment to all eligible consumers during the open enrollment period for plan year 2025. At this stage, eligible consumers will not have the option to instead enroll in Marketplace coverage.
The final phase, Phase 4, would use a Section 1332 waiver to introduce the option for consumers with incomes between 138-200 percent FPL to choose between the BHP and subsidized Marketplace plans. This phase relies on the state’s ability to transition to a fully state-based Marketplace (expected in 2026 at the earliest).
The task force has emphasized that the Bridge Program will mitigate the coverage “cliff” that consumers face when they lose Medicaid, when the public health emergency ends and beyond. While some stakeholders have endorsed Oregon’s proposed plan, others have shared concerns; the state hospital association, likely fearful of losing the higher reimbursements they receive for commercially insured patients, argued that any Bridge program should be temporary, and that the state should aim over the long term to transition those losing Medicaid into Marketplace or commercial insurance. An insurer that primarily serves the private market expressed concern that a BHP would cause “market destabilization.”
Reducing Care Disruptions and Implementation Barriers Through Existing Medicaid Infrastructure
Oregon’s new BHP would largely leverage the infrastructure of its existing Medicaid program. Oregon’s Medicaid enrollees receive benefits through “coordinated care organizations” (CCOs), a type of Medicaid managed care organization (MCO) operating under a global budget. The recommended Bridge Program would offer coverage through CCOs. The “ideal scenario” outlined in the report would allow most current Medicaid enrollees to “transition[] in place,” rather than enroll through a different state program like the Marketplace. CCOs’ existing relationships with providers may allow BHP enrollees to access similar provider networks at significantly less cost-sharing than they would face in many Marketplace plans.
Program Details Shaped by Federal Funding Parameters
By creating a BHP, Oregon can draw down federal funding to finance its Bridge Program. In general, the federal government pays states that operate BHPs on a per-person basis equal to 95 percent of what enrollees would have received in federal subsidies had they enrolled in exchange coverage. These funding parameters influenced Oregon’s BHP design to ensure manageable state program costs.
Provider reimbursement rates: Provider reimbursement rates significantly influence the cost of the BHP, and provider groups have played an active role in Oregon’s evaluation and consideration of a BHP, consistently noting a strong preference for payment rates that are higher than what they receive for Medicaid patients. Ultimately, the task force recommended the program establish baseline rates that allow CCOs to pay providers more than they do under the state’s Medicaid program but less than they receive from commercial insurers. However, CCOs operate through “global budgets” and exact rates would not be state-determined.
Generosity of coverage: The generosity of the BHP benefits package also impacts the cost of a BHP. While BHPs must cover at least the ten Essential Health Benefits, states have some flexibility to establish benefit and cost-sharing designs. Oregon’s task force recommends that the Bridge program aligns its benefits with the state’s Medicaid benefits, including coverage of adult dental care. The task force further recommends that cost-sharing be a “last resort,” only used if necessary for program sustainability and based on a sliding scale according to enrollee income.
Takeaway
The BHP is one of several state policies that can increase and improve health insurance coverage. Alongside the federal expansion of premium subsidies under the American Rescue Plan Act (recently extended by the Inflation Reduction Act), states have implemented and explored public options, state-funded financial assistance, Medicaid innovation waivers, and other policies to expand access to affordable, comprehensive health insurance. The BHP allows states to leverage federal funding to offer affordable and comprehensive coverage to lower income residents, but like all of these policies, the feasibility and effectiveness of a BHP depends in large part on local market conditions and existing infrastructure.
Under the task force’s recommended path to a BHP, Oregon’s program would take years to implement, and require the state to build a new state-based Marketplace eligibility and enrollment platform. Future legislative reports will explore the effect of the program on the larger market and recommend strategies to mitigate potential disruptions.
The end of the COVID-19 PHE will undoubtedly test our coverage safety net programs as millions of people lose Medicaid eligibility. If the state legislature acts to implement the task force’s recommendations, Oregon’s Bridge Program may provide a pathway to coverage that reduces enrollment barriers and care disruption to protect recent coverage gains.
