12VAC30-141 Family Access to Medical Insurance Security Plan

REGULATIONS

Vol. 32 Iss. 7 - November 30, 2015

TITLE 12. HEALTH

DEPARTMENT OF MEDICAL ASSISTANCE SERVICES

Chapter 141

Proposed Regulation

Title of Regulation: 12VAC30-141. Family Access to Medical Insurance Security Plan (amending 12VAC30-141-100, 12VAC30-141-120).

Statutory Authority: §§ 32.1-325 and 32.1-351 of the Code of Virginia; 42 USC § 1396 et seq.

Public Hearing Information: No public hearings are scheduled.

Public Comment Deadline: January 29, 2016.

Agency Contact: Victoria Simmons, Regulatory Coordinator, Department of Medical Assistance Services, 600 East Broad Street, Suite 1300, Richmond, VA 23219, telephone [phone], FAX [phone], TTY [phone], or email [e-mail].

Basis: Section 32.1-325 of the Code of Virginia grants to the Board of Medical Assistance Services the authority to administer and amend the State Plan for Medical Assistance and directs that such plan include a provision for the Family Access to Medical Insurance Security (FAMIS) program. Section 32.1-324 of the Code of Virginia authorizes the Director of the Department of Medical Assistance Services (DMAS) to administer and amend the State Plan for Medical Assistance when the board is not in session, subject to such rules and regulations as may be prescribed by the board. Section 32.1-351 of the Code of Virginia authorizes DMAS or the director, as the case may be, to develop and submit to the federal Secretary of Health and Human Services an amended Title XXI plan for the Family Access to Medical Insurance Security Plan, and revise such plan and promulgate regulations as may be necessary.

Section 2105 of the Social Security Act (42 USC § 1397ee) provides governing authority for payments for services. The Patient Protection and Affordable Care Act (PPACA) (2010) permits states to extend eligibility in the Children's Health Insurance Program (CHIP) to children of state employees who are otherwise eligible under the state child health plan, known in Virginia as FAMIS. A critical issue reported to the Governor by the agency's director is the denial of access for the children of Virginia state employees to the FAMIS program. Virginia's workforce includes a significant number of lower income employees. Last year, more than 9,600 full-time state employees qualified for the Earned Income Tax Credit, a federal tax subsidy for lower-income working families. Full-time state employees may cover their dependent children through their employee health insurance, but for many families this is not an affordable option. Employees who choose this option face an increase in their insurance premium contributions of approximately $100 to $200 per month. Even with the most comprehensive coverage, employees must also pay co-pays of up to $40 for doctor visits. These health care premiums and cost sharing represent a significant reduction in take home pay for many state workers. Some may be forced to opt for employee-only coverage, thereby leaving their children with no health insurance; others may struggle to pay for rent or other necessities because of the additional cost for their children's insurance. This reduced access to covered medical services creates increased health risks for the children of Virginia state workers.

Current DMAS regulations exclude state employees from FAMIS eligibility. DMAS now seeks to remove this barrier to the FAMIS program and open up low-cost comprehensive health care coverage for the dependent children of Virginia state employees. This rule change will only affect state employees who are qualified for employer-sponsored health insurance; wage employees are not eligible to receive a state contribution toward the cost of their health coverage.

Purpose: The proposed regulatory action is intended to remove a barrier (i.e., high out-of-pocket costs) to access to health care services for more lower-income families.

At this time, a child who is a member of a family that is eligible for subsidized coverage under any Virginia state employee health insurance plan is not eligible for FAMIS. This policy was originally enacted to be compliant with § 2110(b)(2)(B) of the Social Security Act, which categorically excluded dependents of state employees in the definition of a "targeted low-income child."

Virginia's state employee health benefit policies do not allow adding or dropping dependents to coverage outside of the open enrollment period for the new plan year beginning annually July 1, except in the case of certain qualifying events. Eligibility for Medicaid has been such a qualifying event. Children in very low-income families (at or less than 143% federal poverty level (FPL)) are already eligible for Medicaid; those who are dependents of state employees can, under current rules, be dropped from state-subsidized coverage and enroll in Medicaid. The new rules will allow children in families with income between 144% and 200% FPL to move from state-subsidized coverage and enroll in FAMIS.

