Experts: Approval likely for Indiana's health plan

But Indiana Gov. Mike Pence’s administration may have to negotiate at least two parts of its proposal with the federal government.

Features of the plan likely to spur conversations with federal health officials are the up to $25 copayment for use of an emergency room in a nonemergency situation and the six-month lockout period for participants earning above the federal poverty line that fail to pay monthly contributions to a health savings account.

Those issues are relatively minor details, said Joan Alker, executive director of the Georgetown University Center for Children and Families.

“As long as both sides continue to talk, I think they are going to get the ‘yes,’” Alker said.

What’s important is Pence’s proposal already reflects the preference of not charging participants under the federal poverty line monthly premiums, said Judy Solomon, vice president for health policy for the Center on Budget and Policy Priorities.

“In doing that, they’ve really come within what (Centers for Medicare & Medicaid Services) is willing to approve,” Solomon said.

In May, Pence unveiled his proposal to cover 350,000 uninsured adults Hoosiers by tapping into Medicaid dollars made possible by the Affordable Care Act. The proposal expands the Healthy Indiana Plan, which currently serves more than 40,000 participants, by dividing the coverage into two tiers. If approved, the federal government would pay for all the cost associated with new enrollees through 2016, and then the federal share gradually declines to 90 percent by 2020.

The tiered coverage is what experts say makes Indiana’s plan unique. The plan charges participants above the federal poverty line a monthly contribution. Participants below the poverty line can choose to pay a monthly contribution for greater coverage but default to a plan with lesser coverage and co-pays if monthly payments aren’t made.

In Iowa, the federal government allowed premiums for participants below the federal poverty line, but coverage isn’t lost if they aren’t paid. Iowa also offers incentives to waive premiums and a participant can claim economic hardship.

Solomon anticipates most participants below the poverty line won’t make a monthly contribution to a health savings account and go to the lesser benefit package if Indiana is allowed to expand the program.

“That’s the experiment I guess, and we’ll see, but my expectation with what we know from programs that charged premiums to very low-income people, we see a drop off in participation,” Solomon said. “People have a choice. They don’t necessarily have to pay them and as result get not as good as a benefit and pay out of pocket for services.”

Pence’s administration makes an argument to charge an up to $25 copay for nonemergency use of an emergency room for all Healthy Indiana Plan participants to discourage inappropriate visits. The first “inappropriate” visit would carry an $8 charge, which the state is currently allowed to bill through Medicaid. But participants would face a $25 charge for any following visits. Alker said the state will likely receive approval for co-pays, except for the $25 charge because it’s higher than what’s allowed in the Medicaid program.

The proposal also lowers the lockout period for nonpayment from 12 months to six months. Under the current plan, participants are locked out if they fail to pay. The proposed expansion would lock out participants above the federal poverty level if they don’t make payments, but would not affect participants below the poverty line. Pennsylvania’s proposal carries a lockout period but the federal government has yet to make a decision on that state’s plan.

Alker said she suspects Indiana’s lockout feature may change in the final agreement. State officials say in the proposal the lockout policy is “more lenient” than the federal marketplace, which by the state’s timeline could disenroll a participant for seven months for nonpayment.

Pence submitted his proposal last week, saying Indiana is “capable” and “prepared” to expand the program. There is no set timetable for the federal government to rule on the waiver.