Oklahoma (O-EPIC)

Background – The Oklahoma Employer/Employee Partnership for Insurance Coverage (O-EPIC) program is a financial subsidy initiative that assists qualified Oklahoma small businesses and employees in paying for health insurance premiums. The target population includes low-income individuals and small employers. Two programs were created for the target population: the Premium Assistance Partnership Program (referred to as just Premium Assistance Program) and the Premium Assistance Public Program (referred to as Individual Plan). The Premium Assistance Program began enrolling beneficiaries in November 2005 and the Individual Plan will be implemented in January 2007.

O-EPIC is covered under a HIFA waiver and is funded through Federal Medicaid funds, State matching funds generated from a tobacco sales tax, and individual and employer premiums. The Premium Assistance Program utilizes the private employer-sponsored insurance (ESI) market and provides subsidies to employers to pay for employee health insurance premiums for the Premium Assistance Program. The State’s goal is to allow market forces to determine the benefit package and integrate low-wage workers into the private insurance marketplace. Regulation of private plans is not carried out by O-EPIC. Rather, the State Insurance Commission provides general oversight and approval of the private plans.

The Individual Plan is a primary care case management program that will be administered by the State Medicaid agency providing limited benefits and a one million dollar maximum lifetime benefit. Primary Care Providers provide primary care services and refer enrollees for specialist services as medically necessary. The State Medicaid infrastructure provides administrative support and utilizes Medicaid providers to deliver care. Providers are paid Medicaid premiums and may charge additional co-pays.

The Health Resources and Services Administration (HRSA) State planning grant (SPG) program provided information that was useful for problem identification, demonstrating to stakeholders the nature of the problem and influencing legislation that created funding for the program. The State leveraged existing Medicaid infrastructure to support O-EPIC. The State Medicaid agency will provide administrative support for the Individual Plan and provides program oversight for the Premium Assistance Program. Web-based applications are utilized for enrollment and marketing activities for both programs.

Program History – O-EPIC was the culmination of work by Governor Brad Henry, the Oklahoma State Legislature, the Oklahoma Health Care Authority, and other stakeholders to assist Oklahoma residents in purchasing health care insurance. State Senate Bill 1546, which passed in April 2004, charged the Oklahoma Health Care Authority (OHCA), which also administers the State Medicaid agency, with the task of designing a health insurance initiative that would target uninsured working adults. The OHCA was commissioned to create a program for adults with incomes below 185 percent of the Federal poverty level (FPL). This program was to either provide subsidies to pay for a portion of health insurance premiums or allow individuals to purchase a State-sponsored health plan operated by the State Medicaid program. The OHCA utilized a HRSA SPG to study the problem and design an approach to provide insurance coverage. No other State health insurance initiatives exist for this population.

The program design includes two initiatives: the Premium Assistance Program and the Individual Plan. The Premium Assistance Program pays subsidies to small employers to help them pay for employee and family insurance. The Individual Plan will provide a State-run reduced benefit plan to the self-employed, some unemployed individuals, and workers with no access to small group health insurance. Funding for the programs comes from an increase in tobacco sales taxes, which was passed by Oklahoma voters in November of 2004 under the Oklahoma Health Care Initiative.

The Premium Assistance Program began enrolling beneficiaries in November of 2005. As of October 26, 2006, 645 businesses and 1,219 employees and spouses were enrolled. Roughly 430 of the participating businesses have enrolled individuals, while 200 employers have no enrollees. The Individual Plan will be implemented in January of 2007.

O-EPIC is designed to serve 50,000 to 70,000 individuals. The target is based on the total amount of money that the State has to serve the population, divided by the average projected cost to serve each person. Currently, there is a cap of 25,000 enrollees on the Premium Assistance Program and 25,000 on the Individual Plan. The programs have not been in operation long enough to determine if the target number will need to be revised, but they could change as the program evolves.

