Pre-Existing Condition Is Out of Money

WASHINGTON (CN) - The federally-administered Pre-existing Condition Insurance Program (PCIP) must cut costs to provide coverage through 2014, according to the Department of Health and Human Services (HHS). The Centers for Medicare & Medicaid Services (CMMS), under the HHS, made the announcement in a temporary regulation.

The PCIP is part of the Patient Protection and Affordable Care Act, otherwise known as Obamacare, and is meant as a bridge to provide insurance to individuals who previously were locked out of insurance programs due to pre-existing conditions.

The program is costlier than anticipated, however, and will run out of money before 2014 if adjustments - in addition to ones already introduced - are not made, according to the temporary rule.

"Since enrollment began in July 2010, the PCIP program has experienced significant and sustained growth, enrolling more than 135,000 otherwise uninsured individuals with pre-existing conditions. Many PCIP enrollees have serious health conditions that require immediate and ongoing medical treatment including severe or life threatening conditions such as cancer. In 2012, the average annual claims cost paid per enrollee was $32,108," the CMS stated in its action.

As a result of the number of enrollees, the HHS was forced to raise the annual out-of-pocket expense to enrollees from $4,276 per enrollee to $6,250.

Many enrollees were well above the average $32,000 claim, racking up health care costs of over $170,000 to $225,000 per year, according to HeartLand Magazine, online.

Other "adjustments" made by the HHS to help defray costs include pairing down plan options from three to one; increasing coinsurance, once the deductible has been met, from 20 to 30 percent of the plan allowance for in-network covered services; cutting referral fees to agents and brokers; and requiring that applications for enrollment include documentation showing the individual has been denied health insurance coverage due to a pre-existing condition.

In addition, the federally-administered PCIP switched provider networks to reduce negotiated and out-of-network payment rates to providers, and has limited the specialty drug benefit to only cover those dispensed by in-network pharmacies.

State-based PCIP programs suspended their acceptance of new enrollment applications received after March 2, 2013, according to the CMC's action. State PCIP programs are identical to the government plan, but are run by individual states.

"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," the rule says.

The new adjustments include setting the covered services furnished to enrollees in the federally-administered PCIP program to be paid at 100 percent of Medicare payment rates.

In addition, "as a condition of accepting payment for most covered services, facilities and providers will be prohibited from 'balance billing' enrollees in the federally-administered PCIP for the difference between the plan allowance for those covered services and the charge for the covered service they might otherwise bill to a patient who is not a federally-administered PCIP enrollee," the HHS said in its action.

The regulation goes into effect June 15, and is open for public comment through July 22.

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