Nov. 25—Medicaid changes and concerns about the affordability of marketplace plans drove one Wisconsin hospital to overcome its legal concerns and help some low income area residents afford new coverage.
The $2 million UW Health initiative aims to help 7,500 Dane County residents afford private insurance plans sold through Wisconsin’s new federally operated insurance marketplace, or exchange, which was authorized by the Affordable Care Act (ACA).
In addition to helping Dane County residents with incomes from 100 percent to 133 percent of the federal poverty level (FPL) afford marketplace plans, the program run by the United Way of Dane County also could prevent an increase in the hospital’s uncompensated care load, said James Dechene, general counsel for UW Health.
“What we’re really trying to do is to encourage and subsidize through the United Way program those individuals to choose coverage on the exchange so we don’t have an increase in the population of the uninsured that shows up at the ED without having insurance,” Dechene said.
Such insurance assistance can raise a variety of complex legal and regulatory issues, which has kept many hospitals from launching similar initiatives.
But UW Health officials decided to navigate the complex and legally murky issues surrounding insurance subsidies because they anticipated some local residents would not afford marketplace coverage and become uninsured.
Addressing a State-specific Challenge
Much of the coverage concern stems from Wisconsin’s plan to shift Medicaid eligibility in 2014 to drop 77,000 current beneficiaries and open eligibility to 83,000 other people.
Republican leaders in the state rejected the ACA’s Medicaid coverage expansion for all residents with incomes of up to 133 percent of FPL in favor of plan that shifts all Medicaid residents between 100 and 200 percent FPL to the marketplace.
Marketplace subsidies begin at 100 percent FPL in states that don’t expand Medicaid. But UW Health officials worried that residents at the lowest subsidy-eligible income levels still would not afford their private plans. After-subsidy premium costs of as little at $25 could keep people with incomes in the range of 100 to 133 percent FPL unable to afford coverage, Dechene said.
“For somebody who’s making $15,000 per year and trying to put gasoline in his car so he can get to work, or whatever it may be, it [premiums] actually can be a barrier for them to get coverage,” Dechene said.
The program stopped short of helping to cover out-of-pocket costs, which can be substantial in some marketplace plans.
A private UW Health analysis concluded the subsidy could reduce uncompensated care costs from patients previously covered by Medicaid and unable to afford marketplace coverage. The hospital provided nearly $1.7 million in “subsidized health services” and more than $4.6 million in “financial/in-kind contributions” in FY12, UW Health reported.
“We thought our donation to United Way would be cost effective,” Dechene said.
Such economic benefits would accrue even if residents eligible for the UW subsidies bought marketplace plans other than those sold by Unity Health Insurance, UW Health’s HMO.
Fraud Avoidance Focus
UW Health’s dual role as a provider and insurer was the source of several concerns that shaped its approach to the assistance program. Donating the funds through a charity that controlled which income-eligible residents would receive the money aimed to shield UW Health from state insurance fraud laws and federal anti-trust law.
The UW Health approach followed guidance that the Office of the Inspector General (OIG) has provided to pharmaceutical firms looking to subsidize prescription drug purchases.
The OIG opinions said such pharmaceutical assistance was acceptable “as long as that support is broadly given to anyone in that disease state without regard to which product they might be buying,” Dechene said.
The long-term outlook for the hospital’s one-year insurance premium support program will depend on an analysis of its effectiveness next year.
“We’re not committed to go beyond one year, but if the program works well, we obviously have an incentive to continue beyond the first year,” Dechene said.
Meanwhile, the UW Health initiative has caught the attention of hospitals across the country looking to reduce their uncompensated care costs in an era of reduced compensation.
“I’ve gotten calls from other providers that have heard about it and are looking at their own program or changes or differences, etc.,” he said.
Rich Daly is a senior writer/editor, in HFMA’s Washington, D.C., office. Follow Rich on Twitter @rdalyhealthcare.
Publication Date: Monday, November 25, 2013