Administrative Code

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Virginia Administrative Code
Title 12. Health
Agency 30. Department of Medical Assistance Services
Chapter 20. Administration of Medical Assistance Services
7/4/2022

12VAC30-20-210. State method on cost effectiveness of qualified employer-sponsored insurance plans.

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.

"Cost effective" and "cost effectiveness" mean the reduction in Title XIX expenditures, which are likely to be greater than the additional expenditures for premiums and cost-sharing items required under § 1906 of the Social Security Act (the Act), with respect to such enrollment.

"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 that 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, § 4980B of the Internal Revenue Code of 1986, or Title VI of the Employee Retirement Income Security Act of 1974. 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 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 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 that 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 group health plan; such cost may be shared by the employer and employee or paid in full by either party.

"Premium assistance subsidy" means the portion that DMAS will pay of the employee's cost of participating in a qualified employer-sponsored insurance plan to cover the Medicaid eligible members under the employer-sponsored plan if DMAS determines it is cost effective to do so.

"Qualified employer-sponsored insurance" as defined under § 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 Program shall be to:

1. Enroll members who have qualified employer-sponsored insurance plans that are likely to be cost effective;

2. Provide premium assistance subsidy for payment of the employee share of the premiums and other cost-sharing obligations for items and services otherwise covered under the State Plan for Medical Assistance; and

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 individual 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 cost for the individual 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 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 all group health plans available to the recipients in the case including the effective date of coverage, the services covered by the plan, the deductibles and copayments required by the plan, the exclusions to the plan, and the amount of the premium. 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 persons who are eligible for coverage under the qualified employer-sponsored insurance plan and who are eligible for Medicaid shall be eligible for consideration for HIPP, except those identified in subdivisions 2 a through 2 e of this subsection.

a. The recipient is Medicaid eligible due to "spenddown."

b. The recipient is currently enrolled in the qualified employee-sponsored insurance plan and is only retroactively eligible for Medicaid.

c. The recipient is in a nursing home or has a deduction from patient pay responsibility to cover the insurance premium.

d. Currently, Medicare beneficiaries who are enrolled in a MCO do not qualify for participation in the HIPP Program. If a Medicaid beneficiary is enrolled in an MCO, the beneficiary must wait until he is disenrolled from the MCO to become eligible for HIPP. HIPP applications are not approved until the managed care eligibility has ended at the end of the month.

e. The recipient is eligible for Medicare Part B but is not enrolled in Part B.

E. Application required. A completed HIPP application must be submitted to DMAS to be evaluated for HIPP program eligibility; if HIPP program eligibility is established, DMAS shall then evaluate the group health plan for cost effectiveness. The HIPP application consists of the forms prescribed by DMAS and any necessary information as required by the program to evaluate eligibility and perform a cost-effectiveness evaluation.

1. Effective date of premium assistance subsidy. Payment of premium assistance subsidy shall become effective on the first day of the month following the month in which DMAS approves the application and makes the cost effectiveness determination. Payment shall be made to either the employer, the insurance company, or to the individual who is carrying the group health plan coverage.

2. Termination date of premium assistance subsidy. 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 recipient loses eligibility for coverage in the qualified employer-sponsored insurance plan; or

c. 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 redetermined that the group health plan is no longer cost effective.

3. Non-Medicaid-eligible family members. Payment of premium assistance subsidy for non-Medicaid-eligible family members may be made when their enrollment in the qualified employer-sponsored insurance plan is required in order for the recipient to obtain the qualified employer-sponsored insurance plan coverage. Such payments shall be treated as payments for Medicaid benefits for the recipient. No payments for deductibles, coinsurances, and other cost-sharing obligations for non-Medicaid-eligible family members shall be made by DMAS.

4. Evidence of enrollment required. The payee to whom DMAS is paying the qualified employer-sponsored insurance plan premium assistance subsidy shall, as a condition of receiving such payment, provide to DSS or DMAS, upon request, written evidence of the payment of the employee's share of the plan premium for the qualified employer-sponsored insurance plan that DMAS determined to be cost effective.

F. Cost-sharing wrap.

1. Premium assistance enrollment is voluntary. Individuals enrolled in the 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 state 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.

G. HIPP program participation requirements. Participants must comply with the following program requirements as prescribed by DMAS for continued enrollment in HIPP. Failure to comply shall result in termination from the program.

1. Submission of documentation of any change 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 change, including income and individuals in 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 participation and program requirements as required by DMAS.

H. HIPP redetermination. DMAS shall redetermine the cost effectiveness of the qualified employer-sponsored insurance plan periodically, and at least every 12 months. DMAS shall also redetermine cost effectiveness when changes occur with the recipient's average Medicaid cost or with the qualified employer-sponsored insurance plan information that was used in determining the cost effectiveness. When only part of the household loses Medicaid eligibility, DMAS shall redetermine the cost effectiveness to ascertain whether payment of the premium assistance subsidy of the qualified employer-sponsored insurance plan continues to be cost effective.

I. Multiple group health plans. When a member is eligible for more than one group health plan, DMAS shall perform the cost effectiveness determination on the group health plan in which the member is enrolled. If the member is not enrolled in a group health plan, DMAS shall perform the cost effectiveness determination on each group health plan available to the member.

J. Third-party liability. When recipients are enrolled in group health plans, these plans shall become the first sources of health care benefits, up to the limits of such plans, prior to the availability of Title XIX benefits.

K. 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).

L. Provider requirements. Providers shall be required to accept the greater of the group health plan's reimbursement rate or the Medicaid rate as payment in full and shall be prohibited from charging the recipient or Medicaid amounts that would result in aggregate payments greater than the Medicaid rate as required by 42 CFR 447.20.

M. Provider participation or enrollment. The Commonwealth will enroll network providers as full Medicaid providers or 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 state enrolls providers for the sole purpose of being reimbursed for cost sharing, the payee 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. 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 VR460-02-4.2230, eff. April 1, 1993; amended, Virginia Register Volume 25, Issue 20, eff. July 23, 2009; Volume 29, Issue 2, eff. October 25, 2012; Volume 38, Issue 12, eff. March 17, 2022.

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