State Marketplace Profiles: Massachusetts
Updated as of September 29, 2013
Establishing the Marketplace
On April 12, 2006, former Governor Mitt Romney (R) signed into law comprehensive health reform legislation designed to provide near-universal health coverage for state residents.1 The Massachusetts health reform law became the model for national health reform.
An important component of the law was the creation of the Massachusetts Health Connector, a health insurance marketplace that manages several coverage programs. Commonwealth Care provides subsidized coverage for individuals with incomes below 300% of the federal poverty level ($33,510 for an individual and $69,150 for a family of four in 2012) and Commonwealth Choice enables those who are not eligible for Commonwealth Care to shop for and purchase insurance offered by private health plans. In 2010, the Massachusetts Connector launched the Business Express program for businesses with 50 or fewer employees. As of August 2013, the Connector enrolled over 254,000 individuals in coverage—over 207,000 in Commonwealth Care and more than 42,000 in Commonwealth Choice, including approximately 5,000 enrollees in Business Express.2 Enrollment is expected to continue to increase in fiscal year 2013, in part due to reintegration of legal immigrants who became eligible for enrollment in the Connector after a recent Massachusetts Supreme Court decision.
In 2012, Governor Deval Patrick (D) enacted two laws affecting the Health Connector.3,4 The first authorized the Health Connector to be certified as a state-based exchange as defined in the Affordable Care Act (ACA) and gave the Health Connector authority to perform key tasks, such as establishing a Navigator program and administering appeals related to the federal exchange. The second law included a number of provisions related to the ACA, including: designating the Connector as the entity to conduct risk adjustment; authorizing the Health Connector to sell stand-alone dental, vision, catastrophic, and child-only plans; and designating the Health and Human Services Department (known as MassHealth) to administer the Basic Health Plan option.
Structure: The Massachusetts Health Connector was established as a quasi-governmental organization, specifically a “public entity not subject to the supervision and control of any other executive office.”
Governance: The Health Connector is governed by an 11-member Board, including four ex officio members (or designees): Secretary for Administration and Finance, Director of Medicaid, Commissioner of Insurance, and Executive Director of the Group Insurance Commission. The Governor appoints an actuary, a health economist, a representative of small business, and an underwriter. The Attorney General appoints an employee health benefits specialist, a representative of health consumers, and a representative of organized labor. Appointees cannot be employed by an insurance carrier licensed in Massachusetts.
Current appointed Board members are:
- George Gosner Jr, Spring Insurance Group
- Jonathon Gruber, Massachusetts Institute of Technology
- Andrés López, AJL Consultants
- Louis Malzone, Massachusetts Coalition of Taft-Hardly Funds
- Nancy Turnbull, Harvard School of Public Health
- Celia Wcislo, 1199 SEIU United Healthcare Workers East
- Ian Duncan, Solucia Inc.
Contracting with Plans: The Health Connector acts as an active purchaser and requires health insurance carriers offering plans through the Connector to receive the “Seal of Approval” by meeting requirements such as participation in all Commonwealth Choice offerings (meaning individual and small group) and offering all standardized benefit packages for all plan benefit levels (gold, silver, bronze, and young adult plans). Carriers may also offer non-standardized products to consumers, and the Health Connector is considering displaying these plans within the corresponding metal tiers (as suggested by an actuarial review).5 For 2013 plan year, the Connector received proposals from all eight existing Commonwealth Choice carriers and one new entrant, and granted the Seal of Approval to all standardized and non-standardized plans.
The Seal of Approval process provides the framework for the Health Connector’s certification, recertification, decertification, and ongoing performance monitoring processes. It is substantially in compliance with the Affordable Care Act’s (ACA) qualified health plan certification standards and only a few refinements are necessary.
On February 21, 2013, the Health Connector released the 2014 Seal of Approval Request for Responses (RFR). Participating insurers must offer seven standardized plans on their broadest commercial network, including two Platinum plans, three Gold plans, one Silver plan, and one Bronze plan. In addition, issuers with at least 1,000 members must offer a tiered-network Platinum or Gold plan. Issuers may also offer additional standardized plans with narrower networks and up to seven non-standardized plans. Issuers must also propose a Catastrophic plan and Wrap-Compatible Silver Plan, though not all of the proposed plans will be selected by the Health Connector.6
The Wrap-Compatible Silver Plans will be available to those with incomes up to 300% of the federal poverty level and will provide additional subsidies to lower premiums and cost-sharing so that the costs are in line with what individuals currently pay for coverage through the Commonwealth Care program. All Wrap-Compatible Silver Plans must meet the network adequacy standards that currently apply to Commonwealth Care.
