The challenge of churning
Insurers and states seek to ensure coverage continuity between Medicaid and private plans
After Stella Marie Means retired in March at age 55 from a clerical job in the healthcare industry, she worried about how she and her husband would be able to maintain their health coverage and afford their medications. Her husband was not employed, and between them, they had 20 prescriptions.
Retiring meant the West Bloomfield, Mich., couple’s household income dropped from $4,000 a month to $1,200. Getting coverage through COBRA was too expensive. Healthy Michigan, the state’s expanded Medicaid program for adults earning up to 138% of the federal poverty level, was their only option. They feared the healthcare they would get through Medicaid would be poor quality. But they joined the Midwest Health Plan, a Medicaid managedcare plan, and have been pleasantly surprised.
“You think you’re going to get doctors that are not good enough to get on the main floor with providers in private plans, and that you’re not going to be able to get the prescription drugs you need, especially if they are name brand,” Means said. “Fortunately, we’ve been able to keep our same doctor and our prescriptions.”
The Means’ coverage shift because of a change in income is known as “churn,” where people go from private coverage to Medicaid or vice versa, often with a spell of being uninsured. More than 28 million low-income adults could experience enough of a change in income within six months of enrollment in an Obamacare exchange plan to churn between their private plan and Medicaid or move between public or private coverage and being uninsured, according to a Health Affairs article in April.
Churning matters a lot to patients because moving from one type of coverage to another could mean losing access to their established healthcare providers, having their covered benefits change, or paying more or less in premiums and cost sharing. Some states are seeking solutions to mitigate churn to ensure continuity of care. Strategies include allowing Medicaid beneficiaries to stay in the program for up to 12 months even if their income increases, or establishing a state Basic Health Program, which involves a state using federal dollars to set up a health plan for people whose income is above the Medicaid threshold but below 200% of the poverty level.
For their part, insurers have offered or are planning to offer Medicaid and exchange plans to ensure continuity of coverage for people whose income changes. During the first open-enrollment period that ended in March, exchanges for 32 states and the District of Columbia had participating insurers that offered an exchange plan and a Medicaid plan, according to the Association for Community Affiliated Plans, which represents 58 not-for-profit safety net health plans in 24 states. The association estimated that 41% of 286 exchange insurers nationally offer both exchange and Medicaid plans in the same states.
For some providers, churn is a focal point in their Obamacare outreach strategy. After Michigan opened enrollment for its expanded Medicaid in April, Detroit Medical Center let consumers know about it. “We made sure to let people know that if their situation changed, whether it be a loss of work or a divorce or whatever the bad thing was, they were still eligible for insurance,” said Conrad Mallett, the hospital’s chief administrative officer.
When patients churn from Medicaid to exchange plans,
however, that can create payment problems for providers. Exchange plans often have high deductibles and cost-sharing. Medicaid patients are used to having very limited costsharing, so they don’t necessarily understand their financial responsibilities under a private plan’s deductible or coinsurance, said Craig Hauben, chief sales and marketing officer at NSLIJ CareConnect, a health plan owned by North Shore-Long Island Jewish Health System, based in Great Neck, N.Y. “These individuals are used to going to a doctor and just having it covered,” he said.
On the other hand, exchange plan enrollees in silver-tier plans who have incomes under 250% of the poverty level qualify for federal cost-sharing subsidies that can reduce their outof-pocket costs to as little as 6% of their total medical costs.
CareSource, an Ohio-based notfor-profit Medicaid plan, offers an exchange plan, called CareSource Just4Me, to expand its market and ensure continuity of coverage and care for members whose incomes increase and become ineligible for Medicaid. The company focused its outreach on people earning between 138% of poverty—the cutoff for Medicaid in Ohio and other states that expanded the program under the Patient Protection and Affordable Care Act—and 250% of the poverty level. The strategy paid off: Just4Me enrolled 36,000 people on the exchange in Ohio as of June.
“We leveraged our infrastructure and expertise of working with lower-income individuals to appeal to this newer population,” said Scott Streator, a vice president at CareSource. “The typical comment we hear is that this was something they always wanted but could never afford.”
Now, CareSource intends to introduce Just4Me in Kentucky, a Medicaid expansion state where it now serves nearly 70,000 Medicaid beneficiaries, and in Indiana, a non-expansion state that would be a new market for CareSource.
The number of insurers offering exchange and Medicaid plans is likely to increase as more companies focus on churn. For instance, Florida-based WellCare Health Plans, which offers Medicaid plans in expansion states including Hawaii, Kentucky and New York, and in non-expansion states such as Florida and Georgia, is mulling over where to launch exchange plans. “The key is ensuring that our members have access to similar benefit designs, that the networks overlap to support continuity of care and that our members have access to options they can reasonably afford,” said Dr. Steven Goldberg, senior vice president and chief medical officer at WellCare. To achieve this, the company will have to offer a similar provider network in its Medicaid and exchange plans.
Even when an insurer offers both plans, the transition isn’t always seamless for people whose economic circumstances change. They have to inform the state Medicaid agency that their income has increased or they no longer meet the income eligibility requirements. After that, they qualify for special enrollment in a private plan on the exchange and may be eligible for a premium tax credit.
Some states have, or are planning, strategies to address churn. For instance, Delaware has established rules to ease the transition for people losing private coverage, such as requiring private plans to continue to pay for prescriptions and treatment that already were in progress, for a set period of time. Maryland has similar requirements for plans on its exchange. “That benefits us to the extent that people should not experience complete lapses in coverage and, therefore, are more likely to maintain better overall health,” said Stephen Groff, Delaware’s Medicaid director.
For Americans who work seasonally, their incomes may fluctuate above and below the Medicaid-eligibility level. Kentucky has adopted a provision that allows people with fluctuating incomes to stay in Medicaid since their earning pattern indicates they likely will be back within the Medicaid threshold before year-end, said Jill Midkiff, a spokeswoman for the Kentucky Cabinet of Health and Family Services.
Kentucky is one of a number of states that are exploring a “bridge plan” under the Basic Health Program provision in the
Affordable Care Act. The plan would provide subsidized coverage for individuals and families whose income is between 138% and 200% of the poverty level, ensuring continuity of care for individuals whose Medicaid eligibility fluctuates.
Oregon and West Virginia also are considering launching a Basic Health Program. Minnesota and Washington already were operating a version of a Basic Health Plan years prior to the ACA’s passage. States such as Arkansas, Iowa and Pennsylvania that have expanded or proposed to expand Medicaid through the private-plan option—taking the federal Medicaid expansion money and using it to buy exchange coverage for adults earning up to 138% of the poverty level—argue that their approach better mitigates the negative effects of churn. Under the private-plan model, if beneficiaries experience an income increase, they can keep their private plan and their same network of providers, said Kate Luck, a spokeswoman for Arkansas’ Department of Human Services.
Since moving from private coverage to Medicaid in June, Means said she’s been surprised to see her and her husband’s out-of-pocket costs drop. Office visits now require co-pays of $2 versus the $25 they spent when they had private insurance. They used to have to spend $30 for each brand-name drug and $15 for each generic drug. Now, they get all 20 of their prescriptions for a combined total of $76. “We are extremely happy,” Means said.
CareSource, an Ohio-based not-for-profit Medicaid plan, focuses outreach for its exchange plan on people earning between 138% and 250% of the federal poverty level.