Update: Ending presumed Medicare eligibility for New Jersey's elder ACA marketplace enrollees

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I’d like to provide a couple of updates regarding an abuse in New Jersey’s individual market that I wrote about in September (here and here). the issue in brief: in 2023, the state’s standard individual health plan contract stipulated that insurers could presume that enrollees over age 65 were eligible for Medicare unless they provide written proof otherwise. Failing that proof, the insurer would assume Medicare eligibility and act as a secondary payer to Medicare — paying only a small fraction of the enrollee’s bills while collecting a full premium. In 2023, about 9,000 enrollees via GetCoveredNJ, the state’s ACA exchange, were over age 65.

As I reported, in May 2023 CMS issued guidance that unambiguously stated that this practice — presuming Medicare eligibility for senior enrollees and acting as a secondary payer — violated ACA requirements. While New Jersey’s Department of Banking and Insurance did not respond to my queries about the New Jersey policy and the CMS guidance, they did respond to the same queries from an nj.com reporter, Karin Price Mueller, whom I approached about the issue. As they told Mueller, on September 27 DOBI issued a directive (described in Mueller’s paywalled article and in my followup post) to insurers in New Jersey’s individual market instructing them to comply with DOBI’s guidance — that is, cease presuming Medicare eligibility and acting as a secondary to Medicare simply because an enrollee was over age 65.

NJ DOBI responds: No more elder abuse in the ACA marketplace

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My last post spotlighted a form of elder abuse in New Jersey’s ACA marketplace. The state’s Individual Health Program (IHC) allows or requires insurers in the individual market to presume that enrollees who are over age 65 are eligible for Medicare — unless the enrollee provides proof positive otherwise.

If such proof is not furnished (at least one insurer, AmeriHealth, requires a letter from the Social Security Administration, which in turn requires applying for Medicare)— the insurer pays the enrollee’s claims only as a secondary payer, presuming that Medicare will pay the bulk of each claim. That leaves the enrollee on the hook for the bulk of every medical bill she incurs, rendering the insurance policy’s statutory out-of-pocket limit essentially void. NJ DOBI has been allowing insurers to do this since 2016, and in 2023 ratified the practice, stipulating in the standard policy policy form that the insurer “will assume the Covered Person is Eligible for Medicare and pay secondary benefits as set forth in this section unless the Covered Person provides written documentation that proves the Covered Person is not Eligible for Medicare” (p. 126)

CMS guidance issued on May 24, 2023 flatly forbids this practice, as CMS told me in response to a query, adding “CMS has been in contact with the New Jersey Department of Banking and Insurance (NJDOBI) regarding this issue.  We recommend contacting NJDOBI for further information.” The May 24 guidance states that an ACA-compliant individual market insurer “may not limit or exclude coverage based on the theoretical possibility of an individual’s enrollment in other coverage… regardless of whether an individual is (or is presumed) eligible for Medicare.”

NJ DOBI did not respond to my repeated requests for comment on the state insurers’ apparent continuing violation of the CMS guidance — under color of state regulation. But an investigative reporter at NJ.com and the Star-Ledger, Karin Price Mueller, got on the case. And DOBI did respond to Mueller. Thus pushed, they are apparently ending the practice — effective yesterday:

“In light of the possible confusion in the market, the department (Wednesday) issued its own directive to carriers in the individual market — both on and off the marketplace — to ensure they are following the (Medicare guidance), which falls under the `Conformity with Law’ provision of the standard individual health benefits plans,” spokeswoman Dawn Thomas said.

The agency has told all insurance carriers to review the benefits of individuals who are 65 and older and enrolled in plans through GetCoveredNJ “to ensure that the policyholders are receiving the appropriate coverage, and that all coverage is consistent with the applicable Federal Guidance,” she said.

Thomas also said DOBI is reviewing how consumers may have been affected.

“Specifically, it is requiring that all carriers provide information on how the rule was implemented, including any requirements placed on consumers 65+ years of age, and what specific documentation may have been required for both on and off marketplace consumers,” Thomas said.