On September 12, 2013, the Health Connector’s Board of Directors awarded the Seal of Approval for plans offered by ten health insurers and five dental carriers to be sold on the Health Connector for coverage beginning January 1, 2014. These insurers will offer 114 medical plan options and 24 dental plan options. Seven carriers will offer plans in the new ConnectorCare program.7
Dental and Vision Benefits: The Health Connector plans to include stand-alone dental plans beginning in 2014 and using a dental Seal of Approval program in parallel with the medical benefit. The Connector released the RFR for stand-alone dental plans on February 21, 2013. Stand-alone dental issuers are required to offer three standardized plans, including a pediatric plan, and a low and high cost adult plan. The adult plans will be sold to single adults as well as families. For families choosing one of the adult plans, any children will receive the scope of benefits and cost-sharing associated with the pediatric dental essential health benefit. In addition to the stand-alone dental plans, carriers may offer plans that integrate the medical and dental benefits or that bundle and price together a medical and dental plan.8
Risk Adjustment, Reinsurance, and Risk Corridors: Massachusetts will administer the Connector’s risk adjustment program. A multi-agency workgroup, co-chaired by the Connector and Division of Insurance, is developing the methodology and plans to leverage the state’s existing All-Payer Claims Database.9 In June 2013, the Health Connector, in collaboration with the Center for Health Information Analytics conducted comprehensive risk adjustment simulation and completed data quality assessments for all carriers. The Division of Insurance will also oversee administration of the transitional reinsurance program.
Consumer Assistance and Outreach: The Health Connector has developed a multi-faceted outreach and marketing campaign. The Outbound Calling campaign will target 215,000 current and newly eligible Health Connector members transitioning to new coverage. Calls will be made by the customer service vendor and will enable consumers to apply over the phone. There will also be a direct mail and an e-mail campaign to run from August 2013 through March 2014 that will include important messages, as well as notifications and reminders. The Health Connector also launched a Public Information Unit to respond to questions from the public and legislators. The unit identifies recurring issues that will inform other outreach activities, including Navigator training, road shows, etc.10 The Health Connector will also conduct “Road Shows” targeting small employers and is partnering with Health Care for All to conduct a grassroots, public education campaign.
Over the summer, the Health Connector did a soft-launch of the new branding campaign, including the new logo and website, and in September 2013, the new Contact Center was launched. In addition, two walk-in centers to provide in-person support will be available. Paid and earned media campaigns will launch in the fall while the Health Connector re-launched its social media presence on Twitter, Facebook, and Google+ in August.
On July 22, 2013, the Health Connector announced the ten organizations selected to serve as Navigators. These organizations will target the remaining uninsured and will focus on populations transitioning from existing programs to new coverage available beginning in January 2014.11 Navigators must complete required training programs and be certified before they can begin assisting consumers. Initial training of Navigators began in August 2013 and continued through September. A third phase of training is anticipated in November/December in support of additional system functionality. Navigators must also attend quarterly policy and operation check-in meetings.
In addition to Navigators, the Health Connector is leveraging MassHealth’s existing Virtual Gateway program and its network of 200 hospitals and health centers to serve as Certified Application Counselors. It has also provided regional training to brokers
Small Business Health Options Program (SHOP) Marketplace: The Division of Insurance has identified a subcontractor to evaluate the impact on the insurance market of broadening the definition of small employer to those with 100 or fewer employees before 2016.12 The Health Connector currently offers the Business Express program, which allows small employers to select a Connector plan to offer to their employees. As the Health Connector converts its Business Express program to the SHOP, the Connector will offer small employers three plan selection options: selection of single plan offered by a single insurer; selection of all plans offered at a particular metal tier; or selection of multiple metal tier plans offered by a single insurer. All QHPs, including both standardized and non-standardized plans, except for catastrophic plans will be available to small employers.
The Health Connector is creating “Sub-connectors,” an alternative distribution channel for small employers (and the brokers who serve them) to purchase coverage through the Health Connector while retaining aspects of their current shopping experience. The goal is to allow more small businesses to access QHPs through the Connector.13 The Health Connector has issued a Request for Information (RFI) to collect feedback on licensing requirements for Sub-connectors.
The Connector hopes to leverage knowledge acquired from the Contributory Plan pilot, which was frozen shortly before the Business Express was introduced in 2010. The Contributory Plan allowed employers to fix their contribution to premium costs, while still providing meaningful plan choice to employees. Previous experience with the Contributory Plan indicated that the concept appealed to employers but there were opportunities for improvement to make the methodology consistent across carriers and ensure the shopping experience was simple and intuitive.
Basic Health Program (BHP): In June 2012, MassHealth was authorized to create a BHP.14 The BHP is an optional coverage program available through the ACA that allows states to use federal funding to offer subsidized health insurance to adults with incomes between 139% and 200% of the federal poverty level (FPL) who would otherwise be eligible to purchase subsidized coverage through an Exchange. In addition, the Connector was authorized to make wrap-around premium and cost-sharing subsidies available to individuals covered by qualified health plans through the Health Connector if their incomes were between 200% and 300% FPL. The wrap-around subsidy was meant to hold the new premiums for individuals with incomes up to 300% of FPL in line with the current premiums for Commonwealth Care.
However, HHS delayed issuing regulations for the BHP forcing the state to consider an alternative approach. given the delay in federal guidance detailing the administration of a BHP, Massachusetts developed an alternative approach. The QHP Wrap program provides state-based wrap-around subsidies for individuals with incomes between 139% and 300% FPL who are enrolled in specified QHPs.15 Only carriers that offer the lowest-priced QHPs will be qualified to offer the wrap plans. The state submitted an amendment to its Medicaid Section 1115 demonstration waiver to obtain federal funding to support the state wrap-around subsidies.
