Sebelius Continues Work to Implement Health Reform, Announces
First Steps to Establish Temporary High Risk Pool Program
Secretary Sends Letters to Governors,
Insurance Commissioners
U.S. Department of Health and Human Services (HHS) Secretary
Kathleen Sebelius today issued a letter to governors and independent
insurance commissioners asking each state to express their interest
in participating in the temporary high risk pool program established
by the new health insurance reform law. The temporary high risk pool
program was created to help provide coverage to people who are
uninsured because of pre-existing conditions. States may choose
whether and how they participate in the program. HHS is committed to
working closely with states as the program is implemented.
“The establishment of a temporary new high risk pool program is
one of our first tasks in implementing the new health reform law and
will help provide affordable insurance for Americans who have been
locked out of the insurance market for too long,” said Sebelius.
“This letter marks the first step in that process and demonstrates
one of our core principles of implementation -- building on
effective programs that already exist. In the coming days, we will
work closely with states to answer their questions.”
In her letter, Sebelius writes, “We are interested in building
upon existing state programs in this important initiative to provide
expanded access to health coverage for individuals who cannot
otherwise obtain health insurance. To that end, I am writing you
today to request an expression of your state’s interest in
participating in this temporary high risk pool program, consistent
with one of the implementation options described below.”
The new health insurance reform law provides $5 billion in
federal funds to support this new program. States have a number of
options for how they may participate. Options include:
- Operate a new high risk pool alongside a current state high
risk pool;
- Establish a new high risk pool (in a state that does not
currently have a high risk pool);
- Build upon other existing coverage programs designed to cover
high risk individuals;
- Contract with a current HIPAA carrier of last resort or other
carrier, to provide subsidized coverage for the eligible
population; or
- Do nothing, in which case HHS would carry out a coverage
program in the state.
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Dear _________:
As you are aware, on March 23, 2010, the President signed into
law H.R. 3590, the Patient Protection and Affordable Care Act
(Public Law 111-148). As the Department of Health and Human
Services (HHS) begins the monumental task of implementing this
historic legislation, I look forward to working in partnership with
you as we transform the nation’s health care system. I would
like to draw your attention to one of the immediate changes that
will be implemented this year. Section 1101 of the new
law establishes a “temporary high risk health insurance pool
program” to provide health insurance coverage to currently uninsured
individuals with pre-existing conditions. The law directs HHS to
carry out the program directly or through contracts with states or
private, non-profit entities.
We are interested in building upon existing state programs in
this important initiative to provide expanded access to health
coverage for individuals who cannot otherwise obtain health
insurance. To that end, I am writing you today to request an
expression of your state’s interest in participating in this
temporary high risk pool program, consistent with one of the
implementation options described below. We understand that
final decisions in this regard may be subject to the availability of
additional details, approval from your state legislature, and other
factors. HHS will engage individually with each state that indicates
its intent in response to this letter, both in the preparation of
its potential application and during the application review process,
as appropriate.
The new statute establishes some specific requirements
surrounding the eligibility, benefits, and funding for the new high
risk pool program. Specific statutory requirements include but
are not limited to:
Eligible Individuals Must:
- Be a citizen or national of the United States or lawfully
present in the United States;
- Not have been covered under creditable coverage (as defined in
Section 2701(c)(1) of the Public Health Service Act) for the
previous 6 months before applying for coverage; and
- Have a pre-existing condition, as determined in a manner
consistent with guidance issued by the Secretary.
Benefits/Coverage Must Have:
- An actuarial value of at least equal 65 percent of total
allowed costs;
- An out-of-pocket limit no greater than the applicable amount
for high-deductible health plans linked to health savings
accounts, described in section 223(c)(2) of the Internal Revenue
Code of 1986 (that is, $5,950 for an individual); and
- No pre-existing condition exclusions.
Premiums Must:
- Be established at a standard rate for a standard population
(that is, not exceed 100 percent of the standard non-group rate);
and
- Not have age rating greater than 4 to 1.
Beyond the minimum statutory requirements, HHS’s goal is to grant
the flexibility needed to permit successful and expeditious
implementation of the program by interested states. For
example, we recognize that there are different avenues for states to
carry out the statutory requirements for a high risk pool
program. A state could consider the following options:
- Operate a new high risk pool alongside a current state high
risk pool;
- Establish a new high risk pool (in a state that does not
currently have a high risk pool);
- Build upon other existing coverage programs designed to cover
high risk individuals;
- Contract with a current HIPAA carrier of last resort or other
carrier, to provide subsidized coverage for the eligible
population; or
- Do nothing, in which case HHS would carry out a coverage
program in the state.
In reviewing the existing state high risk pools, there is much
common ground in the benefits currently provided. Since HHS is
considering establishing a floor set of benefits that all the new
high risk pool programs must cover, we anticipate that these benefit
requirements would take into account benefit lists currently used by
existing state high risk pools. Similarly, states would have the
option to follow pre-existing condition criteria for determining
eligibility established by the Secretary, or propose their own,
subject to Secretarial approval. We are committed to working with
states to identify other areas where flexibility is appropriate.
The law appropriates $5 billion of federal funds to support the
new high risk pool program. It will be available beginning on July
1, the start of many state fiscal years, until the program ends on
January 1, 2014. HHS anticipates allocating these funds to states
based on population as well as state costs (similar to the
allocation method used for the Children’s Health Insurance Program),
with a reallocation of unused funds after 2 years. More
details regarding the potential funding available to states will be
made available prior to the deadline for applications. HHS
will also hold a conference call in mid-April to provide a forum for
learning additional details about the anticipated structure of the
program and the anticipated application requirements, as well as to
respond to any questions you may have regarding this program. We ask
that your state’s primary contact for the high risk pool program
participate in this call.
To begin the process of implementing this program, HHS is asking
that each state do the following:
- Submit the name of a primary contact person to
highriskpools@cms.hhs.gov by April 9, 2010. We also strongly
encourage the advance submission of questions that you may have to
the same mailbox, to facilitate a productive exchange of
information during the conference call.
- Submit a letter of intent by April 30, 2010, that indicates
whether you intend to submit an application to contract with HHS
to operate a high risk pool program under the new law. This letter
should include the anticipated timing for establishment of the
program, as well as information on any State legislative decisions
that would be needed in order to participate in the new high risk
pool program. This information should be submitted to the same
email box, with the subject line, “Notice of intent.”
In addition, we would particularly appreciate an advance
indication of which of the potential implementation options appears
to be most likely for states to use to carry out their program,
including available additional details (such as outlines of
programs, or other ideas about potential mechanisms of providing
coverage under the new law).
In order to determine the extent to which we will carry out our
obligations directly, or under contracts with States or other
entities, it is critical that HHS receive States’ indication of
intent to participate and requested preliminary information by April
30, 2010. I appreciate your assistance in ensuring that your state
provides this information by the specified deadlines. This
information will be critical in helping successfully implement the
high risk health insurance pool program. HHS intends on establishing
an option for eligible individuals in States that do not indicate
their intent to participate. A State that indicates its intent
but does not follow through with a successful application could be
delaying assistance for its residents.
We look forward to working with you to bring affordable health
care to individuals in your State through the new high risk pool
program.
Sincerely,
Kathleen Sebelius
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Note: All HHS press releases, fact sheets and other press
materials are available at http://www.hhs.gov/news.
Last revised: April 02,
2010
U.S. Department of Health & Human Services - 200 Independence Avenue,
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