Feds Outline Plan to Pay States for Basic Health Program in 2016

The federal government will continue to fund an optional health insurance program for the working poor in 2016 with the methodology it used for 2015, according to a proposed notice from the CMS (PDF).

The Patient Protection and Affordable Care Act established the Basic Health Program. The initiative is a form of managed care that gives people younger than 65 who earn between 138% and 200% of the federal poverty level and are not otherwise eligible for Medicaid a chance to obtain affordable health coverage. The Basic Health Program is voluntary, and it’s an alternative to the widely followed insurance marketplaces.

States that move forward with the Basic Health Program must offer plans that at least cover the 10 essential health benefits required by the healthcare law, such as hospitalization, lab tests and mental health services. The federal government will reimburse states 95% of the value of the premium tax credits and cost-sharing reductions that Basic Health Program enrollees would have received if they bought a plan through an exchange. Those enrollees’ monthly premiums and cost-sharing options like copayments and deductibles also will not exceed what they would’ve paid under an exchange plan.

The CMS’ latest notice is similar to its final rule from March, when the agency outlined how it would pay states who decide to move forward with a Basic Health Program in 2015. The notice posted Tuesday said the feds will use the same payment methodology for 2016. The CMS calculates Basic Health Program payments to states through complex equations that factor in a consumer’s potential premium tax credits, cost-sharing reduction, age, geographic area, household size, income range and other elements.

The CMS also said it would allow states to propose payment methodologies that factor speculated health differences between Basic Health Program enrollees and exchange enrollees. Those proposals would have to be approved by Dec. 31, 2015.

The CMS will issue a final notice on 2016 Basic Health Program funding in February.

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