The children of working families who cannot afford insurance due to out-of-pocket costs suffer from lack of access to health care. While state employees may cover their dependent children through their employee health insurance, for many low-income families this is not an affordable option due to premium contributions, copayments, and deductibles that can add up to a substantial proportion of earned income. This regulatory action will allow children of state employees who are otherwise eligible (e.g., by virtue of family income, residency) to be enrolled for health coverage under the FAMIS Plan. The action will remove the current exclusion of such children from enrollment. This will allow employees of the Commonwealth to be treated the same as other families with access to employer-sponsored health insurance who by current policy may apply for coverage under FAMIS.

As a result of this regulatory action, more lower-income families will be able to obtain insurance coverage for preventive services and necessary medical care for their children. This regulatory action is essential to protect the health, safety, and welfare of these affected individuals by providing an opportunity to access high quality health care services that they may otherwise not be able to afford.

Substance: The intent of this action is to align Virginia policy with changes in federal laws and in doing so to offer more options for health care coverage to more children in lower-income families.

The proposed regulatory action allows state employees to enroll their otherwise-eligible dependent children in the FAMIS plan by removing the language that prohibits such enrollment. Since emergency regulations went into effect in January 2015, state employees who do not currently cover their dependent children on their health benefits have been able to enroll their dependent children in FAMIS if all eligibility standards are met. DMAS and the Department of Human Resources Management (DHRM) are implementing communication strategies to include agency website postings of a fact sheet, electronic newsletters to state benefit administrators, inclusion in the annual notice to all state employees about premium assistance, and the state employee open enrollment newsletter for 2015. It is estimated that 5.0% of the eligible state workforce will be impacted by this change, with a resulting 5,000 children enrolled in FAMIS

Issues: The primary advantage of this proposed action to the public is that more low-income working families will have access to the FAMIS program, with significantly reduced out-of-pocket expenses for health care. This will result in more disposable income for such families to cover their basic necessities or other discretionary expenses. Businesses that offer health insurance to their employees may see a reduction in their health insurance costs if any of their employees have a spouse employed by the state and their eligible children can be enrolled in FAMIS. The primary disadvantage for families is the administrative process of dropping a child from state-sponsored insurance during the open enrollment period (if already covered) and having to apply for FAMIS.

The primary advantage to the Commonwealth is cost savings associated with the state employee health benefit plan. Those employees who currently cover their children on the state health plan could reduce their benefit option to that of an employee only, or employee plus spouse, thus reducing the state's share of premium for family coverage. Since the state employee health plan is self-insured, the actual costs of claims incurred for children covered under the plan would generate additional savings if those children were enrolled in FAMIS. According to DHRM staff, the state health plan's actuary estimates that the reduced cost to the state employee health plan for each child up to age 19 years (i.e., the FAMIS age limit) who leaves the plan averages $2,877. The employer's average share (both general and nongeneral funds) of this amount is $2,418.

Therefore, if 100 children leave the state plan for FAMIS coverage, the savings to the plan is projected to be $287,700, and the employer's share is estimated to be $241,800. DHRM notes that it has no reliable way to predict how many children will leave the health plan for FAMIS coverage. DHRM also cannot predict the specific health status or age of the children who leave, so actual savings may vary from this estimate.

Another advantage to the Commonwealth is reduction of the social and economic costs associated with reducing the number of uninsured children. It is estimated that about 100,000 children remain uninsured in Virginia. This regulatory action aims to reduce that number by 5.0%. DMAS does not anticipate any disadvantages to the public, the agency, or the Commonwealth. The proposed regulatory action fulfills the intent of Governor McAuliffe's A Healthy Virginia Plan to allow FAMIS coverage for children of state employees. It also has the potential to be considered a positive benefit for many state employees that may aid in workforce satisfaction and retention.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The proposed changes remove the current exclusion in regulations and allow low-income state employees, whose children are otherwise eligible for Family Access to Medical Insurance Security Plan, to be enrolled in the program.