And, she said, the agency will make sure the language is clear when the 2024 plans roll around.

“If GetCoveredNJ determines a consumer eligible for a marketplace plan, the consumer should remain eligible and get the full benefits of the policy selected,” she said.

If those promises look a little soft to jaded eyes, other language in DOBI’s statement to Mueller, which she shared with me, was less equivocal:

On May 24, 2023, the Centers for Medicare and Medicaid Services (CMS) released guidance to insurers that demonstrated to the department that the IHC board’s rule change was not in compliance with CMS rules. Therefore, in June, the department informed carriers that the CMS guidance will govern the individual market and made clear the department accepted CMS’ position.

Apparently, that June bulletin changed nothing. Now, pending enforcement, this longstanding abuse of the fundamental ACA promise (quality affordable comprehensive coverage) appears to be ended going forward. But “going forward” points to a problem, which Mueller gave me a chance to articulate:

“I’m delighted to learn that DOBI is now acting swiftly to end this abusive practice — allowing Obamacare insurers to strip older plan members of most of the coverage to which they’re entitled,” Sprung said. “Now DOBI needs to dig in and find out whether there are people who have been subject to this practice for years who may have been saddled with provider bills that their insurer should have paid — and if so, to make sure those wrongs are righted.”

DOBI clarified to Mueller that NJ individual market insurers have been allowed to presume over-65 enrollees eligible for Medicare and act as a secondary payer at least since 2016. I have viewed bills from 2022 that reflect that practice. So there is compensatory work to be done. In 2023, almost 9000 enrollees through GetCoveredNJ were over 65. How many have been enrolled, and shorted coverage, in seven or more years?

Why 2016? In that year’s annual Notice of Benefit and Payment Parameters (NBPP) for the ACA marketplace, clarified that a marketplace enrollee who turns 65 during the plan year and enrolls in Medicare can maintain her marketplace plan, though she would lose eligibility for subsidies. A Medicare enrollee can even renew a marketplace plan if that plan does not change, i.e. if a new “contract of insurance” is not required. Why anyone would want to pay full freight for a marketplace plan (at least $800+/month in New Jersey in 2023 for an over-65 enrollee) when they are enrolled in Medicare is hard to fathom, but it can be done.

While finalizing this rule, CMS noted, “Several commenters expressed concerns that individuals enrolled in Medicare and those who are eligible for but not yet covered by Medicare present a significant burden to the single risk pool” (p. 94068). That is very likely the concern that New Jersey’s individual market insurers brought to regulators to get permission to presume elder enrollees eligible for Medicare. Ever since (if not before), in at least some if not virtually all cases, they have been getting full premiums for enrollees over age 65 while paying only what Medicare is presumed not to pay on claims.

Hats off to Karin Mueller, who was able to get what I could not from DOBI.

Two pending health coverage expansions in New Jersey

A Jersey City view of Manhattan

In coming months, two health insurance coverage initiatives will come to fruition in New Jersey.

First, On January 1, 2023, Phase 2 of a Cover All Kids initiative enacted in 2021 will extend Medicaid eligibility to undocumented children under age 19.

Second, on November 23, the state Department of Banking and Insurance (DOBI) announced its intent to propose a regulation requiring health plans regulated by the state to provide comprehensive coverage for abortion, albeit with an opt-out for religious employers. As with almost all state insurance regulations, this does not apply to self-insured employer plans, which are regulated by the federal government through ERISA.

Both bring to fruition initiatives that were delayed by late changes to legislation. When Cover All Kids legislation passed in  June 2021, the legislature, facing state elections in November, balked at funding coverage for undocumented children in FY 2022 (beginning days after budget passage) and broke the initiative into two phases, outlined below. 

Similarly, in January of this year, the legislature codified the right to abortion in New Jersey but held off from requiring that all health plans subject to state regulation cover the procedure .  Instead, the bill directed DOBI to conduct a study to determine whether such a requirement was warranted. Yesterday (Nov. 30), DOBI released the study, which found that "for a variety of reasons, the availability of insurance coverage for such services is inconsistent." 

