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Virginia Administrative Code
Title 12. Health
Agency 30. Department of Medical Assistance Services
Chapter 20. Administration of Medical Assistance Services
7/3/2022

12VAC30-20-205. Health Insurance Premium Payment for Kids.

A. Definitions. The following words and terms when used in this section shall have the following meanings unless the context clearly indicates otherwise:

"Case" means all family members who are eligible for coverage under the qualified employer-sponsored insurance plan and who are eligible for Medicaid.

"Code" means the Code of Virginia.

"DMAS" means the Department of Medical Assistance Services consistent with Chapter 10 (§ 32.1-323 et seq.) of Title 32.1 of the Code of Virginia.

"DSS" means the Department of Social Services consistent with Chapter 1 (§ 63.2-100 et seq.) of Title 63.2 of the Code of Virginia.

"Family member" means an individual in the household, who is not a parent and who is related by blood, marriage, adoption, or legal custody.

"Group health plan" means a plan which meets § 5000(b)(1) of the Internal Revenue Code of 1986 and includes continuation coverage pursuant to Title XXII of the Public Health Service Act (42 USC § 201 et seq.), § 4980B of the Internal Revenue Code of 1986, or Title VI of the Employee Retirement Income Security Act of 1974 (42 USC § 200I et seq.). Section 5000(b)(1) of the Internal Revenue Code provides that a group health plan is a plan, including a self-insured plan, of, or contributed to by, an employer (including a self-insured person) or employee association to provide health care (directly or otherwise) to the employees, former employees, or the families of such employees or former employees, or the employer.

"High deductible health plan" means a plan as defined in § 223(c)(2) of the Internal Revenue Code of 1986, without regard to whether the plan is purchased in conjunction with a health savings account (as defined under § 223(d) of the Internal Revenue Code of 1986).

"HIPP" means the Health Insurance Premium Payment Program administered by DMAS consistent with § 1906 of the Social Security Act (42 USC § 301 et seq.) (the Act).

"HIPP for Kids" means the Health Insurance Premium Payment Program administered by DMAS consistent with § 1906A of the Act.

"Member" means a person who is eligible for Medicaid as determined by DMAS or a DMAS designated agent, including the Department of Social Services.

"Network provider" means a provider who is enrolled with a DMAS contracted managed care organization (MCO) as a provider and meets the requirement for an expedited enrollment as a fee-for-service (FFS) Medicaid provider for payment and billing purposes.

"Parent" means the biological or adoptive parent, or the biological or adoptive parent and the stepparent, living in the home with the Medicaid-eligible child. The health insurance policyholder shall be a parent as defined in this section.

"Payee" means the insured employee who is the policy holder of the qualified employer-sponsored insurance plan who is paid the HIPP or HIPP for Kids premium and cost-sharing reimbursement.

"Premium" means the fixed cost of participation in the qualified employer-sponsored insurance plan, which cost may be shared by the employer and employee or paid in full by either party.

"Premium assistance subsidy" means the amount that DMAS will pay of the employee's cost of participating in the qualified employer-sponsored insurance plan to cover the Medicaid eligible member younger than 19 years of age if DMAS determines it is cost effective to do so.

"Qualified employer-sponsored insurance" as defined in § 2105(c)(10)(B) of the Social Security Act means a group health plan or health insurance coverage offered through an employer:

1. That qualifies as creditable coverage as a group health plan under § 2701(c)(1) of the Public Health Service Act;

2. For which the employer contribution toward any premium for such coverage is at least 40%; and

3. That is offered to all individuals in a manner that would be considered a nondiscriminatory eligibility classification for purposes of § 105(h)(3)(A)(ii) of the Internal Revenue Code of 1986 without regard to § 105(h)(3)(B)(i).

"State Plan" means the State Plan for Medical Assistance for the Commonwealth of Virginia.

