Massachusetts Health Exchange Profile
Establishing the Exchange
On April 12, 2006, former Governor Mitt Romney (R) signed into law comprehensive health reform legislation designed to provide near-universal health coverage for state residents. The Massachusetts health reform law became the model for national health reform.
An important component of the law was the creation of the Massachusetts Health Connector, a health insurance exchange that manages several coverage programs. Commonwealth Care provides subsidized coverage for individuals with incomes below 300% of the federal poverty level ($33,510 for an individual and $69,150 for a family of four in 2012) and Commonwealth Choice enables those who are not eligible for Commonwealth Care to shop for and purchase insurance offered by private health plans. In 2010, the Massachusetts Connector launched the Business Express program for businesses with 50 or fewer employees. As of December 2012, the Connector enrolled over 225,000 individuals in coverage—over 190,000 in Commonwealth Care and more than 40,000 in Commonwealth Choice, including approximately 4,750 enrollees in Business Express. Enrollment is expected to continue to increase in fiscal year 2013, in part due to reintegration of legal immigrants who became eligible for enrollment in the Connector after a recent Massachusetts Supreme Court decision.
In 2012, Governor Deval Patrick (D) enacted two laws affecting the Connector. The first authorized the Connector to be certified as a state-based exchange as defined in the Affordable Care Act (ACA) and gave the Connector authority to perform key tasks, such as establishing a Navigator program and administering appeals related to the federal exchange. The second law included a number of provisions related to the ACA, including: designating the Connector as the entity to conduct risk adjustment; authorizing the Connector to sell stand-alone dental, vision, catastrophic, and child-only plans; and designating the Health and Human Services Department (known as MassHealth) to administer the Basic Health Plan option.
Structure: The Massachusetts Connector was established as a quasi-governmental organization, specifically a “public entity not subject to the supervision and control of any other executive office.”
Governance: The Connector is governed by an 11-member Board, including four ex officio members (or designees): Secretary for Administration and Finance, Director of Medicaid, Commissioner of Insurance, and Executive Director of the Group Insurance Commission. The Governor appoints an actuary, a health economist, a representative of small business, and an underwriter. The Attorney General appoints an employee health benefits specialist, a representative of health consumers, and a representative of organized labor. Appointees cannot be employed by an insurance carrier licensed in Massachusetts.
Current appointed Board members are:
- Ian Duncan, Solucia Inc.
- George Gosner Jr, Spring Insurance Group
- Jonathon Gruber, Massachusetts Institute of Technology
- Andrés López, AJL Consultants
- Louis Malzone, Massachusetts Coalition of Taft-Hardly Funds
- Nancy Turnbull, Harvard School of Public Health
- Celia Wcislo, 1199 SEIU United Healthcare Workers East
Contracting with Plans: The Connector acts as an active purchaser and requires health insurance carriers offering plans through the Connector to receive the “Seal of Approval” by meeting requirements such as participation in all Commonwealth Choice offerings (meaning individual and small group) and offering all standardized benefit packages for all plan benefit levels (gold, silver, bronze, and young adult plans). Carriers may also offer non-standardized products to consumers, and the Connector is considering displaying these plans within the corresponding metal tiers (as suggested by an actuarial review). For 2013 plan year, the Connector received proposals from all eight existing Commonwealth Choice carriers and one new entrant, and granted the Seal of Approval to all standardized and non-standardized plans.
The Seal of Approval process provides the framework for the Connector’s certification, recertification, decertification, and ongoing performance monitoring processes. It is substantially in compliance with the Affordable Care Act’s (ACA) qualified health plan certification standards and only a few refinements are necessary.
However, in order to comply with the metal tier requirement in the ACA, the Health Connector is considering maintaining a base of standardized and non-standardized plans for both the individual and small group exchanges, and to include additional non-standardized plans for the small group market only. The additional non-standardized plans would not be available in the individual exchange but must be made available through other channels (such as directly from the carrier) to be consistent with state and federal regulations. Carriers would be required to offer at least one plan for each standardized benefit package on their broadest commercial network. The Connector plans to release the 2014 Seal of Approval Request for Responses (RFR) in January 2013.