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Cover All Kids follows Cover Your Ass

Legislation to make health coverage available to all children in New Jersey has been a longstanding goal of state advocacy groups including New Jersey Policy Perspective (which crunched the numbers in a series of reports, first in 2018 and most recently this past June); New Jersey Citizen Action; and the New Jersey for Health Care Coalition, an umbrella group. 

According to NJPP's most recent estimate, of about 88,000 uninsured children in the state, about 53,000 were eligible for coverage, while another 36,000 were ineligible, either because they exceeded income limits (18,000), were undocumented (16,000), or both (2,000). 

The legislation passed in late June 2021 broke the program into two phases. Phase 1, with $20 million in funding for FY 2022, has aimed to enroll uncovered-but-eligible children by eliminating CHIP premiums (already eliminated on an emergency basis in response to the pandemic in March 2020), eliminating the 90-day waiting period for new CHIP enrollees, and conducting outreach to enroll eligible children. 

Phase 2, beginning in January, will offer eligibility to undocumented children* and a buy-in to children in families with income above the state's current 355% FPL CHIP eligibility threshold. Funding allocated for Phase 2 in the state's FY 2023 budget is about $11 million.

As NJ Spotlight's Lilo Stainton noted at passage: 

the [bill] passed almost unanimously by the Senate and Assembly and signed by Murphy does not mention undocumented or immigrant children. According to several people involved with the process, the language was changed so that lawmakers — who are all up for reelection this year, along with the governor — did not have to be on record voting for a measure that uses public dollars to fund health insurance for undocumented individuals. 

The bill does, however, establish presumptive eligibility for any child whose family income qualifies her for coverage, without reference to immigration status, and mandates school-based outreach to make the availability of coverage known. And as Stainton pointed out, last spring a DHS Q&A affirmed that "DHS, in collaboration with DOBI, will also engage in intensive planning to develop coverage options for uninsured children who are currently ineligible for NJ FamilyCare, either because of family income or immigration status." That's Phase 2.

According to a presentation to the state Medical Assistance Advisory Council (MAAC) on Oct. 27, the "systems build" -- the infrastructure required to enroll undocumented children in Medicaid and CHIP -- is on track to go live in January. A Nov. 30 presentation to the state Dept. of Human Services' Cover All Kids workgroup (unpublished as yet) reiterates that the system is ready to "go green" in January. A communication campaign should go live this month. Children do not need to have social security numbers to be enrolled.

The stated goal in Phase 1 of Cover All Kids was to cover the 53,000 uninsured children in the state who were eligible for subsidized coverage. The Nov. 30 work group presentation notes that since June 2021, the month prior to  Phase 1 enactment, NJ FamilyCare enrollment for those under age 21 increased by 48,928 as of September 2022. 

Those numbers include adults aged 19-21. Among non-ABD children, from July 2021 through October 2022, enrollment increased by 39,917. During this period, however, a moratorium on disenrollments implemented in response to the pandemic in March 2020 remained (and still remains) in place, and that moratorium has driven enrollment growth throughout the pandemic -- accounting for 84% of Medicaid enrollment growth since February 2020 nationwide, according to the Kaiser Family Foundation. 

In New Jersey, that enrollment growth has steadily diminished as the economy has recovered. Among non-ABD children in New Jersey, enrollment grew 5.6% from January to July 2020, 4.1% from July 2020 to January 2021,  3.0%  from Jan-July 2021, 2.2% from July 2021 to Jan. 2022, and 1.7% from Jan.-July 2022. It's not clear that outreach and enrollment streamlining in Cover All Kids in Phase 1 materially affected total enrollment.

Here's hoping that Phase 2 will insure significant numbers of children who are currently shut out of NJ FamilyCare.  While NJPP estimates that 18,000 undocumented children in the state are uninsured, Stainton reported that other advocates think the numbers could be much higher, and no one knows.