Eligibility Requirements for the Premium Assistance Program – Employed adults aged 19 to 64 who earn less than 185 percent of the FPL are eligible for the program. In addition, employees must meet the following criteria:

• Be an Oklahoma resident and a U.S. citizen or legal alien
• Be ineligible for Medicare or Medicaid
• Contribute up to 15 percent of health insurance premium costs
• Be enrolled in an O-EPIC qualified Premium Assistance Program (sole proprietors are not covered by the program)

Coverage in the Premium Assistance Program is limited to low-income adults with ESI coverage. The State assumes that children whose family income levels meet the requirements will be eligible for the SoonerCare program, which provides primary care case management services. The State has applied to raise the income level cap to 200 percent of the FPL in an 1115 Medicaid waiver renewal application. However, this is subject to approval by the State legislature.

There are no employer or employee crowd-out restrictions for the Premium Assistance Program. Employers are now eligible for participation in the program if the size of their firm is less than 50 employees.

Eligibility Requirements for the Individual Plan – The Individual Plan was designed as a “fall-back” program that offers primary care case management to qualified individuals who are ineligible to participate in the Premium Assistance Program. Individuals who may be eligible include:

• Adults aged 19-64 who earn less than 185 percent of the FPL
• Oklahoma residents who are U.S. citizens or legal aliens
• Individuals who are ineligible for Medicare or Medicaid
• Individuals not eligible for small group health coverage (this includes sole proprietors)
• Workers at small businesses who are either not eligible to participate in their employer's health plan or whose employer does not offer a Qualified Health Plan
• Unemployed individuals who are currently seeking work
• Working individuals with a disability who meet the Ticket-to-Work program requirements and have incomes above the Medicaid level, but below 200 percent of the FPL

If an individual drops his or her own private coverage, he or she can join the Individual Plan without a waiting period as long as the person’s employer does not enroll in the Premium Assistance Program. However, for employees of employers who drop ESI coverage, there is a waiting period of six months from the time that their employer dropped previous insurance to when they can enroll in the Individual Plan. Employers must also certify that they do not offer health insurance to employees in order for the employee to receive coverage under the Individual Plan.

Program Funding – O-EPIC is funded through Federal Medicaid funds, matching State special funds, and individual and employer contributions. Matching Federal Medicaid funds can be as high as $100,000,000 per year. State special funds are generated from a portion of the sales tax on tobacco; these funds are non-lapsing. As of October 15, 2006, collections for the program were approximately $58 million.

Individuals in the Premium Assistance Program pay up to 15 percent of monthly premium costs. Total employee contributions cannot exceed 3 percent of the gross household income. The State pays 60 percent of an individual’s premium and 85 percent of a spouse’s premium. However, if an individual and spouse are spending more than 3 percent of family income on the premium itself, the State may provide additional contributions. Employers in the Premium Assistance Program are responsible for contributing at least 25 percent of eligible employee premiums. For the Individual Plan, enrollees pay on a sliding fee scale, with fees ranging from $8 to $64 per month. The State then pays the remaining amount.

Program Design – O-EPIC is covered under a Medicaid HIFA waiver. The State will administer the Individual Plan. The benefit package will be a more limited product than the SoonerCare plan, which provides primary care and case management services. Enrollees will choose a primary care case manager, who will be responsible for linking them with necessary covered services. The State will enroll and pay providers directly.

The Premium Assistance Program builds upon the private Oklahoma insurance market. At present, there are 11 private insurance companies participating (additional companies may join in the future). Some insurers in the market have not yet applied to have their products approved. Any health plan producer licensed by the Oklahoma Insurance Department may choose to use O-EPIC as a selling tool. The carrier sends a list of product lines that they think meet program guidelines to the OHCA. The OHCA then reviews the products and forwards them to the Oklahoma Insurance Department to confirm that they are licensed in the State. Employers who use or want to use any of these product lines can then apply to be in the program. Once the employer has been approved, the employees can apply for the program. All employer, employee, and insurance plan applications are completed online.

