Children's Health Insurance: Coverage of Services and Costs to Consumers in Selected CHIP and Private Health Plans in Five States
Released: 2015-03-27T00:00:00

Letter

Background

Coverage and Cost Requirements for CHIP

Unlike states that opt to cover CHIP-eligible children in their Medicaid programs and therefore must extend Medicaid covered services to CHIP- eligible individuals, states with separate CHIP programs have flexibility in program design and are at liberty to modify certain aspects of their programs, such as coverage and cost-sharing requirements. However, federal laws and regulations require states’ separate CHIP programs to include coverage for routine check-ups, immunizations, emergency services, and dental services defined as “necessary to prevent disease and promote oral health, restore oral structures to health and function, and treat emergency conditions.” States typically cover a broad array of additional services in their separate CHIP programs and, in some states, adopt the Medicaid requirement to cover Early and Periodic Screening, Diagnostic and Treatment (EPSDT) services.must also comply with mental health parity requirements—meaning they must apply any financial requirements or limits on mental health or substance abuse benefits in the same manner as applied to medical and surgical benefits.

With respect to costs to consumers, CHIP premiums and cost-sharing— irrespective of program design—may not exceed amounts as defined by law. States may vary separate CHIP premiums and cost-sharing based on income and family size, as long as cost-sharing for higher-income children is not lower than for lower-income children. Federal laws and regulations also impose additional limits on premiums and cost-sharing for children in families with incomes at or below 150 percent of the federal poverty level (FPL). In all cases, no cost-sharing can be required for preventive services—defined as well-baby and well-child care, including age-appropriate immunizations and pregnancy-related services. In addition, states may not impose premiums and cost-sharing that, in the aggregate, exceed 5 percent of a family’s total income for the length of the child’s eligibility period in CHIP.

Coverage and Cost Requirements for QHPs

PPACA includes provisions that seek to standardize coverage and costs of private health plans in the individual and small group markets. QHPs offered both on and off the exchanges are required to comply with applicable private insurance market reforms, including relevant premium rating requirements, the elimination of lifetime and annual dollar limits on EHBs, prohibition of cost-sharing for preventive services, mental health parity requirements, and the offering of comprehensive coverage. PPACA allows exchanges in each state to offer coverage of pediatric dental services as an integrated benefit in a QHP or through an SADP, which consumers can purchase separately. In exchanges with at least one participating SADP, QHPs are not required to include the pediatric dental benefit. Some states require children obtaining coverage in their state- based exchanges to enroll in an SADP if their QHP does not include the pediatric dental benefit; consumers purchasing coverage in the federally facilitated exchange are not required to do so.

With respect to costs to consumers, QHPs must offer coverage that meets one of four metal tier levels, which correspond to actuarial value (AV) percentages that range from 60 to 90 percent: bronze (AV of 60 percent), silver (AV of 70 percent), gold (AV of 80 percent), or platinum (AV of 90 percent). that a health plan will pay, on average—the higher the AV, the lower the cost-sharing expected to be paid by consumers. Cost-sharing subsidies are available to individuals with incomes between 100 and 250 percent of the FPL to offset the costs they incur through copayments, coinsurance, and deductibles in a silver-level QHP. The cost-sharing subsidies are not provided directly to consumers; instead, QHP issuers are required to offer three variations of each silver plan they market through an exchange in the individual market. These plans are to reflect the cost-sharing subsidies through lower out-of-pocket maximum costs and, if necessary, through lower deductibles, copayments, or coinsurance. Once the adjustments from the subsidies are made, the AV of the silver plan available to eligible consumers will effectively increase from 70 percent to 73, 87, or 94 percent, depending on income. SADPs have different AV requirements than QHPs. SADPs are categorized as “high” and “low” level plans, with 85 and 70 percent AV, respectively.subsidies are not available for pediatric dental costs incurred by a consumer enrolled in an SADP.