B. Program purpose. The purpose of the HIPP for Kids program shall be to:

1. Enroll members who are eligible for coverage under a qualified employer-sponsored insurance plan.

2. Provide premium assistance subsidy for payment of the employee share of the premiums and other cost-sharing obligations for the Medicaid-eligible child younger than 19 years of age. In addition, to provide cost sharing for the child's parent who is not Medicaid eligible for items and services covered under the qualified employer-sponsored insurance that are also covered services under the State Plan. There is no cost sharing for parents for services not covered by the qualified employer-sponsored insurance.

3. Treat coverage under such qualified employer-sponsored insurance plan as a third-party liability consistent with § 1906 of the Social Security Act.

C. Cost effectiveness methodology.

1. DMAS shall evaluate the member to determine the appropriate managed care organization (MCO) capitation rate to be used. The capitation rate will be determined based on aid category, nursing facility or waiver eligibility, age, gender, and region.

2. DMAS shall adjust the capitation rate to exclude Medicaid services that are not available through commercial group health insurance policies. This requires that the capitation rate be adjusted to exclude services, including nursing facility and long-term services and supports provided in the Commonwealth Coordinated Care (CCC) Plus program as well as community mental health services and nonemergency transportation services available in CCC Plus and Medallion.

3. DMAS shall adjust the reduced capitation rate from subdivision 2 of this subsection to reflect the higher prices employer plans pay. The Virginia price factor shall be based on the national factor of 1.3 that is published by the Centers for Medicare and Medicaid Services.

4. The qualified employer-sponsored insurance plan cost for the member shall be increased to reflect the amount of coinsurance and other member cost sharing typically imposed on HIPP members and paid by DMAS. Such amount shall be determined by averaging the aggregate amount of such expenditures by DMAS in the most recently completed fiscal year by the number of HIPP members covered during the fiscal year.

5. The qualified employer-sponsored insurance plan cost determined in subdivision 4 of this subsection shall be increased to reflect the DMAS administrative expenses directly related to the HIPP program. This additional cost is determined based on the average total monthly compensation paid to each HIPP analyst employed by DMAS and divided by the anticipated caseload.

6. The cost effectiveness shall be affirmed if the adjusted capitation rate from subdivision 3 of this subsection equals or exceeds the adjusted qualified employer-sponsored insurance plan cost from subdivision 5 of this subsection.

D. Member eligibility.

1. DMAS shall obtain specific information on qualified employer-sponsored insurance available to the members in the case including the effective date of coverage, the services covered by the plan, the deductibles and copayments required by the plan, and the amount of the premium paid by the employer and employee. Coverage that is not comprehensive shall be denied premium assistance. A qualified employer-sponsored insurance plan must provide the following services in order to be considered comprehensive:

a. Physician services;

b. Inpatient and outpatient hospitalization;

c. Outpatient labs, shots, and x-rays; and

d. Prescription drugs.

2. All Medicaid-eligible family members younger than 19 years of age who are eligible for coverage under the qualified employer-sponsored insurance shall be eligible for consideration for HIPP for Kids except the following:

a. The member who is Medicaid eligible due to "spenddown"; or

b. The member who is currently enrolled in the qualified employer-sponsored insurance and is only retroactively eligible for Medicaid.

E. Application required. A completed HIPP for Kids application must be submitted to DMAS to be evaluated for program eligibility. The HIPP for Kids application consists of the forms prescribed by DMAS and any necessary information as required by the program to evaluate eligibility and determine if the plan meets the criteria for qualified employer-sponsored insurance.

F. Exceptions. The term "qualified employer-sponsored insurance" does not include coverage consisting of:

1. Benefits provided under a health flexible spending arrangement (as defined in § 106(c)(2) of the Internal Revenue Code of 1986);

2. A high deductible health plan (as defined in § 223(c)(2) of the Internal Revenue Code of 1986), without regard to whether the plan is purchased in conjunction with a health savings account (as defined under § 223(d) of the Internal Revenue Code of 1986); or

3. For self-employed individuals, qualified employer-sponsored insurance obtained through self-employment activities shall not meet the program requirements unless the self-employment activities are the family's primary source of income and the insurance meets the requirements of the definition of qualified employer-sponsored insurance in subsection A of this section. Family for this purpose includes family by blood, marriage, or adoption.

