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April 2004
 SCI
talks with Joanne Slesser, the former director of Pennsylvania’s
Health Insurance Premium Payment (HIPP) program.
Questions and text prepared by:
Isabel Friedenzohn, SCI associate
Pennsylvania’s
Health Insurance Premium Payment (HIPP) program
has emerged as an efficient and financially successful employer
buy-in program. HIPP, established as Section 1906 in the Medicaid
statute, is one method of implementing employer buy-ins. Other states
have typically developed employer buy-ins through SCHIP or through
Section 1115 demonstration or Health Insurance Flexibility and Accountability
(HIFA) waivers. Implemented in 1994, Pennsylvania’s program
is one of 11 HIPP programs currently in operation. As of April 1,
2004, the program had enrolled more than 21,000 members who receive
coverage from employers that vary from small businesses to large
corporations.
Joanne
Slesser, the former director of the program, has worked for the
state of Pennsylvania for 19 years and was closely involved with
the HIPP program’s design and implementation. Her first assignment
on HIPP was to review the proposed Omnibus Budget Reconciliation
Act of 1990 (OBRA ‘90) regulations that led to the program’s
implementation in 1994. We asked Slesser about how Pennsylvania’s
HIPP program works, its successes and challenges, and the lessons
she learned along the way.
Slesser
attributes the success of the program to its automated process for
enrolling and tracking participants and effective outreach. The
program’s 53 staff in five regional offices have established
solid relationships with employers throughout the state. The most
difficult obstacle to implementing the program was getting referrals
and establishing the cost-effectiveness analysis, Slesser says.
But with everything now in place, the program has achieved savings
goals: Savings for Fiscal Year 2003 reached $76.3 million.
1.
SCI: What kind of political and financial commitment did you need
to make in order for the program to succeed?
SLESSER:
Once HIPP was implemented as a result of OBRA ’90, our
state legislature approved a request for funding based on the federal
mandate and detailed projections of program savings, as well as
the necessary staff and equipment. The staffing request was based
on program size projections that were made using reports showing
the number of employed persons currently receiving Medical Assistance
and estimating the percentage of those employers who offered medical
benefits. Costs were justified by showing return-on-investment projections.
The
state’s financial commitment to provide the staff necessary
to run the program was essential to its success. When compared to
the savings generated by the HIPP program, the return on investment
for staff is about 30:1. This reflects net savings after consideration
of premium amounts, deductibles, and co-pay amounts, which could
be billed to Medical Assistance. Operating expenses are compiled
at the end of each fiscal year, and deducted from the reported savings
at that time.
2.
SCI: Of your 21,000 enrollees, 71 percent are under the age of 17.
Why is there such a high proportion of young people in the program?
SLESSER:
There are several reasons. First, a large number of children
are eligible for Supplemental Security Income whose parents are
not Medicaid-eligible. Second, many Medicaid-eligible parents with
access to employer-sponsored insurance opt only to enroll their
children, because their employer covers 100 percent of their coverage
but not that of their dependents. Finally, many enrolled parents
have multiple children.
3.
SCI: Given the general lack of success of HIPP programs in other
states, what distinguishes Pennsylvania’s program?
SLESSER:
The automated system that we developed exclusively for HIPP
distinguishes it from other programs. We created a software application
that stores case records and generates payments. The application
has interface capability with the mainframe eligibility files for
the Department of Public Welfare. With the system and database,
we can:
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Process and maintain a large number of cases with minimal cost
and effort.
-
Provide quality control and eliminate data-entry errors, especially
with regard to the automated cost-analysis functions and the real-time
transfer of data.
-
View reports and compare case statistics, such as the number of
enrollments, average savings, average costs, policy benefits,
employer data, etc., from an individual case level to a program-wide
level. With this capability, management can identify needed program
or procedure adjustments to respond to changes in the market or
staffing needs.
-
Respond to all inquiries quickly and easily by accessing the case
and looking at the narrative, which is a detailed history of the
case and any action taken on it from the time of enrollment until
the case is ended. This represents a huge time savings; often
an inquiry can be resolved immediately during the initial phone
call.
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Generate a large number of HIPP payments to the correct payee.
This helps establish and maintain good relationships with employers.
4.
SCI: How does the automated referral process work?
SLESSER:
When a case is being considered for HIPP enrollment, the system
allows us to enter and import all the information needed to assess
cost-effectiveness. This includes demographic information for all
members of a household, and the premium amount and deductible for
an employer’s insurance policy. The system has a matrix that
returns cost-effectiveness information showing yearly and monthly
cost-effective amounts.
