While struggling with the impact of COVID-19, states marched ahead in the second quarter, considering health coverage initiatives begun before 2020, including reviews of innovation waivers, single-payer health coverage and a public health option. Lawmakers in three states — Idaho, Indiana and Virginia — passed laws imposing pharmacy benefit manager (PBM) oversight. Despite the pandemic, Massachusetts, New Jersey, and Washington, DC required employers and health insurers covering residents to file state reports for 2019 coverage.
Insurance laws tackled during the quarter include benefit mandates, insulin cost sharing and gender nondiscrimination. Other health-plan-related issues involve coordination of benefits with auto insurance in Michigan, as well as facilitating telepsychology and cross-border mental health treatment in a growing number of states. Paid leave laws continued to proliferate, including additional COVID-19-related leave, new paid sick leave in Colorado and Washington, DC’s universal paid leave (UPL) launch.
Here are highlights of some of the developments in states during the second quarter. Download the full 12-page print-friendly PDF for full coverage.
State innovation waivers under Section 1332 of the Affordable Care Act (ACA) have tended toward reinsurance programs for high-cost conditions. A Department of Health and Human Services (HHS) report reviews states’ progress using the waivers. However, states are facing COVID-19 headwinds in other health coverage initiatives, slowing efforts to expand coverage. New Mexico released a study on its single payer healthcare system that reveals funding challenges. Washington’s governor vowed to move forward on the state’s public health plan option.
An HHS Center for Consumer Information and Insurance Oversight (CCIIO) review of ACA Section 1332 waivers found that 12 of the 13 waivers approved to date allow states to implement their own reinsurance programs. ACA Section 1332 waivers, first available in 2017, permit a state to pursue innovative strategies that provide its residents with access to affordable, quality healthcare. The waiver must not increase the federal deficit, reduce the availability of comprehensive, affordable health coverage or decrease the number of state residents covered.
The report includes tables displaying each state reinsurance program’s first year of operation, program parameters, premium reductions, market participation and funding sources. In addition to federal funding, some states have made appropriations, imposed assessments on medical providers and facilities, charged health insurer fees, or implemented a combination of these approaches.
At least two of these state programs could have an impact on self-insured plan sponsors. In 2018, Maine imposed “a market-wide assessment” that includes self-insured plans. More recently, Oregon enacted legislation (2019 Ch. 2, HB 2010) expanding its assessment to stop-loss insurance beginning in 2020 at a rate of 2% gross quarterly premiums derived from health plans in Oregon.
In an effort to increase oversight of PBMs, Idaho, Indiana and Virginia have enacted laws requiring registration or licensing with a state agency and imposing specified restrictions and obligations. To what extent, if any, these mandates would affect self-insured plans is unclear. Self-insured plan sponsors may want to confer with their PBMs to determine compliance issues.
Guidance from Massachusetts, New Jersey, and Washington, DC, outline employer reporting obligations for residents subject to individual health coverage mandates. These states required 2020 reporting for the 2019 plan year, despite other permitted delays resulting from COVID-19 emergencies. Massachusetts also updated coverage standards.
State insurance laws and regulatory guidance imposed coverage requirements for specific treatments, capped insulin cost sharing, and clarified coverage for gay and transgender individuals.
Colorado enacted fertility preservation coverage in insured plans. A New York emergency rule requires first-dollar coverage for essential workers’ behavioral health treatment.
Three states — New Mexico, Utah and Washington — imposed cost-sharing caps on insulin, responding to skyrocketing costs. Colorado and Illinois enacted similar laws in 2019 and earlier in 2020, respectively.
California and New York have confirmed their requirements for nondiscrimination based on sexual orientation and gender identity in healthcare and coverage. These positions align with a recent US Supreme Court ruling, but contrast with recently revised ACA Section 1557 nondiscrimination rules for federally funded healthcare programs and activities.
Issues arising in three states could have some impact on employer-sponsored health coverage. Michigan regulators offered some clarity on the state’s automobile insurance reform coordination of benefits. Pennsylvania and Virginia have joined Psychology Interjurisdictional Compact (PSYPACT), which could facilitate expanded access to mental health treatment, including via telemedicine.
Paid leave laws drew much attention in the second quarter. States took action to add or update COVID-19-related leave, expand or explain state paid family and medical leave laws, and push forward paid sick leave mandates. A California appellate court outlined criteria needed for unlimited vacation plans to avoid the state’s use-it-or-lose-it ban.