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United States Government Accountability Office: 
GAO: 

Report to the Ranking Member, Committee on Health, Education, Labor, & 
Pensions, U.S. Senate: 

July 2011: 

Pre-Existing Condition Insurance Plans: 

Program Features, Early Enrollment and Spending Trends, and Federal 
Oversight Activities: 

GAO-11-662: 

GAO Highlights: 

Highlights of GAO-11-662, a report to the Ranking Member, Committee on 
Health, Education, Labor, & Pensions, U.S. Senate. 

Why GAO Did This Study: 

Individuals applying for health insurance are often denied coverage 
due to a pre-existing condition. The Patient Protection and Affordable 
Care Act appropriated $5 billion to create a temporary pool—known as 
the Pre-Existing Condition Insurance Plan (PCIP) program—to provide 
access to insurance for such individuals until new protections take 
effect in 2014. Twenty-seven states opted to run their own PCIPs, 
while 23 states and the District of Columbia opted to let the 
Department of Health and Human Services (HHS) run the PCIPs for their 
residents. Initial projections of total enrollment varied from 200,000 
to 375,000, and questions have been raised about funding, 
implementation, and oversight of this new program. 

GAO examined (1) PCIP features, premiums, and criteria for 
demonstrating a pre-existing condition, (2) trends in PCIP enrollment 
and spending, including administrative costs, and (3) federal 
oversight activities. GAO reviewed PCIP benefits and rates; 
interviewed officials from selected state PCIPs, HHS, and the Office 
of Personnel Management (OPM), which assists HHS in administering 
aspects of the federally run PCIP; analyzed data provided by HHS and 
OPM; and examined contracts and interagency agreements. 

In its comments, HHS emphasized its recent efforts to increase 
enrollment and provided technical comments, which GAO incorporated as 
appropriate. 

What GAO Found: 

State and federally run PCIPs generally had similar cost sharing 
arrangements, although other features varied. Most states had annual 
deductibles falling within $1,000 to $2,999, with out-of-pocket limits 
at or near $5,950. Coverage limits were common but varied, both in 
terms of the benefits affected and the extent of the limits. Monthly 
premiums ranged considerably—from $240 in Utah to $1,048 in Alaska for 
a 50-year-old enrollee—and were generally lower in the federally run 
PCIP. Additionally, applicants in the federally run PCIP generally had 
fewer options to demonstrate a pre-existing condition—a criteria of 
program eligibility—than did those in the state-run PCIPs. 

Enrollment and spending for state and federally run PCIPs have been 
significantly lower than initial projections. As of April 30, 2011, 
enrollment had exceeded 21,000, ranging from 0 in one state to nearly 
3,200 in another state. Factors contributing to low enrollment include 
the statutory requirement that enrollees be uninsured for 6 months 
prior to applying; premiums that may be unaffordable to many; and a 
lack of PCIP awareness. In response, HHS reduced premiums in the 
federally run PCIP states and increased its outreach efforts in 2011. 
Spending was also lower than projected—about 2 percent of total 
program funding had been spent, or about $78 million by state-run 
PCIPs and $26 million for the federally run PCIP. 

Figure: Monthly Enrollment in State and Federally Run PCIPs Remained 
Lower Than Initial Projections, Despite Increases: 

[Refer to PDF for image: stacked line graph] 

Month: July 2010; 
Enrollment, State-run PCIPs: 23; 
Enrollment, Federally run PCIP: 0; 
Enrollment, Total: 23. 

Month: August 2010; 
Enrollment, State-run PCIPs: 274; 
Enrollment, Federally run PCIP: 299; 
Enrollment, Total: 573. 

Month: September 2010; 
Enrollment, State-run PCIPs: 1,853; 
Enrollment, Federally run PCIP: 924; 
Enrollment, Total: 2,777. 

Month: October 2010; 
Enrollment, State-run PCIPs: 5,205; 
Enrollment, Federally run PCIP: 1,506; 
Enrollment, Total: 6,711. 

Month: November 2010; 
Enrollment, State-run PCIPs: 7,002; 
Enrollment, Federally run PCIP: 2,040; 
Enrollment, Total: 9,042. 

Month: December 2010; 
Enrollment, State-run PCIPs: 8,781; 
Enrollment, Federally run PCIP: 2,596; 
Enrollment, Total: 11,377. 

Month: January 2011; 
Enrollment, State-run PCIPs: 10,300; 
Enrollment, Federally run PCIP: 3,194; 
Enrollment, Total: 13,494. 

Month: February 2011; 
Enrollment, State-run PCIPs: 11,784; 
Enrollment, Federally run PCIP: 3,816; 
Enrollment, Total: 15,600. 

Month: March 2011; 
Enrollment, State-run PCIPs: 13,543; 
Enrollment, Federally run PCIP: 4,808; 
Enrollment, Total: 18,351. 

Month: April 2011; 
Enrollment, State-run PCIPs: 15,781; 
Enrollment, Federally run PCIP: 5,673; 
Enrollment, Total: 21,454. 

Source: HHS and OPM. 

[End of figure] 

To provide for program oversight, HHS established contracts with 
states and the carrier selected to provide benefits for the federally 
run PCIP, which include numerous provisions to ensure program 
requirements are met. For example, the contracts require regular 
reporting of expense and enrollment data, and annual completion of 
independently audited financial reports. Also, HHS and OPM are engaged 
in ongoing oversight activities, such as reconciling the reported 
data, and HHS intends to conduct performance audits in the future. 

View [hyperlink, http://www.gao.gov/products/GAO-11-662] or key 
components. For more information, contact John E. Dicken at (202) 512-
7114 or dickenj@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

PCIPs Generally Had Similar Cost Sharing, but Varied in Coverage 
Limits, Premiums, and Criteria for Demonstrating Pre-Existing 
Conditions: 

PCIP Enrollment and Spending Remain Significantly Lower Than Initial 
Projections, Though Enrollment Has Increased Steadily: 

Federal Oversight Activities Intended to Ensure Compliance with PCIP 
Program Requirements Are in Place or Being Planned: 

Agency Comments: 

Appendix I: Pre-Existing Condition Insurance Plan (PCIP) Cost Sharing 
Features by State, 2011: 

Appendix II: Premiums for the Most Popular Pre-Existing Condition 
Insurance Plans (PCIP) by State, June 2011: 

Appendix III: Criteria for Demonstrating a Pre-Existing Condition by 
State, June 2011: 

Appendix IV: Enrollment and Expenditures for State-and Federally Run 
Pre-Existing Condition Insurance Plans (PCIP): 

Appendix V: Comments from the Department of Health & Human Services: 

Appendix VI: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: States Selected for Interviews, 2011: 

Table 2: Cost Sharing Features for the Most Popular PCIPs across All 
States, 2011: 

Table 3: Expenditures for State-and Federally Run PCIPs, through March 
31, 2011: 

Figures: 

Figure 1: Implementation Timeline of the PCIP Program, 2010: 

Figure 2: Most Common PCIP Coverage Limits across All States, 2011: 

Figure 3: Distribution of Average Monthly PCIP Premiums for 50-year-
old Persons across All States, June 2011: 

Figure 4: Criteria for Demonstrating Pre-existing Conditions Across 
All States, June 2011: 

Figure 5: Monthly Enrollment in State-and Federally Run PCIPs, July 
2010 through April 2011: 

Abbreviations: 

CCIIO: Center for Consumer Information and Insurance Oversight: 

CMS: Centers for Medicare & Medicaid Services: 

GEHA: Government Employees Health Association, Inc. 

HHS: Department of Health and Human Services: 

HRP: high-risk pool: 

HSA: health savings account: 

NFC: National Finance Center: 

OIG: Office of Inspector General: 

OPM: Office of Personnel Management: 

PCIP: Pre-Existing Condition Insurance Plan: 

PPACA: Patient Protection and Affordable Care Act: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

July 27, 2011: 

The Honorable Michael B. Enzi: 
Ranking Member: 
Committee on Health, Education, Labor, & Pensions: 
United States Senate: 

Dear Senator Enzi: 

Those applying for health insurance in the individual markets of most 
states are often denied coverage or may be charged significantly 
higher premiums if they have a pre-existing medical condition. 
[Footnote 1] The Patient Protection and Affordable Care Act (PPACA), 
which became law in March 2010, appropriated $5 billion toward the 
creation of a temporary federal high-risk pool, known as the Pre-
Existing Condition Insurance Plan (PCIP) program. The PCIP program 
provides access to insurance for individuals unable to acquire 
affordable coverage due to a pre-existing condition.[Footnote 2] 
States were given the option to run their own PCIP with federal 
funding, or to allow the Department of Health and Human Services (HHS) 
to administer the PCIP in their state. Twenty-seven states elected to 
administer a PCIP for their residents, while 23 states and the 
District of Columbia opted to allow HHS to administer their PCIPs. In 
order to implement various provisions of PPACA, including the PCIP 
program, HHS created the Center for Consumer Information and Insurance 
Oversight (CCIIO) in April 2010.[Footnote 3] PCIP enrollment began as 
early as July 2010, and all PCIPs will run until December 31, 2013, 
after which, the enrollees will be able to transition to a plan under 
their state's new health insurance Exchange.[Footnote 4] 

Early estimates of the number of people the PCIP program could cover 
varied. Before the program was implemented, the Congressional Budget 
Office estimated the program could cover an average of 200,000 
individuals each year with the $5 billion appropriation.[Footnote 5] 
The Office of the Actuary within the Centers for Medicare & Medicaid 
Services (CMS) projected enrollment of 375,000 by the end of 2010 and 
that funding would be exhausted by 2011 or 2012.[Footnote 6] Concerns 
were raised that the number of individuals potentially eligible for 
this program may be significantly more than its capacity to serve 
them.[Footnote 7] Also, given the new and unique nature of this 
federal program, there was uncertainty about whether there would be 
differences in the implementation or administration of the state-and 
federally run PCIPs, and an interest in ensuring appropriate oversight 
of the PCIPs. 

Because of these questions, you asked us to examine several aspects of 
the PCIP program. In this report, we describe: 

1. PCIP features, premiums, and criteria for demonstrating a pre- 
existing condition; 

2. trends in enrollment and spending, including administrative costs, 
for state-and federally run PCIPs; and: 

3. federal oversight of the PCIP program. 

