New Insurance Program Covers Preexisting Conditions
Medical Economics Feature – October 2011
Tex Med. 2011;107(10):39-42.
By Ken Ortolon
James Howard, of Katy, lost his insurance shortly after he was diagnosed with brain cancer. Mr. Howard knew that his lack of coverage could be a death sentence, but luckily he was able to take advantage of a new federal program that provides affordable comprehensive health coverage for Texans with preexisting conditions.
Mr. Howard is one of 2,020 Texas who had signed up as of June for the Pre-existing Condition Insurance Plan (PCIP), created under the Affordable Care Act (ACA). The plan was launched in Texas in August 2010 and recently lowered monthly premiums and eased eligibility requirements.
The Texas Consumer Health Assistance Program (CHAP), a division of the Texas Department of Insurance that assists people in finding insurance coverage through PCIP and other sources, is trying to raise awareness of the program and get the word out to physicians across the state that they can help their patients with preexisting conditions gain coverage.
"Physicians now have the opportunity to help patients with pre-existing conditions obtain affordable and comprehensive health coverage," Aelia Khan, CHAP director, said in a letter in June to attendees of Texas Medical Association's TexMed 2011. Recent changes mean adults and children can now submit a letter from their doctor as proof of a preexisting condition, Ms. Khan says.
ACA created PCIP as a bridge to help people with preexisting conditions get coverage until 2014, when all group insurance plans and all new individual insurance plans will be required to cover preexisting conditions.
The federal Government Employee Health Association runs PCIP in Texas and 19 other states. Other states chose to run the program themselves.
In a recent opinion article, Renard L. Murray, DM, Southwest regional administrator for the U.S. Centers for Medicare & Medicaid Services (CMS), said PCIP "has made health care coverage available to people who have been unable to buy or afford it because they have a preexisting condition.
"The comprehensive plan covers primary and specialty care, hospital stays, skilled nursing care, home health care, and prescription drugs," Dr. Murray added. "And there's no waiting period for new enrollees; the insurance provides immediate coverage of their condition."
Texas already has its own high-risk pool for people with preexisting conditions, the Texas Health Insurance Pool (THIP). That pool has some 26,000 enrollees, but Ms. Khan says PCIP monthly premiums are substantially lower.
To be eligible for PCIP, a person must have been uninsured for at least the previous six months, have a preexisting condition, and be a U.S. citizen or be legally present in the United States.
Previously, patients had to submit a letter from a private insurer denying coverage because of a preexisting condition before obtaining coverage under PCIP. Now, patients can submit a letter from a physician, physician assistant, or nurse practitioner dated within the preceding 12 months stating that they have or had a medical condition, disability, or illness, or they can submit proof that they had been offered a health insurance policy with a rider excluding coverage for their preexisting condition. The letter must include the patient's name and medical condition, disability, or illness, and the name, license number, state of licensure, and signature of the physician, physician assistant, or nurse practitioner.
Richard Popper, director of the Office of Insurance Programs at CMS's Center for Consumer Information and Insurance Oversight, says there is no specific list of conditions that a person must have to be eligible for PCIP, but some of the conditions that could qualify include cancer, heart disease, diabetes, and asthma.
"A person must simply submit documentation that she or he has or has had a medical condition, disability, or illness," Mr. Popper said.
PCIP premiums are lower than the Texas insurance pool because PCIP is subsidized with $5 billion in federal funds.
"That funding was allocated as part of the Affordable Care Act and provides funding for the program through 2013," Mr. Popper said. "The funding makes up the difference between the total costs of the program, including claims costs and the premiums collected from PCIP enrollees."
THIP, by statute, charges twice the prevailing private market rate. PCIP premiums range from $133 to $572 per month based on which plan is chosen and the person's age.
PCIP has three plan options – the standard plan, an extended plan, and a health savings account (HSA) option.
The standard plan offers comprehensive coverage with separate medical and prescription deductibles. The medical deductible is $2,000 for in-network care and $3,000 for out-of-network care. There is also a 20-percent coinsurance for in-network services, 40 percent for out-of-network services, $25 in-network office visit copayment, and a 40-percent out-of-network office visit copayment.
The prescription deductible is $500 formulary and $750 for nonformulary drugs.
Total annual maximum out-of-pocket costs in network are $5,950, but that jumps to $7,000 for out-of-network care.
The extended option is the most costly plan but has deductibles of only $1,000 for in-network services and $1,500 for out-of-network care. The prescription deductible also is lower, $250 and $375, respectively, for formulary and nonformulary drugs.
The HSA plan has medical deductibles of $2,500 and $3,000, respectively, for in-network and out-of-network care but no prescription deductibles.
Mr. Popper says PCIP premiums were reduced in July to conform more closely to current individual market premiums in each state. Rates in Texas went down 24 percent.
End in Sight
While THIP premiums are higher than those for PCIP, patients already enrolled in THIP cannot switch to PCIP, at least not immediately, because people who already have insurance are ineligible, Mr. Popper says. Those patients would have to give up their coverage for six months in order to apply.
Regardless of which program patients are in, they likely will see their coverage change again in 2014. That's when private health plans must begin covering preexisting conditions.
Ms. Khan says PCIP will expire once the new rules go into effect in 2014. THIP likely will go out of existence, as well, although that would require action by the Texas Legislature to repeal the program, she says.
"However, once federal laws that require guaranteed issue and that prohibit application of preexisting condition clauses go into effect in 2014, it is anticipated that no one will qualify for coverage under the Texas Health Insurance Pool," CHAP said in a fact sheet comparing THIP and PCIP coverage.
Information about PCIP, as well as help for patients needing assistance applying for the plan can be obtained by calling CHAP at (855) TEX-CHAP or (855) 839-2427 or by visiting www.TexasHealthOptions.com.
Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by email.