Deductibles, co-pays, coinsurance amounts, and out-of-pocket maximum costs can vary within these plans, as long as the overall cost-sharing structure meets the required AV levels. Plans are allowed a de minimis variation of +/- 2 percent. Premium costs are not included in the AV computation. these premium contributions ranged from $471 to $8,949 for a family of four. The premium tax credit is available to eligible consumers regardless of which metal tier they choose; however, the credit is calculated based on the second-lowest cost silver plan in the rating area in which the consumer resides. Unlike cost-sharing subsidies, which generally do not apply to costs incurred for services by a consumer enrolled in an SADP, the maximum contribution amount on premiums includes premiums for both QHPs and SADPs, if relevant.

Finally, PPACA established out-of-pocket maximum costs that apply to EHBs included in QHPs and SADPs. In 2014, these maximum costs for QHPs ranged from $2,250 to $6,350 for individuals and $4,500 to $12,700 for families for households with incomes between 100 and 400 percent of the FPL. Out-of-pocket maximum costs for SADPs are in addition to the out-of-pocket maximum costs for QHPs and were established by each exchange in 2014.

CHIP-Eligible Children and Enrollment in QHPs

CHIP-eligible children may enroll in QHPs instead of enrolling in CHIP— either through a child-only plan or through a plan with other family members—but they are ineligible for premium tax credits and cost- sharing subsidies because of their eligibility for CHIP. However, if a state experiences a CHIP funding shortfall in the future and is therefore unable to enroll all CHIP-eligible children into a CHIP plan, such children may qualify for premium tax credits and cost-sharing subsidies to offset the In states not experiencing a funding shortfall, cost of QHP coverage.enrolling CHIP-eligible children in QHPs would generally increase costs for families. Under CMS regulations, if an individual who is ineligible for cost-sharing subsidies enrolls in the same policy as another family member who is eligible for cost-sharing subsidies, nobody covered under the policy will qualify for cost-sharing subsidies. As a result, enrolling CHIP-eligible children in QHPs could result in a loss of cost-sharing subsidies for family members that are eligible for these subsidies. To maintain cost-sharing subsidies for eligible family members, the CHIP- eligible child would need to be enrolled in a child-only health plan, for which premium tax credits would be unavailable because of the child’s eligibility for CHIP.

In Five States, Coverage in Selected CHIP Plans and QHPs Was Generally Comparable, Although the CHIP Plans More Commonly Covered Dental and Certain Enabling Services and Had Fewer Coverage Limits

We determined that coverage in the selected CHIP plans and QHPs in our five states was generally comparable in that it included some level of coverage for nearly all the services we reviewed. Notable exceptions were certain enabling services and pediatric dental services, which were more frequently covered by the selected CHIP plans. (See app. I for a detailed list of selected services covered by the plans we reviewed.) With respect to certain enabling services, which may be particularly important for low income children, care coordination or case management was offered by all selected CHIP plans, but by only one selected QHP. Similarly, routine transportation to and from medical appointments was covered by two CHIP plans but by none of the selected QHPs. With respect to pediatric dental services, the QHP in New York was the only selected QHP that covered them; the selected QHPs in the other four states did not integrate pediatric dental services within the medical coverage they offered. To obtain coverage for pediatric dental services, consumers who purchased the selected QHP in these states would also need to purchase an SADP. For consumers who purchased the selected QHP in New York or the selected SADP in the other four states, we determined that pediatric dental coverage available was generally comparable to what was available in their state’s selected CHIP plan, with the exception of Utah, where the selected CHIP plan was more generous than the selected SADP.

