Indiana is pushing the bounds of Medicaid with the first-ever consumer-driven health plan for low-income populations. It's opening up new possibilities for other right-leaning states, but testing federal limits.
Some 700,000 Hoosiers will soon be eligible to get Medicaid coverage under a plan designed by Indiana Governor Mike Pence's administration and approved by the federal government on a waiver.
The program, Healthy Indiana Plan 2.0, is a new version of a previous, by many accounts successful demonstration covering about 60,000 residents.
With HIP 2.0, Indiana will be the 28th state to expand Medicaid eligibility under the Affordable Care Act, the 10th to do so with a Republican Governor, and the fourth to use a variation of so-called private option to expand Medicaid, pioneered by Arkansas.
Indiana will also be the first to run a consumer-driven health plan for a Medicaid population, and the first to use two policies that the feds have heretofore been wary of approving.
"The expanded and updated HIP 2.0 is based on a program that has been serving 60,000 low-income Hoosiers in our state for seven years. It is a proven model for Medicaid reform across the nation," Pence said.
"We have worked hard to ensure that low-income Hoosiers have access to a healthcare plan that empowers them to take charge of their health and prepares them to move to private insurance as they improve their lives. This has been a long process, but real reform takes work."
The program features two main types of plans: HIP Plus, with HSA-esque Personal Wellness and Responsibility (or POWER) accounts, and HIP Basic.
Individuals earning up to 138 of the federal poverty level can choose to enroll in HIP Plus health plans, under which beneficiaries contribute up to 2 percent of their monthly income, on a sliding scale of $1 to $27, to POWER accounts. The state will also contribute on a sliding scale to give every HIP Plus beneficiary a balance of $2,500 that can be tapped to pay for the first $2,500 of healthcare and be rolled over. HIP Plus also features options for dental and vision care.
The Basic HIP plan is for anyone below the poverty level who can't pay the monthly contributions; it does not include dental or vision and requires copayments for care that in total are limited to 5 percent of income.
One feature of HIP Plus is a first in waivers for Medicaid eligibility: HIP Plus beneficiaries earning above 100 percent FPL who stop making monthly payments will be locked out of coverage for six months. Indiana sought a lock-out penalty of 12 months, a feature of HIP 1.0 for a much smaller population. CMS allowed that only to be six months -- raising the possibility that other states may try to incorporate it.
Another first-time approval is CMS's okay for Indiana to charge new Medicaid patients $8 for non-emergent use of the ER and $25 for repeated non-emergent ER visits. Pennsylvania's private option Medicaid plan, which is slated to be phased out before starting thanks to a newly-elected Democratic Governor, also won federal approval for an $8 non-emergent ER use fee, but not subsequent charges.
In Indiana, CMS approved the ER fees to "study testing whether copays encourage care in the most appropriate settings while not harming beneficiary health." Some HIP beneficiaries will be assigned to a control group and will not be charged, and CMS will follow the long-term results.
CMS did not approve Indiana's bid to include a mandatory job-search requirement for unemployed Medicaid beneficiaries -- something other states, including Pennsylvania, unsuccessfully sought -- but the state is going to run a separate program called HIP Link, offering low-income Hoosiers assistance to purchase private insurance through their employers.
With the approval of HIP 2.0, Indiana is going to end traditional Medicaid for all non-disabled Hoosiers between 19 and 64, while also increasing reimbursement for providers under the program.
The state estimates that more than 300,000 residents will sign up for the program in the first year, representing about half of those newly eligible for Medicaid, and that some 400,000 would sign up next year. About 350,000 Hoosiers are estimated to be uninsured.
Leaders Anthem Blue Cross and Blue Shield of Indiana, one of the managed care organizations contracted for the current HIP program, praised the federal approval and plans to hire about 200 new employees to staff up for expansion.
"Members appreciate having control of their healthcare decisions, and HIP 2.0 broadens this opportunity for Medicaid eligible Hoosier residents," said Kristen Metzger, president of Anthem Blue Cross and Blue Shield's Indiana Medicaid division. "We are excited to have been a partner with Indiana on HIP since the program's inception and look forward to serving more Hoosiers under this new expanded program."