Monthly,
all cases scheduled for payment are pulled from the HIPP system
and loaded onto a file, which interfaces with the eligibility files
of the Department of Public Welfare. Once the eligibility edits
are passed, a second file is generated and submitted to the Pennsylvania
Department of Treasury for payment. Checks are generated monthly
following established time frames, to ensure that checks are received
prior to the first of the month. Checks can be made payable to employers,
insurance carriers, or directly to employees.
Cases
that do not pass the eligibility edits are returned to the HIPP
worker for appropriate action. The HIPP worker receives one of three
status codes:
Status
code #1 identifies cases where there are fewer Medical Assistance-eligible
members in the household than reported on the HIPP case. These cases
generate a HIPP payment, but are returned to the operations specialist
to re-evaluate cost-effectiveness. The worker will then either close
the case as no longer cost- effective, or continue the case with
an adjusted savings amount.
Status
Code #2 identifies cases where all members have lost their eligibility
for Medical Assistance for less than 30 days. These cases generate
a payment but the operations specialist sends a HIPP notice to the
client advising them that HIPP will no longer pay their employer
group health insurance premium if they remain ineligible for Medical
Assistance. The case is tracked until the next cycle to see if it
remains closed.
Status
Code #3 identifies cases where all members have lost their eligibility
for Medical Assistance for longer than 30 days. These cases do not
generate a HIPP payment. The operations specialist ends the case
on the HIPP system and performs a savings adjustment to deduct the
previous month’s savings amount.
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5.
SCI: How does the HIPP program coordinate with those eligible for
Medical Assistance?
SLESSER:
Pennsylvania’s application form for those applying for
Medical Assistance has been modified to include three relevant questions,
which are the backbone of the automated referral process:
1)
Is anyone in the household employed by an employer who offers
health insurance?
2) Did you or anyone in your family lose a job within the past
30 days where you had health insurance?
3) Is there someone in your family who is pregnant or seriously
ill?
These
questions are used to trigger the automated referral process. Once
an individual is found eligible for Medical Assistance, his or her
responses are entered by clerical staff in each County Assistance
Office onto the Department’s mainframe eligibility file. On
a weekly basis, a batch process pulls these responses and generates
a HIPP referral letter to clients who answered “yes”
to one or more of the three questions. The letter indicates that
enrollment in the HIPP program is mandatory for Medical Assistance
enrollees that meet eligibility criteria for the program. They must
enroll in their employer’s health insurance, which will serve
as their primary insurance; however, they will continue to maintain
their eligibility for Medicaid.
Responses
are required within 10 days of receipt of the referral. HIPP screens
the referrals, and contacts employers for additional information
when it appears a referral response could result in a HIPP enrollment.
About 95 percent of all HIPP referrals are received using this automated
referral process.
6.
SCI: How does the system prove cost-effectiveness?
SLESSER:
Our computerized matrix contains information on the benefits
programs of employers in the state to simplify the cost-effectiveness
analysis. Program staff calculate the average Medicaid cost per
client from insurance data in the matrix; the information can be
organized by employees’ age, insurance category, and geographic
location. They then compare the estimate to HIPP program costs,
including premiums, deductibles, co-payments, and administrative
fees.
For fee-for-service Medicaid, staff calculate expenses yearly and
compare them with the HIPP program’s paid claims history database.
For managed care Medicaid, cost-effectiveness is determined by comparing
the average cost of Medicaid’s health plan with that of the
employer.
7.
SCI: How does the HIPP program monitor enrollees?
SLESSER:
Program staff do periodic re-evaluations of cases to verify
such items as employment status, insurance carrier information,
household composition, premium amounts, and levels of coverage.
8.
SCI: How has the program dealt with recent changes in benefit packages
and cost-sharing arrangements as employers try to manage rapidly
rising premiums?
SLESSER:
Our automated system gives us the ability to enter benefit information
unique to each employer package, including benefit limitations such
as co-pay and deductible amounts. All these variables, and any changes
that may occur, are taken into account when the system calculates
cost-effectiveness. We have experienced an increase in premiums
and changes in benefits packages and have had to disenroll cases
that are no longer cost-effective due to these changes. Although
we don’t have any statistics on the number of disenrolled
cases, our program is still strong. However, we are concerned that
these trends may persist, and are also worried that employers may
decide it is too costly to continue to offer group health benefits.
9. SCI: How does the state administer the COBRA continuation benefit?
SLESSER:
We treat COBRA cases as any other HIPP enrollment, and our staff
is trained in COBRA regulations. We have been very successful in
working with COBRA administrators, and we have been assigned regular
contact persons who handle the HIPP enrollments for COBRA enrollees.
10. SCI: How has the state addressed the obstacle of narrow open-enrollment
periods determined by employers?
SLESSER:
We have submitted proposed revisions to our state code of regulations
that would make eligibility for the HIPP program a “qualifying
event.” This would require employers to enroll employees as
soon as they are found eligible for HIPP, and would allow us to
circumvent the problem of employers only allowing enrollment in
their benefit plans during open enrollment periods.