G. Payments. When DMAS determines that a qualified employer-sponsored insurance plan is eligible and other eligibility requirements have been met, DMAS shall provide for the payment of premium assistance subsidy and other cost-sharing obligations for items and services otherwise covered under the State Plan, except for the nominal cost-sharing amounts permitted under § 1916 of the Social Security Act.

1. Effective date of premium assistance subsidy. Payment of premium assistance subsidies and other cost-sharing obligations shall become effective on the first day of the month following an approved application for which qualified employer-sponsored insurance becomes effective. Payments shall be made to the individual who is carrying the qualified employer-sponsored insurance plan coverage.

2. Payments for deductibles, coinsurances, and other cost-sharing obligations.

a. Medicaid eligible children younger than 19 years of age pursuant to § 1906A of the Act. The Medicaid agency pays all premiums, deductibles, coinsurance, and other cost-sharing obligations for items and services covered under the State Plan, as specified in the qualified employer-sponsored insurance, without regard to limitations specified in § 1916 or 1916A of the Act, for eligible individuals younger than 19 years of age who have access to and elect to enroll in such coverage. The eligible individual is entitled to services covered by the State Plan that are not included in the qualified employer-sponsored insurance.

b. In order to receive reimbursement, the individual shall submit to DMAS an explanation of benefits or similar documentation from the insurance company or doctor's office showing the date of service (DOS), that the expense is the responsibility of the member or parent, that the expense was paid prior to the submission of the request, and sufficient identification codes for the DOS to enable DMAS to determine if the service is reimbursable before applying the remaining cost sharing criteria.

c. Reimbursement for cost sharing shall be processed on a quarterly basis.

d. Ineligible family members. When coverage for Medicaid-eligible family members younger than 19 years of age is not possible unless a parent who is not Medicaid eligible enrolls in qualified employer-sponsored health insurance, the Medicaid agency pays premiums for enrollment of the parent who is not Medicaid eligible and other family members who are eligible for coverage under the qualified employer-sponsored insurance. In addition, the agency provides cost sharing for the parent who is not Medicaid eligible for items and services covered under the qualified employer-sponsored insurance that are also covered services under the State Plan. There is no cost sharing for parents who are not Medicaid eligible for items and services not covered by the qualified employer-sponsored insurance.

3. Documentation required for premium assistance subsidy reimbursement. A payee to whom DMAS is paying a qualified employer-sponsored insurance premium assistance subsidy shall, as a condition of receiving such payment, provide documentation as prescribed by DMAS of the payment of the qualified employer-sponsored insurance plan premium, as well as payment of coinsurances, copayments, and deductibles for services received.

H. Cost-sharing wrap.

1. Premium assistance enrollment will be voluntary. Individuals enrolled in the Commonwealth's Health Insurance Premium Payment (HIPP) program are afforded the same member protections provided to all other Medicaid enrollees. Cost sharing shall only be charged to Medicaid members as permitted under §§ 1916 and 1916A of the Social Security Act. Cost sharing shall not exceed 5.0% of household income.

2. The Commonwealth will provide a cost-sharing wrap to any cost-sharing amounts of a Medicaid covered service that exceeds the cost-sharing limits described in the State Plan, regardless of whether individuals enrolled in a HIPP program receive care from a Medicaid participating provider or a nonparticipating provider.

3. To effectuate the cost-sharing wrap, the Commonwealth will encourage nonparticipating providers to enroll by conducting targeted outreach to inform nonparticipating Medicaid providers on how to enroll in Medicaid for the purposes of receiving payment from the Commonwealth for cost-sharing amounts that exceed the Medicaid permissible limits.

4. The Commonwealth will inform members regarding options available when the member obtains care from a nonparticipating provider, including, as applicable, reimbursement for out-of-pocket, cost-sharing costs from this provider.

