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IN Medicaid Waiver Uses Work Requirements, Tobacco Penalties

Indiana is the second state to receive approval for a Medicaid program that uses work requirements and adds tobacco-use penalties to encourage cessation.

Indiana 1115 waiver uses work requirements and tobacco use premium penalties.

Source: Thinkstock

By Thomas Beaton

- Indiana is the second state to receive approval for a 1115 Medicaid demonstration that adds work requirements as a condition of beneficiary eligibility.  The demonstration also adds premium penalties for tobacco use as well as financial rewards for preventive care utilization.

The demonstration changes eligibility standards for Healthy Indiana Plan (HIP) enrollees aged 19-64.  The new standards require that able-bodied adults complete between 5 to 20 hours a week of employment, community service, or a related community engagement activity.

Pregnant women, beneficiaries considered medically frail, members in active SUD treatment, and students are exempt from work and community engagement requirements.

HIP will incorporate rewards and penalties based on a member’s participation in healthy behaviors and degree of activity in health plan management.

The new edition of the program adds a premium surcharge for tobacco users equal to 50 percent of their premium contribution amount. The surcharge is officially applied when an enrollee is identified as a tobacco user.  

Medicaid managed care organizations (MCOs) will flag members that are tobacco users. Members can also self-identify if they quit their tobacco use. Member surcharges will be applied by the second year of enrollment and are appealable if individuals feel an MCO incorrectly identified them as a user. The demonstration did not provide additional indication of how they would review tobacco cessation data.

HIP beneficiaries that make monthly premium contributions to a state-provided health savings account, known as a Personal Wellness and Responsibility (POWER) account, can receive extra benefits and rewards under the new demonstration.

The extra benefits could include dental, vision, and chiropractic coverage. Members that continue their POWER contributions will remain enrolled in an “HIP Plus” plan.

Beneficiaries can lower their contribution amounts to POWER accounts if they participate in preventive services like chronic disease screenings and continuously contribute to their POWER account. Individuals at or below 100 percent of the federal poverty line (FLP) that do not make monthly contributions will be moved to a basic HIP plan.

The demonstration also expands available SUD treatment for all HIP members by using federal funds.

Individuals aged 21 to 64 will receive coverage for care within Institutions for Mental Diseases (IMD) for short-term residential stays. The benefits covered by the plan include SUD residential treatment, crisis stabilization and withdrawal management services provided in IMDs.

Indiana governor Eric J. Holcomb views the SUD provisions of the new HIP demonstration as a way to combat the state’s struggles with opioid abuse.

“A decade after it launched, Indiana’s HIP program has become the national model for a state-led, consumer-driven healthcare program that meets citizens’ needs, provides choices and improves lives,” Holcomb said. “This approval continues coverage for hundreds of thousands of Hoosiers and unlocks funding to expand resources to help people struggling with addiction.”

HIP also contains strict redetermination periods for beneficiaries that do not continue their enrollment responsibilities.

Members that fail to meet redetermination and eligibility requirements have a 90-day period to provide HIP the necessary information to re-enroll. If members do not successfully meet redetermination requirements, then they will face another 90-day waiting period, which means beneficiaries may not receive Medicaid benefits for six months.

The HIP demonstration includes provisions similar to Kentucky’s new Medicaid demonstration, Kentucky Health. Both demonstrations may provide a blueprint for the other eight states experimenting with Medicaid work requirements and benefit incentives.

Both demonstrations use federal reimbursement to fund SUD treatment and prevention services in response to the nation’s overwhelming opioid crisis.

Each demonstration also uses a mix of rewards and penalties to ensure members are maximizing savings accounts.

Kentucky Health leverages a redetermination penalty based on timely premium contributions whereas HIP increases premium totals for tobacco users. Each program also pairs state health plans with health savings accounts to encourage individuals to earn comprehensive benefits.

The use of work requirements and community engagement incentives are fully supported by CMS. More demonstrations may receive approval in the coming months, based of the quick turnarounds of the Kentucky and Indiana approvals.


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