Result of Analysis. The benefits likely exceed the costs for all proposed changes.

Estimated Economic Impact. These regulations establish rules for implementation and oversight of the state's Children's Health Insurance Program (CHIP), known in Virginia as the Family Access to Medical Insurance Security (FAMIS) plan. In the past, the federal government prohibited eligibility of children of state employees for FAMIS under section 2110(b)(2)(B) of the Social Security Act which categorically excluded dependents of state employees in the definition of a "targeted low-income child." However, the federal Patient Protection and Affordable Care Act (PPACA) enacted in 2010 permitted states to extend eligibility in CHIP to children of state employees who are otherwise eligible under FAMIS. The proposed changes remove the current exclusion in regulations and allow low-income state employees, whose children are otherwise eligible for FAMIS, to be enrolled in the program.

According to the Department of Human Resource Management (DHRM), last year, more than 9,600 full-time state employees qualified for the Earned Income Tax Credit, a federal tax subsidy for lower-income working families. Full-time state employees may cover their dependent children through their employee health insurance, but for many families this is not an affordable option. Employees who choose this option face an increase in their insurance premium contributions of approximately $100 to $200 per month. Even with the most comprehensive coverage, employees must also pay co-pays of up to $40 for doctor visits and must pay deductibles. These health care premiums and cost sharing represent a significant reduction in take home pay for many state workers. Some are forced to opt for employee-only coverage, thereby leaving their children with no health insurance; others may struggle to pay for rent or other necessities because of the additional cost for their children's insurance. This reduced access to covered medical services creates increased health risks for the children of Virginia state workers.

In light of this situation, the Governor charged the Secretary of Health and Human Resources to create a plan to provide Virginians with greater access to health care for uninsured citizens. As a result, the Department of Medical Assistance Services (DMAS) developed and promulgated emergency regulations that became effective on January 1, 2015. The proposed changes will permanently implement the emergency regulations currently in effect.

The new rules allow children in families with income between 144% and 200% federal poverty level who are currently not covered under their parent's state-subsidized plan to enroll in FAMIS.¹ Similarly, if the children are currently covered under their parent's state-subsidized plan, they are allowed to drop their current coverage and enroll in FAMIS. This change allows employees of the Commonwealth to be treated the same as other families with access to employer-sponsored health insurance who by current policy may apply for coverage under FAMIS. It is estimated that five percent of the state workforce eligible for insurance will be impacted by this change, with a resulting 5,000 children enrolled in FAMIS.

The economic effects of the proposed changes are different depending on whether the affected children are currently covered under their parent's policy or not. For state employees currently covering their children, a reduction in out-of-pocket expenses for health care is expected. This will result in more disposable income for such families to cover their basic necessities or other discretionary expenses. According to DMAS, most of the new enrollment in FAMIS is expected to be in this category (i.e., children dropping their existing coverage). For state employees who are not currently covering their children, some reduction in out-of-pocket expenses may also be expected. Such families may be paying out of pocket expenses for emergency or nonemergency services for their uninsured children. A reduction in out of pocket expenses will also result in more disposable income for such families to cover their basic necessities or other discretionary expenses. The primary disadvantage for affected families is the administrative process of having to apply for FAMIS and/or dropping their child from state sponsored insurance during the open enrollment period.

In addition to the savings to the employees, the primary advantage to the Commonwealth is cost savings associated with the state employee health benefit plan. Employees who currently cover their children on the state health plan could reduce their benefit option to that of an employee only, or employee plus spouse, thus reducing the state's share of premium for family coverage. Since the state employee health plan is self-insured, the actual costs of claims incurred for children covered under the plan would generate additional savings if those children were enrolled in FAMIS instead. According to DHRM, the state health plan's actuary estimates that the reduced cost to the state employee health plan for each child up to age 19 (i.e., the FAMIS age limit) who leaves the plan averages $2,877 per year. The employer's average share (both general and nongeneral funds) of this amount is $2,418 per year. Similarly, the Commonwealth may also experience a reduction in uncompensated health care costs for currently uninsured children of state employees.

