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9/24/2015

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Dental ACA Update:Exchanges and Medicaid

ExpansionJoanne Fontana and Teresa Wilder

Milliman, Inc.

September 30, 2015 3:15-4:15 PM

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9/24/2015

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Agenda

ACA Exchange Update

1. Review of Exchange Product and Pricing Considerations

2. Enrollment Statistics and Commentary

3. Standalone v. Embedded Pediatric Dental

ACA Medicaid Expansion Update

1. Medicaid Dental Landscape

2. Medicaid Expansion under ACA

3. Concerns and Considerations

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ACA: Pediatric Dental Essential Health Benefit ACA defined minimum essential health benefit (EHB) package

required in individual and small group markets

“Pediatric oral health services” is one of the named EHBs

Adult dental is NOT an EHB

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Pre-ACA ACA

Group Coverage

Family Coverage

Separate from Medical

Individual Coverage

Pediatric and Adult Coverage

Separate or Embedded

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What is the Pediatric Dental EHB?States charged with defining benchmark plan for EHB

All of the benchmarks provide comprehensive pediatric dental coverage of preventive/diagnostic, basic, and major services

Almost all states cover orthodontia when medically necessary

Benchmarks are being revisited for 2017 policy year

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Pediatric Dental EHB on Exchanges May be embedded in medical or sold by standalone dental

plan (SADP)2015 exceptions:

– Alaska, California, Vermont, West Virginia, Washington DC – all QHPs embedded

Standalone dental product could be a pediatric EHB-only plan or a family dental plan with EHB included

Required “offer”, not required “purchase”– Except for states listed above

– Nevada was required purchase in 2014, now required offer

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Pediatric Dental EHB Off Exchanges

“Equitable Treatment” issue

ACA says that off exchange, medical carriers must offer all 10 EHBs

If medical issuer is reasonably assured that pediatric dental EHB has been obtained via Exchange-certified standalone dental plan, need not offer the benefit in medical plan

Pediatric dental EHB can come from medical carrier or SADP

Some states have provided guidance on how reasonable assurance and exchange certification are defined

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Pediatric Dental EHB Product/Pricing

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Group Coverage

Family Coverage

Annual Benefit Maximum

Orthodontia with Lifetime Maximum

Standalone Dental

Individual Coverage

Pediatric and Adult Purchase May Be Separate

No Annual Benefit Maximum

Medically Necessary Orthodontia

Actuarial Value

Out-of-Pocket Maximum

Standalone v. Embedded

Pre-ACA ACA

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Pediatric Dental Actuarial Value

September 30, 2015

High (85%) or Low (70%) AV for pediatric dental EHB

No standard methodology; carriers have actuary certify

Must adjust cost sharing to comply with AV

Fairly similar plan designs across carriers

Standalone Dental Plan Embedded in Medical Plan

No specific AV requirement for pediatric dental EHB

component

Plan AV calculated with HHS standard calculator

Changes to pediatric dental benefits do not affect overall

plan AV

Wide variance in pediatric dental benefit richness

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Pediatric Dental OOP Maximum

After OOPM achieved, plan pays 100% of dental cost for remainder of year

Example: child needing orthodontic treatment costing $3,000

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$350/$700 OOPM for 2016

Standalone Dental Plan Embedded in Medical Plan

Pediatric dental subject to overall plan OOPM

($6,600/$13,200)

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1.4M SADP selections in the 37 states using healthcare.gov

25K SADP selections in 14 SBMs

Age breakdown for healthcare.gov states:

Enrollment Statistics (March 2015)

September 30, 2015

SADP Selections by Age % of SADP Total

% of QHP Age Group Total

Age < 18 7% 14%Age 18-25 12% 16%Age 26-34 22% 20%Age 35-44 19% 18%Age 45-54 20% 15%Age 55-64 20% 12%Age ≥ 65 0% 0%Total 100% 16%Source: Health Insurance Marketplaces 2015 Open Enrollment Period: March Enrollment Report. Department of Health and Human Services.