To describe the PCIP benefits, cost sharing features, premiums, and 
criteria for demonstrating a pre-existing condition, we obtained 2011 
PCIP benefit summaries and premium rate tables through the federal 
PCIP web sites and individual state PCIP web sites. In addition, we 
interviewed officials from HHS and the Office of Personnel Management 
(OPM), which is assisting CCIIO in the administration of the federally 
run PCIP. We also interviewed PCIP officials from eight states. We 
selected states with varying levels of enrollment based on data 
available in November 2010. We also included states that did and did 
not have an existing state high-risk pool (HRP).[Footnote 8] (See 
table 1.) 

Table 1: States Selected for Interviews, 2011: 

Lower enrollment: Existing state high-risk pool: Alaska; Connecticut; 
Lower enrollment: No state high-risk pool: Maine; Michigan; 
Higher enrollment: Existing state high-risk pool: Illinois; North 
Carolina; 
Higher enrollment: No state high-risk pool: Ohio; Pennsylvania. 

Source: GAO. 

[End of table] 

To describe the enrollment and spending trends among the state-and 
federally run PCIPs, we obtained enrollment data as of April 2011 from 
HHS's web site, states' unaudited monthly reports from July 2010 
through March 2011, and PCIP financial information from CCIIO. We also 
obtained enrollment and financial data from OPM for the federally run 
program covering the same period. To assess the reliability of the 
enrollment and spending data, we discussed with agency officials the 
steps taken by CCIIO and OPM to ensure data accuracy and completeness, 
and conducted our own logic testing, such as verifying internal 
agreement within a data source. We determined that the enrollment and 
spending data were sufficiently reliable for our purposes. We also 
discussed the enrollment and spending trends with officials from HHS, 
OPM, and the eight selected states. Because of the unaudited nature of 
the data, and because the data represent less than 1 year of a newly 
established program, we do not make conclusions about long-term 
program enrollment and spending trends. 

To describe the federal oversight of the PCIP program, we reviewed key 
documents from CCIIO, OPM, and state-run PCIPs. These documents 
included state-and federally run PCIP proposals and contracts; 
interagency agreement documents between HHS, OPM, and the National 
Finance Center (NFC);[Footnote 9] the HHS request for proposal for 
selecting an insurance carrier for the federally run PCIP; and the 
PCIP regulations as promulgated by HHS. In addition, we discussed 
planned and actual oversight activities with officials from HHS, OPM, 
and the eight selected states. We conducted this performance audit 
from November 2010 through June 2011 in accordance with generally 
accepted government auditing standards. Those standards require that 
we plan and perform the audit to obtain sufficient, appropriate 
evidence to provide a reasonable basis for our findings and 
conclusions based on our audit objectives. We believe that the 
evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. 

Background: 

PPACA required HHS to establish the PCIP program within 90 days of 
enactment and set forth requirements for eligibility, coverage, and 
premiums. For example, PPACA limited PCIP enrollment to those who have 
a pre-existing condition and have been without creditable coverage 
[Footnote 10] for at least 6 months prior to application. This 
requirement effectively prevents enrollment by those who were already 
insured, thus limiting the program to those who have likely been 
unable to access insurance because of their pre-existing health 
condition.[Footnote 11] PCIP programs may not impose waiting periods 
for coverage based on the enrollee's pre-existing condition, and plan 
benefits must cover at least 65 percent of the cost of coverage 
without exceeding a statutory out-of-pocket spending limit, which was 
$5,950 for an individual in 2010 and 2011. PPACA required PCIP 
premiums to be set at 100 percent of the standard rate for a standard 
population in each state or market, and the premiums may vary only on 
the basis of age--by no more than a 4 to 1 ratio--geography, and 
smoking status. 

The PCIP program was generally modeled after existing HRPs, but with 
some important distinctions. For example, unlike PCIPs, state HRPs do 
not require that individuals be without coverage for 6 months to be 
eligible. Once enrolled, however, many HRPs impose waiting periods of 
6 to 12 months for coverage of the pre-existing condition, while PCIPs 
have no waiting periods.[Footnote 12] Also, there is no federal limit 
on out-of-pocket expenses in existing HRPs. Finally, whereas PCIP 
premiums are limited to the standard rate in each state, existing HRPs 
typically offer premiums ranging from 125 to 200 percent of the 
standard rates available in their states. 

To begin implementing the PCIP program, CCIIO determined states' 
funding allocations and issued regulations. In April 2010, CCIIO 
determined a state-by-state allocation of the total $5 billion PCIP 
appropriation, and asked states to indicate their interest in 
administering their own PCIP by April 30. The initial allocations were 
based on a formula similar to that used for the Children's Health 
Insurance Program with factors that reflected each state's population, 
number of uninsured individuals under age 65, and a geographic health 
care cost factor.[Footnote 13],[Footnote 14] CCIIO issued an interim 
final rule on July 30, 2010 to provide further guidance on PCIP 
program requirements, although it allowed state-run PCIPs some 
flexibility in how they operated their programs.[Footnote 15] For 
example, CCIIO identified options PCIPs may allow for applicants to 
demonstrate their pre-existing conditions, such as documentation of 
coverage denial by another carrier, an offer of coverage with a rider 
excluding a pre-existing condition, or a diagnosed medical condition 
or health condition approved by the state. The rule also prescribed 
that eligible individuals who submitted their complete applications 
before the fifteenth day of the month must be covered on the first day 
of the following month. All PCIPs were required to cover certain 
categories of services, such as physician and hospital services, 
mental health and substance abuse services, skilled nursing and home 
health care, preventive and maternity care, and prescription drugs. 
[Footnote 16] 

For the 27 states that chose to administer their own PCIPs, HHS 
directly contracted with states or their designated nonprofit 
entities, and obligated funds for calendar years 2010 and 2011. The 
contracts established that HHS would reimburse states or their 
designated entities for claims and administrative costs incurred in 
excess of the premiums they collected. HHS also established a limit on 
administrative costs of no more than 10 percent of each state's total 
spending over the lifetime of the program. The contracting process for 
states could also involve the selection of subcontractors to provide 
services, such as claims processing, pharmacy benefits management, or 
disease management. Two state-run PCIPs began coverage in July 2010, 9 
states began coverage in August 2010, 12 states in September 2010, and 
the remaining 4 states in October 2010. 

To implement the federally run PCIP for the 24 states that opted not 
to administer their own PCIP, HHS coordinated with other federal 
agencies and selected the Government Employees Health Association, Inc. 

(GEHA) to administer the coverage benefits in these states.[Footnote 
17],[Footnote 18] In 2011, HHS offered three plans through GEHA--the 
Standard, Extended, and Health Savings Account (HSA) plans.[Footnote 
19] To assist with the administration of the federally run PCIP, CCIIO 
established interagency agreements with two federal agencies--OPM and 
NFC--that had experience administering the Federal Employees Health 
Benefits Program.[Footnote 20] Under these agreements, OPM manages the 
daily operations with GEHA and NFC, and NFC performs administrative 
functions pertaining to eligibility determination and premium 
collection. GEHA was awarded a cost-plus-award fee contract, which 
established that HHS would reimburse GEHA for claims and 
administrative costs in addition to granting fixed and performance-
based award fees.[Footnote 21] Moreover, the agreements with OPM and 
NFC established that HHS would reimburse the administrative costs 
incurred by the two agencies. HHS began taking applications in July 
2010, and coverage began in August 2010 in 21 states, in September 
2010 in 2 states, and in October 2010 in 1 state.[Footnote 22] (See 
figure 1.) 

Figure 1: Implementation Timeline of the PCIP Program, 2010: 

[Refer to PDF for image: illustrated timeline] 

March: 
Patient Protection and Affordable Care Act (PPACA) became law, 
requiring the HHS Secretary to establish a temporary high risk pool 
within 90 days, known as the Pre-Existing Condition Insurance Plan 
(PCIP) program. 

April: 
HHS asks states to declare their intent to run their own PCIPs by 
April 30, 2010. 

HHS creates Center for Consumer Information and Insurance Oversight 
(CCIIO) to implement and oversee the PCIP program. 

CCIIO determines the state-by-state allocation of PCIP funding. 

May: 
CCIIO establishes interagency agreements with OPM and the National 
Finance Center (NFC). 

HHS issues a request for proposal for a health insurance carrier to 
administer coverage for the federally run PCIP. 

June: 
State-run PCIPs: HHS finalizes contracts with 27 state-run PCIPs (June –
August); 
Federally run PCIP: HHS awards contract to the Government Employees 
Health Association, Inc. (GEHA) to administer coverage for the 
federally run PCIP. 

July: 
CCIIO issues an interim final rule establishing PCIP program 
requirements; 
State-run PCIPs: Coverage begins for 2 state-run PCIPs: 
New Hampshire; 
South Dakota. 

August: 
State-run PCIPs: Coverage begins for 9 state-run PCIPs (11 total): 
Kansas; 
Maine; 
Missouri; 
Montana; 
New Jersey; 
New Mexico; 
North Carolina; 
Oregon; 
Wisconsin. 
Federally run PCIP: Coverage begins for 21 federally run PCIP states: 
Alabama; 
Arizona; 
Delaware; 
Florida; 
Georgia; 
Hawaii; 
Idaho; 
Indiana; 
Kentucky; 
Louisiana; 
Massachusetts; 
Minnesota; 
Mississippi; 
Nebraska; 
Nevada; 
North Dakota; 
South Carolina; 
Tennessee; 
Texas; 
Virginia; 
Wyoming. 

September: 
State-run PCIPs: Coverage begins for 12 state-run PCIPs: 
Alaska; 
Arkansas; 
Colorado; 
Connecticut; 
Illinois; 
Iowa; 
Kansas; 
Ohio; 
Oklahoma; 
Oregon; 
Utah; 
Wisconsin; 
Federally run PCIP: Coverage begins for 2 federally run PCIP states: 
Vermont; 
West Virginia. 

October: 
State-run PCIPs: Coverage begins for 4 state-run PCIPs: 
California; 
Michigan; 
New York; 
Pennsylvania; 
Federally run PCIP: Coverage begins for 1 federally run PCIP state: 
District of Columbia. 

Source: GAO. 

[End of figure] 

The interim final rule set forth additional requirements for both 
state-and federally run PCIPs providing CCIIO the means to oversee the 
program and to promote its efficient and fair operation. For example, 
the rule requires PCIPs to establish procedures to identify and report 
instances of fraud, waste, and abuse, as well as cases of "insurer 
dumping"--that is, insurance carriers or employers discouraging high- 
risk individuals from remaining enrolled in their coverage so that 
they may instead enroll in a PCIP program.[Footnote 23] In addition, 
state-run PCIPs operating in states that had an existing HRP were 
subject to a maintenance of effort provision, which required these 
states to maintain funding for the existing pool. Provisions relating 
to maintenance of effort and other requirements were included in 
contracts signed with states and nonprofit entities administering the 
PCIPs.[Footnote 24] 

PCIPs Generally Had Similar Cost Sharing, but Varied in Coverage 
Limits, Premiums, and Criteria for Demonstrating Pre-Existing 
Conditions: 

Health insurance plans offered by state-and federally run PCIPs 
generally had similar cost sharing features. Other PCIP features 
varied across states, such as coverage limits, premiums, and the 
criteria for demonstrating that an applicant had a pre-existing 
condition. 