Inevitably, the eventual end of the Public Health Emergency will trigger the disenrollment of far more NJ FamilyCare enrollees, a bit fewer than half of whom are children, than the Cover All Kids program will enroll. About 140,000 thousand more children are enrolled in NJ FamilyCare now than in January 2020; tens of thousands may be determined ineligible when redeterminations restart. 

That's not a knock on Cover All Kids: the moratorium was a good thing, its end is unavoidable, and the state is making a good-faith effort to make the resumption of "redeterminations" as undisruptive as it can. What matters in both efforts -- the PHE unwinding and Cover All Kids --  is effective outreach and enrollment assistance -- to transition some who no longer qualify for Medicaid to subsidized marketplace coverage in the first case, and to keep enrollment of undocumented kids as simple as possible in the second.

To step back, it is a major advance to offer health coverage to any child in the state rendered eligible by family income. Premium-free coverage is currently available to all children in the state in families with income up to 355% of the Federal Poverty Level -- $65,000 for a family of two, 98,512 for a family of four.

Abortion coverage guaranteed, but it may cost you

DOBI's announcement of intent to mandate abortion coverage without restrictions notes:  "Currently, policies are available with either abortion coverage for all abortions or only for cases of rape, incest and the life of the mother." While most plans do not impose such restrictions, the report suggests that the rule is needed as much for communication purposes as to expand access: "While information regarding this coverage is included in the Summary of Benefits and Coverage (SBC) it may not always be clear to consumers what coverage is included in each health benefits plan." A potentially confusing description in one plan is cited by way of example. The report also notes that requiring all plans to offer full abortion coverage may make it easier for facilities that perform abortions to accept all insurance plans.

While the report acknowledges that significant numbers of women may have difficulty paying for an abortion (citing median costs of $560 for medicated abortion and $575 for first-trimester medical abortions), and that for insured patients, deductibles may be a barrier, it is silent as to eliminating or restricting those costs. New Jersey FamilyCare, the state Medicaid program, does cover abortion -- usually at the state's expense, as the federal Hyde Amendment bars federal funding for abortion except when the mother's life is in danger or in cases of rape or incest.  

Leaving out-of-pocket costs untouched probably forestalled any resistance on the part of insurers in the state. DOBI canvassed insurers as to cost impact, and "Carriers estimated a range of zero impact to .1% of premium."

The target date for the as-yet-unpublished Proposed Rule to be implemented is Jan. 1, 2024. But DOBI is asking state insurers and health plans "to make coverage for abortion services, without exceptions, effective for the start of the 2023 plan year on January 1, 2023."

That too is better done than left undone.

Update:, 12/2: Via NJPP, One more measure to reduce the “churn” that plagues Medicaid enrollment: Yesterday, NJ Governor Phil Murphy signed 12-month continuous eligibility for Medicaid into law.

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* In the vanguard of of opening Medicaid to the undocumented on the state's own dime is California, which offered Medicaid to undocumented residents first under age 19, then under age 26, then over age 50, and soon, on Jan. 1,  2024, to all undocumented residents eligible by income.

Time for New Jersey's Health Insurers to Do Their Part to Counter ACA Sabotage

New Jersey's legislature, governor and Department of Banking and Insurance (DOBI)) have acted swiftly and decisively to protect the state's individual market for health insurance from several rounds of Republican sabotage.

On May 30, Governor Murphy signed into law two bills designed to hold down individual market premiums. The first created a state "individual mandate" -- a  requirement that those for whom affordable insurance is available obtain it or pay a tax penalty -- to replace the federal mandate that the Republican Congress repealed as part of its tax bill last September. The second measure directed DOBI to seek federal funding for a reinsurance program that would restrain premium increases.  DOBI submitted its proposal on July 2,  designed to reduce premiums by 15% per year compared to what they would have been without the reinsurance.

Both of those measures benefit insurers as well as consumers -- the mandate by keeping healthier enrollees in the risk pool, the reinsurance program by reducing insurers' risk.  Now it's time for health insurers to do their part -- by structuring their offerings to maximize federal subsidies and hold unsubsidized buyers harmless from a prior round of Trump administration sabotage.