However, the extent to which consumers obtained coverage that included pediatric dental services is not clear. Available federal data with information on QHP enrollment suggest that many children in the United States with exchange coverage in 2014 may have been without comprehensive dental coverage. According to our analysis of enrollment data for 2014 provided by ASPE, 16 percent of children younger than 18 years of age in the 36 states with federally facilitated exchanges were enrolled in a QHP that included comprehensive dental services that covered check-ups, basic, and major dental services. children were enrolled in QHPs that either had less than comprehensive or no dental coverage. Some of these families are likely to have purchased an SADP for their children, however. According to an ASPE report issued in May 2014, 18 percent of children younger than 18 years of age in the 36 states with federally facilitated exchanges who enrolled in a QHP also enrolled in an SADP, and these were likely among the families that had no comprehensive dental coverage included in their According to our analysis of enrollment data for 2014 provided by QHP.ASPE, virtually no children younger than 18 years of age in the 36 states with federally facilitated exchanges were enrolled in a QHP that included comprehensive dental services and an SADP.

According to CMS, a QHP must offer check-ups, basic, and major dental services to be considered a QHP with embedded dental coverage. According to our analysis of enrollment data for 2014 provided by ASPE, less than half of the QHPs in a given state offered any type of dental coverage—checkups, basic, or major dental services—in two thirds of states with federally facilitated exchanges. did impose limits on outpatient therapies, pediatric vision, and pediatric hearing. One notable difference between these selected CHIP plans and QHPs was the frequency by which they limited home-and community- based health care. While the selected QHP in four states imposed day or visit limits on these services, only one state’s selected CHIP plan did so. In contrast, no QHPs imposed limits on durable medical equipment, while one CHIP plan imposed a $2,000 annual limit.

For services where coverage limits were sometimes imposed on QHPs and CHIP plans, our review found that the limits on CHIP plans were at times less restrictive. For example, the selected QHP in Utah limited home- and community-based health care services to 60 visits per year while the selected CHIP plan in the state did not impose any limits on these services. Comparability between service limits in states’ selected CHIP plans and QHPs was less clear for outpatient therapy services. For example, the selected CHIP plan in New York limited outpatient physical and occupational therapies to 6 weeks per year, with no limits on outpatient speech therapy, while the selected QHP in the state limited outpatient therapies to a combined 60 visits per condition per lifetime. (See app. II for a detailed list of coverage limits for services we reviewed in the selected plans.)

In addition, for pediatric dental services, coverage limits in the selected QHP and SADPs were generally similar to those in the selected CHIP plan; however, when there were differences, CHIP was generally more generous. For example, the selected CHIP plan in Kansas allowed one sealant per tooth per year; in contrast, the selected high and low SADP in the state allowed one sealant per tooth every three years. Similarly, the selected CHIP plan in Utah did not have any coverage limits on x-rays while the selected high and low SADPs in the state did. (See app. III for a detailed list of selected dental limits we reviewed in selected plans.)

Costs to Consumers Were Almost Always Less in Selected CHIP Plans Than in Selected QHPs Despite PPACA Provisions That Limit QHP Costs

We determined that costs to consumers were almost always less in the selected CHIP plans than in the selected QHPs. Even considering PPACA provisions aimed at reducing cost-sharing amounts for certain low-income consumers who purchased QHPs, the differences remained, though were smaller. For example, the selected CHIP plans in four of the five states did not include any deductible, which means that enrollees in those states did not need to pay a specified amount before the plan began paying for services. In contrast, QHPs we reviewed typically imposed annual deductibles, which were as high as $500 for an individual and $1,500 for a family in the plan variation that offered the lowest available deductibles for QHP enrollees. In addition, consumers who purchase selected SADPs may face separate deductible costs. For example, whereas dental services were subject to the plan deductible in the New York QHP, SADPs in Colorado, Illinois, and Kansas had separate dental deductibles that ranged from $25 to $50 for individuals enrolled in selected high plans to $45 to $50 for individuals enrolled in selected low plans. (See app. III for a detailed list of selected dental cost- sharing we reviewed in the selected plans.)