Similar to the benefits to the Commonwealth, businesses that offer health insurance to their employees also stand to see a reduction in their health insurance costs if any of their employees have a spouse employed by the state and can enroll their eligible children in FAMIS.

The proposed changes may also affect health care providers. Currently, state health plan and FAMIS utilizes several provider networks. If coverage under the state health plan is dropped, affected children may start receiving services from a different provider participating in FAMIS. However, there is significant overlap between providers in state health plan networks and providers in FAMIS networks. Thus, affected children may be able to continue to receive their health care from the same providers. Likewise, a reduction in uninsured children of state employees would also reduce utilization of uncompensated health care services provided and increase utilization of providers in FAMIS.

While the Commonwealth will experience savings due to reduced employer contributions toward family coverage on the state health plan or reduced uncompensated care costs, some of these savings will be offset due to the state's share of FAMIS costs for additional children. Based on 250 new children expected to be enrolled in FAMIS in fiscal year (FY) 2015 and 5,000 new children expected in FY 2016 and thereafter, DMAS estimates $255,687 increase in total FAMIS expenditures ($89,490 in general funds, $166,196 in federal funds) in FY 2015, $12.9 million increase in total FAMIS expenditures ($2.3 million in general funds, $10.6 million in federal funds) in FY 2016, and $13.6 million increase in total FAMIS expenditures ($1.6 million in general funds, $12 million in federal funds) in FY 2017.

The average cost per FAMIS child is estimated to be $2,454 in FY 2015 ($859 in general funds due to 65% federal match and $1,595 in federal funds), is estimated to be $2,580 in FY 2016 ($458 in general funds due to 82.25% federal match and $2,122 in federal funds), and is estimated to be $2,724 in FY 2017 ($327 in general funds due to 88% federal match and $2,397 in federal funds). Given that the Commonwealth is expected to save $2,418 per child whose family drops their coverage under the state employee health plan, significant net savings to the Commonwealth are expected.

In general, most of the Commonwealth's net savings will be replaced by federal funds and consequently increase inflow of federal funds coming into Virginia. An increase in federal funds would contribute to the Commonwealth's overall economy.

Businesses and Entities Affected. Under the proposed changes, approximately 250 new children are expected to be enrolled in FAMIS in FY 2015 and 5,000 new children are expected in FY 2016 and thereafter. Most of the new enrollment in FAMIS is expected to be from children dropping their existing coverage.

The proposed changes are also expected to shift utilization of services from providers in state health plan or from providers of other health plans offered to the children of state employees to the providers participating in FAMIS.

The primary affected entity is the Commonwealth of Virginia as it will see a significant reduction in its contributions to the state employee health plan and a relatively small increase in expenditures in FAMIS due to significant federal funding, therefore experiencing significant net savings.

Localities Particularly Affected. The proposed amendment does not disproportionately affect particular localities.

Projected Impact on Employment. The proposed amendments may reduce demand for labor by providers in the state health plan or by providers of other health plans offered to the children of state employees and increase the demand for labor by the providers participating in FAMIS. However, DMAS indicates that there is a significant overlap between the providers in the state health plan and in FAMIS.

Effects on the Use and Value of Private Property. The proposed amendments are unlikely to significantly affect the use and value of private property.

Real Estate Development Costs. The proposed amendments are unlikely to significantly affect real estate development costs.

Small Businesses.²

Costs and Other Effects. The proposed amendments may affect health care providers who are currently providing services to affected children and who will be providing services through FAMIS as discussed above. The majority of these providers are believed to be small businesses.

Alternative Method that Minimizes Adverse Impact. There is no known alternative method that would minimize the potential adverse impact on providers who are currently providing services to affected children while accomplishing the same goals.

Adverse Impacts:

Businesses: The proposed amendments may have an adverse impact on health care networks currently utilized by the state health plan which are not believed to be small businesses. However, some of these networks also participate in FAMIS and may continue to provide services to majority of the same children affected by the proposed changes.

