On June 22, the Senate Republicans released their version of H.R. 1628, the American Health Care Act that was passed in the House on May 4. The Senate bill (known as the Better Care Reconciliation Act, or BCRA) would repeal and replace the Affordable Care Act (ACA) and make significant changes to the Medicaid program. The legislation includes a longer phase-out of Medicaid expansion funding; tighter inflation indexing of Medicaid per-capita caps in the outer years; a two-year transition period of ACA premium and cost-sharing subsidies; revised ACA subsidies based on income, geography, and age in 2020 and beyond; repeal of all ACA-related taxes; waivers of essential health benefits and other protections; and a host of other provisions. However, the overall framework of BCRA is very similar to the House-passed AHCA.
The BCRA contains numerous provisions that would have an impact on the practice of psychiatry and the treatment of individuals with serious mental illness and substance use disorders. They are summarized below:
- Fundamentally alters the payment structure of the Medicaid program. Beginning in FY 2020, state Medicaid programs will be funded on a fixed per-beneficiary basis (i.e. per capita cap). The per capita cap is calculated based on past expenditures, and over time the cap is expected to grow at a slower rate than the House bill. States that exceed a specific spending threshold will be penalized in the form of reduced federal funding.
- Adds administrative costs and burdens to Medicaid programs. The BCRA requires states to reassess enrollees’ Medicaid eligibility once every six months. It would also give states the option of requiring non-disabled, non-elderly, and non-pregnant individuals to satisfy work requirements as a condition for eligibility. An increased federal match is available to cover the higher administrative costs prompted by both provisions.
- Phases out Medicaid expansion made available to states under the ACA. States will no longer be able to expand eligibility for their Medicaid programs on January 1, 2020. States that elected to expand their Medicaid programs will temporarily continue to receive a federal match; the rate of that match will decline beginning in 2020 and will end altogether by 2023. Hospitals in states that chose not to expand Medicaid will receive a temporary increase in Disproportionate Share Hospital (DSH) funding from 2020 to 2024.
- Establishes an optional block grant program called the “Medicaid Flexibility Program”. Beginning in FY 2020, states will have the option of applying to establish a “Medicaid Flexibility Program” funded at a fixed, pre-determined amount. Any such applications must be subjected to a public notice and comment period. Certain benefits and services must be covered under these programs for individuals that the state is currently obligated by federal law to enroll in its Medicaid program. Parity between coverage of mental health/substance abuse services and other services applies in these programs. Premiums, deductibles, and cost-sharing may be charged to enrollees in Medicaid Flexibility Programs so long as they do not exceed five percent of family income.
Individual Insurance Market
- Preserves premium tax credits established under the ACA, but is much less generous with them. The BCRA maintains the ACA’s basic tax credit structure, and subsidies would be available to individuals between 0% and 350% of the Federal Poverty Level (as opposed to between 100%-400% of FPL under the ACA). However, subsidies are calculated based on the individual’s age, income, and cost of plans available in the individual’s location. This is different from the fixed credits offered under the House version of the bill. However, under the BCRA, because the cost of plans is based on a less-generous benchmark plan than under the ACA, subsidies will be substantially lower. Subsidies intended to assist low-income families with reducing their out-of-pocket costs will continue throughout 2019, but will end by 2020.
- Expands waivers of ACA insurance rules. Under the ACA, the waiver program was intended to let states experiment with different designs of their insurance markets—changing the structure of the subsidies, or requiring insurers to cover different benefits—within the law’s basic parameters. Provisions include:
- Under the ACA, states can waive major ACA provisions related to essential health benefits, actuarial value, out-of-pocket limits (for individual plans), other qualified health plan requirements, as well as its premium tax credit. These provisions can be waived if the State provides a description to how it would “provide for alternative means of, and requirements for, increasing access to comprehensive coverage, reducing average premiums, and increasing enrollment.”
- Under the BCRA, the Secretary must approve the waiver unless he determines that the state’s plan would increase the federal deficit.
- The BCRA also provides $2 billion in additional funding in FY201 for grants to states to assist them with applying for and implementing a State plan under the waiver program.
- Waivers requested under the BCRA would be applicable immediately upon enactment and retroactively apply to waivers requested before the date of the statute.
- Maintains preexisting conditions protections, but allows states to waive Essential Health Benefits requirements. The BCRA retains the guarantee for coverage of individuals with preexisting conditions, and insurance companies would be required to accept all applicants regardless of health status. However, the BCRA will permit States to waive federal requirements that plans carry certain “essential health benefits”, or EHB. Waivers of EHB could affect large employer plans, which are only prohibited from imposing annual and lifetime limits on EHB and only required to cap out-of-pocket expenditures for EHB. By reducing benefits, insurance premiums would most likely be lower in cost but will likely pass on more costs to patients after services are provided
- Sets Aside Funds for High-Risk Individuals. The BCRA establishes a State Stability and Innovation Program with an appropriation of $62 billion over eight years. Funds not spent by a state within 3 years would be redistributed. Beginning in 2022, States will have to pay a match to receive 100 percent of the federal amount. The state match increases each year States can apply funding toward one of four purposes:
- To establish a program or mechanism to provide financial assistance to high risk individual who do not have access to employer coverage get individual market coverage;
- To enter into arrangements with health insurance issuers to help stabilize insurance markets and promote State health insurance market participation;
- To pay health care providers for health care services, and;
- To provide financial assistance to reduce out-of-pocket costs in the individual market.
Additional provisions affecting access to and delivery of evidence-based mental health and substance use disorder treatment services:
- BCRA would create a one-time appropriation of $2 billion in FY 2018 to HHS “to provide grants to States to support substance use disorder treatment and recovery support services for individuals with mental or substance use disorders.” This amount is much less than was offered in the House version of the bill.
- BCRA would repeal the Prevention and Public Health Fund, which is a significant source of funding for programs administered by the Substance Abuse and Mental Health Services Administration (SAMHSA).
- States may also include inpatient psychiatric services as an optional benefit in their Medicaid plans, with a federal match of 50%.
- BCRA repeals or delays taxes established under the ACA as funding sources for its provisions.
- BCRA does not include the requirement in the House bill that individuals maintain “continuous coverage” or else pay an increased premium amount.
- Eliminates the individual and employer mandates to buy insurance under the ACA by eliminating its tax penalties for failure to obtain insurance.
- In 2019, BCRA would end the ACA-mandated medical loss ratio (MLR) that dictates the maximum portion of premiums an insurer can spend on administrative or operational expenses. Instead, BCRA requires states to set their own MLRs; however, it does not specify any minimum or maximum MLR that states can set.
- BCRA would allow insurers to set premiums for older enrollees at rates up to five times more than their younger counterparts; under the ACA, premiums for older adults could only be three times more expensive than those paid by younger adults.
© 2017 American Psychiatric Association.