CMS sets payment methodology for Basic Health Plan

The Centers for Medicare & Medicaid Services has proposed payment rules for the Basic Health Insurance Program, which would provide affordable coverage to individuals earning between 133 percent and 200 percent of the federal poverty level.

The Affordable Care Act created the concept of the basic plan, which is intended to provide coverage to people of moderate means who earn too much to qualify for expanded Medicaid eligibility.

CMS' formula is based on a variety of factors, including an applicant's age, income and where in the state they reside. CMS would cover 95 percent of premiums that would account for the tax credit they would receive if they purchased insurance on the exchange, along with 95 percent of the federal cost-sharing subsidies for which the applicants qualify.

The plan was suppposed to be implemented in 2014, but was delayed by the U.S. Department of Health and Human Services, without explanation, until 2015, along with a variety of other ACA-related initiatives.

It's unclear how many people would enroll in the plan by state, but brining this population into the fold would help beef up the number of insured in states that have declined to expand their Medicaid eligibility under the Affordable Care Act--a decision many hospitals say will hurt them financially. However, Health Affairs noted that a Basic Health Plan option is only being considered by about a dozen states altogether.

After a public comment period, CMS will finalize the payment methodology in March 2014.

Now that the payment methodology for 2015 has been proposed, CMS said it would propose changes in Basic Health Plan payment methodology annually in October. Those changes would then be implemented 15 months later -- starting at the beginning of the calendar year.

To Learn More:
- read the Health Affairs blog post
- check out the CMS' proposed payment methodology (.pdf)

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