Localities: The proposed amendments will not adversely affect localities.

Other Entities: The proposed amendments will not adversely affect other entities.

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¹ Children in very low-income families (at or less than 143% federal poverty level) are already eligible for Medicaid; those who are dependents of state employees can, under the current rules, be dropped from state-subsidized coverage and enroll in Medicaid.

² Pursuant to § 2.2-4007.04 of the Code of Virginia, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

Agency's Response to Economic Impact Analysis: The agency has reviewed the economic impact analysis prepared by the Department of Planning and Budget regarding the regulations concerning FAMIS Eligibility for Children of State Employees. The agency raises no issues with this analysis.

Summary:

The proposed amendments remove the exclusion of otherwise eligible, by income and residency, state employees, who have access to subsidized health insurance coverage, from enrolling their dependent children in the Family Access to Medical Insurance Security (FAMIS) Plan and allow low-income state employees, whose children are eligible for the FAMIS Plan, to be enrolled in the program.

Part III
Eligibility Determination and Application Requirements

12VAC30-141-100. Eligibility requirements.

A. This section shall be used to determine eligibility of children for FAMIS.

B. FAMIS shall be in effect statewide.

C. Eligible children must:

1. Be determined ineligible for Medicaid by a local department of social services or be screened by the FAMIS central processing unit and determined not Medicaid likely;

2. Be under 19 years of age;

3. Be residents of the Commonwealth;

4. Be either U.S. citizens, U.S. nationals or qualified noncitizens;

5. Be uninsured, that is, not have comprehensive health insurance coverage; and

6. Not be a member of a family eligible for subsidized dependent coverage, as defined in 42 CFR 457.310(c)(1)(ii) under any Virginia state employee health insurance plan on the basis of the family member's employment with a state agency; and

7. 6. Not be an inpatient in an institution for mental diseases (IMD), or an inmate in a public institution that is not a medical facility.

D. Income.

1. Screening. All child health insurance applications received at the FAMIS central processing unit must be screened to identify applicants who are potentially eligible for Medicaid. Children screened and found potentially eligible for Medicaid cannot be enrolled in FAMIS until there has been a finding of ineligibility for Medicaid. Children who do not appear to be eligible for Medicaid shall have their eligibility for FAMIS determined. Children determined to be eligible for FAMIS will be enrolled in the FAMIS program. Child health insurance applications received at a local department of social services shall have a full Medicaid eligibility determination completed. Children determined to be ineligible for Medicaid due to excess income will have their eligibility for FAMIS determined. If a child is found to be eligible for FAMIS, the local department of social services will enroll the child in the FAMIS program.

2. Standards. Income standards for FAMIS are based on a comparison of countable income to 200% of the federal poverty level for the family size, as defined in the State Plan for Title XXI as approved by the Centers for Medicare & Medicaid Services. Children who have income at or below 200% of the federal poverty level, but are ineligible for Medicaid due to excess income, will be income eligible to participate in FAMIS.

3. Grandfathered CMSIP children. Children who were enrolled in the Children's Medical Security Insurance Plan at the time of conversion from CMSIP to FAMIS and whose eligibility determination was based on the requirements of CMSIP shall continue to have their income eligibility determined using the CMSIP income methodology. If their income exceeds the FAMIS standard, income eligibility will be based on countable income using the same income methodologies applied under the Virginia State Plan for Medical Assistance for children as set forth in 12VAC30-40-90. Income that would be excluded when determining Medicaid eligibility will be excluded when determining countable income for the former CMSIP children. Use of the Medicaid income methodologies shall only be applied in determining the financial eligibility of former CMSIP children for FAMIS and for only as long as the children meet the income eligibility requirements for CMSIP. When a former CMSIP child is determined to be ineligible for FAMIS, these former CMSIP income methodologies shall no longer apply and income eligibility will be based on the FAMIS income standards.