Dental and Vision Benefits: The Health Connector plans to include stand-alone dental plans beginning in 2014 and using a dental Seal of Approval program in parallel with the medical benefit. The RFR release date for dental plans is targeted for January 2013.
Risk Adjustment, Reinsurance, and Risk Corridors: Massachusetts will administer the Connector’s risk adjustment program. A multi-agency workgroup, co-chaired by the Connector and Division of Insurance, is developing the methodology and plans to leverage the state’s existing All-Payer Claims Database. The Division of Insurance will also oversee administration of the transitional reinsurance program.
Consumer Assistance and Outreach: The state has also begun planning an outreach and education initiative that builds on previous public education campaigns and an established foundation of stakeholder engagement. The Connector will continue working with inter-agency partners to conduct a new assessment of the environment, identify remaining needs, and define an effective strategy to reach individual consumers and small businesses. These initiatives will be a key component of the multi-year plan to increase public awareness and involvement and to establish a Navigator program to facilitate enrollment. In December 2012, Massachusetts concluded the competitive bidding process to identify a vendor to assist with communications over the next year. The vendor will develop a style guide for the Health Connector and MassHealth and will design the print and electronic communications for individuals, employers, Navigators, and brokers.
Small Business Health Options Program (SHOP) Exchange: The Division of Insurance has identified a subcontractor to evaluate the impact on the insurance market of broadening the definition of small employer to those with 100 or fewer employees before 2016.
The Health Connector is creating “Sub-connectors,” an alternative distribution channel for small employers (and the brokers who serve them) to purchase coverage through the Health Connector while retaining aspects of their current shopping experience. The goal is to allow more small businesses to access QHPs through the Connector.11 The Health Connector has issued a Request for Information (RFI) to collect feedback on licensing requirements for Sub-connectors.
The Health Connector is contemplating an employee choice model in which employees choose from all QHPs within an employer-selected level of coverage. The Connector hopes to leverage knowledge acquired from the Contributory Plan pilot, which was frozen shortly before the Business Express was introduced in 2010. The Contributory Plan allowed employers to fix their contribution to premium costs, while still providing meaningful plan choice to employees. Previous experience with the Contributory Plan indicated that the concept appealed to employers but there were opportunities for improvement to make the methodology consistent across carriers and ensure the shopping experience was simple and intuitive.
Information Technology (IT): The current IT structure in Massachusetts includes two eligibility systems: MA21 (for Medicaid and the Children’s Health Insurance Program or CHIP) and Beacon (for the Supplemental Nutrition Assistance Program or SNAP and the Temporary Assistance to Need Families program or TANF). By 2015, Massachusetts plans to have integrated the two systems into a single eligibility hub which assesses eligibility for Medicaid, CHIP, TANF, SNAP, the Health Safety Net (or HSN, the state’s free care program), and subsidized private coverage in the Connector.
The Massachusetts Executive Office for Health and Human Services (EOHHS), the Connector, and the University of Massachusetts Medical School are collaborating to develop the Health Insurance Exchange and Integrated Eligibility System (HIX/IES). To support this initiative, the state received both federal exchange grants and the EOHHS applied for and received CMS approval of an Advanced Planning Document for the enhanced federal match to upgrade the state’s Medicaid eligibility systems. In December 2011, the state released a Request for Resources (RFR) to identify a vendor to act as a Systems Integrator that would design, develop and implement the HIX/IES for Massachusetts’s multiple health care programs.
In November 2012, the Health Connector issued a Request for Proposals (RFP) for subcontractor assistance with creation of a single, integrated system that replaces the separate customer service and business operations programs currently used for Commonwealth Care and Commonwealth Choice. The subcontractor would need to create a program that interfaces with the technology systems being built through the HIX/IES project, implement technology systems to manage premium billings and contracts, establish and maintain a call center, create new tools for members like web-chat and an email message center. The three-year contract would start in March 2013 and could be extended for three additional one year extensions.
