Washington state officials have decided they can't rely only on the honor system to keep track of residents' eligibility for insurance subsidies under the Basic Health Plan (BHP) from year to year.
New slogan in WA state: 'Trust, but verify'
April 30, 1998
New slogan in Washington state: 'Trust, but verify'
Officials will now check annual incomes of Basic Health Plan enrollees
Washington state officials have decided they can't rely only on the honor system to keep track of residents' eligibility for insurance subsidies under the Basic Health Plan (BHP) from year to year.
As BHP enrollment has ballooned in recent years-a total of 125,131 Washington residents now receive subsidized insurance coverage- the state has increasingly relied on voluntary reporting of income changes by those receiving insurance subsidies.
But, from now on the state will step up efforts to verify income.
Before adjourning in March, the Washington legislature appropriated $330,000 for verifying residents' eligibility for subsidies. The legislature also gave the Health Care Administration (HCA), the agency in charge of administering BHP, authority to bill policyholders for overpaid subsidies and to establish penalties. Currently, the state is able to bill enrollees only at the new premium rate and cannot recoup the costs of overpaid subsidies.
Only residents earning less than 200% of the federal poverty level (FPL) qualify for subsidies of BHP insurance. Premiums cost from $132 to $302 per month depending on which health plan is selected and subsidies range from a minimum of $10 to 59% of premium costs.
85,000 people on waiting list
State officials and consumer advocates alike hope that by tightening eligibility verification more people who actually need subsidized coverage will be able to get it. Last year, as many as 85,000 people were on the waiting list for subsidized coverage.
In BHP's early years, when enrollment was smaller, HCA annually reviewed each account to make sure the policyholder still qualified for a subsidy and that the subsidy level was correct. After enrollment began to surge in1995, the agency began relying on self-reported income changes. About 2,200 enrollees receiving subsidized coverage voluntarily sent in income updates last year.
Officials discovered the honor system wasn't working very well when they cross-referenced records from HCA and the State Department of Employment Security. They found a "significant" number of enrollees who could be receiving excess subsidies. State officials acknowledge the cross-referenced sample may have overestimated the numbers receiving excess subsidies because family size and other factors were not taken into account, but they still believe they have a problem.
The HCA also conducted an internal sampling of accounts. The agency contacted 3,012 enrollees who had not submitted income documentation for more than a year and required them to re-enroll. Of that group, 1,847 remained eligible for subsidies, 328 had income increases too high for subsidies (although 82 cases are pending review) and 837 failed to respond to requests for information about income. Those who did not respond were invoiced for their premiums at the unsubsidized rate.
Verification costs
The cost in staff time to verify the eligibility of this sample of 3,012 enrollees was approximately $78,000. To finance broader eligibility verification for BHP, the agency looked to the state legislature.
Democratic Gov. Gary Locke requested $1.069 million in his proposed1998 budget to allow the HCA to review all subsidized accounts every 18 months. But Republican legislators in both houses balked at such a sum and instead appropriated $330,000.
The appropriation will make it possible for the agency to double its verification efforts and explore other methods for determining eligibility for subsidies.
Since the beginning of the year, the agency has been working its way through about 575 accounts each month: 500 identified from another cross-referenced list from the State Department of Employment Security and 75 from other sources such as providers, friends and family members. Surprisingly, the state is receiving many referrals from the community, presumably from individuals who believe that subsidies should only go to those who qualify for them.
Janet Peterson, BHP deputy program manager, said the agency is also looking into using information from the Department of Revenue to reach enrollees who are self-employed.
"If we use data from other agencies, it would be less costly," added Ms. Peterson.
Roger Neumaier, HCA assistant administrator for finance and administration, said staff from various divisions in the agency will be working together to come up with new and efficient approaches for verifying income. A report will be sent to the legislature in December.
Reducing paperwork
The agency also will examine ways to reduce enrollees' paperwork. It's possible that complicated documentation requirements pose barriers for enrollees who didn't respond to agency inquiries. "The process can be intimidating for people," said Ms. Peterson.
Legislators gave the agency discretion to either bill an enrollee for overpayments of subsidies or apply civil penalties after officials testified that subsidies as small as $2 to $5 would not be worth the administrative costs of restrospectively determining when monthly income levels had changed. Ms. Peterson estimates it costs the agency between $22 and $25 to recertify an enrollee's eligibility status.
"Obviously, we're not going after 50 cents," said Ms. Peterson. "We'll have to figure out how to go for the cases that are substantial."
One question for state officials is whether BHP enrollees receiving subsidies will continue paying for premiums if their subsidies are reduced or eliminated. When premiums were increased recently, enrollment dropped 5% for subsidized coverage and 16% for unsubsidized coverage as of January. A survey of those who were disenrolled found that most dropped coverage because of the costs.
-Shauna Brown
Contact Ms. Peterson at 360-923-2925 or Mr. Neumaier at 360-923-2804.
Shauna Brown has served as editor of
Washington Health, a monthly publication covering health policy issues in Washington state.
Washington state officials have decided they can't rely only on the honor system to keep track of residents' eligibility for insurance subsidies under the Basic Health Plan (BHP) from year to year.
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