For services we reviewed where the plans imposed copayments or coinsurance, the amount was typically less in a state’s selected CHIP plan compared to its selected QHP, even considering PPACA provisions aimed at reducing cost-sharing amounts for certain low income consumers who purchased QHPs. For example, the selected CHIP plan in two of our five states – Kansas and New York – did not impose copayments or coinsurance on any of the services we reviewed. In two of the remaining three states, the selected CHIP plan imposed copayments or coinsurance on less than half of the services we reviewed, and the amounts were usually minimal and on a sliding income scale. For example, for each brand-name prescription drug, the Illinois CHIP plan imposed a $3.90 copayment on enrollees with incomes greater than 142 and up to 157 percent of the FPL, which was increased to $7 for enrollees with incomes greater than 209 and up to 313 percent of the FPL. In contrast, selected QHPs in all five states imposed copayments or coinsurance on most covered services we reviewed, and the amounts were consistently higher than the CHIP plan in the same state. For example, depending on income, the copayment for primary care and specialist physician visits in Colorado ranged from $2 to $10 per visit for enrollees in the selected CHIP plan, but was $25 and $35 per visit, respectively, for all enrollees in the selected QHP. Cost-sharing for dental services was also higher in a state’s selected SADP than in its selected CHIP plan a majority of the time. In addition, in states where the selected QHP charged coinsurance and the selected CHIP plan required a copayment, a direct comparison of cost differences could not be made, although data suggest CHIP costs would generally be lower. For example, for an inpatient hospital admission, higher-income enrollees in the selected CHIP plan in Colorado paid $50, while all enrollees in the selected QHP in the state were responsible for 20 percent coinsurance after the deductible was met, an amount that was likely to be higher given that 20 percent of the average price for an inpatient facility stay in 2011 was over $3,000.services we reviewed in selected plans.) (See app. IV for a detailed list of cost-sharing for Our review of premiums for selected CHIP plans and QHPs also suggests that premiums were always less in the CHIP plans than in the QHPs we reviewed, even with the application of the premium tax credit to defray the cost of QHP premiums. For example, according to CHIP officials, annual CHIP premiums in 2014 for an individual varied by income level and ranged from $0 for the lowest income CHIP enrollees in Colorado, Illinois, Kansas, and New York, to $720 for enrollees between 351 and 400 percent of the FPL in New York, with most enrollees across the five selected states paying less than $200 per year.annual premiums for a single child only enrolled in selected QHPs ranged from $1,111 to $1,776 in our five states before the application of the premium tax credit. With the premium tax credit, the annual premium amount for selected QHPs was often significantly lower, but was still higher than the selected CHIP plan in all five states. For example, in Illinois, the premium for the selected CHIP plan for an individual with an income at 150 percent of the FPL was $0 and was $1,254 for the selected QHP, which was reduced to $944 after the premium tax credit was applied.

However, the additional premium cost to families enrolling previously eligible CHIP children into their QHPs—a possibility if CHIP funding is not reauthorized—may be minimal or nothing.amount lower income families pay in premiums, families with incomes at 250 percent or less of the FPL—at least 75 percent of the separate CHIP enrollees in the states we reviewed—would generally pay no additional premium to add a child to their QHP. For example, in Kansas, the 2014 annual premium for the lowest cost silver level QHP was $4,875 for a couple age 40 and an additional $1,211 to add a child. However, if the couple’s income was 200 percent of the FPL, their maximum annual Because PPACA limits the premium would be $2,494, and they would incur no additional costs by adding a child to their plan.

Finally, all selected CHIP plans and QHPs limited the total potential costs to consumers by imposing out-of-pocket maximum costs, and these maximum costs were typically less in the CHIP plans we reviewed. For example, all five states applied the limit a family could pay in CHIP plans as established under federal law—including deductibles, copayments, coinsurance, and premiums—at 5 percent of a family’s income during the child’s (or children’s) eligibility for CHIP. This 5 percent cap resulted in limits that varied based on a family’s income level. This amount ranged from $584 to $2,334 for individuals, and $1,193 to $4,770 for a family of four, between 100 and 400 percent of the FPL in 2014. PPACA also established out-of-pocket maximum costs that apply to QHPs and may vary by income. premiums, which may be separately reduced through the application of premium tax credits. QHPs may set out-of-pocket maximum costs that are lower than those established by PPACA, which was the case for For example, the selected QHP in three of the five selected QHPs.Colorado had individual out-of-pocket maximum costs ranging from $750 to $6,300 for individuals between 100 and 400 percent FPL. This amount was less than out-of-pocket maximum costs established under federal law, which ranged from $2,250 to $6,350 for individuals between 100 and 400 percent FPL in 2014.