4. Spenddown. Deduction of incurred medical expenses from countable income (spenddown) shall not apply in FAMIS. If the family income exceeds the income limits described in this section, the individual shall be ineligible for FAMIS regardless of the amount of any incurred medical expenses.

E. Residency. The requirements for residency, as set forth in 42 CFR 435.403, will be used when determining whether a child is a resident of Virginia for purposes of eligibility for FAMIS. A child who is not emancipated and is temporarily living away from home is considered living with his parents, adult relative caretaker, legal guardian, or person having legal custody if the absence is temporary and the child intends to return to the home when the purpose of the absence (such as education, medical care, rehabilitation, vacation, visit) is completed.

F. U.S. citizen or nationality. Upon signing the declaration of citizenship or nationality required by § 1137(d) of the Social Security Act, the applicant or recipient is required under § 2105(c)(9) to furnish satisfactory documentary evidence of U.S. citizenship or nationality and documentation of personal identity unless citizenship or nationality has been verified by the Commissioner of Social Security or unless otherwise exempt.

G. Qualified noncitizen. The requirements for qualified aliens set out in Public Law 104-193, as amended, and the requirements for noncitizens set out in subdivisions 3 b, c, and e of 12VAC30-40-10 will be used when determining whether a child is a qualified noncitizen for purposes of FAMIS eligibility.

H. Coverage under other health plans.

1. Any child covered under a group health plan or under health insurance coverage, as defined in § 2791 of the Public Health Services Act (42 USC § 300gg-91(a) and (b)(1)), shall not be eligible for FAMIS.

2. No substitution for private insurance.

a. Only uninsured children shall be eligible for FAMIS. A child is not considered to be insured if the health insurance plan covering the child does not have a network of providers in the area where the child resides. Each application for child health insurance shall include an inquiry about health insurance. Each redetermination of eligibility shall also document inquiry about current health insurance.

b. Health insurance does not include Medicare, Medicaid, FAMIS, or insurance for which DMAS paid premiums under Title XIX through the Health Insurance Premium Payment (HIPP) Program or under Title XXI through the SCHIP premium assistance program.

I. Eligibility of newborns. If a child otherwise eligible for FAMIS is born within the three months prior to the month in which a signed application is received, the eligibility for coverage is effective retroactive to the child's date of birth if the child would have met all eligibility criteria during that time. A child born to a mother who is enrolled in FAMIS, under either the XXI Plan or a related waiver (such as FAMIS MOMS), on the date of the child's birth shall be deemed eligible for FAMIS for one year from birth unless the child is otherwise eligible for Medicaid.

12VAC30-141-120. Children ineligible for FAMIS.

A. If a child is:

1. Eligible for Medicaid, or would be eligible if he applied for Medicaid, he shall be ineligible for coverage under FAMIS. A child found through the screening process to be potentially eligible for Medicaid but who fails to complete the Medicaid application process for any reason, cannot be enrolled in FAMIS;

2. A member of a family eligible for coverage under any Virginia state employee health insurance plan, he shall be ineligible for FAMIS;

3. 2. An inmate of a public institution as defined in 42 CFR 435.1009, he shall be ineligible for FAMIS; or

4. 3. An inpatient in an institution for mental disease (IMD) as defined in 42 CFR 435.1010, he shall be ineligible for FAMIS.

B. If a child's parent or other authorized representative does not meet the requirements of assignment of rights to benefits or requirements of cooperation with the agency in identifying and providing information to assist the Commonwealth in pursuing any liable third party, the child shall be ineligible for FAMIS.

C. If a child, if age 18, or if under age 18, a parent, adult relative caretaker, guardian, or legal custodian obtained benefits for a child or children who would otherwise be ineligible by willfully misrepresenting material facts on the application or failing to report changes, the child or children for whom the application is made shall be ineligible for FAMIS. The child, if age 18, or if under age 18, the parent, adult relative caretaker, guardian, or legal custodian who signed the application shall be liable for repayment of the cost of all benefits issued as the result of the misrepresentation.

VA.R. Doc. No. R15-4206; Filed October 30, 2015, 2:06 p.m.