Right
now, our workload is significantly increased during January and
July—the open-enrollment periods for most employers—and,
if we miss the open enrollment, we must pend the case until the
next open enrollment. In these situations, enrollees stay in Medicaid
because employers’ open enrollment requirements do not affect
an individual’s Medical Assistance eligibility. Making HIPP
a qualifying event would greatly improve our operational efficiency
and increase our savings because we would not have to wait for these
time frames.
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SCI: What role do the HIPP regional offices play in maintaining
close working relationships with local employers?
SLESSER:
Our offices are located in the regions they serve, so the staff
are familiar with employers and the employment environment in their
area. Cases are assigned alphabetically by employer. One operations
specialist routinely deals with the same employer, eliminating duplicate
phone calls, minimizing the burden on the employer, and enabling
HIPP staff to establish good working relationships with employers.
At first, it was difficult to forge these relationships because
employers didn’t understand what the program was. However,
once employers came to know us and realize that they could depend
on receiving their checks in a timely fashion, things got much easier.
Anecdotally, employers have told us that HIPP enrollment enlarges
the size of their group and may allow them to negotiate lower group
rates. In addition, employers have found that employees who participate
in their group benefits are more likely to stay on the job longer,
as they are reluctant to give up their health benefits.
There
are a few employers who refuse to accept our check, but this is
largely due to their payroll withholding system. The majority of
our employers are very cooperative, and some voluntarily contact
us on a quarterly basis to submit a list of new employees, to determine
if they would be HIPP-eligible.
12. SCI: How is the state trying to partner with employers that
self-insure?
SLESSER:
We do not have any special arrangements with employers whose
employees are insured through Employee Retirement Income Security
Act (ERISA) plans. When we encounter an ERISA plan, we work with
the employer to make the same arrangements as with any other employer.
For the most part, we have been very successful. However, we have
drafted revisions to our existing regulations that will provide
additional support for the HIPP program. The change will affect
the ERISA plans, because they require every entity providing privately
funded health care to give the Department of Public Welfare information
on the health care benefits available to Medicaid recipients.
As
I mentioned earlier, the regulations will require employers to recognize
eligibility for the HIPP program as a qualifying event, thereby
permitting employees and eligible beneficiaries to enroll in HIPP
regardless of established open-enrollment periods. They also mandate
that employers must accept premium payments from the Department,
and allow disenrollment from the plan on request from the Department.
13.
SCI: Overall, how do employers respond to your requests for assistance
and partnership?
SLESSER:
We have encountered very little resistance from employers. We
are not asking them to give any special treatment to their employees
who are enrolled in HIPP. However, it is illegal for employers to
discriminate against employees due to their eligibility for Medical
Assistance. In addition, we do not focus only on those with high-cost
medical conditions. If HIPP determines that it would be cost-effective
to enroll a Medical Assistance client in HIPP, we pay the employee’s
portion of the premium and enroll him or her in the plan.
14. SCI: How have you overcome the challenges posed by the implementation
of the Health Information Portability and Accountability Act (HIPAA)?
SLESSER:
Our staff have completed HIPAA training, and our payments have
been revised to exclude the Social Security Number of the company
employee. However, HIPAA privacy regulations don’t require
authorization for the release of information when such information
is needed for the purpose of treatment, payment, or health care
operations. Our staff has been provided the regulatory language
to give to employers if they have concerns about providing us with
employee information.
We
have found it very helpful to use a subrogation
clause in the HIPP application to be signed by the applicant.
The clause gives the HIPP operations specialist the authority to
enroll in employer insurance on behalf of the client, and also addresses
the HIPAA privacy regulations. It should also be noted that HIPP
has the subrogation right to elect COBRA on behalf of the Medical
Assistance client if it becomes necessary.
I hereby
authorize and request the disclosure to the Pennsylvania Dept. of
Public Welfare any information that would be needed to determine
eligibility for the Health Insurance Premium Payment (HIPP) Program,
and appoint the Department my limited attorney –in-fact with
the power to elect group health benefit coverage on my behalf, to
enroll me in such coverage and to pay premiums or contributions
on my behalf. This power of attorney shall remain in effect until
revoked, in writing by me. I understand this information will be
kept confidential and will be used only for the purpose of determining
eligibility for the HIPP program. In compliance with Federal HIPAA
privacy regulations I understand and agree that the HIPP Program
may use and disclose protected health information (including but
not limited to name, address, diagnosis and treatment) for treatment,
payment or health care operations. I understand that I must consent
to this use and disclosure in order to enroll in or receive services
through the HIPP Program.
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15.