PCIPs Generally Had Similar Cost Sharing Features: 

Health insurance plans offered by state-and federally run PCIPs had 
similar cost sharing, including annual deductibles and out-of-pocket 
maximums. For example, the most popular plans available in most states 
had annual deductibles ranging from $1,000 to $2,999, out-of-pocket 
maximums at or near the legal maximum of $5,950, and coinsurance of 20 
percent.[Footnote 25] (See table 2.) In 2011, the 27 state-run PCIPs 
collectively offered 49 plans--15 out of the 27 states offered a 
single plan, 5 states offered 2 plans, and 7 states offered more than 
2 plans. HHS offered 3 plans in the 24 federally run PCIP states--
known as the Standard, Extended, and HSA plans.[Footnote 26] See 
appendix I for PCIP cost sharing features by state. 

Table 2: Cost Sharing Features for the Most Popular PCIPs across All 
States, 2011: 

Annual cost sharing features: Medical deductible: Less than $1,000; 
Number of states: State-run PCIPs: 4; 
Number of states: Federally run PCIP: 0; 
Number of states: Total states: 4. 

Annual cost sharing features: Medical deductible: $1,000-$1,999; 
Number of states: State-run PCIPs: 11; 
Number of states: Federally run PCIP: 0; 
Number of states: Total states: 11. 

Annual cost sharing features: Medical deductible: $2,000-$2,999; 
Number of states: State-run PCIPs: 9; 
Number of states: Federally run PCIP: 24; 
Number of states: Total states: 33. 

Annual cost sharing features: Medical deductible: $3,000 or more; 
Number of states: State-run PCIPs: 3; 
Number of states: Federally run PCIP: 0; 
Number of states: Total states: 3. 

Annual cost sharing features: Prescription deductible: No deductible; 
Number of states: State-run PCIPs: 22; 
Number of states: Federally run PCIP: 0; 
Number of states: Total states: 22. 

Annual cost sharing features: Prescription deductible: $100-$499; 
Number of states: State-run PCIPs: 2; 
Number of states: Federally run PCIP: 0; 
Number of states: Total states: 2. 

Annual cost sharing features: Prescription deductible: $500; 
Number of states: State-run PCIPs: 3; 
Number of states: Federally run PCIP: 24; 
Number of states: Total states: 27. 

Annual cost sharing features: Out-of-pocket maximum: $1,000-$2,999; 
Number of states: State-run PCIPs: 4; 
Number of states: Federally run PCIP: 0; 
Number of states: Total states: 4. 

Annual cost sharing features: Out-of-pocket maximum: $3,000-$4,999; 
Number of states: State-run PCIPs: 4; 
Number of states: Federally run PCIP: 0; 
Number of states: Total states: 4. 

Annual cost sharing features: Out-of-pocket maximum: $5,000-$5,950; 
Number of states: State-run PCIPs: 19; 
Number of states: Federally run PCIP: 24; 
Number of states: Total states: 43. 

Annual cost sharing features: Coinsurance: Less than 20%; 
Number of states: State-run PCIPs: 5; 
Number of states: Federally run PCIP: 0; 
Number of states: Total states: 5. 

Annual cost sharing features: Coinsurance: 20%; 
Number of states: State-run PCIPs: 18; 
Number of states: Federally run PCIP: 24; 
Number of states: Total states: 42. 

Annual cost sharing features: Coinsurance: More than 20%; 
Number of states: State-run PCIPs: 4; 
Number of states: Federally run PCIP: 0; 
Number of states: Total states: 4. 

Source: State-and federally run PCIP web sites. 

Notes: In cases where a state-run PCIP offers more than one plan, we 
show the cost sharing features of the most popular plan in that state 
as of March 31, 2011. For the federally run PCIP, we show the cost 
sharing features of the Standard plan, the most popular of the three 
plan options. 

[End of table] 

Coverage Limits, Premiums, and Criteria for Demonstrating Pre-Existing 
Conditions Varied across States: 

In 2011, almost all state-and federally run PCIPs had coverage limits 
for some benefits; however, the selected benefits and the extent of 
coverage limits varied.[Footnote 27] (See figure 2.) Most PCIPs 
imposed limits on skilled nursing, home health, and therapy services. 
For example, coverage limits for skilled nursing services in the state-
run PCIPs ranged from 30 days to 180 days per year in Utah and 
Oklahoma, respectively. The federally run PCIP limited skilled nursing 
charges to $700 per day for up to 14 days following an acute inpatient 
discharge. Limits on home health services ranged from 25 visits per 
year in the federally run PCIP states to 270 visits per year in 
Alaska's, Arkansas', and Illinois' state-run PCIPs. Most state-run 
PCIPs (17 out of 27) imposed coverage limits for mental health and 
substance abuse services, whereas the federally run PCIP did not have 
any limits for these services. For example, in California's state-run 
PCIP, adult enrollees were limited to 10 inpatient days and 15 
outpatient visits per year for mental health disorders, and up to 20 
visits per year for outpatient alcohol and drug treatment. 
Additionally, the federally run PCIP and 13 state-run PCIPs did not 
impose any lifetime dollar limits, whereas 14 state-run PCIPs had 
lifetime limits ranging from $1 million to $5 million. In addition to 
these common coverage limits, some state-run PCIPs also imposed limits 
on professional services, durable medical equipment, and hospital 
inpatient services. 

Figure 2: Most Common PCIP Coverage Limits across All States, 2011: 

[Refer to PDF for image: stacked horizontal bar graph] 

Number of states: 

Skilled nursing facility services; 
State-run PCIPs: 20; 
Federally run PCIP: 24; 
Total: 44. 

Therapy services[A]; 
State-run PCIPs: 15; 
Federally run PCIP: 24; 
Total: 39. 

Home health services; 
State-run PCIPs: 14; 
Federally run PCIP: 24; 
Total: 38. 

Hospice; 
State-run PCIPs: 6; 
Federally run PCIP: 24; 
Total: 30. 

Mental health and substance abuse services; 
State-run PCIPs: 16; 
Total: 16. 

Lifetime dollar limits; 
State-run PCIPs: 14; 
Total: 14. 

Source: State and federally run PCIP web sites. 

Note: Where state-run PCIPs offered more than one plan option, the 
coverage limits were generally the same across all plans, except for 
one state for which we present the limits for the most popular plan. 
Similarly, coverage limits were the same for each of the three plans 
offered by the federally run PCIP. 

[A] Therapy services include physical, occupational, and speech 
therapy. 

[End of figure] 

Premiums among PCIPs varied by age, state, and plan type, and premiums 
were on average higher among state-run PCIPs compared with the 
federally run PCIP. (See figure 3.) As of June 2011, the average 
monthly premium for a 50-year-old person was $407 across all states, 
ranging from $240 in Utah to $1,048 in Alaska.[Footnote 28],[Footnote 
29] Monthly premiums among state-run PCIPs were 19 percent higher, on 
average, than the average premium for the same enrollee in the 
federally run PCIP Standard plan--$440 per month for a 50-year-old 
person compared to $370, respectively.[Footnote 30] In 2010, however, 
average premiums among state-run PCIPs were 5 percent lower compared 
to the federally run PCIP--$431 per month versus $455. 

Figure 3: Distribution of Average Monthly PCIP Premiums for 50-year-
old Persons across All States, June 2011: 

[Refer to PDF for image: vertical bar graph] 

Number of states: 

$300 or less; 
State-run PCIPs: 6; 
Federally run PCIP: 2. 

$301-$350; 
State-run PCIPs: 2; 
Federally run PCIP: 5. 

$351-$400; 
State-run PCIPs: 5; 
Federally run PCIP: 12. 

$401-$450; 
State-run PCIPs: 4; 
Federally run PCIP: 5. 

Greater than $450; 
State-run PCIPs: 10; 
Federally run PCIP: 0. 

Source: State and federally run PCIP web sites. 

Notes: For state-run PCIPs that offered multiple plan options or 
varied premiums by geographic region, we calculated the average across 
all regions for the most popular plan for a 50-year-old person. If the 
state varied premiums by smoking status, we used premiums for 
nonsmokers. For the federally run PCIP, we used the premiums for the 
Standard plan for this analysis because it was the most popular plan 
option. 

On May 31, 2011, HHS announced in a news release that it would reduce 
premiums in 18 federally run PCIP states beginning July 1, 2011, in 
order to more closely align premiums with each state's individual 
health insurance market. 

[End of figure] 

Eleven state-run PCIPs charged higher premiums for smokers, and seven 
state-run PCIPs varied premiums by geographic regions within the 
state. Conversely, the federally run PCIP did not vary premiums by 
smoking status or geographic regions within states. Furthermore, in 
developing their standard rates, state-run PCIPs typically based their 
rates on a survey of top insurance carriers in their states, whereas 
HHS and OPM calculated the rates for the federally run PCIP states 
based on premiums charged by existing state HRPs.[Footnote 31] See 
appendix II for the premium rates for the most popular PCIPs by state. 

Until July 1, 2011, applicants for the federally run PCIP generally 
had fewer options available to demonstrate their eligibility based on 
a pre-existing condition than did those in the state-run PCIPs. In the 
federally run PCIP, applicants could demonstrate the criteria by 
providing documented evidence in one of two ways: (1) a denial letter 
indicating refusal of coverage by an insurance carrier; or (2) an 
offer of insurance with a rider that excluded coverage for a pre-
existing condition.[Footnote 32] Additionally, within the federally 
run PCIP, all children under age 19 had the option to provide 
documented evidence of an offered plan with premium rates at least 
twice that of the PCIP Standard plan premium rates offered in their 
respective states.[Footnote 33] On May 31, 2011, HHS announced in a 
news release that beginning July 1, 2011, applicants could demonstrate 
their pre-existing condition by providing a letter from a health care 
provider dated within the previous 12 months documenting a current or 
past diagnosed medical condition.[Footnote 34] 

In contrast, most state-run PCIPs have allowed three options to 
demonstrate a pre-existing condition since their inception. Similar to 
the federally run PCIP, most state-run PCIPs allowed applicants to 
document their pre-existing condition by submitting a notice of denial 
or an offer of coverage with a rider excluding the condition.[Footnote 
35] In addition, 24 state-run PCIPs allowed applicants to provide 
documentation from a health care provider of a medical condition on 
the state's pre-existing condition list.[Footnote 36] Additionally, 
seven states accepted evidence of an offered health plan with premiums 
higher than the PCIP premiums available to the same applicant in those 
states.[Footnote 37] Considering the four options above, 20 states 
accepted at least three options, including 5 states that accepted all 
four options for demonstrating a pre-existing condition. (See figure 
4.) See appendix III for the criteria allowed for demonstrating a pre- 
existing condition in each state. 

