ACA Implementation—Monitoring and Tracking New Mexico

ACA Implementation—Monitoring and Tracking New Mexico Site Visit Report August 2012 Teresa A. Coughlin The Urban Institute Kevin Lucia and Katie Keith Georgetown University Health Policy Institute TABLE OF CONTENTS Executive Summary ........................................3 Medicaid Policy .............................................15 Background .....................................................6 Budget Pressures and Medicaid ..................16 Health Insurance Exchange: Planning The ACA and New Mexico Medicaid ............17 and Implementation ........................................8 Provider and Insurance Markets .................19 Legislative Developments ................................8 New Mexico’s Hospital Market .....................20 Progress in Operationalizing the Exchange .......8 New Mexico’s Primary Care Market .............21 Policy Issues: Decisions Made and Sources New Mexico’s Insurance Market ..................22 of Controversy ...............................................9 New Mexico’s Business Community Insurers Participation and Expected and the ACA ...............................................22 Enrollment in Exchange Plans ......................10 Conclusions ...................................................23 Health Insurance Exchange: Enrollment and Subsidy Determination ..........................11 Notes ..............................................................24 Maximizing Enrollment in Medicaid and Exchange Plans ...........................................12 Insurance Reforms .......................................12 Implementation and Impacts of the ACA’s Early Market Reforms ...................................13 Planning for the Insurance Reforms of 2014 ....13 High-Risk Pool ............................................14 Focus on Affordability: Medical Loss Ratio and Rate Review .........................................14 EXECUTIVE SUMMARY New Mexico has long been recognized for its efforts to 10, 2012, New Mexico announced that it had selected promote meaningful health reform. Prior to the Affordable Leavitt Partners, a health policy consulting firm, to assist the Care Act (ACA), for example, the state had already state in furthering its strategic planning for the exchange as expanded Medicaid eligibility to adults without dependent well as assisting with the development of exchange policy, children, implemented premium assistance programs for the rules and regulations.1 In addition, as of this writing in May uninsured, and established a quasi-public entity to increase 2012, the OHCR has yet to issue an award in response to a access to health insurance for small businesses and the request for proposals for exchange information technology self-employed. (IT) that was issued in February 2012. Despite this shift, New Mexico has signaled that it intends to move forward in In light of these previous efforts, it was no surprise that implementing an exchange but faces many important policy then-Governor Bill Richardson’s administration embraced decisions ahead. the passage of the ACA and began implementing many activities simultaneously. Then-Governor Richardson Health Insurance Exchange: Planning and established the New Mexico Office of Health Care Reform Implementation —The concept of a health insurance (OHCR) in July 2010 and charged this new office with exchange is not new in New Mexico and has been studied planning, coordinating, and administering federal health by the state legislature since at least 2007. Despite prior reform for the state. New Mexico also received federal support for an exchange among conservative legislators, funding for consumer assistance and its rate review Governor Martinez has not signed exchange legislation. process, and began to take steps to plan for a state-based Soon after taking office in 2011, she vetoed an exchange bill exchange using a level one exchange planning grant. after concluding that it was “premature” to approve such a Following seven years of the Richardson administration, bill without additional federal guidance. In 2012, exchange New Mexicans elected a new governor – Susana Martinez legislation was reintroduced during the state’s short – who was sworn in on January 1, 2011. Governor Martinez legislative session but the bill died in committee. Without has urged the repeal of the ACA and, in lieu of full repeal, exchange legislation, the governor has long been expected asked for significantly more flexibility in implementation of to issue an executive order establishing an exchange but, as the law. With this change, New Mexico’s pace of ACA of this writing in May 2012, no order has yet been issued. implementation slowed, and it adopted a more measured Notwithstanding the absence of legislation or an executive approach to implementation. Although some informants expressed ambivalence and skepticism about the ACA, order, New Mexico has made some key policy decisions most noted that the Martinez administration recognizes surrounding the exchange. First, the governor’s office, that the ACA is the “law of the land” and has pushed state officials, and health care stakeholders appear to be ahead on implementation to ensure that New Mexico is committed to pursuing a state-based exchange. Second, positioned to be in compliance with the law if it is upheld New Mexico is likely to have a single exchange established by the Supreme Court. as a quasi-public entity. Although there is an existing quasi- public entity in New Mexico that may serve as the exchange, As described in this case study, exchange implementation the issue of exchange governance has been of significant has been a difficult undertaking, and, like most states, New controversy and has yet to be resolved. Mexico has encountered both success and challenges. At the time of our site visit in February 2012 and as described New Mexico has taken important steps towards establishing in this report, the state had taken a number of steps a state-based exchange. It received a federal exchange forward in exchange planning and development. However, planning grant and, in November 2011, a level one recent developments since the time of our site visit suggest establishment award. Much of these funds will be used that New Mexico is taking steps to reevaluate its current to begin operationalizing the exchange, further engage approach to exchange development. For example, on May stakeholders, and enhance interagency cooperation. ACA Implementation in New Mexico—Monitoring and Tracking 3 Health Insurance Exchange: Enrollment and Medicaid Policy—State estimates indicate that New Subsidy Determination—New Mexico has begun Mexico’s Medicaid enrollment could increase by up to 36 preparing its Medicaid and exchange IT systems to work percent between 2012 and 2020, from its current level seamlessly by 2013. To that end, New Mexico is considering of 550,000 to as many as 750,000 in 2020. While such a “no wrong door” approach as its vision for the exchange growth is considerable, New Mexico’s existing Medicaid IT. The state could leverage its current eligibility system for program will serve as a strong foundation to support this Medicaid and other human services—which, separately, is coverage expansion. Its Medicaid eligibility standards, undergoing a major overhaul—as it plans to build a separate scope of services, and provider reimbursement levels are exchange eligibility system. This simultaneous modernization largely consistent with national standards and perceived of the Medicaid eligibility system could give New Mexico a as reasonable by informants. New Mexico can also draw head start in operationalizing its exchange IT system. upon its strong Medicaid managed care program. Currently covering about 80 percent of Medicaid enrollees, New Consumer outreach on health reform was widely regarded Mexico’s managed care program has been operating for as critical, especially because of the state’s rural and small 15 years and enjoys a stable relationship with all the state’s population as well as its high rate of uninsured. Informants major health plans. particularly noted the importance of conducting outreach to the state’s Native American population, which is Federal funding for Medicaid is helping New Mexico overhaul disproportionately represented among the uninsured. New its Medicaid eligibility and enrollment IT system, which will help ensure that the state will be ready for ACA expansion in Mexico currently has no specific strategies for consumer 2014. In the meantime, New Mexico aims to fundamentally outreach and education but has begun strategic planning restructure its Medicaid program in accordance with its on this issue. recent Centennial Care plan. Citing concerns that the Insurance Reforms—Although New Mexico’s current Medicaid system is “not sustainable” and to prepare legislature considered bills in 2011 and in 2012 that for future expansion, the Martinez administration’s goal is would have adopted some of the ACA’s market reforms, to establish a comprehensive service delivery system that these bills did not pass. While New Mexico has not provides cost-effective care, slows the rate of Medicaid cost yet enacted new legislation on all of the ACA’s market growth, and streamlines administrative burdens. reforms, the state has passed legislation regarding Providers and Insurers—New Mexico has a unique medical loss ratio (MLR) requirements and new, provider and insurance market, which presents challenges enhanced rate review requirements. The MLR legislation to health care access. The state

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