SCI: Moving forward, has the state considered implementing a buy-in
to the State Children’s Health Insurance Program (SCHIP)?
SLESSER:
In Pennsylvania, SCHIP is not part of Medical Assistance and,
to date, the SCHIP program has not included an employer-sponsored
component. Pennsylvania’s insurance department operates SCHIP.
We have had other states contact us for information about our HIPP
program so that they could use our ideas to support their SCHIP
program.
For
states just starting their buy-in programs, I recommend that the
two programs be operated by the same agency because many of the
HIPP functions could interface very easily with SCHIP. Many of the
operational procedures used for HIPP also apply to SCHIP, so it
would be operationally efficient to combine the administration of
the two programs.
16.
SCI: What have you learned by managing a successful public-private
initiative?t
SLESSER:
I attribute the success of our program to making sure that every
member of our HIPP staff was given a sense of ownership. We have
solicited input from all staff during the continuing development
of our automated system. It is also critical that the program director
believe in what he or she is doing. There must be a commitment to
the program and the people.
The
program should be treated as a business, even though it is part
of a state program. As in any industry, you need to remain keenly
aware of what is happening in the marketplace. You must also stay
in tune with any new legislation and how it may affect your program.
Finally,
be sure to make the best use of the latest technology. Program staff
must constantly look for better ways to get the job done. As with
any business, the minute you think you have the best product, someone
finds a better way.
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In
fiscally challenging times, states have looked to partner their
Medicaid and State Children’s Health Insurance Programs (SCHIP)
with the private sector through premium-assistance programs. States
have several options for implementing these programs, including:
- Medicaid—through
Section 1906—Health Insurance Premium Payment (HIPP);
- SCHIP
separate child health programs; or
- Section
1115 demonstration waivers or Health Insurance Flexibility and
Accountability (HIFA) waivers.
Although
most states have used SCHIP or waiver authority to implement premium
assistance programs, 11 states have adopted the HIPP model.
The
HIPP provision was added to the Medicaid statute in 1990. It required
states to establish Medicaid programs to pay for the cost of health
insurance premiums, coinsurances, and deductibles for Medicaid-eligible
people with access to employer-based insurance, when it is proven
cost-effective for them to do so. Employer-based coverage is considered
cost-effective if its costs are likely to be lower than the costs
incurred by the state providing Medicaid coverage.
HIPP
enrollees are entitled to all the states’ Medicaid benefits,
including those not included in the employer-based insurance plans.
State Medicaid programs must cover certain services that are not
covered by private plans.
Although
the original 1990 provision was mandatory for states, a 1997 amendment
made the program voluntary. This change may have been a response
to the failure of many states to implement the HIPP program. According
to a 1994 report by the Office of the Inspector General, at least
30 states had not implemented the provision. Likewise, those states
with active HIPP programs have struggled, experiencing very low
enrollment, and achieving modest, if any, savings.
In
1997, the U.S. General Accounting Office (GAO) disseminated a report
on the barriers states had experienced in enrolling beneficiaries
to their HIPP plans. The major obstacles cited by the GAO included:
difficulty in identifying eligibles, poor cooperation by employers
to provide information regarding health insurance coverage offered,
and difficulty enrolling HIPP eligibles within private health plans’
narrow open-enrollment periods.
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State
Coverage Initiatives newsletter. “Pennsylvanania’s
Buy-In: A Model of Efficiency and Savings,” October 2001,
No. 6, pp. 10-11.
State
Coverage Initiatives Stateside newsletter. “SCI
Helps States Fine-Tune their Premium-Assistance Programs,”
October 2003, pp. 4-5.
SCI
list of state resources on employer-based
coverage.
The
State Coverage Initiatives team, in collaboration with the National
Association of State Health Policy and the Centers for Medicare
and Medicaid Services, is preparing a “toolbox” to guide
state policymakers who are considering implementing premium-assistance
programs. Watch www.statecoverage.net for
the release of the four-part project.
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Subrogation
Clause
I hereby
authorize and request the disclosure to the Pennsylvania Dept. of
Public Welfare any information that would be needed to determine
eligibility for the Health Insurance Premium Payment (HIPP) Program,
and appoint the Department my limited attorney –in-fact with
the power to elect group health benefit coverage on my behalf, to
enroll me in such coverage and to pay premiums or contributions
on my behalf. This power of attorney shall remain in effect until
revoked, in writing by me. I understand this information will be
kept confidential and will be used only for the purpose of determining
eligibility for the HIPP program. In compliance with Federal HIPAA
privacy regulations I understand and agree that the HIPP Program
may use and disclose protected health information (including but
not limited to name, address, diagnosis and treatment) for treatment,
payment or health care operations. I understand that I must consent
to this use and disclosure in order to enroll in or receive services
through the HIPP Program.
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