PPACA out-of-pocket maximum costs on EHB for households with incomes between 100 and 400 percent of the FPL in 2014 ranged from $2,250 to $6,350 for individuals and $4,500 to $12,700 for families. In 2015, out-of-pocket maximum costs on EHB for households with incomes between 100 and 400 percent of the FPL ranged from $2,250 to $6,600 for individuals and from $4,500 to $13,200 for families.

Out-of-pocket maximum costs for SADPs are in addition to the out-of- pocket maximum costs for QHPs and may increase potential costs for families who purchase them. In 2014, each exchange established maximum out-of-pocket costs for SADPs, which do not include premiums. Annual out-of-pocket maximum costs for selected SADPs for three of the four selected SADPs were $700 for one child and $1400 for two or more children.

Agency Comments

We provided a draft of this report for comment to HHS. HHS officials provided technical comments, which we incorporated as appropriate.

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Appendix I: Coverage for Selected Services in CHIP Plans and Qualified Health Plans (QHP) GAO Reviewed in Five States

Testing (screening and/or exam)  The Patient Protection and Affordable Care Act (PPACA) allows exchanges in each state to make available coverage of pediatric dental services as an embedded benefit in a QHP or through a stand- alone dental plan (SADP), which consumers may purchase separately. In exchanges with at least one participating SADP, QHPs were not required to include the pediatric dental benefit. Consumers in these five states were not required to purchase SADPs in 2014, even if their QHP did not include the pediatric dental benefit.

Rehabilitation is provided to help a person regain, maintain or prevent deterioration of a skill that has been acquired but then lost or impaired due to illness, injury, or disabling condition. While PPACA and its implementing regulations do not define habilitative services, habilitation has been defined by several advocacy groups as a service that is provided in order for a person to attain, maintain, or prevent deterioration of a skill or function never learned or acquired due to a disabling condition. The plan covers bone anchored hearing aids and cochlear implants only. Bone anchored hearing aids are used when traditional hearing aids are not efficient because of complications such as chronic infections or blockage. Cochlear implants are for patients with severe hearing loss where traditional amplification is no longer beneficial. The plan covers care coordination and case management for children with special health care needs only. Utah CHIP defines children with special health care needs as enrollees who have or are at increased risk for chronic physical, developmental, behavioral, or emotional conditions and who also require health and related services of a type or amount beyond that required by adults and children generally. Routine transportation includes transportation to and from medical appointments. Routine transportation is covered for CHIP children greater than 142 and up to 209 percent of the federal poverty level only.

Appendix II: Coverage Limits for Selected Services in CHIP Plans and QHPs GAO Reviewed in Five States

Tables 1 and 2 provide information on coverage limits for selected services in State Children’s Health Insurance Program (CHIP) plans and qualified health plans (QHP) in each of the five states we reviewed: Colorado, Illinois, Kansas, New York, and Utah. For coverage limits on pediatric dental services, see Appendix III.

Appendix III: Coverage, Coverage Limits, and Cost-Sharing for Selected Dental Services in CHIP Plans, QHPs, and SADPs

Tables 3 through 12 provide information on coverage, coverage limits, and cost-sharing—deductibles, copayments, and coinsurance—for selected dental services in State Children’s Health Insurance Program (CHIP) plans we reviewed in five states: Colorado, Illinois, Kansas, New York, and Utah; a qualified health plan (QHP) in New York; and stand- alone dental plans (SADP) in Colorado, Illinois, Kansas, and Utah. For selected CHIP plans and the QHP in New York, we note differences in cost-sharing amounts by income level. For selected SADPs, we note the cost-sharing amounts for the “high” and “low” level options, which have actuarial values of 85 and 70 percent, respectively.