Figure 4: Criteria for Demonstrating Pre-existing Conditions Across 
All States, June 2011: 

[Refer to PDF for image: stacked horizontal bar graph] 

Proof of denial; 
State-run PCIPs: 23; 
Federally run PCIP: 24; 
Total: 47. 

Proof of exclusionary rider: 
State-run PCIPs: 21; 
Federally run PCIP: 24; 
Total: 45. 

Pre-existing condition diagnosis[A]: 
State-run PCIPs: 24; 
Federally run PCIP: 0; 
Total: 24. 

Proof of higher premium[B]: 
State-run PCIPs: 7; 
Federally run PCIP: 2; 
Total: 9. 

Source: State and federally run PCIP web sites. 

Note: On May 31, 2011, HHS announced in a news release that beginning 
July 1, 2011, applicants living in the 24 federally run PCIP states 
would be able to demonstrate their pre-existing condition by 
submitting a letter from a doctor, physician assistant, or nurse 
practitioner stating that they have or, at any time in the past, had a 
medical condition, disability, or illness. 

[A] Most states required documentation of a diagnosed medical 
condition that is included on the state's list of presumptive 
conditions, although some considered documentation of conditions not 
on the list on a case-by-case basis. States that did not have a list 
of presumptive conditions, however, considered a provider's letter 
documenting of a diagnosed medical condition. 

[B] States determined how much higher the premium must be compared to 
those offered by the state's PCIP. For instance, New Mexico accepted 
proof of offered coverage with premiums that are at least 25 percent 
higher than the state's standard rate for similar deductible options. 
Individuals in two federally run PCIP states--Massachusetts and 
Vermont--who were offered plans with premiums that were at least twice 
as high as the premiums for the federally run PCIP Standard plan in 
each state would meet the criteria for demonstrating a pre-existing 
condition. 

[End of figure] 

PCIP Enrollment and Spending Remain Significantly Lower Than Initial 
Projections, Though Enrollment Has Increased Steadily: 

As of April 2011, enrollment in state-and federally run PCIPs was 
significantly lower than projected, though it has increased steadily. 
To increase awareness of the program, HHS and states have undertaken a 
variety of outreach efforts. Consistent with the low enrollment, 
spending has also been lower than projected. 

PCIP Enrollment Remains Lower Than Projected but Has Increased 
Steadily: 

Early PCIP enrollment has been significantly lower than initially 
projected. By November 2010, after about 4 months of coverage, total 
PCIP enrollment was about 9,000, and increased to nearly 21,500 by 
April 2011, ranging from 0 in Vermont to nearly 3,200 in Pennsylvania. 
Initial projections of average monthly enrollment made in 2010 were 
about 71,500 for state-run PCIPs and about 78,000 for the federally 
run PCIP.[Footnote 38] As of April 30, 2011, actual enrollment totaled 
about 15,800 in the state-run PCIPs and about 5,700 in the federally 
run PCIP. (See figure 5.) This represents 5.6 people per 10,000 
uninsured living in the 27 state-run PCIP states and 2.5 per 10,000 
uninsured living in the 24 federally run PCIP states.[Footnote 39] 
Enrollment in PCIPs was evenly split between males and females and the 
majority of enrollees were age 45 or older.[Footnote 40] See appendix 
IV for additional information on state-level PCIP enrollment. 

Figure 5: Monthly Enrollment in State-and Federally Run PCIPs, July 
2010 through April 2011: 

[Refer to PDF for image: stacked line graph] 

Month: July 2010; 
State-run PCIPs: 23; 
Federally run PCIP: 0; 
Total: 23. 

Month: August 2010; 
State-run PCIPs: 274; 
Federally run PCIP: 299; 
Total: 573. 

Month: September 2010; 
State-run PCIPs: 1,853; 
Federally run PCIP: 924; 
Total: 2,777. 

Month: October 2010; 
State-run PCIPs: 5,205; 
Federally run PCIP: 1,506; 
Total: 6,711. 

Month: November 2010; 
State-run PCIPs: 7,002; 
Federally run PCIP: 2,040; 
Total: 9,042. 

Month: December 2010; 
State-run PCIPs: 8,781; 
Federally run PCIP: 2,596; 
Total: 11,377. 

Month: January 2011; 
State-run PCIPs: 10,300; 
Federally run PCIP: 3,194; 
Total: 13,494. 

Month: February 2011; 
State-run PCIPs: 11,784; 
Federally run PCIP: 3,816; 
Total: 15,600. 

Month: March 2011; 
State-run PCIPs: 13,543; 
Federally run PCIP: 4,808; 
Total: 18,351. 

Month: April 2011; 
State-run PCIPs: 15,781; 
Federally run PCIP: 5,673; 
Total: 21,454. 

Source: HHS and OPM. 

[End of figure] 

We found that lower than expected enrollment may be attributed to five 
factors: (1) the statutory requirement that applicants be uninsured 
for 6 months prior to applying, (2) affordability concerns, (3) a lack 
of awareness about the program, (4) the processes used for determining 
eligibility, and (5) existing state laws or state-supported health 
insurance programs. 

1. Statutory requirement that applicants be uninsured for 6 months: 
Officials from several state-run PCIPs told us they considered this 
requirement to be a barrier to eligibility. Based on applications data 
received from CCIIO, 45 percent of denials for state-run PCIPs and 69 
percent of denials for the federally run PCIP were due to the 
applicant having creditable health coverage within the previous 6 
months. Other individuals likely did not apply because they had 
creditable coverage within the prior 6 months and knew they were not 
eligible. 

2. Affordability concerns: CCIIO and state PCIP officials told us they 
considered the cost of premiums--which were required to be set at 100 
percent of the standard market rate, and averaged $407 per month in 
June 2011--to be unaffordable for many. In its May 31, 2011 news 
release, HHS announced it would reduce PCIP premiums in 18 states with 
a federally run PCIP beginning July 1, which may improve the 
affordability in those states. 

3. Lack of awareness of the PCIP program: PCIP officials cited several 
possible reasons for why awareness about the program has been low. 
First, PCIP officials explained that the quick roll-out of the program 
allowed little time to focus on marketing and outreach, and that the 
agency intentionally limited initial marketing activities in an effort 
to avoid enrolling more individuals than the plan could support. 
Further, PCIP officials also said that, compared to other populations 
targeted by federal programs (such as low-income children), the 
segment of the uninsured population with pre-existing conditions has 
been difficult to identify and target. Additionally, hospitals and 
providers are generally less familiar with the individual insurance 
market and where to refer uninsured individuals. 

4. Processes used for determining eligibility: Lower enrollment in the 
federally run PCIP states may be due, in part, to the fact that 
applicants only had two options to demonstrate their pre-existing 
condition through June 2011, whereas most state-run PCIPs allowed 
three or more options. Most notably, the federally run PCIP did not 
use a pre-existing condition list, and required applicants to provide 
proof of denial or an offer of coverage with an exclusionary rider 
from another insurance carrier, which could have imposed additional 
burden. We found that over half of new enrollees in state-run PCIPs 
demonstrated their pre-existing condition by providing evidence of a 
diagnosed condition on their state's list. In its May 31, 2011 news 
release, HHS announced that beginning July 1, 2011, applicants living 
in the 24 states in the federally run PCIP would be able to 
demonstrate their pre-existing condition by submitting a letter from a 
provider documenting a current or past diagnosed medical condition. 

5. Existing state laws or state-supported health insurance programs 
without pre-existing condition limitations: PCIP enrollment has likely 
been affected by state health insurance laws. For example, five 
states--Maine, Massachusetts, New Jersey, New York, and Vermont--have 
guaranteed issue laws that prohibit health insurance denials based on 
health status or medical condition, which may have contributed to low 
PCIP enrollment in these states. PCIP enrollment may also be lower in 
states that offer other state-funded health insurance programs that do 
not impose pre-existing condition limitations. For example, PCIP 
officials from Connecticut and Maine told us that they attribute low 
PCIP enrollment, in part, to the availability of alternative health 
insurance programs in their states that provide lower cost coverage 
for individuals without imposing any restrictions for those with pre- 
existing conditions. Similarly, controlling for differences in state 
populations of uninsured individuals, enrollment was lower among the 
states with an existing HRP compared to the states that did not have 
an existing pool--3.7 per 10,000 uninsured compared to 5.5, 
respectively.[Footnote 41] 

In efforts to improve the affordability of PCIP coverage and to 
increase awareness of the program, CCIIO lowered PCIP premiums and 
undertook additional marketing and outreach efforts beginning in 2011. 
Compared to 2010 premiums, CCIIO lowered 2011 premiums for adults in 
the federally run PCIP Standard plan by about 19 percent, and intends 
to further lower premiums, ranging from 2 percent to 40 percent, in 18 
states beginning July 1, 2011. HHS also added rates for children under 
19 beginning in 2011, which allowed these enrollees to pay lower 
premiums than they would have paid in 2010.[Footnote 42] CCIIO's 
outreach efforts included educating various referral sources about the 
PCIP program--that is, those who most often interact with potential 
PCIP applicants, such as disease advocacy groups, provider groups, and 
state officials. In addition, CCIIO conducted several nationwide 
webinars, distributed posters and brochures, and coordinated with the 
Social Security Administration to contact individuals applying for 
disability insurance.[Footnote 43] Since integrating as part of CMS in 
2011, CCIIO and CMS have coordinated to conduct PCIP outreach at over 
100 events and conferences. In addition, HHS announced in February 
2011 that several large carriers had volunteered to include PCIP 
information in all insurance denial letters,[Footnote 44] and the 
agency announced in its new release on May 31, 2011 that beginning in 
fall 2011, HHS will begin paying health insurance agents and brokers a 
referral fee for successfully enrolling individuals in a PCIP. 
Further, PCIP officials told us they were actively procuring media and 
grassroots outreach contracts. 