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Standalone v. Embedded Dental EHB

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Price Point and

Benefits

Admin Costs

Actuarial

Value

Adverse Selection

OOP Max

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SADP versus Embedded EHB

ADA Health Policy Institute Research Brief – February 2015

Key Findings:

Upward trend in share of medical plans with embedded pediatric dental benefits on exchanges

Embedded more likely than SADP to offer first dollar coverage for preventive dental services

Less expensive to purchase pediatric dental coverage via embedded plan

Upward trend in number of SADPs offering family dental

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Upward trend in share of medical plans with embedded pediatric dental benefits on exchanges

Across 40 states studied: 35.7% in 2015 v. 26.8% in 2014

Embedded pediatric dental characteristics:

September 30, 2015

Embedded Plan Pediatric Dental Deductible % of Plans

Medical Deductible, Waived for Preventive Dental Services 65.5%

Medical Deductible, Not Waived for Preventive Dental Services 23.8%

Separate Dental Deductible, Waived for Preventive Dental Services

4.7%

No Deductible, First Dollar Preventive Dental Coverage 5.5%

No Deductible, Non-First-Dollar Preventive Dental Coverage 0.5%

Source: “More Dental Benefits Options in 2015 Health Insurance Marketplaces”. ADA Health Policy Institute, February 2015.

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Embedded more likely than SA to offer first dollar coverage for preventive dental services

Standalone plan characteristics:

75.7% of embedded plans offer first dollar preventive dental compared to 43.9% of standalone plans

September 30, 2015

SADP Pediatric Preventive Dental Cost Sharing % of Plans

Deductible waived for preventive services 39.6%

Deductible not waived for preventive services 43.1%

No deductible; first dollar preventive coverage 4.3%

No deductible; non-first-dollar preventive coverage 13.0%


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Less expensive to purchase pediatric dental coverage via embedded plan

September 30, 2015

Pediatric Dental Plan Type 2015 Monthly Per Member Premium or “Shadow Premium”

Embedded $16.21

Standalone 70% AV $27.61

Standalone 85% AV $35.95


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Why are embedded plans able to offer seemingly better coverage at a lower cost than SADPs?

Cost spread over all members rather than per child

SADPs must contend with:

– $350/$700 OOPM

– Actuarial Value requirements

– Benefit plan ramifications of meeting OOPM and AV requirements

– Recouping admin costs over lower premium base

Coverage for non-routine services likely better under SADPs but that is not as obvious and impacts far fewer children

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Upward trend in proportion of SADPs offering family dental

2014: 42.0% of SADPs were child-only, 58.0% family

2015: 29.6% of SADPs child-only, 70.4% family

Why?

September 30, 2015


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Medicaid Dental Landscape

• Children / CHIP –• Mandatory Comprehensive Benefit

• Traditional Adult Medicaid Populations• No minimum requirements• Dental benefits for adults range from no

coverage to emergency only to comprehensive• 46 states and Washington DC offer some level

of dental benefit to Medicaid-enrolled adults • Adult dental benefits can vary by population

type such as pregnant women, disabled, elderly and all other

Dental Coverage

by Medicaid

Population

September 30, 2015

Source: http://www.chcs.org/media/Adult-Oral-Health-Fact-Sheet-_070615.pdf

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Med

icai

d A

dult

Den

tal B

enef

its Emergency OnlyRelief of pain under defined emergency situations (e.g.,

uncontrolled bleeding, traumatic injury, etc.)

