SB531: extending the New Hampshire health protection act.

SB 531-FN - AS INTRODUCED

2016 SESSION

16-2807

01/09

SENATE BILL 531-FN

AN ACT extending the New Hampshire health protection act.

SPONSORS: Sen. Pierce, Dist 5; Sen. Woodburn, Dist 1; Sen. Watters, Dist 4; Sen. Kelly, Dist 10; Sen. Lasky, Dist 13; Sen. Feltes, Dist 15; Sen. Soucy, Dist 18; Sen. D'Allesandro, Dist 20; Sen. Fuller Clark, Dist 21; Rep. Grenier, Sull. 7; Rep. Richardson, Coos 4

COMMITTEE: Health and Human Services

ANALYSIS

This bill extends the New Hampshire health protection program. The program currently would expire December 31, 2016. This bill also includes funding for such program by using moneys from the insurance premium tax and changing the priorities of the uncompensated care and Medicaid fund.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

16-2807

01/09

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Sixteen

AN ACT extending the New Hampshire health protection act.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Department of Health and Human Services; Premium Assistance Program. Amend RSA 126-A:5, XXV(a) to read as follows:

XXV.(a) Consistent with the time frames in this paragraph, there is hereby established the marketplace premium assistance program. This will be a premium assistance program for newly eligible adults and their eligible spouse and dependents, if applicable[, until December 31, 2016] and shall be administered by the department of health and human services. In order to receive medical assistance from the program, newly eligible adults who are ineligible for the HIPP program shall choose from any qualified health plans (QHPs) offered on the federally-facilitated exchange if cost effective; provided, however, that any newly eligible adult who had coverage under an alternative benefit plan (ABP) offered by a managed care organization (MCO) under paragraph XIX during the voluntary bridge to marketplace premium assistance program established under RSA 126-A:5, XXIV shall be automatically enrolled at the beginning of open enrollment in a comparable QHP by that same MCO if one is available, unless such newly eligible adult subsequently chooses a different QHP during the enrollment period. If a comparable QHP is not offered by the newly eligible adult's MCO then the newly eligible adult may choose from any QHPs, if cost effective. Provider payments shall be in an amount which shall be no less than before the effective date of this paragraph.

2 Department of Health and Human Services; Premium Assistance Program. Amend RSA 126-A:5, XXV(c) to read as follows:

(c) If the waiver to implement the marketplace premium assistance program is approved on or before March 31, 2015 then, coverage under the voluntary bridge to marketplace premium assistance program established in RSA 126-A:5, XXIV shall terminate on December 31, 2015. Enrollment in the marketplace premium assistance program shall begin on October 15, 2015 and coverage shall begin on January 1, 2016. [Coverage shall end on December 31, 2016.] The cost of the medical assistance provided under the marketplace premium assistance program shall be paid solely from federal funds as provided under 42 U.S.C. section 1396d(y).

3 New Hampshire Health Protection Program. Amend 2014, 3:10, I to read as follows:

I. If at any time the federal match rate applied to medical assistance for newly eligible adults under RSA 126-A:5, [XXIII] XXIV-XXV [between July 1, 2014 - December 31, 2016] is less than [100 percent] the amount as set forth in 42 U.S.C. section 1396d(y)(1), then RSA 126-A:5[, XXIII,] XXIV[,] and XXV shall immediately be repealed upon notification by the commissioner of the department of health and human services to the secretary of state and the director of legislative services.

4 New Paragraph; New Hampshire Health Protection Program; Funding. Amend RSA 126-A:5 by inserting after paragraph XXVI the following new paragraphs:

XXVI-a. To fund the benefits contained in RSA 126-A:5, XXIV-XXV, consistent with the schedule outlined in 42 U.S.C. section 1396d(y)(1), the following funding sources shall be applied in the following order:

(a) The insurance premium tax deposited pursuant to RSA 400-A:32, III(b) in the New Hampshire health protection trust fund, established in RSA 126-A:5-b.

(b) Uncompensated care and Medicaid fund revenues for priorities established under RSA 167:64, I(a)(3).

5 Insurance Premium Tax; New Hampshire Health Protection Program. Amend RSA 400-A:32, III to read as follows:

III.(a) Except as provided in subparagraph (b), the taxes imposed in paragraphs I and II of this section shall be promptly forwarded by the commissioner to the state treasurer for deposit to the general fund.

