Health Reform WK-EDGE Basic health program funding methodology for 2019 and 2020 announced
Thursday, November 7, 2019

Basic health program funding methodology for 2019 and 2020 announced

By Rebecca Mayo, J.D.

CMS released the methodology and data sources necessary to determine federal payments amounts for program years 2019 and 2020 for states that elect to establish a Basic Health Program.

The newly released final funding methodology for the Basic Health Program will now include a Metal-Tier Selection Factor adjustment for program year 2020. CMS published the final methodology for program years 2019 and 2010 in the Federal Register with a detailed explanation of the calculations and data sources used to calculate the federal payment amounts for states that implemented a Basic Health Program (Notice, 84 FR 59529, November 5, 2019).

Basic Health Program. The Patient Protection and Affordable Care Act (ACA) provided states with an option to establish a Basic Health Program (BHP). The BHP makes coverage affordable to individuals under age 65 with household incomes between 133 percent and 200 percent of the federal poverty level, and who do not otherwise qualify for Medicaid, the Children’s Health Insurance Program (CHIP) or affordable employer-sponsored coverage. In March 2014, a final rule was published in the Federal Register, implementing the section of the ACA that governed the establishment of BHPs. The BHP final rule established the standards for state and federal administration for BHPs, including provisions regarding eligibility and enrollment, benefits, cost-sharing requirements and oversight activities.

The final rule does not, however, provide the specific information necessary to determine federal payments, but instead indicated that that the funding methodology would be addressed in a separate annual BHP Payment Notice. Each year a proposed BHP Payment notice would be published in October and the final BHP Payment Notice would be published in February.

Methodology. The ACA provides for funding of a BHP based on the amount of premium tax credit (PTC) and cost-sharing reductions (CSRs) that would have been provided for the fiscal year to eligible individuals enrolled in BHP standard health plans in the state if such eligible individuals were allowed to enroll in a qualified health plan (QHP) through Affordable Insurance Exchanges. The BHP funding methodology is designed to calculate the PTC and CSRs as consistently as possible. The notice details the calculations used in the methodology, including a newly proposed metal-tier selection factor (MTSF) which has been added for 2020. The MTSF will account for the impact of individuals selecting different metal tier level plans in the Exchange.

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