Although Kentucky’s 1115 Medicaid waiver (called Kentucky HEALTH) is currently blocked by a federal court order, Kentucky is moving full steam ahead with implementing new policy pieces that implement some parts of the waiver. One of those is a program that will pay the premiums of working Medicaid beneficiaries who have access to insurance through their employers. The mouthful of a program, called the Kentucky Integrated Health Insurance Premium Payment program (KI-HIPP for short), is being promoted heavily by the Department for Medicaid Services right now, and it’s about to send tens of thousands more letters to Medicaid households early in August.
What does KI-HIPP do? It’s targeted towards Medicaid households who are working in low-income jobs that don’t pay more than 138% of the Federal Poverty Level (less than about $28,600 for a household of 3). If health insurance is offered at all, it’s often unaffordable. KI-HIPP can pay those premiums IF the state determines that the employer-offered insurance is more cost-effective than Medicaid. If that’s the case, enrolling in KI-HIPP should expand that individual’s network of providers to include both Medicaid and those who accept the employer’s health insurance plan. It sounds like a good thing, right? Well…it turns out to be more complicated than it sounds. So we asked questions, some of which should be easy to answer since this program is already operating. We submitted these questions to the Medicaid administrators on June 14th. It’s now July 16, and we still don’t have answers, which raises some serious red flags for Medicaid beneficiaries who are being actively recruited to enroll in this new program.
First, a little background. What makes insurance “affordable?” Is the premium the only factor? Of course not; there are all kinds of out of pocket expenses like copays (usually between $25-50 a visit), coinsurance (typically 20% of the cost of the visit), and deductibles (which can cost thousands of dollars per year) to consider. According to state regulations, Medicaid Services should take all that PLUS the types of services covered into consideration before determining whether the state will save any money.
It sure would save the state lots of money if they just don’t cover those out of pocket expenses, right? Based on what we’ve learned about the program, that seems to be what’s happening. Even though federal Medicaid rules are in place to protect beneficiaries from paying no more than 5% of their income towards these costs, regardless of which in-network provider they see, we’ve been told in several settings (most recently the July Kentucky HEALTH Stakeholder Forum, see the last slide) that Medicaid will pay exactly $0 if a patient chooses to see a provider who only takes the employer’s insurance. And if they see a provider who only takes Medicaid, the state is paying for the employer’s insurance AND that doctor visit, doubling the state’s cost. Although the state claims KI-HIPP “May widen healthcare networks by providing access to additional services via KI-HIPP providers,” this only works for both the state and the beneficiary if beneficiaries choose to see only those doctors who take both types of coverage, essentially limiting the individual’s choice to the providers they already have access to via Medicaid.
You won’t find this in the state’s marketing material except in one place. Their handbook states “It is very IMPORTANT [emphasis by the state] to receive services from In-Network providers that accept Medicaid.” That doesn’t exactly widen one’s network. In fact, there is no mention in any of the state’s materials on how to get reimbursed for out of pocket expenses, or for that matter how to access Medicaid-covered services not covered by the employer, like dental and vision.
Did I mention “reimbursement?” This is another huge red flag in the program. When the state says “premium payment,” it really means “premium reimbursement.” Rather than paying the employer or the insurance company directly, the state is choosing to require Medicaid beneficiaries—who make near-poverty or below-poverty wages—pay the premium and submit proof to the state in order to get reimbursed after it’s processed. Not just the first payment, every payment. The beneficiary will be required to report this proof monthly at a minimum. This seems to be a variation of Kentucky HEALTH’s monthly reporting of work activity, which has been blocked in federal court. If Kentucky were to pay the premium upfront, as Medicaid rules require, there would be no need for beneficiaries to submit paystubs on a monthly basis.
If the premium is divided among bi-weekly or weekly checks, it will double or quadruple the amount of paperwork submission required in order to be made whole. This is an extraordinary burden on anyone. Period.
There are simply too many red flags and unanswered questions about KI-HIPP to recommend it to any Medicaid beneficiary at this time. Heck, we don’t even know if the program is voluntary, as it is currently marketed, or mandatory, as stated in the newly-revised state regulation. But one thing is clear: for a state that claims to want to teach Medicaid beneficiaries the virtues of commercial insurance, they sure are missing a big chunk when it comes to KI-HIPP. And that big chunk will likely result in unintentional (and financially catastrophic) surprise medical bills for the people least likely to afford them. Kentucky states it projects to save $300,000 just with the few people they’ve signed up so far. Now we know how.
For now, Kentuckians should be wary of KI-HIPP. At least until Kentucky complies with federal Medicaid rules that will protect them from unaffordable out of pocket costs and burdensome reporting requirements.