Managers of the Pre-existing Condition Insurance Plan (PCIP) say health care providers will have to share some of the program's financial pain.
The federal PCIP program run by the U.S. Department of Health and Human Services (HHS) will set most reimbursement levels at just 100 percent of the Medicare reimbursement rates, officials said in a new interim final rule that is set to appear in the Federal Register May 22.
In situations in which federal PCIP managers cannot use Medicare provider reimbursement rates to set rates, PCIP managers will pay either 50 percent of billed charges or an amount set using a "relative value scale pricing methodology," officials said.
The new payment rules will not apply to prescription drugs, organ transplants, dialysis services or durable medical equipment.
Another provision in the final rule will prohibit providers from "balance billing," or billing patients for the difference between the amount PCIP will pay and the amount the provider wants to collect.
The rule is set to take effect June 15.
Comments will be due 60 days after the Federal Register publication date.
The managers of the PCIP program have to take emergency steps to cut reimbursement costs, because Congress allocated only $5 billion for the program, the money is running out, PCIP already has done everything else it can think of to cut costs, and Congress seems to be unwilling to provide any more funding, officials said in the preamble to the rule.
"Based on estimates, HHS believes it is prudent and necessary to make additional adjustments in the federally-administered PCIP with respect to payment rates for covered services in order to ensure that there is sufficient funding available to provide coverage to currently enrolled individuals until the program ends in 2014," officials said.
The drafters of the Patient Protection and Affordable Care Act of 2010 (PPACA) created PCIP to provide major medical coverage for people with serious health problems at prices comparable to the rates healthy people pay for commercial coverage.
PCIP -- pronounced "P sip" -- was supposed to provide temporary relief, with the understanding that the sick people in the program would be able to get ordinary commercial coverage in January 2014, when new PPACA restrictions on medical underwriting are set to take effect.
Some states chose to run their own PCIP programs. Others let the Centers for Medicare & Medicaid Services (CMS), an arm of HHS, provide PCIP programs for their residents through a contract with the Government Employees Health Association (GEHA), a self-insured, not-for-profit association that provides health and dental coverage for about 1 million federal employees, federal retirees and federal dependents.
Enrollment in PCIP grew more slowly than expected. The program now has only about 135,000 enrollees, officials said.
But the average cost of claims has been much higher than expected -- about $32,000 per enrollee in 2012, or 2.5 times as much as the expenses at the state risk pools for people with health problems, officials said.
PCIP programs are much more expensive even than comparable state risk pool programs because PPACA does not let PCIP programs impose any waiting period or pre-existing condition exclusion requirements on new PCIP enrollees, officials said.
PPACA lets PCIP pass only $6,250 in out-of-pocket costs on to the enrollees, officials said.
Officials said they've already made the following cost-cutting efforts:
- Eliminating the payment of federal PCIP program referral fees to agents and brokers. (May 2012)
- Putting federal PCIP program enrollees in a cheaper provider network and trying to negotiate volume discounts with some providers. (August 2012)
- Requiring federal PCIP program enrollees to buy specialty drugs from in-network pharmacies. (August 2012)
- Elimating two of three federal PCIP program plan design options; increasing the maximum out-of-limit for in-network services; and increasing the coinsurance rate for patients who have met the deductible requirement. (January 2013)
- Shutting down federal PCIP program enrollment. (February 2013)
- Shutting down state PCIP program enrollment. (March 2013)
- Requiring states with state-run PCIP programs to shift to a fixed-payment contract from June 1, 2013, through December 31, 2013, when the program ends, or else shut down their programs and put their enrollees in the federal PCIP program. (May 2013)
HHS has the authority to change PCIP rules to cut costs, because Section PPACA 1101(g)(2) gives the HHS secretary the authority to take steps to eliminate any projected program deficit, officials said.