Administration Stops Risk Adjustment Payments to Insurers: Another Act of Sabotage?

July 11, 2018 Edwin Park

On July 7, the Centers for Medicare and Medicaid Services announced that it would indefinitely delay making “risk adjustment” payments owed to insurers participating in the individual and small group markets. In the short-run, this would result in many insurers not receiving payments they are expecting this year as scheduled. That would adversely affect these insurers’ bottom line as well as their cash flow, as they assumed they would receive those payments as scheduled, when setting their past premiums for 2017. This delay could also provoke substantial uncertainty among insurers about whether risk adjustment payments will be made, as they assumed for 2018 and 2019. That could result in some insurers revisiting their 2019 premiums (and increasing them) as well as their overall decisions to participate in the individual markets inside and outside the marketplaces both in 2019 and in future years.

Under the Affordable Care Act, all insurers offering plans in the individual and small group markets must participate in the permanent risk adjustment program. Under risk adjustment, insurers who enroll sicker-than-average individuals receive payments from insurers who have healthier-than-average enrollees. The intent of risk adjustment is to mitigate adverse selection and promote market stability by compensating insurers that take on higher-cost individuals with chronic conditions and serious illnesses and discourage insurers from “cherry-picking” only low-cost, healthy people. Risk adjustment is budget neutral; that is, payments are funded by other insurers, not the federal government. The payments can be substantial. CMS has determined that insurers will receive a total of $10.4 billion in risk adjustment payments for 2017.

Was the July 7 action to indefinitely stop 2017 risk adjustment payments another act of sabotage against the Affordable Care Act? It seems like it. CMS ostensibly claims that a February U.S. District Court decision in New Mexico invalidating part of the risk adjustment formula requires them (many months later) to not make any payments owed to insurers for 2017 nationwide. But as legal experts explain, since February, CMS could have instead issued interim final regulations modifying the risk adjustment formula for 2017 in response to the court decision. (CMS has already modified the risk adjustment formula for 2018 and future years.) It also could have stopped payments only in New Mexico. The Department of Justice could have also asked for a stay of the decision while it is being appealed. Even if CMS ultimately makes the risk adjustment payments owed to insurers at a later date, its action would still have disrupted insurers’ revenue streams this year and created substantial uncertainty among insurers about whether future risk adjustment payments for 2018 and beyond will be made as they have assumed and as scheduled.

Moreover, this is not the first time that CMS has taken steps to undermine the risk adjustment program. Under regulations finalized in April, starting in 2020, states can seek federal approval to reduce by up to 50 percent how much insurers in both the individual and small group markets must pay in risk adjustment charges. That, of course, would considerably reduce how much insurers with sicker-than-average enrollees receive to compensate them for their higher costs. A substantially less effective risk adjustment program could result in a more unstable market and spur some insurers to focus on strategies that avoid enrollment of higher cost individuals. While marketplace insurers are generally prohibited from designing discriminatory benefit packages and marketing efforts, it is doubtful that those standards will be enforced to any significant degree by CMS, especially in federal marketplace states. Moreover, CMS has also given states authority to provide insurers greater latitude to scale back or drop benefits in ways that would adversely affect those with pre-existing conditions. Insurers would either have to take these kinds of steps or risk facing adverse selection that forces them to sharply raise premiums or drop out of the markets entirely.

Finally, even a fully effective risk adjustment system, which was not hobbled by the Administration’s actions, would not address the significant threats to stability in the individual market posed by short-term plans which do not have to comply with the Affordable Care Act. Such plans, for which the Administration is in the process of finalizing regulations expanding their availability, can discriminate against people with pre-existing conditions by charging higher premiums or denying coverage outright and dropping critical benefits. These plans can thus cherry pick and siphon off healthy individuals from the marketplaces and the rest of the individual market, driving up premiums in the ACA-compliant markets and severely destabilizing them. Risk adjustment does not even apply to these non-compliant plans.