For all five states, cost-sharing amounts were subject to out-of-pocket maximum costs. For CHIP enrollees in each state, cost-sharing and premium amounts were subject to a federally established out-of-pocket- maximum cost equal to 5 percent of a family’s income. For QHP enrollees, issuers established an out-of-pocket maximum cost for each plan that was equal to or less than the out-of-pocket maximum cost established under the Patient Protection and Affordable Care Act (PPACA). PPACA out-of-pocket maximum costs for households with incomes between 100 and 400 percent of the federal poverty level (FPL) in 2014 ranged from $2,250 to $6,350 for individuals and $4,500 to $12,700 for families. In 2014, each exchange established out-of-pocket maximum costs for SADPs. Annual out-of-pocket maximum costs for the selected SADPs in Colorado, Illinois, and Kansas were $700 for one child and $1400 for two or more children. The selected SADP in Utah imposed an out-of-pocket maximum cost of $40 for the low plan and $20 for the high plan. In contrast to CHIP, the out-of-pocket maximum costs for QHPs and SADPs do not include premiums.

Appendix IV: Cost-Sharing for Selected Services in CHIP Plans and QHPs GAO Reviewed in Five States

Tables 13 through 17 provide information on cost-sharing—deductibles, copayments, and coinsurance—for selected services in State Children’s Health Insurance Program (CHIP) plans and qualified health plans (QHP) we reviewed in five states: Colorado, Illinois, Kansas, New York, and Utah. For selected CHIP plans and QHPs, we note differences in cost- sharing amounts by income level. For selected QHPs, these variations reflect the cost-sharing subsidies that are available to certain enrollees. For all five states, cost-sharing amounts were subject to out-of-pocket maximum costs. For CHIP enrollees in each state, cost-sharing and premium amounts were subject to a federally established out-of-pocket maximum cost equal to 5 percent of a family’s income. For QHP enrollees, issuers established an out-of-pocket maximum cost for each plan that was equal to or less than out-of-pocket maximum costs established under the Patient Protection and Affordable Care Act (PPACA). PPACA out-of-pocket maximum costs for households with incomes between 100 and 400 percent of the federal poverty level (FPL) in 2014 ranged from $2,250 to $6,350 for individuals and $4,500 to $12,700 for families. These out-of-pocket maximum costs do not include costs associated with services provided through a SADP and, in contrast to CHIP, these out-of-pocket maximum costs do not include premiums.

Appendix V: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, Susan T. Anthony, Assistant Director; Sandra George; John Lalomio; Laurie Pachter; and Teresa Tam made key contributions to this report.

Related GAO Products

Children’s Health Insurance: Cost, Coverage, and Access Considerations for Extending Federal Funding. GAO-15-268T. Washington, D.C.: December 3, 2014.

Children’s Health Insurance: Information on Coverage of Services, Costs to Consumers, and Access to Care in CHIP and Other Sources of Insurance. GAO-14-40. Washington, D.C.: November 21, 2013.

Children’s Health Insurance: Opportunities Exist for Improved Access to Affordable Insurance. GAO-12-648. Washington, D.C.: June 22, 2012.

Medicaid and CHIP: Most Physicians Serve Covered Children but Have Difficulty Referring Them for Specialty Care. GAO-11-624. Washington, D.C.: June 30, 2011.

Medicaid and CHIP: Given the Association between Parent and Child Insurance Status, New Expansions May Benefit Families. GAO-11-264. Washington, D.C.: February 4, 2011.

Oral Health: Efforts Under Way to Improve Children’s Access to Dental Services, but Sustained Attention Needed to Address Ongoing Concerns. GAO-11-96. Washington, D.C.: November 30, 2010.

Medicaid: State and Federal Actions Have Been Taken to Improve Children’s Access to Dental Services, but Gaps Remain. GAO-09-723. Washington, D.C.: September 30, 2009.