In contrast to federal outreach efforts, many state-run PCIPs 
undertook multiple marketing and outreach efforts early on. Officials 
we interviewed from all eight states told us they conducted outreach 
to referral sources, such as advocacy and provider groups. Officials 
from six states told us they leveraged free media outlets, such as 
news articles or local television coverage, through the use of press 
announcements or media events; five used paid radio, television, or 
print advertisements; and four paid agent referral bonuses. The amount 
of money states have spent on marketing varies, with one state 
spending as much as $1.1 million and others spending nothing. Any 
spending on marketing is limited by the 10 percent cap on 
administrative expenditures. 

States and HHS Spent about 2 Percent of Total Program Funding by March 
2011: 

As of March 31, 2011, federal expenditures for the PCIP program 
totaled about $106 million, significantly lower than projections. 
Specifically, state-run PCIPs collectively expended about $78 million 
as of March 31, 2011, and HHS expended almost $26 million for the 
federally run PCIP and about $1.6 million for its own administrative 
expenses, which together represented about 2 percent of the total $5 
billion appropriation. (See table 3.) Related to lower-than-expected 
enrollment, expenditures have been significantly lower than 
projections. State-run PCIPs had initially projected that they would 
collectively spend about $123 million in calendar year 2010 and over 
$644 million in 2011. Initial spending projections for the federally 
run PCIP were nearly $71 million in fiscal year 2010 and over $555 
million in fiscal year 2011. While spending varied across states, 
according to CCIIO officials, it is too soon to predict whether they 
will need to reallocate funds. See appendix IV for additional 
information on state-level PCIP expenditures. 

Table 3: Expenditures for State-and Federally Run PCIPs, through March 
31, 2011: 

PCIP type: State-run; 
Paid claims: $81,338,650; 
Paid administrative expenses[A]: $19,620,486; 
Total expenses (paid claims and administrative expenses): $100,959,136; 
Premium revenue: $22,622,210; 
Expenditures net of premium revenue: $78,336,926. 

PCIP type: Federally run; 
Paid claims: $27,360,116; 
Paid administrative expenses[A]: $5,267,351; 
Total expenses (paid claims and administrative expenses): $32,627,467; 
Premium revenue: $6,824,441; 
Expenditures net of premium revenue: $25,803,026. 

Source: HHS. 

[A] Administrative expenses for state-run PCIPs include fees for 
claims processing, eligibility screening, and personnel and marketing 
costs, among other expenses. Administrative expenses for the federally 
run PCIP include GEHA's administrative expenses and payments to OPM. 
HHS does not track administrative expenses by state in the federally 
run program. 

[End of table] 

On average, state-run PCIPs spent about 19 percent of their total 
expenditures on administrative expenses as of March 31, 2011. In sum, 
state-run PCIPs spent the most on marketing, eligibility screening, 
claims processing, personnel costs, and "other" costs, which included 
such expenses as case and utilization management, consultant services, 
audit fees, and pharmacy benefits management. According to state PCIP 
officials we spoke to, it is expected that administrative expenditures 
as a percentage of program spending will drop to below 10 percent of 
total expenditures over the lifetime of the program that was 
established in the interim final rule. 

Administrative expenditures by the federally run PCIP were incurred by 
federal agencies and GEHA, and represented about 16 percent of its 
total spending as of March 31, 2011. Specifically, OPM received 
interagency payments totaling $2.2 million to manage the daily 
operations with GEHA and NFC, though according to CCIIO officials, OPM 
had only expended a portion of the funds and will return any unused 
funds to HHS. NFC is authorized to receive up to $63.7 million through 
fiscal year 2011 to conduct eligibility screening and premium 
collection, though as of March 31, 2011, the agency had not withdrawn 
any funds from HHS. Administrative expenses also included payments to 
GEHA to reimburse its incurred costs for such items as claims 
processing, customer service, and member materials.[Footnote 45] In 
addition, GEHA received $865,000 in payment for its contractual fixed 
award fee, which was set at 5 percent of projected administrative 
costs.[Footnote 46] Due to lower than expected enrollment, actual 
administrative costs were only 13 percent of projections in 2010, and 
thus projections were revised significantly downward for 2011 to about 
$6 million with a fixed award fee of $296,400.[Footnote 47] 

Federal Oversight Activities Intended to Ensure Compliance with PCIP 
Program Requirements Are in Place or Being Planned: 

Contained in the contracts CCIIO established with states and GEHA are 
provisions intended to help CCIIO assure program requirements are met. 
Three federal agencies--CCIIO, OPM, and HHS Office of Inspector 
General (OIG)--are currently engaged in or planning oversight 
activities. 

CCIIO Established Contracts Intended to Ensure Key Program 
Requirements Are Met: 

The contracts HHS signed with states and GEHA to provide PCIP coverage 
are a primary means to ensure that the state-and federally run PCIPs 
are implemented efficiently and as intended. 

State-run PCIP contracts: 

For state-run PCIPs, CCIIO developed a model contract requiring 
states, or their non-profit designees implementing the PCIP on their 
behalf, to conduct key activities consistent across all states. 
[Footnote 48] The contracts formalized and operationalized the federal 
requirements established in PPACA and the interim final rule. For 
example, state-run PCIPs are contractually required to: 

* verify that the enrollee meets all PCIP eligibility criteria; 

* implement disease and utilization management procedures to ensure 
enrollees receive necessary but cost-effective care; 

* establish a detailed claims database that tracks each covered 
service; 

* develop operating procedures to detect and report to CCIIO 
incidences of fraud, waste, abuse, and insurer dumping; 

* notify CCIIO if enrollment reaches 75 percent of projected levels or 
if the state expects its expenses to exceed its allotted funding, and 
develop a mitigation strategy to control costs, which may include 
raising premiums, reducing benefits, or capping enrollment, as 
approved by CCIIO; 

* submit monthly cost reports--certified as being accurate and 
complete--with information on administrative expenses, paid claims, 
premiums collected, and withdrawals from HHS; 

* provide CCIIO with an independently audited financial report 
detailing all PCIP finances by June 30 of each year, 2011 through 
2013, in accordance with the state's standard accounting practices or 
generally accepted accounting principles. 

Additionally, states with existing high-risk pools were required to 
segregate PCIP funding from expenditures associated with the operation 
of the existing pool, and to comply with the maintenance of effort 
requirement that they maintain funding for their existing high-risk 
pools. CCIIO required that states include in their proposals a 
description of how they would comply with the maintenance of effort 
requirement and stipulated in the signed contracts that any state-run 
PCIP shall notify the agency of any changes in the state's funding 
levels or methods of the existing pool.[Footnote 49] 

Federally run PCIP contract: 

For the federally run PCIP, GEHA was generally subject to contractual 
requirements similar to those applied to state-run PCIPs, such as 
implementing disease and utilization management, reporting cases of 
fraud or insurer dumping, and submitting regular cost reports. As do 
the state-run PCIPs, GEHA is also required to submit independently 
audited financial statements each year. Notable differences from the 
state PCIP contracts included provisions related to periodic data 
reporting and reporting of fraud, waste, and abuse. Rather than the 
monthly cost reports required of state-run PCIPs, GEHA is required to 
report similar information biweekly, including claims and 
administrative expenses and a reconciliation of expenditures to 
withdrawals from HHS. Regarding fraud, waste and abuse, HHS stipulated 
additional requirements for GEHA--specifically that it would annually 
(by March 31) report detailed information on the disposition and 
dollar amounts associated with any identified cases. In the first such 
report required, GEHA identified one active case. 

Three Federal Agencies Are Engaged in or Planning Future Oversight 
Activities: 

CCIIO is engaged in or planning a range of PCIP oversight activities. 
While ultimately responsible for the entire program, CCIIO also relies 
on OPM in its capacity as administrator of the contract with GEHA to 
perform oversight. Additionally, the OIG is considering its role. 

CCIIO, in its role directly overseeing state-run PCIPs, relies on 
several mechanisms to monitor their compliance and performance. For 
example, according to CCIIO officials, the agency uses the data 
provided by state-run PCIPs in their monthly reports to conduct 
comparisons between projected and actual costs, and reported 
withdrawals of federal funds. According to CCIIO officials, the agency 
also conducts a more formal annual reconciliation in March of each 
year to compare state-reported claims and state-reported withdrawals 
with records of actual withdrawals from HHS's Payment Management 
System. CCIIO notifies any state with identified discrepancies, asking 
them to correct or clarify the difference. For example, as part of its 
first reconciliation, CCIIO identified a small number of states for 
which reported withdrawals did not match records from HHS's Payment 
Management System in a given month. In addition, CCIIO officials said 
they will examine the independently audited financial statements each 
state-run PCIP is required to provide by June 30th of each year. In 
addition to financial audits, CCIIO officials stated that they are 
developing a performance audit strategy, which will include oversight 
of enrollment, disenrollment, spending as a percentage of allocated 
funds, and other performance metrics. To identify which states to 
review, CCIIO officials told us they will conduct a risk assessment of 
state-run PCIPs based on such factors as enrollment, premium revenue, 
claims expenditures, and applicability of the maintenance of effort 
provision. 

OPM, as the agency overseeing GEHA's day-to-day operation of the 
federally run PCIP, reviews GEHA's compliance with contractual 
requirements and its financial reports. According to OPM officials, 
they monitor GEHA's daily reimbursements from HHS and request detailed 
information when needed to explain any unusually high claims. OPM also 
plans to review the annual independently audited financial report to 
compare claims and administrative expenses to the withdrawal of 
federal funds. OPM is also responsible for reviewing GEHA's reported 
performance measures and determining the amount of its incentive award 
fee. While GEHA's performance is self-reported, the systems it relies 
on to calculate performance will be evaluated by an independent 
auditor as part of its annual financial audit, according to OPM 
officials. 

Finally, the OIG has authority to initiate reviews of state or federal 
PCIPs at its discretion, per the signed contracts with state PCIPs and 
GEHA. Although still in the planning phase, OIG included in its fiscal 
year 2011 work plan an evaluation of the methods used across the PCIP 
program (state and federal) to prevent and identify fraudulent health 
care claims. An OIG official told us in May 2011 that it is 
reconsidering whether to conduct the audit given lower than expected 
enrollment in the program. 

Agency Comments: 

We provided a draft of this report to HHS for comment, and received a 
written response, which is included in this report as appendix V. In 
commenting on the draft, HHS emphasized our findings addressing its 
recent and planned efforts to increase enrollment by expanding 
outreach activities, providing additional ways for applicants to 
demonstrate eligibility, and reducing premiums. Regarding our finding 
that administrative costs incurred by the federally run and some state-
run programs have exceeded 10 percent of total expenditures during the 
first year, HHS said that it anticipates administrative costs will 
average 10 percent or less of total expenditures over the life of the 
program as required by the interim final rule, and will continue to 
monitor those costs closely.[Footnote 50] HHS also provided technical 
comments, which we incorporated as appropriate. 