Using the LifeCourse Framework

Video: These Parents of Medically Complex Kids Explain Why Medicaid Matters to Their Families

July 11, 2018 Adam Searing

If you want to know about kids, listen to parents. Sometimes in the health policy and political worlds, it’s easy to forget this simple piece of advice – and sometimes politicians and policymakers are too focused on the latest bill or political win to remember it.

Over the last year, we’ve spent a lot of time talking about Medicaid with parents of children with complex medical needs. The parents featured in this video know more about Medicaid than just about anyone because their childrens’ lives depend on it.  The families we interviewed are simply amazing, loving, dedicated and resilient. They know Medicaid first hand. Their concerns should be given serious consideration when policymakers debate cuts or changes to Medicaid.

And Medicaid is not only important to children with complex medical needs, it is a crucial lifeline for millions of children and parents. Did you know that half of Medicaid beneficiaries are children. Cut or cap Medicaid and inevitably these changes will affect children. We also know that children are affected by health insurance changes that hit their parents. Medicaid coverage makes it easier for parents to maintain their health and financially stability and that’s simply better for the family and better for kids.

[Medicaid: A Promise to America from Georgetown CCF on Vimeo.]

Guide to Medicaid Appeals, including Managed Care

This background brief provides a comprehensive look at the appeals process for the Medicaid program, which differs significantly from those available through the Medicare program and private health insurance. The Medicaid appeals process provides redress for individual applicants and beneficiaries seeking eligibility for the program or coverage of prescribed services, but the process is multi-layered and can be complex to navigate. The guide describes Medicaid’s appeals system, including the fair hearing process and the appeals process required for Medicaid managed care organizations. As coverage expands under health reform and efforts proceed to integrate services for dual eligibles, who are enrolled in both Medicare and Medicaid, protections through the appeals process will be increasingly important.

Guide to Medicaid Appeals by Family Voices Indiana on Scribd

FSSA Appeals in Indiana

What are appealable actions? Listed below are some examples of appealable issues:

• The amount of your TANF or Food Stamp (SNAP) benefit.
• The effective date of Medicaid coverage.
• The amount of your Medicaid spend-down or patient liability to be paid to a health care facility
• A delay by the Division of Family Resources in making an adjustment in the amount of your benefits.
• A decision that benefits have been paid in error and must be repaid.

You may represent yourself at the hearing or you may authorize someone else to represent you such as a lawyer, friend, relative, or any other person. If you want a lawyer but cannot afford one, Indiana Legal Services may be able to help. Their website is https://www.indianalegalservices.org/. Their phone number is (317) 631-9410. If you choose to represent yourself at the hearing, you might find it helpful to write down your reasons for appealing so that you will remember to cover all of the points you wish to raise. It is important to read all the instructions provided carefully.

Hearings and Appeals - FSSA 1009 by Family Voices Indiana on Scribd

Understanding Medicaid Appeals

If you need addtl info, feel free to contact us: 844 F2F INFO info@fvindiana.org


Free Webcast: Legal Basics- Medicaid Appeals from Justice in Aging on Vimeo.

Q & A on Customized Employment: Parent Questions Answered!

by Katherine Inge, Ph.D., O.T.R.

 “To Work or Not to Work?”… may be a question asked by parents and guardians as they begin to think about their sons and daughters going to work.  This Q & A on Customized Employment addresses concerns that family members may have and provides answers to address the concerns.  Please visit Virginia Commonwealth University’s Disability and Rehabilitation Research Project (DRRP) on Customized Employment at [https://drrp.vcurrtc.org/] for more information on customized employment.

Question:  How do I know if my son / daughter with a disability is ready to work in the community?

Answer: If your son or daughter wants to work, customized employment may help him / her achieve that goal.  A key aspect to customized employment is finding a job that matches the job seeker’s interests and skills. Using this approach, a  representative, usually referred to as an employment specialist, works closely with your son or daughter to negotiate a specific position that uses the person’s talents to meet the needs of a business.  The goal is not just to locate any job, but a job specifically negotiated that capitalizes on the job seeker’s interests and abilities.   If your son or daughter wants to work, then it may be time to try customized employment as a way to support him or her in finding a job.