Essential Health Benefits (EHB): The Affordable Care Act requires that all non-grandfathered individual and small-group plans sold in a state, including those offered through the Marketplace, cover certain defined health benefits. Along with collecting stakeholder feedback, the Division of Insurance compared the ten possible EHB benchmark plans and concluded that the three largest small group plans offered in Massachusetts offer similar benefits and have virtually the same relative value.16 Massachusetts selected Blue Cross Blue Shield’s HMO Blue, the largest small group plan, as the EHB benchmark.17 The DOI also recommended that the benchmark plan be supplemented with the state’s CHIP pediatric dental benefit plan.
Financing: Massachusetts initially appropriated $25 million to operate the Health Connector, but it is now financially self-sustaining and authorized to apply a surcharge to all health benefit plans offered through the Connector. The collected funds pay for the Health Connector’s administrative and operational expenses, not premium assistance payments, under Commonwealth Care.
The Health Connector is developing a long-term financing strategy that involves continued state funding and a carrier administrative fee targeted at or below 2.5% of premium. Because of the availability of federal Establishment Grant funding to support Health Connector operations in 2014, the carrier administrative fee for 2014 has been temporarily eliminated.18
In September 2010, the Massachusetts Commonwealth Insurance Connector Authority received a federal Exchange Planning grant of $1 million. In February 2012, the Connector Authority also received a Level One Establishment grant of $11.6 million to analyze coverage transitions and the operational interface between the Exchange and the state’s Medicaid program.19 In addition, Massachusetts is a member of the consortium of New England States Collaborative Insurance Exchange Systems that received a federal Early Innovator grant of $36 million to develop, share, and leverage insurance exchange technology.20 The University of Massachusetts Medical School is the grant holder. In September 2012, Massachusetts received a second Level One grant of $41.7 million dollars to create a risk-adjustment program and support IT development lead by the HIX/IES. In January 2013, the Connector received a Level Two grant of $81.3 million to support creation of a state-specific risk adjustment program, development of an outreach and education campaign, and the first year of operations of the Connector as an ACA-compliant exchange.21
On December 7, 2012, Massachusetts received conditional approval from the U.S. Department of Health and Human Services (HHS) to establish a State-based Marketplace.22 Until new coverage begins on January 1, 2014, the state will continue providing coverage to eligible individuals through existing programs, including Commonwealth Care and Commonwealth Choice. Beginning October 1st, the state will start to transition consumers to their new coverage options.
Massachusetts Connector Quarterly Program Summary Report, August 2013. September 6, 2013.
Chapter 96. An Act Making Appropriations for the Fiscal Year 2012 to Provide for Supplementing Certain Existing Appropriations and For Certain Other Activities and Projects.
Chapter 118. An Act Making Appropriations for the Fiscal Year 2012 to Provide for Supplementing Certain Existing Appropriations and For Certain other Activities and Projects.
Stephany S and Yang J. “Commonwealth Choice 2013 Seal of Approval.” Presented to the Health Connector Board of Directors. September 13, 2012.
The Health Connector Team “2014 Seal of Approval Launch” presented to the Health Connector Board of Directors, February 14, 2013.
The Health Connector press release, “Health Connector Announces Seal of Approval for Health Insurance Plans Effective January 2014” September 12, 2013.
“2014 Seal of Approval Launch” presentation.
Apicella D and Berardi C. “National Health Care Reform Update” Presented to the Health Connector Board of Directors, September 13, 2012.
“Outreach and Communications Strategy and Contract Extension” presentation to the Board of Directors, June 13, 2013.
Massachusetts Executive Office of Health and Human Services. “Health Insurance Reform Working Group: ACA Changes to Small Employer Definition and Rating Factor Rules.” March 23, 2012.
Mansur R. “Licensing Procedures Request for Information.” November 16, 2012.
Chapter 118. An Act Making Appropriations for the Fiscal Year 2012 to Provide for Supplementing Certain Existing Appropriations and For Certain other Activities and Projects.
Yang J and Hague A. “2014 Seal of Approval Introduction (III): Subsidized Health Insurance and the QHP Wrap.” December 13, 2012.
Executive Office of Health and Human Services. “Analysis of Three Largest Small Group Plans for EHB Benchmark.” September 19, 2012.
Essential Health Benefits, Benchmark Plan for Massachusetts. Accessed January 8, 2013.
Board of the Commonwealth Health Insurance Connector Authority meeting minutes, February 14, 2013.
Massachusetts Health Insurance Connector Authority application for Level One Establishment grant. Project Abstract. December 27, 2011.
Massachusetts application for the Cooperative Agreement to Support Innovative Exchange Information Technology Systems. IE-HBE-11-001. The New England States Collaborative Insurance Exchange Systems (NESCIES)
Massachusetts Affordable Insurance Exchange Grants Awards List.
Letter from Secretary Sebelius to Governor Patrick. December 7, 2012.