By Zachary Baron | September 2014
Comprehensive, affordable coverage is now a reality for millions of newly insured consumers, but the work to connect individuals to coverage is just beginning. Identifying strategies that enrollment stakeholders can adopt to make it easier for people to obtain and keep coverage will continue to be important. This issue brief discusses why affordable coverage matters, highlights efforts in Wisconsin and Oregon to supplement financial assistance for marketplace enrollees through third-party payment programs, and raises questions stakeholders should consider when deciding whether to pursue a third-party payment program in their region or community.
Financial help made available by the Affordable Care Act (ACA) to purchase private coverage through the health insurance marketplaces has helped connect millions of individuals and families to comprehensive health insurance.1 Organizations in a handful of states are building on this foundation to make it even more affordable for individuals to get covered and stay covered.
Enrollment stakeholders have the opportunity to help consumers achieve peace of mind and financial security. First, stakeholders should continue to raise awareness about the availability of financial help through the marketplace. Showing consumers that they can qualify for premium tax credits and cost-sharing reductions is still the best way to maximize enrollment. Second, stakeholders may want to consider implementing affordability programs to supplement the financial help made available by the ACA. Any new solution or program must also be paired with outreach and education, and must comply with federal and state regulations.
One innovative strategy that has arisen over the last year has been third-party payments, where private organizations help pay for premiums and out-of-pocket costs for consumers enrolled in marketplace coverage (see Figure 1). Enrollment stakeholders may want to consider whether such an approach would benefit individuals living in their community who may need additional assistance paying for health coverage.
Figure 1. Third-Party Payment Programs
Why Affordable Coverage Matters
Affordability remains the primary factor for many uninsured consumers as they weigh the significant and personal decision about whether to explore their options and sign up for health coverage. The more affordable coverage is, the more likely consumers are to enroll.2 For those who enrolled through the marketplace during the initial open enrollment period, financial assistance played a central role. Eighty-five percent of individuals selecting marketplace plans across the country were determined eligible to receive financial assistance to help pay their premiums.3 Enrollees receiving financial help in federally facilitated marketplace (FFM) states pay, on average, 76 percent less on their monthly premium once the tax credit is factored in.4
Consumers who did not look for insurance during the first open enrollment period, or who tried to enroll but were ultimately unsuccessful, cited affordability as the primary barrier to coverage; individuals assumed coverage would be unaffordable and/or did not know financial help was available.5 For instance, only one in five (21 percent) who did not look for insurance and 38 percent of those who tried to enroll but were ultimately unsuccessful knew that financial help was available for people with low and moderate incomes.6
Furthermore, while nearly half of enrollees with tax credits in the FFM have premiums of $50 or less per month (after the tax credit is factored in), some individuals would find it easier to keep coverage if they had more financial support.7 As recent academic research and analysis illustrates, the financial responsibilities associated with health coverage can dampen enrollment and retention among lower-income consumers. For instance, a $10 increase in monthly premiums was associated with a 6.7 percent drop in in Medicaid or Children’s Health Insurance Program (CHIP) enrollment among households with family incomes between 101 and 150 percent of the federal poverty level (FPL).8 In Wisconsin, an increase in Medicaid premiums from $0 to only $10 a month made adult and child enrollees 12 to 15 percent more likely to lose coverage.9
Third-Party Payment Programs
Third-party payment programs are a type of affordability program. Third-party payments from private and nonprofit foundations can only be made based on an enrollee’s financial status (health status cannot be considered), and must cover the full plan year. The Department of Health and Human Services (HHS) discourages issuers from taking payments directly from certain commercial entities on behalf of consumers and requires issuers to accept third-party payments from certain groups (such as Ryan White HIV/AIDS grantees and Indian tribes) and government programs. For more information, see the more detailed “Regulatory History” of federal guidance in the Appendix (page 9 of the PDF).
Third-party payment programs established in Wisconsin and Oregon demonstrate how enrollment stakeholders are working to maximize enrollment.