One of the advantages of the Premium Assistance Program is that it utilizes existing insurance plans. Therefore, employers can use the same private plans that they had previously been offering. The State does not limit the number of private plans that participate and would like to include as many plans as possible. With the exception of the original enrollment procedures, the process and administration of the Premium Assistance Program are invisible to private insurance companies. The State contracts with the employer for all of its eligible employees and the employer works with the program to receive premium subsidies for his or her employees. The State directly pays employers for the State subsidy for each of their employees.

Delivery of Services in the Premium Assistance Program – The Premium Assistance Program relies on existing insurance carriers to provide health coverage. As such, the program incorporates service delivery models that are available in the health insurance market, including managed care providers and preferred provider organization (PPO) plans. The State believes that safety net providers are enrolled in PPO plans or the commercial networks to the extent they that participate in the private insurance sector. Currently, six of the eleven private carriers offer PPO plans and other alternatives. Since the Premium Assistance Program uses commercial products, the OHCA is not involved in the regulation of the products, nor is it involved in the business practices, reimbursement, billing, standards of care, encounter data reporting, or access issues of the carriers.

Delivery of Services in the Individual Plan – The Individual Plan uses the Oklahoma Medicaid infrastructure to deliver services, including the staff, Medicaid fee-for-service (FFS) networks, and the Medicaid Management Information System. SoonerCare primary care providers have agreed to accept enrollees from the program. The Individual Plan also incorporates safety net providers, such as Federally qualified health centers (FQHCs), to deliver care.

Payment and Reimbursement – The State is not involved with negotiating payments and reimbursements in the Premium Assistance Program because the program relies on private insurance carriers to perform these activities.

The Individual Plan will pay providers 100 percent of Medicaid’s payment rates. Additionally, providers will be allowed to charge a co-pay on top of the Medicaid fee. The impact of the program on safety net provider revenues will not be seen until after the program is initiated in 2007.

Plan Benefits for the Premium Assistance Program – The Premium Assistance Program requires that private insurance carriers include:

• Hospital services
• Physician services
• Laboratory services
• X-ray services
• A pharmacy benefit
• Office visits
• $3,000 maximum out-of-pocket payments
• $50 office visit co-pay maximum
• $500 maximum annual pharmacy deductible

When determining the benefit package, the State set a minimum threshold that was very flexible. The goal was to allow market forces to determine the benefit package and integrate Premium Assistance Program enrollees into the private insurance marketplace. Cost control is also the responsibility of private carriers. In short, the State is taking a hands-off approach to the market and leaving it to employers to obtain the best value in the health insurance marketplace.

There is a 5 percent family income limit on health care expenditure. Families have to keep records of their expenditures and apply to the State when the expenditures exceed the 5 percent level. The State will reimburse enrollees up to $900.

Plan Benefits for the Individual Plan – The Individual Plan offers a limited package of benefits with a lifetime maximum benefit of one million dollars. Enrollees select a primary care physician as part of the application process and PCP referral is required for most services and those outside of the following list. Benefits are limited to a maximum number in a specified time period, including pharmaceuticals. The Individual Plan benefits include:

• Office visits for evaluation and medical management – one wellness exam per year and 4 visits per month
• Women’s routine and preventive health care services –one mammogram per year
• Services delivered to American Indians at Indian Health Service, tribal, or urban Indian clinics
• Inpatient, emergency, and outpatient hospital services – 24 inpatient days per year
• Behavioral health services, including inpatient, outpatient, and outpatient substance abuse – subject to maximum numbers of days per year
• Maternity/Obstetric care
• Diagnostic imaging, lab services, oxygen, blood and blood products
• Pharmacy – 6 prescriptions per month total with a 3 brand name per month maximum
• Dialysis services
• Diabetic supplies
• Family planning methods
• Adult Immunizations
• Smoking cessation – one 90 day therapy per year

The Individual Plan will utilize co-pay and benefit maximums in order to control costs. Examples of co-pays include:

