Just how much "wiggle-room" will HCFA allow in CHIP? Florida will test regulators' flexibility

Florida officials are plowing ahead with their plan to increase children's coverage under the Children's Health Insurance Program (CHIP) by subsidizing employer plans, despite their misgivings about how the plan can be tailored for Florida's market.

The biggest concern among Florida officials is a Health Care Financing Administration (HCFA) requirement that employers contribute at least 60% toward the cost of dependent coverage.

"A brief and unscientific poll of insurers/HMOs … indicated Florida employer contributions for family coverage (when offered at all) may average only 50%," Florida Deputy Insurance Commissioner Susanne Murphy wrote to Department of Health Secretary James Howell, M.D.

Documenting cost-effectiveness

Florida officials appear ready to "play chicken" with HCFA and submit a plan that falls short of the 60% threshold. Their hope is that HCFA will approve the plan if they can come up with a way to meet the more important requirement: documenting that employer-sponsored CHIP coverage is more cost-effective than insuring the child through other programs.

"There appeared to be some wiggle room there," Florida Hospital Association General Counsel Bill Bell said.

In fact, a concept paper approved Oct. 8 by Florida's KidCare Coordinating Council anticipates the problem and cautions that an exception to the 60% rule approved for employer-sponsored coverage in Massachusetts may be predicated on state-specific circumstances that Florida will be unable to replicate.

However, the legislatively authorized coordinating council sent the issue back to a smaller study group without suggesting a minimum employer contribution and without any strategies on how Florida could meet the cost-effectiveness test. Details for submission of the plan will be worked out in future study group meetings after the November election, Department of Insurance senior management analyst Noelle Mahone said.

Family contributions and other components of employer-sponsored coverage are modeled after provisions of Florida Healthy Kids, the state's private-public partnership for expanding children's health insurance coverage. A family's premium will be capped at $15, without regard to the number of children in the family. Subsidy amounts will vary according to an individual employer's insurance cost and the amount of employer subsidy already in place. The benefit package also will mirror that of Florida Healthy Kids.

The FHA's Bell suggested that study group members may try to meet HCFA's cost-effectiveness test by comparing projected expenditures for employer-sponsored coverage to those of the Florida Healthy Kids program. The program's per child per month premiums range from $46.28 to $85.22 for two different benefit packages, Florida Healthy Kids External Affairs Director Jennifer Lloyd said.

Florida lowers estimates

Florida legislators originally estimated in setting up the program that employer-sponsored insurance would cover about 48,000 of the 254,000 children targeted in the state's CHIP expansion, but the budget for the fiscal year that began Oct. 1 lowers the target to 7,500 children. Ms. Mahone said state officials have shifted available CHIP funds to other program components that already have gotten up and running while state officials continue to work on employer-sponsored coverage.

"It's taken us quite a while to figure out what HCFA wants," she said.

At the same time, HCFA officials also wondered privately how Florida would find and enroll children in the employer-sponsored portion of the CHIP expansion, given its generous benefits in other components of the program. Florida Healthy Kids, Medicaid, and Medicaid-lookalike portions of Florida's program cover virtually all children under age 19 in families with incomes under 200% of the federal poverty level.

Contact Ms. Murphy at 850-413-5914 and Ms. Lloyd at 888-352-5437.