HealthConnect – Wisconsin
Wisconsin rolled back Medicaid (“BadgerCare”) eligibility for most adults from 200 percent of poverty to 100 percent of poverty last fall, making a large group of consumers eligible for coverage through the marketplace instead of BadgerCare. Because BadgerCare has little to no premiums or cost-sharing, stakeholders in Dane County (Wisconsin) understood that these lower-income consumers who were no longer eligible for Medicaid may hesitate to purchase marketplace coverage, even with financial help, and premium payments may not be made consistently, potentially creating gaps in coverage. Stakeholders were interested in providing these individuals with more financial support, in addition to what was offered through the marketplace, to help them maintain coverage. Leading up to the first open enrollment period, the United Way of Dane County (UWDC) engaged local stakeholders on how to make coverage more affordable.
Ultimately, UW Health (a health care provider comprising the academic health care entities of the University of Wisconsin–Madison) donated $2 million to UWDC to establish a third-party payment program known as HealthConnect.10 While UW Health funds the program, UWDC holds complete authority to make programmatic decisions. HealthConnect makes premium payments for lower-income individuals, regardless of whether they use UW Health’s services or purchase a UW Health insurance plan.
HealthConnect pays the remaining premium (after the federal tax credit is applied) for silver plan enrollees with income up to 150 percent of poverty ($29,295 for a family of three). As of the beginning of August 2014, Health Connect had made payments directly to marketplace issuers for 798 enrollees. UWDC projects it will spend a total of $850,000 on marketplace premiums through the end of 2014. Conservatively, HealthConnect estimates that issuers in Dane County have received almost $2.2 million in advance payments of the premium tax credit on behalf of individuals in the program, an average of $2,179 per enrollee.
Individuals interested in the HealthConnect program fill out a simple application online, by mail, or over the phone. HealthConnect only takes a consumer’s financial and residential status into consideration when determining eligibility, as opposed to other criteria such as health status.11
UWDC raises awareness about the program through partnerships with trusted messengers such as in-person assisters, local government officials, and libraries; engages trained volunteers to canvass neighborhoods; and strategically distributes program literature in English and Spanish. UWDC is continuing to engage all enrollment stakeholders, including marketplace issuers, to further raise awareness of the program and to streamline payment and operational details (including how to handle renewals).
Project Access NOW – Oregon
There is an existing program in the Portland, Oregon, metro region to help lower-income uninsured consumers by connecting them to donated medical care (volunteer physicians and other health care providers that offer free services). Stakeholders identified an opportunity to build on this model to help newly insured consumers pay their marketplace premiums. Project Access NOW, a nonprofit organization based in Portland and supported by a number of partners including local health systems and the United Way of the Columbia- Willamette, sought and received support from all hospitals in the region to fund a new program for marketplace enrollees. Launched in March 2014, the pilot program pays the remaining premium (after the federal tax credit is applied) for silver plan enrollees with income less than 200 percent of poverty ($39,060 for a family of three). Payments are made directly to issuers. The program provides support regardless of which silver plan the consumer chooses or the network or hospital their plan covers.
Project Access NOW identified qualifying clients of the program through meetings with in-person assisters, safety net clinics, and other already existing partners, including the hospital systems themselves. As of September 2014, the program had assisted more than 150 enrollees, and the program will be able to grow up to 400 enrollees within three years. Although the eligibility criteria are solely based on the consumer’s income, individuals can only participate in the program after being referred to Project Access NOW by a partner organization. Project Access NOW continues to focus on further regional stakeholder engagement and making financial transactions with marketplace issuers more efficient.
While further research is needed on the effectiveness of these programs, early achievements reflect the flexibility that foundations, nonprofit organizations, and other enrollment stakeholders have to help enrollees pay for marketplace coverage. UWDC and Project Access NOW were able to implement functioning third-party payment programs as a result of bringing multiple stakeholders to the table (e.g. hospitals, issuers, in-person assisters, and community-based organizations) and constantly thinking about ways to improve program operations, such as streamlining billing processes and communication with partners. As with any outreach and enrollment work, effective organization and coordination is key to success.