(b) Taxes imposed attributable to premiums written for medical and other medical related services for the newly eligible Medicaid population as provided for under RSA 126-A:5, XXIV-XXVI shall be deposited into the New Hampshire health protection trust fund, established in RSA 126-A:5-b. The commissioner shall notify the state treasurer of sums for deposit into the New Hampshire health protection trust fund no later than 30 days after receipt of said taxes.

6 Uncompensated Care and Medicaid Fund; Priorities. RSA 167:64, I(a)(3) is repealed and reenacted to read as follows:

(3) Subject to subparagraph (a)(3)(D), expenditure of revenues deposited to the

uncompensated care and Medicaid fund shall be made for the following purposes in the following order of priority:

(A) To support provider payments as budgeted in each year of the biennium.

(B) To fund the state share of costs attributable to the newly eligible Medicaid population as provided for under RSA 126-A:5, XXIV-XXVI, if funding under RSA 126-A:5, XXVI-a(a) is insufficient.

(C) To make disproportionate share hospital payments to New Hampshire hospitals with and without critical access designation in the following order of priority:

(i) To support 75 percent of the uncompensated care costs of New Hampshire’s hospitals with critical access designation consistent with the requirements of 42 U.S.C. section 1396r-4(g) and any relevant federal regulations promulgated thereunder to be shared among such hospitals in proportion to the amount of uncompensated care provided;

(ii) To make disproportionate share hospital payments to support 50 percent of the uncompensated care costs of New Hampshire’s hospitals without critical access hospital designation in fiscal year 2017, and 55 percent of uncompensated care costs of New Hampshire’s hospitals without critical access hospital designation in fiscal year 2018 thereafter consistent with the requirements of 42 U.S.C. section 1396r-4(g) and any relevant federal regulations promulgated thereunder in proportion to the amount of uncompensated care provided.

(D) To make a disproportionate share hospital payment to each hospital that meets the criteria set forth for “deemed disproportionate share hospitals” as that term is defined under 42 U.S.C. section 1396r-4 up to an amount as budgeted in each year of the biennium.

(E) Notwithstanding any provision of law to the contrary, in any fiscal year, the amount of uncompensated care reimbursed to non-critical access hospitals shall be reduced in both state contribution and federal match by any shortfall in net Medicaid enhancement tax revenues.

7 Repeal. 2014, 3:12, II-VII, relative to the prospective repeal of the New Hampshire health protection program, are repealed.

8 Effective Date. This act shall take effect upon its passage.

LBAO 16-2807

1/27/16

SB 531-FN- FISCAL NOTE

AN ACT extending the New Hampshire health protection act.

FISCAL IMPACT:

The Department of Health and Human Services, Insurance Department, Department of Corrections, and New Hampshire Municipal Association state this bill, as introduced, will increase state restricted revenue and expenditures, and may decrease state general fund expenditures and local expenditures by indeterminable amounts in FY 2017 and each year thereafter. There will be no impact on county expenditures, or on county or local revenue.

METHODOLOGY:

The Department of Health and Human Services states this bill makes various changes to the NH Health Protection Program (NHHPP), including removing the current repeal date of December 31, 2016. In addition, the bill funds the NHHPP's extension via the following two methods: (1) dedicating revenue generated from the insurance premium tax levied on health plans purchased under the NHHPP, and (2) revising the formula for distribution of revenues generated by the Medicaid Enhancement Tax (MET). The Department notes that beginning January 1, 2017, the Federal Medical Assistance Percentage (FMAP), or the portion of NHHPP costs covered by the federal government, will drop from 100% to 95%. The FMAP will further drop to 94% effective January 1, 2018, 93% effective January 1, 2019, and 90% effective January 1, 2020, where it will remain under current federal law. The share of costs not covered by the federal government will be covered by the state, via the funding methods identified above. The bill retains the NHHPP's current method of providing healthcare to eligible individuals by purchasing Qualified Health Plans (QHP) available on the healthcare exchange established by the federal Affordable Care Act (ACA). In instances in which QHPs fail to offer certain services mandated by federal Medicaid requirements, the Department will provide wrap services to enrollees. Individuals who self-attest to being medically frail will continue to be provided services by the Medicaid program via contracted Managed Care Organizations. The Department has provided the following cost projections, which do not include administrative costs related to the program's implementation. (Note that the costs for FY 2017 are for the last six months of the fiscal year only, as the NHHPP is currently scheduled to expire December 31, 2016, and so the bill's fiscal impact will begin on January 1, 2017.)