Question: I am not familiar with customized employment where can I find these services?

Answer: Customized employment is a service that can be funded by Vocational Rehabilitation (VR) Agencies.  A person with a disability has to apply for VR services, be found eligible, and develop an Individualized Plan for Employment (IPE) with a VR counselor.   Customized employment could then be identified as a service for the person to achieve his or her employment goal.   The VR counselor would authorize payment for an agency,  sometimes referred to as a Community Rehabilitation Program (CRP), to provide the services.  If your son or daughter is not connected to a VR counselor, you should contact the VR agency in your state for more information.  Contact information is located at the end of this Q & A. 

Question:  But, my son / daughter does not have the skills to meet the demands of a job in a business and needs training.  Doesn’t he or she need training first?

Answer:  People with significant disabilities may not transfer skills learned in one environment to another, which may make you think he or she can’t work.  One of the reasons is that it is difficult to simulate the features of a job in a setting that does not have coworkers and the demands of a real job.  For instance, your son / daughter may be in a training program to learn how to work in an office.  The participants in the program take turns completing tasks such as sorting mail, delivering messages, and folding letters and stuffing envelopes.  However, position descriptions change from business to business. The way that one office prepares and delivers mail can be very different from another.  The time spent learning the tasks in the training program could be best spent learning the job duties after your son / daughter becomes employed. In other words, he or she learns on the job! It is also important to consider if the skill being taught in the training program represents an employment goal of your child.  Sometimes, training programs are not individualized to what each person wants to do. Instead the training tries to select activities that may represent potential jobs in the future.  A person might learn how to do these tasks but never use them. because there are no jobs available. Or the person simply doesn’t want the type of job that he or she received training on.

Question: I don’t think my son / daughter should be alone in a community job.  Wouldn’t working in a business be unsafe?

Answer:  It is only natural for you to be concerned about your sons or daughter’s welfare. Looking for a place to work also includes making sure the person is “safe.” First, “safe” needs to be defined in relationship to your son’s / daughter’s support needs. For example, a person who has a history of walking out of any door at home, school, or day program may have a very different safety concern than the person who needs skill training.  In some instances a person may need to have extra training and support from a coworker. Another person might need a more structured situation where the work area is not next to an exit door.  Your safety concerns will be taken into consideration when customizing a job.  For example, part of the negotiations might include arranging for some additional supervision such as a job where your son / daughter works alongside a coworker who is aware of the support need.  Once again, an employment specialist will work closely with an employer to negotiate a job that maximizes your son’s / daughter’s abilities and provides the workplace supports necessary for success.

Question: How would my son / daughter learn the skills in the workplace?

Answer:  Key to the negotiation process is the employer’s willingness to support whatever your son / daughter needs to become successful at work.  For example, sometimes a job applicant with a disability will need more skills training than the employer is able to provide.  In such a case, the employment specialist will go to work with the individual and provide additional on-the-job training.  Or perhaps, the person may need a modification in a company’s policy that would allow him / her to work a flexible schedule.  Workplace supports vary from individual to individual and are negotiated specifically to meet the needs of the person in a customized job.   At the end of the process, when the job is confirmed, the result is a custom made position for your son / daughter.

Question:  I don’t know what kind of job my son / daughter would like. How do you know?

Answer: A very important feature of customized employment is to spend time with the person who wants to work; usually referred to as “discovery.”  An employment specialist will spend time getting to know your son / daughter as well as you, family members, and the people in his or her life. The first recommended step is to visit at your home talking about what the person likes to do as well as observing.  In addition, an employment specialist will spend time with him / her in the community doing familiar activities, talking with family members, meeting with friends who know your son / daughter well, and so forth.  The time will be spent “discovering” his / her interests, abilities, and support needs.