As arranged with your office, unless you publicly announce the 
contents of this report earlier, we plan no further distribution until 
30 days after its issuance date. At that time, we will send copies of 
this report to the Secretary of Health and Human Services, the 
Administrator of the Centers for Medicare & Medicaid Services, and 
other interested parties. In addition, the report will be available at 
no charge on the GAO web site at [hyperlink, http://www.gao.gov]. 

If you or your staff members have any questions about this report, 
please contact me at (202) 512-7114 or dickenj@gao.gov. Contact points 
for our Offices of Congressional Relations and Public Affairs may be 
found on the last page of this report. GAO staff who made major 
contributions to this report are listed in appendix VI. 

Sincerely yours, 

Signed by: 

John E. Dicken: 
Director, Health Care: 

[End of section] 

Appendix I: Pre-Existing Condition Insurance Plan (PCIP) Cost Sharing 
Features by State, 2011: 

State-run PCIPs: 

State: Alaska; 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $1,500; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $3,000; 
Lifetime limit: $3 Million. 

State: Arkansas; 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $1,000; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $2,000; 
Lifetime limit: $1 Million. 

State: California; 
Date PCIP first became effective: 10/25/2010; 
In-network medical deductible: $1,500; 
In-network prescription deductible: $500[A]; 
In-network coinsurance: 15%; 
In-network out-of-pocket limit: $2,500; 
Lifetime limit: Unlimited. 

State: Colorado; 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $2,500; 
In-network prescription deductible: $500[A]; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: $1 Million. 

State: Connecticut; 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $1,250; 
In-network prescription deductible: $250; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $4,250; 
Lifetime limit: $1.5 Million. 

State: Illinois (2 plans); 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $1,000; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950[C]; 
Lifetime limit: $5 Million. 

State: Illinois; 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $2,000[B]; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950[C]; 
Lifetime limit: $5 Million. 

State: Iowa; 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $1,000; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $2,500; 
Lifetime limit: $3 Million. 

State: Kansas; 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $2,500; 
In-network prescription deductible: N/A; 
In-network coinsurance: 30%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: Unlimited. 

State: Maine (2 plans); 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $1,750; 
In-network prescription deductible: N/A; 
In-network coinsurance: 30%; 
In-network out-of-pocket limit: $5,600; 
Lifetime limit: Unlimited. 

State: Maine; 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $2,500[B]; 
In-network prescription deductible: N/A; 
In-network coinsurance: 30%; 
In-network out-of-pocket limit: $3,500; 
Lifetime limit: Unlimited. 

State: Maryland (2 plans); 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $500; 
In-network prescription deductible: $100; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,000; 
Lifetime limit: $2 Million. 

State: Maryland; 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $1,500; 
In-network prescription deductible: N/A; 
In-network coinsurance: 0%; 
In-network out-of-pocket limit: $1,500; 
Lifetime limit: $2 Million. 

State: Michigan (3 plans); 
Date PCIP first became effective: 10/1/2010; 
In-network medical deductible: $1,000; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: Unlimited. 

State: Michigan; 
Date PCIP first became effective: 10/1/2010; 
In-network medical deductible: $2,500; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: Unlimited. 

State: Michigan; 
Date PCIP first became effective: 10/1/2010; 
In-network medical deductible: $3,500; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: Unlimited. 

State: Missouri (3 plans); 
Date PCIP first became effective: 8/15/2010; 
In-network medical deductible: $1,000[B]; 
In-network prescription deductible: $100; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: $1 Million. 

State: Missouri; 
Date PCIP first became effective: 8/15/2010; 
In-network medical deductible: $2,500; 
In-network prescription deductible: $100; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: $1 Million. 

State: Missouri; 
Date PCIP first became effective: 8/15/2010; 
In-network medical deductible: $5,000; 
In-network prescription deductible: $100; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: $1 Million. 

State: Montana; 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $2,500; 
In-network prescription deductible: N/A; 
In-network coinsurance: 30%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: $2 Million. 

State: New Hampshire (3 plans); 
Date PCIP first became effective: 7/1/2010; 
In-network medical deductible: $2,000; 
In-network prescription deductible: 500; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,000; 
Lifetime limit: Unlimited. 

State: New Hampshire; 
Date PCIP first became effective: 7/1/2010; 
In-network medical deductible: $1,000; 
In-network prescription deductible: 500; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $3,500; 
Lifetime limit: Unlimited. 

State: New Hampshire; 
Date PCIP first became effective: 7/1/2010; 
In-network medical deductible: $2,500[B]; 
In-network prescription deductible: 500; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,000; 
Lifetime limit: Unlimited. 

State: New Jersey; 
Date PCIP first became effective: 8/15/2010; 
In-network medical deductible: $2,500; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%[D]; 
In-network out-of-pocket limit: $5,000; 
Lifetime limit: Unlimited. 

State: New Jersey; 
Date PCIP first became effective: 8/15/2010; 
In-network medical deductible: 0[B]; 
In-network prescription deductible: N/A; 
In-network coinsurance: 0%[D]; 
In-network out-of-pocket limit: $5,000; 
Lifetime limit: Unlimited. 

State: New Jersey; 
Date PCIP first became effective: 8/15/2010; 
In-network medical deductible: $2,500; 
In-network prescription deductible: N/A; 
In-network coinsurance: 10%[D]; 
In-network out-of-pocket limit: $5,000; 
Lifetime limit: Unlimited. 

State: New Mexico (3 plans); 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $500[B]; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950[C]; 
Lifetime limit: Unlimited. 

State: New Mexico; 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $1,000; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950[C]; 
Lifetime limit: Unlimited. 

State: New Mexico; 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $2,000; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950[C]; 
Lifetime limit: Unlimited. 

State: New York; 
Date PCIP first became effective: 10/1/2010; 
In-network medical deductible: 0; 
In-network prescription deductible: N/A; 
In-network coinsurance: 0%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: Unlimited. 

State: North Carolina (4 plans); 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $1,000; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: $1 Million. 

State: North Carolina; 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $2,500; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: $1 Million. 

State: North Carolina; 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $3,500[B]; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: $1 Million. 

State: North Carolina; 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $4,500; 
In-network prescription deductible: N/A; 
In-network coinsurance: 0%; 
In-network out-of-pocket limit: $4,500; 
Lifetime limit: $1 Million. 

State: Ohio (2 plans); 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $1,500[B]; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950[C]; 
Lifetime limit: Unlimited. 

State: Ohio; 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $2,500; 
In-network prescription deductible: 150[A]; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950[C]; 
Lifetime limit: Unlimited. 

State: Oklahoma; 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $2,000; 
In-network prescription deductible: 200; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950[C]; 
Lifetime limit: $1 Million. 

State: Oregon (2 plans); 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $500[B]; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950[C]; 
Lifetime limit: $2 Million. 

State: Oregon; 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $750; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950[C]; 
Lifetime limit: $2 Million. 

State: Pennsylvania; 
Date PCIP first became effective: 10/1/2010; 
In-network medical deductible: $1,000; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,000; 
Lifetime limit: Unlimited. 

State: Rhode Island; 
Date PCIP first became effective: 9/15/2010; 
In-network medical deductible: $1,000; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $3,000; 
Lifetime limit: Unlimited. 

State: South Dakota; 
Date PCIP first became effective: 7/15/2010; 
In-network medical deductible: $2,000; 
In-network prescription deductible: N/A; 
In-network coinsurance: 25%; 
In-network out-of-pocket limit: $5,750[C]; 
Lifetime limit: Unlimited. 

State: Utah (4 plans); 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $500; 
In-network prescription deductible: $150; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950[C]; 
Lifetime limit: $1.5 Million. 

State: Utah; 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $1,000; 
In-network prescription deductible: $250; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950[C]; 
Lifetime limit: $1.5 Million. 

State: Utah; 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $2,500; 
In-network prescription deductible: $500; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950[C]; 
Lifetime limit: $1.5 Million. 

State: Utah; 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $5,000[B]; 
In-network prescription deductible: N/A; 
In-network coinsurance: 0%; 
In-network out-of-pocket limit: $5,000; 
Lifetime limit: $1.5 Million. 

State: Washington; 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $500; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $1,500[C]; 
Lifetime limit: Unlimited. 

State: Washington; 
Date PCIP first became effective: 9/1/2010; 
In-network medical deductible: $2,500[B]; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950[C]; 
Lifetime limit: Unlimited. 

State: Wisconsin (4 plans); 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $500; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $3,500[C]; 
Lifetime limit: $2 Million. 

State: Wisconsin; 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $1,000; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $4,000[C]; 
Lifetime limit: $2 Million. 

State: Wisconsin; 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $2,500; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,500[C]; 
Lifetime limit: $2 Million. 

State: Wisconsin; 
Date PCIP first became effective: 8/1/2010; 
In-network medical deductible: $3,500[B]; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950[C]; 
Lifetime limit: $2 Million. 

Federally run PCIP: 

State: 24 States[E] (3 plans in each state[G]; 
Date PCIP first became effective: 8/1/2010[F]; 
In-network medical deductible: $2,000[B]; 
In-network prescription deductible: $500; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: Unlimited. 

State: 24 States[E]; 
Date PCIP first became effective: 8/1/2010[F]; 
In-network medical deductible: $1,000; 
In-network prescription deductible: $250; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: Unlimited. 

State: 24 States[E]; 
Date PCIP first became effective: 8/1/2010[F]; 
In-network medical deductible: $2,500; 
In-network prescription deductible: N/A; 
In-network coinsurance: 20%; 
In-network out-of-pocket limit: $5,950; 
Lifetime limit: Unlimited. 

Source: State-and federally run PCIP web sites. 

Legend: N/A = Not applicable: 

[A] This deductible only applies to brand name drugs. 

[B] This was the most popular plan as of March 31, 2011. 

[C] Includes separate out-of-pocket maximums for medical and 
prescription drugs. 

[D] Coinsurance for prescription drugs is 50 percent. 

[E] The 24 states in the federally run PCIP are Alabama, Arizona, 
Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, 
Indiana, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, 
Nebraska, Nevada, North Dakota, South Carolina, Tennessee, Texas, 
Vermont, Virginia, West Virginia, and Wyoming. 

