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Commonwealth Health Insurance Connector Authority Minimum Creditable Coverage Regulatory Revisions for Consideration Board of Directors Meeting October 8, 2009. Agenda. Recap of current MCC Regulations Review MCC Revisions Under Consideration Out-of-Pocket (OOP) Maximum Calculation

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Commonwealth Health Insurance Connector AuthorityMinimum Creditable Coverage Regulatory Revisions for ConsiderationBoard of Directors MeetingOctober 8, 2009

  • Recap of current MCC Regulations
  • Review MCC Revisions Under Consideration
    • Out-of-Pocket (OOP) Maximum Calculation
    • Indexing OOP Maximum and Deductibles
  • Distribution of Medical Spending and OOP Expenses
  • Impact of Various Scenarios
  • Current Landscape and Carrier Feedback
current mcc regulations
Current MCC Regulations
  • Deductibles:
    • Any deductible for in-network covered services shall not exceed $2,000 (ind) / $4,000 (fam)
  • OOP Maximums:
    • If a health benefit plan includes deductibles or co-insurance for in-network covered core services, the plan must set OOP maximums for in-network covered services.
    • OOP Maximums shall not exceed $5,000 (ind) / $10,000 (fam)
current mcc regulations cont
Current MCC Regulations (cont)
  • Calculation of OOP Maximum:
    • The calculation of the OOP maximum must include the following payments for in-network covered services:
      • Deductibles,
      • Co-payments over $100, and
      • Co-insurance; however
      • Amounts paid for prescription drugs (Rx) need not be considered.
oop maximum calculation possible revisions
OOP Maximum Calculation – Possible Revisions
  • Require all costs (medical and prescription drugs) to count toward OOP maximum
  • Require prescription drug costs to count toward OOP maximum, or, impose separate OOP maximum for Rx
indexing options
Indexing Options
  • OOP Maximum
    • Index to IRS Revenue Procedure re: Inflation Adjusted Items
      • Issued in spring/early summer for subsequent calendar year
    • OOP maximum would be same as allowed for a High Deductible Health Plan (HDHP)
      • For example, in 2010: $5,950 (ind) / $11,900 (fam)
indexing options cont
Indexing Options (cont)
  • Maximum allowable deductible
    • OPTION 1: Index to same rate of increase as OOP maximum
    • OPTION 2: Set to 50% of OOP maximum
distribution of medical expenditures
Distribution of Medical Expenditures
  • Over 98% of the population has OOP costs of $5,000 or less


*Out-of-Pocket medical spending includes all consumer payments for medical services and prescription drugs.

distribution of medical expenditures cont
Distribution of Medical Expenditures (cont)


*Total medical spending is defined as the sum of direct payments for care provided during the year, including out-of-pocket payments and payments by private insurance, Medicaid, Medicare, and other sources. Payments for over-the-counter drugs, alternative care services, and phone contacts with medical providers are not included in MEPS total expenditure estimates.

impact of various scenarios caveats
Impact of Various Scenarios – Caveats
  • Several factors may impact accuracy of model and results:
    • Actual distribution in health benefit packages
    • Actual pricing and utilization patterns (relies on commercial model)
    • Actual carrier risk assumptions for pricing (vast differences across carriers)
oop maximum calculation current landscape
OOP Maximum Calculation –Current Landscape
  • Findings based on survey representing

~3 million MA lives

  • Overwhelming majority are in plans that are not required to have an OOP Maximum to meet MCC
  • Of those in plans required to have OOP Maximum, vast majority do not count Rx cost-sharing
oop maximum calculation carrier feedback
OOP Maximum Calculation –Carrier Feedback
  • Carrier feedback re: integrated OOP Max
    • Vast majority of plans lack administrative/operational capacity to implement
    • Difficult and/or infeasible to integrate services covered by outside vendors into OOP
    • Minimum 18 month lead time to implement
separate oop maximum carrier feedback cont
Separate OOP Maximum –Carrier Feedback (cont)
  • Carrier feedback re: separate Rx OOP maximum
    • Several carriers have this capability and/or could easily implement
      • Two carriers indicated some of existing products have a separate Rx OOP Maximum
    • Several carriers indicated major administrative/operational challenges
    • Minimum 18 month lead time to implement
    • If adopted, require only co-insurance for prescription drugs to count toward a separate Rx OOP maximum