HHS Secretary Takes First Step to Establish High-risk Insurance Pools

The temporary high risk pool program was created to help provide coverage to people who are uninsured because of pre-existing conditions. States may choose whether and how they participate in the program. In her letter, Sebelius said HHS is interested in building upon existing state programs.

Implementation options include:

• Operate a new high risk pool alongside a current state high risk pool;
• Establish a new high risk pool in a state that does not currently have a high risk pool;
• Build upon other existing coverage programs designed to cover high risk individuals;
• Contract with a current HIPAA carrier of last resort or other carrier, to provide subsidized coverage for the eligible population; or
• Do nothing, in which case HHS would carry out a coverage program in the state.

The new reform law establishes specific statutory requirements including, but not limited to: 

• Eligible Individuals Must:
  • Be a citizen or national of the United States or lawfully present in the United States;
  • Not have been covered under creditable coverage (as defined in Section 2701(c)(1) of the Public Health Service Act) for the previous six months before applying for coverage; and
  • Have a pre-existing condition, as determined in a manner consistent with guidance issued by the Secretary.
• Benefits/Coverage Must Have:
  • An actuarial value of at least equal 65% of total allowed costs;
  • An out-of-pocket limit no greater than the applicable amount for high-deductible health plans linked to health savings accounts, described in section 223(c)(2) of the Internal Revenue Code of 1986 (that is, $5,950 for an individual); and
  • No pre-existing condition exclusions.
• Premiums Must:
  • Be established at a standard rate for a standard population (that is, not exceed 100% of the standard non-group rate); and
  • Not have age rating greater than 4 to 1.

According to the letter, HHS is asking that each state:

• Submit the name of a primary contact person to highriskpools@cms.hhs.gov by April 9, 2010, in addition to the advance submission of questions that you may have to the same mailbox, to facilitate a productive exchange of information during a conference call with the state.
• Submit a letter of intent by April 30, 2010, that indicates whether the state intends to submit an application to contract with HHS to operate a high risk pool program under the new law. The letter should include the anticipated timing for establishment of the program, as well as information on any State legislative decisions that would be needed in order to participate in the new high risk pool program. This information should be submitted to the same email box, with the subject line, “Notice of intent.”

In addition, HHS is asking for an advance indication of which of the potential implementation options appears to be most likely for states to use to carry out their program, including available additional details (such as outlines of programs, or other ideas about potential mechanisms of providing coverage under the new law).