There still may be uncertainty about what your son / daughter might like to do and the skills that he would bring to the job.  If this happens, several types of jobs will be identified that seem to match your son / daughter's expressed work interests.  The employment specialist may ask if you know employers in your network that match his or her employment goals. Then, the person can tour these types of businesses to observe as well as “shadow” a coworker.  During a work experience, your son or daughter will have the opportunity to observe and sometimes try different job duties to more specifically identify his/her work preferences and interests. This information will be used to customize a job on your son’s / daughter’s behalf.

The employment specialist may conduct what is called an informational interview with employers to learn more about the business and specific needs of the company.  When an employer is identified that has opportunities matching your son / daughter's specific interests and needs, the job negotiation process begins. A proposal will be prepared for the employer’s consideration that will highlight your son’s / daughter’s abilities and how he / she can bring value to the business.   Once a proposal has been made and both the job applicant and employer agree to the proposal, a work start date may be negotiated.

Question:  How will my son / daughter get to work? The community rehabilitation program provides door-to-door transportation service.

Answer: A critical aspect to customizing a job for your son / daughter will be finding work opportunities at locations where transportation will not present a barrier. Every situation is different.  For example, some people may travel to work using public transportation, while others, ride with co-workers, take specialized transportation services, or walk.  Today, some individuals with disabilities are using Uber or Lyft just like anyone who needs transportation services.

Part of getting to know your son / daughter will be exploring various transportation options.  This information is vital to the strategic plan for customizing a job, since it influences the scheduling requirements and the work location.  For instance, your son / daughter may have access to the public bus system, but may not be able to ride the bus alone.  In this case, a transportation trainer can teach your son / daughter how to get to and from the job on the bus.  Or, another option might be that the place of business is on a friend’s route to and from work.  This could become part of the employment negotiation process.  For example, employment negotiations may center around a specific work schedule that would allow the person to work a schedule that matches the friend’s daily commute times.

If you are not comfortable with these options, staff can determine if there is a specialized transportation service in the community that can offer door-to-door service.  Or, perhaps a college student or senior citizen would like to earn extra money providing transportation.  You can be assured that the support needs of your son / daughter will be met so that everyone feels comfortable.  He / she will not be left alone until the skills to get to and from work independently have been demonstrated.

Question: But, that would cost extra money!  How will that impact his/her paycheck?

Answer: Your son / daughter would be making at least minimum wage or more based on what other workers earn who are performing similar job duties.  The amount would be negotiated with the employer at the time of hire and again during the course of employment for pay raises.  In addition, if your son / daughter is receiving social security benefits, he / she may be able to claim an Impairment Related Work Expense (IRWE) for the transportation expense.  This is a work incentive designed to assist people with disabilities in paying for expenses that are needed to work.  Specialized transportation is one such expense.  Basically, a person can deduct the cost of services and items needed to work and reduce the amount of countable income.  When Social Security calculates how much a person will receive in the monthly check, an IRWE allows him / her to keep more money than if there were no work expenses.  While he / she will not get all of the cost of transportation covered through the work incentive, your son / daughter should have more money available than if not working. 

Question: Well, that raises another concern!  My son / daughter can’t lose Social Security benefits and Medicaid. The reality is that he / she needs the health care coverage.

The answer is to become informed!  A Community Work Incentives Coordinator (CWIC) or sometimes referred to as a benefits planner or specialist can explain the basics of how work will impact your son’s / daughter’s monthly benefit check.  You also will need more information on work incentives.  These incentives were developed to encourage Supplemental Security Income (SSI) recipients and Social Security Disability Insurance (SSDI) beneficiaries to become self-sufficient.  The IRWE is just one of the work incentives that can help your son / daughter.  Others include the Earned Income Exclusion, PASS (Plan for Achieving Self Support), and Section 1619 (a) and (b).