Massachusetts is a member of the New England States Collaborative Insurance Exchange Systems (NESCIES), a learning collaborative led by a multi-state steering committee. Other participating states are Connecticut, Maine, New Hampshire, Rhode Island, and Vermont. Through the Collaborative, participating states can share innovative technology components and best practices for implementing insurance exchanges and integrated eligibility systems. The NESCIES has created a Procurement Management Team to purchase components necessary to develop an IT system in Massachusetts and other states. In May 2012, Massachusetts issued an RFR for independent verification services to assist this team.
Massachusetts is also participating in the Enroll UX 2014 project, which is a public-private partnership creating design standards for exchanges that all states can use.
Basic Health Program (BHP): In June 2012, MassHealth was authorized to create a BHP. The BHP is an optional bridge program available through the ACA which allows states to use federal funding to offer subsidized health insurance to adults with incomes between 139% and 200% of the federal poverty level (FPL) who would otherwise be eligible to purchase subsidized coverage through an Exchange. In addition, the Connector was authorized to make wrap-around premium and cost-sharing subsidies available individuals covered by qualified health plans through the Health Connector if their incomes are between 200% and 300% of FPL. The wrap-around subsidy is meant to hold the new premiums for individuals with incomes up to 300% FPL in line with the current premiums for Commonwealth Care.
However, given the delay in federal guidance detailing the administration of a BHP, Massachusetts is now considering an alternative proposal that would provide state-based wrap-around subsidies for individuals with incomes between 139% and 300% FPL who are enrolled in specified QHPs. Only carriers that offer the lowest-priced QHPs will be qualified to offer the wrap plans. The level of the wrap-around subsidies may depend on the availability of federal funding through an 1115 demonstration waiver.
Essential Health Benefits (EHB): The Affordable Care Act requires that all non-grandfathered individual and small-group plans sold in a state, including those offered through the Exchange, cover certain defined health benefits. Along with collecting stakeholder feedback, the Division of Insurance compared the ten possible EHB benchmark plans and concluded that the three largest small group plans offered in Massachusetts offer similar benefits and have virtually the same relative value. Massachusetts selected Blue Cross Blue Shield’s HMO Blue, the largest small group plan, as the EHB benchmark. The DOI also recommended that the benchmark plan be supplemented with the state’s CHIP pediatric dental benefit plan.
Massachusetts initially appropriated $25 million to operate the Connector, but it is now financially self-sustaining and authorized to apply a surcharge to all health benefit plans offered through the Connector. The collected funds pay for the Connector’s administrative and operational expenses, not premium assistance payments, under Commonwealth Care.
In September 2010, the Massachusetts Commonwealth Insurance Connector Authority received a federal Exchange Planning grant of $1 million. In February 2012, the Connector Authority also received a Level One Establishment grant of $11.6 million to analyze coverage transitions and the operational interface between the Exchange and the state’s Medicaid program. In addition, Massachusetts is a member of the consortium of New England States Collaborative Insurance Exchange Systems that received a federal Early Innovator grant of $36 million to develop, share, and leverage insurance exchange technology. The University of Massachusetts Medical School is the grant holder. In September 2012, Massachusetts received a second Level One grant of $41.7 million dollars to create a risk-adjustment program and support IT development lead by the HIX/IES. In January 2013, the Connector received a Level Two grant of $81.3 million to support creation of a state-specific risk adjustment program, development of an outreach and education campaign, and the first year of operations of the Connector as an ACA-compliant exchange.
On December 7, 2012, Massachusetts received conditional approval from the U.S. Department of Health and Human Services (HHS) to establish a state-based exchange. Final approval is contingent upon the state demonstrating its ability to perform all required Exchange activities on time and complying with future guidance and regulations.
Multiple state agencies have begun to coordinate and plan for a third ACA-reconciliation bill, currently slated for the 2013 legislative sessions. This bill will likely include a compilation of technical changes to previous state health reform legislation and additional substantive changes that reflect policy-decision making by various advisory committees and workgroups.
Additional information about the Massachusetts Connector can be found at: https://www.mahealthconnector.org/