QHP Coverage

SFY 2017

SFY 2018

SFY 2019

SFY 2020

Eligible Individuals

43,968

44,898

45,828

46,758

Per Member Per Year (PMPY) Cost

$7,974 (full year)

$8,612

$9,301

$10,045

FMAP Rate (adjusted based on CY)

95%

94%

93%

90%

Total Funds

$175,294,415

$386,644,743

$426,225,833

$469,665,371

Federal Share

$166,529,694

$365,379,282

$398,521,154

$429,743,814

General Fund Share

$8,764,721

$21,265,461

$27,704,679

$39,921,557

Medically Frail

SFY 2017

SFY 2018

SFY 2019

SFY 2020

Eligible Individuals

3,532

3,602

3,672

3,742

PMPY Cost

$17,079 (full year)

$18,445

$19,921

$21,515

FMAP Rate (adjusted based on CY)

95%

94%

93%

90%

Total Funds

$30,163,870

$66,445,137

$73,155,341

$80,513,801

Federal Share

$28,655,677

$62,790,655

$68,400,244

$73,670,128

General Fund Share

$1,508,193

$3,654,482

$4,755,097

$6,843,673

Wrap Services

SFY 2017

SFY 2018

SFY 2019

SFY 2020

FMAP Rate (adjusted based on CY)

95%

94%

93%

90%

Total Funds

$2,850,017

$5,820,035

$5,940,035

$6,060,036

Federal Share

$2,707,516

$5,499,933

$5,553,933

$5,544,933

General Fund Share

$142,501

$320,102

$386,102

$515,103

TOTAL SUMMARY

SFY 2017

SFY 2018

SFY 2019

SFY 2020

Total Eligible Individuals

47,500

48,500

49,500

50,500

PMPY Cost

$8,771 (full year)

$9,462

$10,208

$11,015

Total Funds

$208,308,303

$458,909,915

$505,321,210

$556,239,208

Net Federal Share

$197,892,888

$433,669,870

$472,475,331

$508,958,875

Net General Fund Share

$10,415,415

$25,240,045

$32,845,879

$47,280,333

The Office of Legislative Budget Assistant states that under the terms of the bill, the state share of NHHPP costs is to be funded via the following sources in the following order: (1) revenue generated from the insurance premium tax levied upon QHPs purchased under the NHHPP, and (2) MET revenue, which is used to fund any state costs remaining after revenue generated by (1) has been exhausted. With respect to funding source (1), the paragraph that follows provides the Insurance Department's estimate of insurance premium tax revenue generated by QHPs purchased under the NHHPP. With respect to funding source (2), the Office notes the bill amends RSA 167:64, I(a)(3), to provide that MET revenue, after first being used to fund budgeted provider payments, shall be used to fund any state share of NHHPP costs remaining after funding source (1) has been exhausted. MET revenue remaining after the NHHPP has been fully funded will be distributed to hospitals in the form of disproportionate share payments. As the Office is awaiting information from the Department of Health and Human Services relative to the total cost of the NHHPP including administrative expenses, it is unable to estimate the amount of MET revenue that will be necessary to fund the remaining state share of NHHPP costs.

The Insurance Department states that, as noted above, the bill restricts the share of insurance premium tax revenue attributable to QHPs purchased under the NHHPP, and uses it to pay for program expenditures. The Department projects that the amount of premium tax revenue attributable to the bill will be $0 in FY 2017, $9.2 million in FY 2018, $4.9 million in FY 2019, and $5.1 million in FY 2020. (Because of timing associated with the way the insurance premium tax is assessed and collected, FY 2017 revenue will be $0 and FY 2018 revenue will reflect two years' worth of payments.) Under current law, all insurance premium tax revenue is deposited into the general fund. Although this bill restricts a portion of insurance premium tax revenue to the NHHPP, the restricted portion is that raised from taxes levied on QHPs. Because these QHPs would not be purchased in the absence of the bill, unrestricted general fund revenue will remain the same under the bill as it would under current law.

The Department of Corrections states that to date, the NHHPP has resulted in decreased general fund expenditures related to inmate medical costs, because medical expenses for eligible inmates are funded via the NHHPP rather than by general funds. Although the Department is unable to predict the extent of any future general fund savings, it presents the following data for informational purposes, and notes that the NHHPP was first implemented in FY 2015:

FY 2013

FY 2014

FY 2015

FY 2016 (as of 11/30/15)

Dollar value of inpatient stays paid for by Medicaid

$627,950

$547,385

$1,820,623

$667,192

The New Hampshire Municipal Association states that, since the NHHPP has resulted in reduced welfare costs for some municipalities since its implementation, the program's extension may continue to result in decreased municipal expenditures.

The Department of Administrative Services and the New Hampshire Association of Counties state this bill will have no fiscal impact.