Under Special SSI Payments for People Who Work: Section 1619 (a) and 1619 (b), a worker can continue to receive Medicaid.  Eligibility continues as long as your son / daughter meets the basic eligibility requirements and the income and resources tests.  Under 1619 (b), Medicaid coverage continues even when earnings become too high to receive a SSI payment, but there are threshold levels in each state.  Some states have eligibility rules for Medicaid that differ from SSA's.  This is information that you will need to discuss with a CWIC to find out exactly how work will impact your son’s / daughter’s benefits.  However, he / she can always earn more money working than by just receiving benefits alone. If you still feel unsure after meeting with a representative, talk to other family members who have adult children with disabilities who are working in the community.   You can download a booklet produced by the Social Security Administration, The Redbook, which provides more information on how work can impact benefits at https://www.ssa.gov/redbook/.

Question: My son / daughter has friends in the day activity program. Wouldn’t he or she lose those friends when going to work?

Answer: If the opportunity to make friends is important to your son / daughter, then this along with other key information would be taken into consideration during negotiations with employers.  Every workplace culture is different.  For instance, some are friendly and others are not. To understand the workplace culture, the employment specialist representing your son / daughter would ask the employer questions and look for signs that the workplace is friendly and supportive. 

Developing a good fit between a person and the social characteristics of a workplace is as important as learning how to perform a job. Most people with disabilities report making new friends at work and an overall, satisfaction with employment.  Your son / daughter would have support establishing relationships with coworkers. Social activities that are available to other employees would also be available to him / her.  Going to work also does not mean that your son or daughter has to give up friends from past agencies.  Working should expand his / her social opportunities and not limit them.

Question: What if my son / daughter loses the job? Can he / she go back to the workshop or day activity program?

Answer:  Negotiating a customized employment opportunity for your son / daughter hopefully will prevent this from happening.  Rest assured that staff will work hard to solve any problems that come up during employment and to address any support needs that could lead to job loss. This includes re-negotiations with the employer, if necessary, to further customize your son’s / daughter’s job. But, of course people still lose jobs.  If this occurs, staff will work with your son / daughter to find a new customized job in the community.  A new position will be negotiated based on what is learned in the first job about his / her interests, work skills, and support needs.  Remember, employment specialists are always willing to talk with you whenever you have additional questions!

Resources

Social Security Redbook

A copy of the Social Security Redbook can be downloaded from the Social Security Administration’s website https://www.ssa.gov/redbook/. The Redbook provides information on how work can impact benefits.

Vocational Rehabilitation

Each state has a Vocational Rehabilitation (VR) Agency that assists individuals with disabilities achieve their employment goals.  A list of state and US territory contacts can be found at the following link: http://www.askearn.org/state-vocational-rehabilitation-agencies/

Work Incentives Planning and Assistance (WIPA) Program

The WIPA program enables Social Security beneficiaries with disabilities to make a successful transition to work. Each WIPA project has Community Work Incentives Coordinators (CWIC) who will provide in-depth counseling about benefits and the effect of work on those benefits.  Learn more at  https://www.ssa.gov/work/WIPA.html and at: https://choosework.ssa.gov/findhelp/

Acknowledgements

The Disability and Rehabilitation Research Project (DRRP) on Customized Employment at VCU is funded by the National Institute on Disability, Independent Living, and Rehabilitation Research (NIDILRR grant number #90DP0085). NIDILRR is a Center within the Administration for Community Living (ACL), Department of Health and Human Services (HHS). The contents of this Q & A do not necessarily represent the policy of NIDILRR, ACL, or HHS, and you should not assume endorsement by the Federal Government.

The author of this Q & A is Dr. Katherine Inge. If you have questions about this Q & A or about the VCU DRRP on Customized Employment, please contact Dr. Katherine Inge at kinge@vcu.edu or 804-828-5956. Visit us at: [https://drrp.vcurrtc.org/].   VCU is an equal opportunity/affirmative action institution providing access to education and employment without regard to age, race, national origin, gender, religion, sexual orientation, veteran’s status, political affiliation, or disability.  If special accommodations are needed, please contact Teri Blankenship at tcblanke@vcu.edu.