LimitedFewer than 100 diagnostic, preventive, and minor restorative procedures recognized by the American Dental Association (ADA); per-person annual expenditure cap is $1,000 or less

ComprehensiveA mix of services, including more than 100 diagnostic,

preventive, and minor and major restorative procedures approved by the ADA; per-person annual expenditure cap is at

least $1,000


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15 states cover emergency dental onlyFL, GA, HI, ME, MD, MS, MO, MT,

NV, NH, OK, TX, UT, WV, ID

15 states cover emergency dental onlyFL, GA, HI, ME, MD, MS, MO, MT,

NV, NH, OK, TX, UT, WV, ID

17 states cover limited dental benefitsAR, CO, DC, IL, IN, KS, KY, LA, MI,

MN, NE, PA, SC, SD, VT, VA, WY

17 states cover limited dental benefitsAR, CO, DC, IL, IN, KS, KY, LA, MI,

MN, NE, PA, SC, SD, VT, VA, WY

15 states offer comprehensive dentalAK, CA, CT, IA, MA, NJ, NM, NY,

NC, ND, OH, OR, RI, WA, WI

15 states offer comprehensive dentalAK, CA, CT, IA, MA, NJ, NM, NY,

NC, ND, OH, OR, RI, WA, WI

No adult dental benefits AL, AZ, DE, TN

No adult dental benefits AL, AZ, DE, TN

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Dental Coverage by State for Traditional Adult Medicaid Population

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Adult Medicaid dental benefits are frequently changing on a state by state basis

Coverage decisions tend to be significantly tied to financial conditions of the state and correspond to budget cycles

In the years following 2008, with the recession, several states began to reduce or eliminate adult dental benefits

Recently, many states are moving to enhance or reintroduce dental coverage for Medicaid adults

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September 30, 2015

Recent Enhancements to Adult Medicaid Dental Benefits

California – Restored adult dental coverage (May 1, 2014)

Colorado – Added adult dental coverage (April 1, 2014)

Illinois – Restored adult dental coverage (July 1, 2014)

Minnesota – Expanded adult dental services (July 1, 2013)

South Carolina – Reinstated adult emergency dental (April 1, 2014);

Added preventive dental benefits with $750 annual max (July 1, 2014)

Vermont – Increased dental cap from $495 to $510 (January 1, 2014)

Washington – Restored adult dental coverage (January 1, 2014)

Source: http://files.kff.org/attachment/medicaid-in-an-era-of-health-delivery-system-reform-results-from-a-50-state-medicaid-budget-survey-for-state-fiscal-years-2014-and-2015-report

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Medicaid Expansion

Patient Protection and Affordable Care Act (ACA) –Medicaid Expansion Overview

ACA prescribed expansion of Medicaid coverage for adults up to 138% of federal poverty level (FPL)

US Supreme Court ruled that Medicaid expansion was at the option of each state

Currently 29 Medicaid expansion states, plus DC

Useful resource for tracking current status of Medicaid expansion by state – https://www.advisory.com/daily-briefing/resources/primers/medicaidmap

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Medicaid Expansion

Enrollment Observations

Among states that had implemented Medicaid expansion and were covering newly eligible adults in June 2015, Medicaid and CHIP enrollment rose by approximately 29.7% compared to the July-September 2013 baseline period. 1

States that have not, to date, expanded Medicaid reported an increase of approximately 9.8% over the same period. 1

The potential coverage expansion is significant, with up to 8.3 million adults gaining some form of dental benefits coverage through Medicaid. 2

1. http://www.medicaid.gov/medicaid-chip-program-information/program-information/downloads/june-2015-enrollment-report.pdf

2. http://jada.ada.org/article/S0002-8177%2815%2900644-3/pdf

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Medicaid Expansion

Financial Considerations of Medicaid Expansion

Under traditional Medicaid, the Federal Government covers approximately 50% to 70% of costs varying by state

ACA requires the federal government to cover 100% of costs associated with Medicaid expansion populations from 2014 to 2016

Federal government contribution will taper down to 90% by 2020

September 30, 2015

2014 – 2016

100%2017

95%

2018

94%

2019

93%

2020

90%

Source: http://www.publicconsultinggroup.com/news/post/2013/02/15/CMS-Posts-Guidance-on-Medicaid-Expansion-FFP-Rates.aspx

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Medicaid Expansion

Dental Benefits for Expansion Population

Consistent with traditional adult coverage, there are no minimum requirements for dental coverage for Medicaid expansion populations