[F] Coverage for the federally run PCIP began in August 2010 in 21 
states, in September 2010 in 2 states, and in October 2010 in 1 state. 

[G] The three plan options are the Standard, Extended, and Health 
Savings Account options, which have annual medical deductibles of 
$2,000, $1,000, and $2,500, respectively. 

[End of table] 

[End of section] 

Appendix II Premiums for the Most Popular Pre-Existing Condition 
Insurance Plans (PCIP) by State, June 2011: 

State-run PCIPs: 

State: Alaska; 
Average monthly premium for a 50 year-old[A]: $1,048; 
Overall monthly premium range: State-run PCIPs: $452-$1,806; 
Number of age bands: 47. 

State: Arkansas; 
Average monthly premium for a 50 year-old[A]: $395[B]; 
Overall monthly premium range: State-run PCIPs: $140-624; 
Number of age bands: 9. 

State: California; 
Average monthly premium for a 50 year-old[A]: $477[C]; 
Overall monthly premium range: State-run PCIPs: $127-652; 
Number of age bands: 12. 

State: Colorado; 
Average monthly premium for a 50 year-old[A]: $406[B,C]; 
Overall monthly premium range: State-run PCIPs: $116-594; 
Number of age bands: 11. 

State: Connecticut; 
Average monthly premium for a 50 year-old[A]: $507; 
Overall monthly premium range: State-run PCIPs: $243-893; 
Number of age bands: 10. 

State: Illinois; 
Average monthly premium for a 50 year-old[A]: $289[B,C]; 
Overall monthly premium range: State-run PCIPs: $99-526; 
Number of age bands: 28. 

State: Iowa; 
Average monthly premium for a 50 year-old[A]: $398[B]; 
Overall monthly premium range: State-run PCIPs: $156-622; 
Number of age bands: 49. 

State: Kansas; 
Average monthly premium for a 50 year-old[A]: $375[B,C]; 
Overall monthly premium range: State-run PCIPs: $133-646; 
Number of age bands: 48. 

State: Maine; 
Average monthly premium for a 50 year-old[A]: $647[C,D]; 
Overall monthly premium range: State-run PCIPs: $439-658; 
Number of age bands: 8. 

State: Maryland; 
Average monthly premium for a 50 year-old[A]: $274; 
Overall monthly premium range: State-run PCIPs: $141-354; 
Number of age bands: 9. 

State: Michigan; 
Average monthly premium for a 50 year-old[A]: $447; 
Overall monthly premium range: State-run PCIPs: $172-687; 
Number of age bands: 10. 

State: Missouri; 
Average monthly premium for a 50 year-old[A]: $544; 
Overall monthly premium range: State-run PCIPs: $195-780; 
Number of age bands: 8. 

State: Montana; 
Average monthly premium for a 50 year-old[A]: $434; 
Overall monthly premium range: State-run PCIPs: $171-681; 
Number of age bands: 48. 

State: New Hampshire; 
Average monthly premium for a 50 year-old[A]: $396[B]; 
Overall monthly premium range: State-run PCIPs: $152-605; 
Number of age bands: 47. 

State: New Jersey; 
Average monthly premium for a 50 year-old[A]: $531; 
Overall monthly premium range: State-run PCIPs: $311-836; 
Number of age bands: 10. 

State: New Mexico; 
Average monthly premium for a 50 year-old[A]: $465[D]; 
Overall monthly premium range: State-run PCIPs: $140-596; 
Number of age bands: 48. 

State: New York; 
Average monthly premium for a 50 year-old[A]: $392[C]; 
Overall monthly premium range: State-run PCIPs: $362-421; 
Number of age bands: 1. 

State: North Carolina; 
Average monthly premium for a 50 year-old[A]: $285[B]; 
Overall monthly premium range: State-run PCIPs: $97-388; 
Number of age bands: 51. 

State: Ohio; 
Average monthly premium for a 50 year-old[A]: $349[B,C]; 
Overall monthly premium range: State-run PCIPs: $101-475; 
Number of age bands: 62. 

State: Oklahoma; 
Average monthly premium for a 50 year-old[A]: $327[B]; 
Overall monthly premium range: State-run PCIPs: $121-524; 
Number of age bands: 28. 

State: Oregon; 
Average monthly premium for a 50 year-old[A]: $649; 
Overall monthly premium range: State-run PCIPs: $263-783; 
Number of age bands: 12. 

State: Pennsylvania; 
Average monthly premium for a 50 year-old[A]: $283; 
Overall monthly premium range: State-run PCIPs: $283; 
Number of age bands: 1. 

State: Rhode Island; 
Average monthly premium for a 50 year-old[A]: $439; 
Overall monthly premium range: State-run PCIPs: $200-897; 
Number of age bands: 11. 

State: South Dakota; 
Average monthly premium for a 50 year-old[A]: $456[B]; 
Overall monthly premium range: State-run PCIPs: $141-626; 
Number of age bands: 11. 

State: Utah; 
Average monthly premium for a 50 year-old[A]: $240; 
Overall monthly premium range: State-run PCIPs: $127-382; 
Number of age bands: 10. 

State: Washington; 
Average monthly premium for a 50 year-old[A]: $514[B]; 
Overall monthly premium range: State-run PCIPs: $183-715; 
Number of age bands: 11. 

State: Wisconsin; 
Average monthly premium for a 50 year-old[A]: $277; 
Overall monthly premium range: State-run PCIPs: $100-398; 
Number of age bands: 10. 

Federally run PCIP: 

State: Alabama; 
Average monthly premium for a 50 year-old[A]: $419; 
Overall monthly premium range: State-run PCIPs: $183-$583; 
Number of age bands: 5. 

State: Arizona; 
Average monthly premium for a 50 year-old[A]: $400; 
Overall monthly premium range: State-run PCIPs: $174-557; 
Number of age bands: 5. 

State: Delaware; 
Average monthly premium for a 50 year-old[A]: $416; 
Overall monthly premium range: State-run PCIPs: $181-578; 
Number of age bands: 5. 

State: District of Columbia; 
Average monthly premium for a 50 year-old[A]: $396; 
Overall monthly premium range: State-run PCIPs: $173-551; 
Number of age bands: 5. 

State: Florida; 
Average monthly premium for a 50 year-old[A]: $450; 
Overall monthly premium range: State-run PCIPs: $196-626; 
Number of age bands: 5. 

State: Georgia; 
Average monthly premium for a 50 year-old[A]: $400; 
Overall monthly premium range: State-run PCIPs: $174-557; 
Number of age bands: 5. 

State: Hawaii; 
Average monthly premium for a 50 year-old[A]: $267; 
Overall monthly premium range: State-run PCIPs: $116-371; 
Number of age bands: 5. 

State: Idaho; 
Average monthly premium for a 50 year-old[A]: $305; 
Overall monthly premium range: State-run PCIPs: $133-424; 
Number of age bands: 5. 

State: Indiana; 
Average monthly premium for a 50 year-old[A]: $385; 
Overall monthly premium range: State-run PCIPs: $168-536; 
Number of age bands: 5. 

State: Kentucky; 
Average monthly premium for a 50 year-old[A]: $377; 
Overall monthly premium range: State-run PCIPs: $164-525; 
Number of age bands: 5. 

State: Louisiana; 
Average monthly premium for a 50 year-old[A]: $393; 
Overall monthly premium range: State-run PCIPs: $171-546; 
Number of age bands: 5. 

State: Massachusetts; 
Average monthly premium for a 50 year-old[A]: $416; 
Overall monthly premium range: State-run PCIPs: $181-578; 
Number of age bands: 5. 

State: Minnesota; 
Average monthly premium for a 50 year-old[A]: $358; 
Overall monthly premium range: State-run PCIPs: $156-498; 
Number of age bands: 5. 

State: Mississippi; 
Average monthly premium for a 50 year-old[A]: $343; 
Overall monthly premium range: State-run PCIPs: $149-477; 
Number of age bands: 5. 

State: Nebraska; 
Average monthly premium for a 50 year-old[A]: $381; 
Overall monthly premium range: State-run PCIPs: $166-530; 
Number of age bands: 5. 

State: Nevada; 
Average monthly premium for a 50 year-old[A]: $416; 
Overall monthly premium range: State-run PCIPs: $181-578; 
Number of age bands: 5. 

State: North Dakota; 
Average monthly premium for a 50 year-old[A]: $305; 
Overall monthly premium range: State-run PCIPs: $133-424; 
Number of age bands: 5. 

State: South Carolina; 
Average monthly premium for a 50 year-old[A]: $374; 
Overall monthly premium range: State-run PCIPs: $163-520; 
Number of age bands: 5. 

State: Tennessee; 
Average monthly premium for a 50 year-old[A]: $374; 
Overall monthly premium range: State-run PCIPs: $163-520; 
Number of age bands: 5. 

State: Texas; 
Average monthly premium for a 50 year-old[A]: $400; 
Overall monthly premium range: State-run PCIPs: $174-557; 
Number of age bands: 5. 

State: Vermont; 
Average monthly premium for a 50 year-old[A]: $339; 
Overall monthly premium range: State-run PCIPs: $148-472; 
Number of age bands: 5. 

State: Virginia; 
Average monthly premium for a 50 year-old[A]: $358; 
Overall monthly premium range: State-run PCIPs: $156-498; 
Number of age bands: 5. 

State: West Virginia; 
Average monthly premium for a 50 year-old[A]: $324; 
Overall monthly premium range: State-run PCIPs: $141-451; 
Number of age bands: 5. 

State: Wyoming; 
Average monthly premium for a 50 year-old[A]: $290; 
Overall monthly premium range: State-run PCIPs: $126-403; 
Number of age bands: 5. 

Source: State-and federally run PCIP web sites. 

Note: On May 31, 2011, HHS announced in a news release that it would 
reduce PCIP premiums in 18 states with a federally run PCIP beginning 
July 1, in order to more closely align premiums with each state's 
individual health insurance market. 

[A] For states with multiple PCIP plans, the premium of the most 
popular plan is shown; for states that varied premiums by region, the 
average premium was calculated across all regions. 

[B] Premiums varied by smoking status in this state and we show the 
premium for a nonsmoker. 

[C] Premiums varied by region in this state. 

[D] Individuals in New Mexico with incomes below 400 percent of the 
federal poverty level could receive premium discounts ranging from 25 
to 75 percent using state funds. Individuals in Maine with incomes 
below 300 percent of the federal poverty level were also eligible for 
state-funded premium subsidies. 