• Physician office visits: $25 co-pay per visit
• Pharmacy: $5 per generic and $10 per brand name
• Hospital emergency room: $30 co-pay per occurrence, waived if admitted to hospital
• Inpatient hospital admission: $50 co-pay per admission
• Specialized imaging scan: $25 co-pay per scan
• Hospital outpatient services: $25 co-pay per visit; $10 per visit for cancer treatment
• Durable medical equipment/supplies: $15,000 lifetime maximum

When determining the benefits for the Individual Plan, the State tried to balance monetary constraints with the desire to provide comprehensive primary care services. There was average monthly allocation of about $200 for enrollees with which to guide the benefit determination. The benefit packages of several health plans, including the Medicaid benefit plan, the State employee plan, and other commercial plans, were examined. In order to reach the monetary target, the State reduced some of the proposed benefits in the Individual Plan, making it more limited than commercial plans. Actual monthly expenditures for the Premium Assistance Program are running a bit higher than allocated: around $240 per member per month (PMPM).

Impact of SPG Program – The State planning grant (SPG) program was useful in providing data that assisted in problem identification and helped stakeholders understand the scope of the problem. The data also helped influence the legislature to pass the tobacco tax, which funds the program. CPS and telephone surveys were the most important sources of information in the SPG program. The State expressed the desire for more information on carriers and the benefits that were being offered in the commercial market, as this type of information was not readily available.

The OHCA utilized SPG funds to develop the Oklahoma State planning grant (OSPG) program. The OSPG program conducted research projects for the purpose of studying the uninsured in the State and for collecting and analyzing data on this population. The research projects included a household survey, focus groups, and a small business survey. The results from these projects provided data and information on the characteristics of the uninsured and the extent of the uninsured problem in the State; beneficiary attitudes; appropriate rate structures for a subsidy program; key determinants to provider participation in the Oklahoma Medicaid program; and the receptivity of small businesses to a State-run ESI subsidy program.

Lessons from Administering the Program – O-EPIC found that it was important to utilize existing health care market structures for the administration and operation of the program. State agencies, insurance plans, brokers and agents, third-party administrators (TPA), and the internet are incorporated into the program. This allowed the program to be implemented with few additional staff positions.

Having a strong Medicaid program, SoonerCare, made it easier to implement the O-EPIC Individual Plan because there is sufficient primary care case management capacity in the SoonerCare program to serve the new population. The OHCA will also utilize the existing SoonerCare quality assurance unit for the Individual Plan.

The O-EPIC Premium Assistance Program is an ESI program. Therefore, the Oklahoma State Insurance Commission determines whether insurance products meet the Premium Assistance Program minimum requirements.

Insurance brokers/agents are heavily involved with the Premium Assistance Program. Brokers and agents have been trained by the State and help employers enroll in the program. In addition, they may have encouraged insurance carriers to enroll products in the program. Brokers are not paid commission by the State, but by insurance carriers, as is the case with the commercial market. O-EPIC uses the Internet to disseminate program information, market the program, provide training resources, and enroll individuals and employers. There is a web-based application process for determining employer and employee eligibility.

Evaluation – A survey of small businesses was carried out for the Premium Assistance Program and a final report has been developed. The report describes the experiences that employers have had with the Premium Assistance Program. It also includes information on employee uptake of the program, benefits of participating in the plan, effectiveness of information sources, and the impact of insurance agents/brokers on successful program implementation. Findings from the evaluation showed that insurance agents were utilized and heavily depended upon in the application and implementation phases of employer participation. Information provided by insurance agents as well as newspapers made income eligibility requirements more comprehensible than information from other sources. Employers reported that the most important benefit of participation in O-EPIC was the ability to offer ESI coverage, which they perceived would improve existing employee morale and productivity. Furthermore, offering health benefits could assist them in attracting new employees. The evaluation also indicated that O-EPIC could potentially increase ESI coverage of previously uninsured workers by 46 percent. However, employers commented that the income eligibility ceiling unfortunately still excluded some lower-wage workers in need of ESI coverage.