The Basic Health Program (BHP)

Under the Affordable Care Act (ACA), states have the option of creating a Basic Health Program (BHP), or a health benefits coverage program that uses federal tax money to subsidize health coverage for low-income individuals who would otherwise be eligible to purchase coverage through the state's Exchange. The BHP is intended to give states the ability to provide more affordable coverage for these low-income residents and improve continuity of care for people whose income fluctuates above and below Medicaid levels.

On Sept. 20, 2013, the Department of Health and Human Services (HHS) released a proposed rule that would establish the BHP. In an effort to promote coordination between the BHP and other insurance affordability programs, the proposed rule generally aligns BHP standards with existing rules governing coverage through the Exchange, Medicaid or the Children's Health Insurance Program (CHIP), rather than establish new and different rules for the BHP.

The BHP was scheduled to be operational by Jan. 1, 2014, but HHS delayed the program for one year. The proposed rule is intended to enable states to implement programs effective on or after Jan. 1, 2015.

OVERVIEW OF THE PROPOSED RULE

The proposed rule sets forth a framework for BHP functions, including:

• The procedures for certification of a BHP Blueprint and standards for state administration of the BHP consistent with that Blueprint;
• Eligibility and enrollment requirements for standard health plans offered through the BHP;
• The benefits covered by standard health plans as well as requirements of the plans;
• Federal funding of certified state BHP;
• The purposes for which states can use federal funding;
• The parameters for enrollee financial participation; and
• Federal oversight of BHP funds.

State Establishment of a BHP

Under the proposed rule, states will use the "Basic Health Program Blueprint" to apply for certification to implement a BHP, consistent with the process for state Exchanges. The rule proposes fundamental elements of a BHP, including statewide operation, enrollment of all eligible individuals and a prohibition on enrollment caps and waiting lists.

Eligibility and Enrollment

The proposed rule would require eligibility determinations to be made by government agencies. The proposed rule also establishes the eligibility criteria for enrolling in coverage through the BHP, tying most standards to those used by the Internal Revenue Service (IRS) to determine advance premium tax credits and cost-sharing reductions under Exchange plans. In general, the BHP is an optional program that states can implement for individuals who:

• Are citizens or lawfully present in the United States;
• Do not qualify for Medicaid, CHIP or other minimum essential coverage; and
• Have income between 133 percent and 200 percent of the federal poverty level (FPL).

Lawfully present non-U.S. citizens whose income falls below 133 percent of FPL but who are unable to qualify for Medicaid due to their non-citizen status are also eligible to enroll in coverage through the BHP.

Additionally, the proposed rule provides a state option to use the annual open enrollment model (as in the Exchange) or the continuous enrollment model (as in Medicaid and most CHIP programs). States are required to use the single streamlined application and to ensure coordination between other insurance affordability programs.

Standard Health Plan

The proposed rule outlines the competitive contracting process and other contracting requirements for states to provide standard health plans under the BHP. The rule also defines the types of entities that can contract with the state to provide a standard health plan to BHP enrollees.

In addition, the rule proposes the minimum benefit standard (the essential health benefits) and makes provisions for additional benefits. Generally, benefits provided under the BHP will include at least the 10 essential health benefits specified in the ACA.

Enrollee Financial Responsibilities

Under the proposed rule, the monthly premium and cost-sharing charged to eligible individuals will not exceed what an eligible individual would have paid if he or she were to receive coverage from a qualified health plan (QHP) through the Exchange.

Consistent with the ACA, the proposed rule provides that monthly premiums may not exceed the monthly premium the individual would have paid had he or she enrolled in the second-lowest-cost silver plan in the Exchange. In addition, the rule establishes cost-sharing standards consistent with those in the Exchange, including protections for American Indian and Alaskan Natives and the prohibition on cost-sharing for preventive health services.

Financing the BHP

The proposed rule:

• Establishes state BHP trust funds for receipt of federal deposits;
• Sets the parameters on the permitted uses of funding; and
• Proposes the process through which HHS will annually develop and finalize the BHP funding methodology and state payment amounts.

A state that operates a BHP will receive federal funding equal to 95 percent of the amount of federal subsidies that would have otherwise been provided to (or on behalf of) eligible individuals if these individuals enrolled in QHPs through the Exchange.

In addition, HHS has stated that they intend to publish a payment notice that will propose the payment methodology for the BHP along with data specifications. States will have an opportunity to comment on the payment notice before the methodology is finalized and applied to state data to determine the state's federal BHP funding amount.

State and Federal Oversight

The proposed rule promotes program integrity and establishes standards for both state and federal oversight of the BHP. Standards are proposed to allow a state to voluntarily terminate the program, as well as termination by HHS of BHP certification.

Source: U.S. Department of Health and Human Services

This Legislative Brief is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.

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