How Partners Can Help
While third-party payment programs are not the only way to make coverage more affordable, enrollment stakeholders should explore whether such a program would be beneficial in their region or community. Table 1 provides key questions stakeholders should consider with respect to community feasibility and program design, implementation, and evaluation.
Table 1. Considerations for Enrollment Stakeholders
|Explore Needs of Community and Feasibility||
Define Needs for Successful Implementation
Monitor and Evaluate
Enroll America is partnering with national and local organizations to identify how stakeholders can best help consumers choose a marketplace plan that fits their needs and budget.
This piece was written by Zachary Baron, Senior Policy Analyst, Best Practices Institute.
Assistance was provided by Sophie Stern, Deputy Director, Best Practices Institute, and Jennifer Sullivan, Director, Best Practices Institute.
The author wishes to thank the following individuals for their input and guidance:
William Tomasko and Cynthia Youngblood from Enroll America for their design and editorial support.
Sandy Erickson, United Way of Dane County
Janet Hamilton & Linda Nilsen-Solares, Project Access NOW
1 Individuals with incomes between 100 and 400 percent of the federal poverty level (FPL) are generally eligible for premium tax credits, and those with incomes between 100 percent and 250 percent of FPL (with higher income thresholds for members of federally recognized Indian tribes) can also qualify for cost-sharing reductions if they enroll in silver plans to help reduce the deductibles, co-pays, and other cost-sharing of applicable health services. Consumers must generally not be eligible for public coverage (e.g. Medicaid, CHIP, Medicare) and job-based coverage (in most instances) in order to receive financial help through the marketplace.↩
2 PerryUndem Research & Communication and Enroll America, Voices from the Newly Enrolled and Still Uninsured, July 2014. Available online at: https://s3.amazonaws.com/assets.enrollamerica.org/wp-content/uploads/2013/11/Post-Enrollment-Survey.pdf.↩
3 Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, Health Insurance Marketplace: Summary Enrollment Report for the Initial Annual Open Enrollment Period, May 2014. Available online at: http://www.aspe.hhs.gov/health/reports/2014/MarketPlaceEnrollment/Apr2014/ib_2014Apr_enrollment.pdf.↩
4 Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, Premium Affordability, Competition, and Choice in the Health Insurance Marketplace, June 2014. Available online at: http://aspe.hhs.gov/health/reports/2014/Premiums/2014MktPlacePremBrf.pdf.↩
5 PerryUndem Research & Communication and Enroll America, Why Did Some People Enroll and Not Others?, May 2014. Available online at: https://s3.amazonaws.com/assets.enrollamerica.org/wp-content/uploads/2014/05/EA-PerryUndem-Survey-Report.pdf.↩
7 See Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, Premium Affordability, Competition, and Choice in the Health Insurance Marketplace.↩
8 Salam Abdus et al., Health Affairs, Children’s Health Insurance Program Premiums Adversely Affect Enrollment, Especially Among Lower-Income Children, August 2014. Available online at: http://content.healthaffairs.org/content/33/8/1353.abstract.↩
9 Laura Dague, Journal of Health Economics, The Effect of Medicaid Premiums on Enrollment: A Regression Discontinuity Approach, May 2014. Available online at: http://ccf.georgetown.edu/wp-content/uploads/2012/03/Dague-Premiums.pdf.↩ 10 UW Health, UW Health’s $2 Million Gift to United Way Provides Insurance Assistance, Oct. 2013. Available online at: http://www.uwhealth.org/news/uw-healths-2-million-gift-to-united-way-providesinsurance-assistance/41938.↩
11 See United Way of Dane County, Health Connect Application Form. Available online at: https://www.unitedwaydanecounty.org/health-connect-form/.↩
Third-Party Payments for Marketplace Enrollees: Regulatory History
On October 30, 2013, in a letter to U.S. Representative Jim McDermott, then- Secretary of the Department of Health and Human Services (HHS) Kathleen Sebelius wrote that HHS does not consider marketplace plans (Qualified Health Plans) and other programs under the Affordable Care Act (such as Navigators) related to the marketplaces to be considered “federal health care programs” under section 1128B of the Social Security Act (the “Anti- Kickback Statute”).i This initial decision was significant because it meant that organizations would not be categorically prohibited from making payments to help individuals pay their marketplace premiums and cost-sharing.ii