5. In order to receive reimbursement, the individual shall submit to DMAS an explanation of benefits or similar documentation from the insurance company or doctor's office showing DOS, that the expense is the responsibility of the member or parent, that the expense was paid prior to the submission of the request, and sufficient identification codes for the DOS to enable DMAS to determine if the service is reimbursable before applying the remaining cost-sharing criteria.

6. Reimbursement for cost-sharing shall be processed on a quarterly basis.

I. Program participation requirements. Participants must comply with program requirements as prescribed by DMAS for continued enrollment in HIPP for Kids. Failure to comply with the following may result in termination from the program:

1. Submission of documentation of any changes to the qualified employer-sponsored insurance plan, to include any changes to the employee share of the premium expense, within 10 days of receipt of notice of the change.

2. Any household changes, including income and individuals in the household, must be reported within 10 days of the change.

3. Completion of annual redetermination.

4. Completion of consent forms. Participants may be required to complete a consent form to release information necessary for HIPP for Kids participation and program requirements as required by DMAS.

J. HIPP for Kids redetermination. DMAS shall redetermine the eligibility of the qualified employer-sponsored insurance periodically, at least every 12 months. DMAS shall also redetermine eligibility when changes occur with the qualified employer-sponsored insurance plan information that was used in determining HIPP for Kids eligibility.

K. Program termination. Participation in the HIPP for Kids program may be terminated for failure to comply or meet program requirements. Termination will be effective the last day of the month in which advance notice has been given (consistent with federal requirements at 42 CFR 431.211).

1. Participation may be terminated for failure to meet program requirements including the following:

a. Failure to submit documentation of payment of premiums;

b. Failure to provide information required for reevaluation of the qualified employer-sponsored insurance;

c. Loss of Medicaid eligibility for all household members;

d. Medicaid household member no longer covered by the qualified employer-sponsored insurance;

e. Medicaid-eligible child turns 19 years of age; or

f. Employer-sponsored health plan no longer meets qualified employer-sponsored insurance requirements.

2. Termination date of premiums. Payment of premium assistance subsidy shall end on whichever of the following occurs the earliest:

a. On the last day of the month in which eligibility for Medicaid ends;

b. The last day of the month in which the member loses eligibility for coverage in the qualified employer-sponsored insurance plan;

c. The last day of the month in which the child turns 19 years of age;

d. The last day of the month in which adequate notice has been given (consistent with federal requirements at 42 CFR 431.211) that DMAS has determined that the qualified employer-sponsored insurance plan no longer meets program eligibility criteria; or

e. The last day of the month in which adequate notice has been given (consistent with federal requirements at 42 CFR 431.211) that HIPP for Kids participation requirements have not been met.

L. Third-party liability. When members are enrolled in qualified employer-sponsored insurance plans, these plans shall become the first sources of health care benefits, up to the limits of such plans, prior to the availability of payment under Title XIX.

M. Appeal rights. Applicants and members shall be given the opportunity to appeal adverse agency decisions consistent with agency regulations for client appeals (12VAC30-110-10 through 12VAC30-110-370).

N. Provider requirements. Providers shall be required to accept the greater of the qualified employer-sponsored insurance plan's reimbursement rate or the Medicaid rate as payment in full and shall be prohibited from charging the member or the Medicaid program amounts that would result in aggregate payments greater than the Medicaid rate as required by 42 CFR 447.20.

O. Provider participation or enrollment. The Commonwealth will enroll network providers as full Medicaid providers or enroll as fee-for-service Medicaid providers solely for the purpose of receiving cost sharing, similar to processes related to enrolling Medicare-participating providers that serve dually eligible members. If the Commonwealth enrolls providers for the sole purpose of being reimbursed for cost sharing, the provider would make the decision to enroll knowing that the provider network would be the same as for other enrollees of the qualified employer-sponsored insurance plan. In either scenario, the member would never pay more than the permissible Medicaid copayment.

Statutory Authority

§ 32.1-325 of the Code of Virginia; 42 USC § 1396 et seq.

Historical Notes

Derived from Virginia Register Volume 29, Issue 2, eff. November 8, 2012; amended, Virginia Register Volume 38, Issue 12, eff. March 17, 2022.

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