Dental coverage for expansion populations does not have to match coverage for the traditional adult Medicaid populations

North Dakota is the only expansion state to adopt dental benefits for its expansion population that do not mirror dental benefits for the traditional Medicaid adult population

– Comprehensive dental benefits are provided to traditional adult enrollees

– No dental benefits are provided to the expansion population

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Medicaid Expansion

6 states cover emergency dental only

HI, MD, NV, NH, MT, WV

6 states cover emergency dental only

HI, MD, NV, NH, MT, WV

10 states cover limited dental benefits

AR, CO, DC, IL, IN, KY, MI, MN, PA, VT

10 states cover limited dental benefits

AR, CO, DC, IL, IN, KY, MI, MN, PA, VT

11 states offer comprehensive dental

CA, CT, IA, MA, NJ, NM, NY, OH, OR, RI, WA

11 states offer comprehensive dental

CA, CT, IA, MA, NJ, NM, NY, OH, OR, RI, WA

No adult dental benefits

DE, AZ, ND

No adult dental benefits

DE, AZ, ND

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Dental Coverage by State for Medicaid Expansion Populations

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Concerns and Considerations

Access Issues

A limited % of dentists nationwide accept Medicaid– Administrative requirements

– Missed appointments

– Long payment wait times

– Low reimbursement rates

In most states that cover adult Medicaid dental

services, Medicaid reimbursement rates are less

than half of commercial reimbursement rates

Both Medicaid expansion and low cost

exchange products have exacerbated

access issues

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More Recent Access Solutions

– Several states are initiating or investigating the use of mid-level providers, such as Registered Dental Practitioners or Dental Therapists, to provide preventive and routine care under the direction of a dentist (Minnesota, Alaska, Maine and being considered in 15 additional states)1

– Colorado has proposed paying dentists a $1,000 bonus for taking five new Medicaid clients and seeing them at least twice per year. They have not received approval from the federal government for matching funds yet. 2

September 30, 2015

1: http://www.pewtrusts.org/en/about/news-room/news/2015/02/06/washington-state-legislators-support-dental-therapists2: http://www.usatoday.com/story/news/2015/02/15/medicaid-patients-struggle-to-get-dental-care/23315811/

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At Budget Time

Adult dental becomes a frequent target because it is one of the few Medicaid benefits that are optional

Dental benefits for expansion populations may be even more at risk as states attempt to balance the bottom line

With the federal cost share for the expansion population decreasing from 100% to 90%, the increasing state cost share drives automatic year over year expenditure growth that must be met by budget increases or benefit decreases

Based upon a very simple model, I have estimated expansion states will see an additional 1% to 3% increase or more in state expenditures for 2017 before any other cost factors

September 30, 2015

Modeling assumptions: Annual premium for average Medicaid enrollee $6,500; Annual premium for average Medicaid expansion enrollee $5,000 -$6,500; enrollment expansion 10% - 30%; FMAP 50%

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Questions?

[email protected]

(860) 687-0104

[email protected]

(317) 524-3520

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Caveats and LimitationsWe, Joanne Fontana and Teresa Wilder, are Consulting Actuaries for Milliman. We are members of theAmerican Academy of Actuaries and meet the Qualification Standards of the American Academy ofActuaries to render the actuarial opinion contained herein.

Milliman has prepared this presentation for the specific purpose of providing commentary on the impactof the Affordable Care Act on the dental benefits industry. This information may not be appropriate, andshould not be used, for any other purpose. This presentation has been prepared solely for the internalbusiness use of, and is only to be relied upon by, the management of NADP. No portion of thispresentation may be provided to any other party without Milliman's prior written consent. Milliman doesnot intend to benefit or create a legal duty to any third party recipient of its work even if we permit thedistribution of our work product to such third party.

Milliman does not provide legal advice, and recommends that NADP consult with its legal advisorsregarding legal matters.

September 30, 2015

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