On November 4, 2013, HHS issued a frequently asked question (FAQ) document discouraging issuers (though not prohibiting them) from accepting third-party payments from hospitals, other health care providers, and other commercial entities because of concerns about how third-party payments could potentially skew insurance risk pools.iii
On February 7, 2014, HHS released a new FAQ to clarify that the November 2013 FAQ does not apply to payments made by Indian tribes, tribal organizations, urban Indian organizations, and state and federal government programs or grantees (such as the Ryan White HIV/ AIDS Program).iv HHS also stated it does not have concerns about third-party payments made by additional private, not-for-profit foundations as long as they are solely based on the individual’s financial status, and as long as any premium and cost-sharing payments are made over the entire policy year.v
On March 11, 2014, HHS issued an interim final regulation following litigation concerning certain marketplace issuers that did not accept third-party payments from grantees funded through the Ryan White program,vi requiring QHP issuers to accept third-party payments from entities funded through the Ryan White Program, Indian organizations, and other federal and state programs.vii Because this rule did not mention the legality of third-party payments from hospital-affiliated or other nonprofit foundations, HHS was pressed to issue further guidance, and responded via letter on May 21, 2014.viii
The May 2014 HHS letter reiterated existing guidance from previous FAQs: “We believe that existing guidance related to third-party payments of premiums and cost sharing made on behalf of Marketplace QHP enrollees by private, not-for-profit foundations is sufficient to put the public on notice that as a general matter, such payments are not prohibited…”.ix Some legal experts believe that after this May 2014 letter, HHS would have difficulty legally challenging third-party payments from “hospital-affiliated” nonprofit foundations as well.x
i Department of Health and Human Services, Letter from HHS Secretary Kathleen Sebelius to U.S. Representative McDermott, Oct. 2013. Available online at: http://www.hlregulation.com/files/2013/10/The-Honorable-Jim-McDermott.pdf. ↩
ii The Anti-Kickback Statute imposes criminal penalties for acts involving improper referrals and payments concerning federal health care programs. ↩
iii Department of Health and Human Services, Centers for Medicare and Medicaid Services- CCIIO, Third Party Payments of Premiums for Qualified Health Plans in the Marketplaces, Nov. 2013. Available online at: http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/third-party-qa-11-04-2013.pdf. ↩
iv Department of Health and Human Services, Centers for Medicare and Medicaid Services- CCIIO, Third Party Payments of Premiums for Qualified Health Plans in the Marketplaces, Feb. 2014. Available online at: http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/third-party-payments-of-premiums-for-qualified-health-plans-in-the-marketplaces-2-7-14.pdf. ↩
v Ibid. ↩
vi See Caroline Chen, Bloomberg News, Insurers Forced to Take Ryan White Funds for HIV Patients, Mar. 2014. Available online at: http://www.bloomberg.com/news/2014-03-14/insurersforced-to-take-ryan-white-funds-for-hiv-patients.html. ↩
vii Department of Health and Human Services, Centers for Medicare and Medicaid Services, Patient Protection and Affordable Care Act; Third Party Payments of Qualified Health Plan Premiums, 79 FR 15240, Mar. 2014. Available online at: http://www.gpo.gov/fdsys/pkg/FR-2014-03-19/pdf/2014-06031.pdf. ↩
viii Department of Health and Human Services, Letter from HHS Secretary Kathleen Sebelius to Sister Carol Keehan, May 2014. Available online at: http://www.chausa.org/docs/default-source/advocacy/052114-hhs-communication-on-premium-support-from-third-parties.pdf?sfvrsn=2. ↩
ix Ibid. ↩
x See Timothy Jost, Health Affairs, Implementing Health Reform: Third-Party Payments and Reference Pricing, May 2014. Available online at: http://healthaffairs.org/blog/2014/05/22/implementing-health-reform-third-party-payments-and-reference-pricing/. ↩