CQ TODAY ONLINE NEWS
July 12, 2011 – 10:29 a.m.
HHS Officials Quiet About High-Risk Pool Expenses
By Rebecca Adams, CQ HealthBeat Associate Editor
When a new program to cover people with pre-existing conditions launched last July, lawmakers and state officials had one central question: How long will the $5 billion set aside for it last? One year later, federal officials still haven’t answered that question — and won’t say how much of the money has been spent so far.
Steven Larsen, director of the Center for Consumer Information and Insurance Oversight (CCIIO), promised the House Energy and Commerce Committee in a May 13 letter that officials would post basic information about how much the program has spent and update such data on a quarterly basis. But now, CCIIO officials say that they will wait until the fall to provide any information about the expenditures of the program, which is formally known as the Pre-existing Condition Insurance Plan (PCIP).
The plan, created under the health care overhaul law (PL 111-148, PL 111-152), is a pool for high-risk patients who have conditions such as cancer or heart disease and have a hard time finding insurance. It will operate until 2014, when more extensive coverage expansions under the law will take place. The overhaul provided states with a choice of either running the pools themselves or letting the federal government do it. In about 35 states, separate state-run high-risk pools existed before the one created by the health law began. Those state programs continue to exist, but their premiums are often much higher than in the federally-required program.
CCIIO officials are vague about why they are keeping the PCIP expenses a secret. They receive information from programs run by the federal government on a daily basis, and administrators of programs run by the states say that they send data to the federal government on a monthly basis; although it takes time to sift through the data, some state officials and lawmakers wonder why no information at all has been released.
Federal officials also are vague about the fall date for the expected release of what they say will be a comprehensive report on the pools. In response to several inquiries over the past month about the program, a CCIIO spokesman said, “All I have is that we hope to issue our first report on PCIP spending later this fall ,and that we’re working to ensure the $5 billion is being used efficiently and effectively.”
More Questions than Answers
The only thing that is clear about the program is that the assumptions experts made about it before it began were wrong. Centers for Medicare and Medicaid Services (CMS) actuaries estimated that 375,000 people would sign up for it last year. Lawmakers were so worried about an influx of enrollees that they added barriers such as eligibility guidelines that require people to be uninsured for at least six months — a rule that in some states has the effect of halving the pool of people who otherwise would be eligible. But instead of a tsunami of interest, only 21,454 people had enrolled by the end of April. New estimates are usually released in the middle of the month and enrollment estimates from May could be released on Friday.
The low enrollment suggests there will be few problems ensuring that the $5 billion for the program will last until it ends in 2014. But state officials are finding that the population of enrollees is more expensive than expected — even more costly than those in the state-based programs that will continue alongside the new federal program.
For instance, in North Carolina, officials are noticing that enrollees are using the emergency room more than expected, even though they now have access to primary care physicians and specialists. In some other states, officials are seeing a higher-than-expected incidence of cancer cases, which patients discover once they have enrolled and visit a physician for the first time in a long while.
As a result, it is unclear to state officials how long the money will last, and many would like to see data on the expenditures so far. Some state officials are curious to see how quickly allotments in other states are running out. They fear that if they are not enrolling beneficiaries as quickly as other states, their funding could be redistributed to those other states.
House Republicans are also interested in examining the expenditure data because some suspect that the low enrollment may cause administration officials to find they have to spend more on marketing the program than expected.
“This is a problem if we don’t know how the money is being spent,” said Rep.
Indeed, in some states, it might appear at first that a good proportion of the budget is going toward outreach or administrative costs. A public audit of the state-run PCIP pool in Wisconsin showed that nearly as much money was spent on setting up and publicizing the program as was used to pay for actual coverage. However, state officials say it would be unfair to judge the program based on just the first-year expenses because often there are up-front, one-time costs associated with creating a new program. And the health care law caps state administrative expenses at 10 percent of overall program costs.
HHS Officials Quiet About High-Risk Pool Expenses
“When you amortize those costs over the life of the program, no state is going to spend more than that 10 percent cap and most will probably be well under 10 percent,” said Amie Goldman, the director of the state pool program in Wisconsin. She noted that the administrative costs are 4 percent of the budget for a state high-risk pool that existed before the law passed and continues to operate. “The pools are run efficiently, and it would not be fair to evaluate them on the first six months of the program.”
Federal officials are not subject to the same 10 percent limit on administrative costs. They have declined to say how much of the budget is going toward outreach but have acknowledged that enrollment is not as high as they would like.
In the past few months, CCIIO officials have traveled the country to generate interest in the coverage so that people who need the benefit are aware of it. They also are contemplating running ads about the program, just as officials in the George W. Bush administration did to raise awareness of the Part D prescription drug benefit when it was first starting.
Consumer advocates and some researchers say that the administration should be spending more money, not less, on outreach, because the population that would benefit really needs the coverage.
“Saying this program is life saving is no overstatement,” said Urban Institute economist Linda Blumberg. “This is the most vulnerable population healthwise. We need to both give credit for those who are being helped and realize that the stakes are incredibly high for this population. These people can’t wait until 2014. And when I talk to people who can benefit [from the program], they don’t know anything about it.”
In North Carolina, state officials have done some advertising, but they still haven’t seen the enrollment increases they would like. North Carolina high-risk pool director Michael Keough, the chairman-elect of the National Association of State Comprehensive Health Insurance Plans, estimates that there are about 200,000 uninsured people with pre-existing conditions in his state. About half of them meet the law’s requirement that they have been uninsured for six months. The state was given a funding allotment that would allow them to cover about 8,000 people.
But even though the state has been one of the most active in trying to advertise the program and sign people up, officials still had approved only 1,984 as of July 5.
Administration officials say they are doing what they can to use low-cost techniques to increase awareness and make the program more attractive. Earlier this month, lower rates took effect in many of the states operated by the federal government. Administration officials also said that they would make it easier to enroll by allowing a doctor’s note confirming a pre-existing condition to suffice as proof, rather than requiring patients to get a letter from an insurer denying coverage. Officials also are encouraging insurers to tell patients whose application they deny because of a pre-existing condition that the new federal program exists. The officials also announced that they will pay insurance agents to refer patients to the program, and they are working with groups including the Susan G. Komen Foundation, the National Baptist Congress, the American Heart Association and American Stroke Association to get the word out.
Keough said that it’s unclear to him what it would take to generate more interest in the program. He said that there is one tool that he wishes the administration would use more often: the comments of President Obama.
“If this were a less controversial program and the president was able to use the bully pulpit like President Bush [with the prescription drug benefit launch], they’d have another tool,” Keough said. “But it’s coupled with health reform, so by association it just gets included in that whole debate.”
Rebecca Adams can be reached at firstname.lastname@example.org.