Marilyn Tavenner, acting CMS administrator (CMS photo)

The managers of the Pre-existing Condition Insurance Plan (PCIP) program — a government health insurance program for people with serious health problems — are cutting benefits for the enrollees as well as suspending the processing of new applications.

Richard Popper, director of the insurance programs group at the Centers for Medicare & Medicaid Services (CMS), talked about the changes at PCIP in a memo posted on a Pennsylvania state government server.

The federal government is running the PCIP program in 23 states and the District of Columbia. State governments are running PCIP programs for their own residents in 27 states.

The Associated Press reported earlier that CMS itself has already suspended enrolling new applicants in the federal PCIP program states.

Popper wrote in the memo on the Pennsylvania server that the federal managers also have changed the PCIP plan design.

To cope with financial constraints, CMS wants the states with state-run PCIP programs to end their own application processing efforts quickly and to think about cutting PCIP plan benefits to match the reduced federal PCIP plan benefits, Popper said.

Federal PCIP program enrollees have to meet a $2,000 in-network deductible before a program plan pays for medical services. Once the plan starts paying for care, the enrollee must pay a coinsurance rate, or percentage of the bills, until the enrollee reaches the plan’s annual out-of-pocket spending limit.

The old coinsurance rate was 20 percent, and the out-of-pocket maximum was $4,000 for in-network care and $7,000 for out-of-network care.

Now, Popper said, the coinsurance rate has increased to 30 percent, and the out-of-pocket maximum has increased to $6,250 for in-network services and $10,000 for out-of-network services.

In the past, CMS has let states use cost-sharing arrangements that were more generous than the federal arrangements, Popper said.

CMS wants states to reject any PCIP enrollment applications received after March 2.

“On the date you choose to stop accepting applications for processing, you must also remove or disable any enrollment application posted to your PCIP website to the extent that you make one available,” Popper said.

CMS also wants states to determine how feasible it is for them to increase their enrollees’ coinsurance percentages and out-of-pocket maximums to the federal level, with dates of service beginning either April 1 or the earliest possible later date, Popper said.

“We appreciate your assistance in implementing this change, and together responsibly managing the funds we have available to continue serving people with pre-existing conditions who are currently enrolled in this program,” Popper wrote. 

PCIP basics
Drafters of the Patient Protection and Affordable Care Act of 2010 (PPACA) created the PCIP program in an effort to provide temporary relief for individuals with health problems who live in states that allow medical underwriting.

PCIP provides health coverage for a price close to a state’s typical commercial rate for individuals who have serious health problems and have been without health insurance for at least six months.

Critics have complained that PCIP enrollment growth has been slower than the PCIP creators expected, but the program now has about 135,000 enrollees.

Claims have been about four times as high as for enrollees in typical commercial health plans.

In Jan. 1, 2014, PPACA is supposed to require all individual health insurers to issue coverage without taking the applicant’s health status into account. Insurers will be able to charge the oldest enrollees three times as much as they charge the youngest enrollees and charge extra for enrollees who smoke or who do poorly in wellness or condition management programs. But, outside of the wellness programs, insurers will not be able to consider health status when pricing coverage, officials say.

Reactions
Michael Consedine, the Pennsylvania insurance commissioner, said his understanding was that PCIP managers would wait until late fall to impose any PCIP cap, and that consumers could then quickly shift into exchange plans.

“CMS’s announcement to suspend enrollments the day after that conversation not only took us by surprise, but raised significant concerns over the number of individuals that may be left without a coverage option over the next 10 months,” Consedine said.

Pennsylvania officials would like to meet with HHS officials about PPACA implementation in Pennsylvania, Consedine said.

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