Medicaid Premium Assistance Programs: What Information is Available About Benefit and Cost-Sharing Wrap-Around Coverage?

States have long used Medicaid funds as premium assistance to purchase private health insurance for beneficiaries as an alternative to providing coverage directly through the state Medicaid program. States using premium assistance generally must provide wrap-around benefits and cost-sharing protections so that Medicaid beneficiaries receiving private coverage will not have access to fewer benefits or pay higher out-of-pocket costs when private coverage fails to meet Medicaid’s level of coverage or is more expensive. Some states seeking alternative ways to implement the Affordable Care Act’s (ACA) Medicaid expansion have been interested in expanding Medicaid premium assistance programs and adopting new models to purchase individual market coverage. These initiatives can be informed by an understanding of how pre-ACA premium assistance programs are working, particularly regarding wrap-around benefits and cost-sharing protections.

This issue brief examines states’ approaches to administering wrap-around benefits and cost-sharing in long-standing Medicaid premium assistance programs and the information available to beneficiaries about how to access these program features. We present findings based on our survey in 2014 of eight states (AL, LA, NV, RI, TX, UT, VT, and WI) that previously had reported spending dedicated to premium assistance wrap-around benefits to collect updated data and ascertain what states considering premium assistance in the Medicaid expansion context could learn about wrap-around benefits and cost-sharing based on long-standing premium assistance programs. We supplement our analysis by examining these states’ written materials designed to inform beneficiaries about premium assistance coverage and end with a discussion of post-ACA premium assistance programs.

Little data are available about spending on wrap-around benefits in state premium assistance programs.  Key findings from the 8 states include the following:

• States serve relatively small numbers of people in premium assistance programs that pre-date the ACA’s Medicaid expansion, and to the extent that limited data are available, spending on wrap-around benefits as a percent of total premium assistance program spending varies considerably among states.
• Few states report how much is spent on wrap-around benefits and cost-sharing protections in their premium assistance programs which makes it difficult to assess the extent to which beneficiaries are accessing those benefits and whether premium assistance programs are cost-effective.
• The clarity of states’ written materials explaining how beneficiaries can access wrap-around benefits varies.
• States’ written materials do not always clearly convey the availability of wrap-around EPSDT services for children.
• States have different policies for administering wrap-around cost-sharing protections, with most protecting beneficiaries from paying excess cost-sharing upfront. However, wrap-around cost sharing protections in examined states are available only if beneficiaries receive services from a provider who is both in their private insurance plan network and also accepts Medicaid. Beneficiaries may not be aware of this limitation, and it may further restrict provider options rather than expanding them.

As states’ interest in Medicaid premium assistance models continues, further research is needed to examine the beneficiary experience in these programs. This is especially true for access to wrap-around benefits and cost sharing protections, as little data presently is available in this area. Premium assistance approaches could have political and practical advantages for enrollees, and implementation of new programs in the context of alternative Medicaid expansions, can be informed by states’ experiences with long-standing programs. At the same time, wrap-around benefits add a layer of complexity for beneficiaries, providers, and states in premium assistance programs. Explaining how the wrap-around works is a challenge, especially when broad benefits that may not be fully included in private coverage, like EPSDT, are involved. Given the complex nature of these programs and variation in state implementation, the extent to which enrollees have access to the full Medicaid benefit package and cost-sharing protections is an area for continued study.

In addition, to the extent that Medicaid beneficiaries enrolled in premium assistance programs do not have access to wrap-around cost sharing protections unless they see Medicaid providers, beneficiaries are not receiving one of the key advantages often cited by proponents of premium assistance – access to a wider network of providers. Educational materials provided to beneficiaries do not always clearly explain the availability of wrap-around benefits and cost sharing protections, particularly EPSDT, and varied considerably in the states we examined. As more states consider premium assistance models to serve greater numbers of beneficiaries, the need to understand how to best administer wrap-around benefits and cost-sharing protections is of growing importance.