[End of table] 

[End of section] 

Appendix III: Criteria for Demonstrating a Pre-Existing Condition by 
State, June 2011: 

State-run Pre-Existing Condition Insurance Plans (PCIP): 

State: Alaska; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Criteria for Demonstrating a Pre-Existing Condition: Proof of 
exclusionary rider: [Check]; 
Proof of higher premium[B]: [C]; 
Total number of criteria options: 3. 

State: Arkansas; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [D]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [C]; 
Total number of criteria options: 2. 

State: California; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Empty]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Empty]; 
Proof of higher premium[B]: [Check]; 
Total number of criteria options: 2. 

State: Colorado; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Empty]; 
Total number of criteria options: 3. 

State: Connecticut; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Empty]; 
Total number of criteria options: 3. 

State: Illinois; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Check]; 
Total number of criteria options: 4. 

State: Iowa; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: ]C]; 
Total number of criteria options: 3. 

State: Kansas; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [C]; 
Total number of criteria options: 3. 

State: Maine; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Empty]; 
Proof of exclusionary rider: [Empty]; 
Proof of higher premium[B]: [Empty]; 
Total number of criteria options: 1. 

State: Maryland; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Check]; 
Total number of criteria options: 4. 

State: Michigan; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Empty]; 
Total number of criteria options: 3. 

State: Missouri; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check][E]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Check]; 
Total number of criteria options: 4. 

State: Montana; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Empty]; 
Total number of criteria options: 3. 

State: New Hampshire; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Empty]; 
Total number of criteria options: 3. 

State: New Jersey; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check][E]; 
Proof of denial: [Empty]; 
Proof of exclusionary rider: [Empty]; 
Proof of higher premium[B]: [Empty]; 
Total number of criteria options: 1. 

State: New Mexico; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Check]; 
Total number of criteria options: 4. 

State: New York; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Empty]; 
Proof of exclusionary rider: [Empty]; 
Proof of higher premium[B]: [Empty]; 
Total number of criteria options: 1. 

State: North Carolina; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Empty]; 
Total number of criteria options: 3. 

State: Ohio; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Empty]; 
Total number of criteria options: 3. 

State: Oklahoma; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [F]; 
Total number of criteria options: 3. 

State: Oregon; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Empty]; 
Total number of criteria options: 3. 

State: Pennsylvania; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Check]; 
Total number of criteria options: 4. 

State: Rhode Island; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Empty]; 
Proof of exclusionary rider: [Empty]; 
Proof of higher premium[B]: [Empty]; 
Total number of criteria options: 1. 

State: South Dakota; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Empty]; 
Total number of criteria options: 3. 

State: Utah; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Empty]; 
Proof of higher premium[B]: [Empty]; 
Total number of criteria options: 2. 

State: Washington; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [Check]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Empty]; 
Total number of criteria options: 3. 

State: Wisconsin; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [G]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [Check]; 
Total number of criteria options: 3. 

Federally run PCIP: 
State: 24 states[H]; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: [I]; 
Proof of denial: [Check]; 
Proof of exclusionary rider: [Check]; 
Proof of higher premium[B]: [J]; 
Total number of criteria options: 2. 

State: Total number of states that allowed each criterion; 
Criteria for Demonstrating a Pre-Existing Condition: 
Pre-existing condition diagnosis[A]: 24; 
Proof of denial: 47; 
Proof of exclusionary rider: 45; 
Proof of higher premium[B]: 9; 
Total number of criteria options: [Empty]. 

Source: State-and federally run PCIP web sites. 

Note: On May 31, 2011, HHS announced in a news release that beginning 
July 1, 2011, applicants living in the 24 states in the federally run 
PCIP would be able to demonstrate their pre-existing condition by 
submitting a letter from a doctor, physician assistant, or nurse 
practitioner stating that they have or, at any time in the past, had a 
medical condition, disability, or illness. 

[A] Most states required documentation of a diagnosed medical 
condition that is included on the state's list of presumptive 
conditions, although some considered documentation of conditions not 
on the list on a case-by-case basis. 

[B] States determined how much higher the premium must be compared to 
those offered by the state's PCIP. For instance, New Mexico accepted 
proof of offered coverage with premiums that are at least 25 percent 
higher than the state's standard rate for similar deductible options. 

[C] Children under age 19 in Alaska, Arkansas, Iowa, and certain 
counties in Kansas could meet the criteria for demonstrating a pre- 
existing condition if they were offered plans with premiums at least 
twice as high as the state's current child-only PCIP premiums. 

[D] Children under age 19 in Arkansas could demonstrate their pre- 
existing condition by submitting documentation stating that they have 
received medical advice or treatment from a physician or other 
licensed health care provider for a condition listed on the state's 
pre-existing conditions list. 

[E] Missouri and New Jersey did not have a list of presumptive 
conditions, but did accept provider documentation of a medical 
condition. 

[F] All children under age 19 in Oklahoma who were offered plans with 
premiums at least 125 percent, or more, higher than the state's 
current child-only PCIP premiums could meet the criteria for 
demonstrating a pre-existing condition. 

[G] Wisconsin allowed proof of a diagnosed pre-existing condition only 
in the case of individuals who have tested positive for HIV. 

[H] The 24 states in the federally run PCIP are Alabama, Arizona, 
Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, 
Indiana, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, 
Nebraska, Nevada, North Dakota, South Carolina, Tennessee, Texas, 
Vermont, Virginia, West Virginia, and Wyoming. 

[I] Beginning in February 2011, all children under age 19 in the 24 
federally run PCIP states could demonstrate their pre-existing 
condition by submitting a letter from a doctor, physician assistant, 
or nurse practitioner stating that they have or, at any time in the 
past, had a medical condition, disability, or illness. 

[J] In addition to the 7 state-run PCIPs that allowed proof of higher 
premium, all individuals in two federally run PCIP states-- 
Massachusetts and Vermont--and children under age 19 in all 24 
federally run PCIP states who were offered plans with premiums that 
were at least twice as high as the premium for the Standard plan in 
their respective states would meet the criteria for demonstrating a 
pre-existing condition. 

[End of table] 

[End of section] 

Appendix IV: Enrollment and Expenditures for State-and Federally Run 
Pre-Existing Condition Insurance Plans (PCIP): 

State-run PCIPs: 

State: Alaska[B]; 
Enrollment as of April 30, 2011: 34; 
Federal allocation: $13,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $757,824; 
Administrative expenses paid[A] as of March 31, 2011: $246,942; 
Expenditures net of premium revenue[A] as of March 31, 2011: $894,812. 

State: Arkansas[B]; 
Enrollment as of April 30, 2011: 226; 
Federal allocation: $46,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $611,951; 
Administrative expenses paid[A] as of March 31, 2011: $202,848; 
Expenditures net of premium revenue[A] as of March 31, 2011: $497,301. 

State: California[B]; 
Enrollment as of April 30, 2011: 1,858; 
Federal allocation: $761,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $8,348,162; 
Administrative expenses paid[A] as of March 31, 2011: $4,784,092; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$11,103,972. 

State: Colorado[B]; 
Enrollment as of April 30, 2011: 699; 
Federal allocation: $90,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $6,496,467; 
Administrative expenses paid[A] as of March 31, 2011: $929,205; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$6,136,869. 

State: Connecticut[B]; 
Enrollment as of April 30, 2011: 42; 
Federal allocation: $50,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $351,584; 
Administrative expenses paid[A] as of March 31, 2011: $1,340,169; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$1,617,332. 

State: Illinois[B]; 
Enrollment as of April 30, 2011: 1,261; 
Federal allocation: $196,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $3,452,527; 
Administrative expenses paid[A] as of March 31, 2011: $263,208; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$1,885,563. 

State: Iowa[B]; 
Enrollment as of April 30, 2011: 143; 
Federal allocation: $35,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $812,031; 
Administrative expenses paid[A] as of March 31, 2011: $497,274; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$1,060,870. 

State: Kansas[B]; 
Enrollment as of April 30, 2011: 177; 
Federal allocation: $36,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $2,241,229; 
Administrative expenses paid[A] as of March 31, 2011: $266,156; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$2,193,995. 

State: Maine; 
Enrollment as of April 30, 2011: 14; 
Federal allocation: $17,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $250,927; 
Administrative expenses paid[A] as of March 31, 2011: $7,419; 
Expenditures net of premium revenue[A] as of March 31, 2011: $193,977. 

State: Maryland[B]; 
Enrollment as of April 30, 2011: 348; 
Federal allocation: $85,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $1,980,256; 
Administrative expenses paid[A] as of March 31, 2011: $402,888; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$2,084,889. 

State: Michigan; 
Enrollment as of April 30, 2011: 225; 
Federal allocation: $141,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $1,441,211; 
Administrative expenses paid[A] as of March 31, 2011: $861,769; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$2,080,058. 

State: Missouri[B]; 
Enrollment as of April 30, 2011: 322; 
Federal allocation: $81,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $731,508; 
Administrative expenses paid[A] as of March 31, 2011: $262,450; 
Expenditures net of premium revenue[A] as of March 31, 2011: $474,288. 

State: Montana[B]; 
Enrollment as of April 30, 2011: 214; 
Federal allocation: $16,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $2,224,149; 
Administrative expenses paid[A] as of March 31, 2011: $279,702; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$2,111,073. 

State: New Hampshire[B]; 
Enrollment as of April 30, 2011: 148; 
Federal allocation: $20,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $4,693,580; 
Administrative expenses paid[A] as of March 31, 2011: $340,659; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$4,725,802. 

State: New Jersey; 
Enrollment as of April 30, 2011: 507; 
Federal allocation: $141,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $3,956,621; 
Administrative expenses paid[A] as of March 31, 2011: $81,488; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$3,312,451. 

State: New Mexico[B]; 
Enrollment as of April 30, 2011: 354; 
Federal allocation: $37,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $2,404,543; 
Administrative expenses paid[A] as of March 31, 2011: $280,784; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$2,244,603. 

State: New York; 
Enrollment as of April 30, 2011: 1,075; 
Federal allocation: $297,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $4,606,218; 
Administrative expenses paid[A] as of March 31, 2011: $3,803,323; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$7,443,353. 

State: North Carolina[B]; 
Enrollment as of April 30, 2011: 1,302; 
Federal allocation: $145,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $2,675,089; 
Administrative expenses paid[A] as of March 31, 2011: $1,011,409; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$2,197,524. 

State: Ohio; 
Enrollment as of April 30, 2011: 1,145; 
Federal allocation: $152,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $7,645,708; 
Administrative expenses paid[A] as of March 31, 2011: $508,045; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$6,003,936. 

State: Oklahoma[B]; 
Enrollment as of April 30, 2011: 291; 
Federal allocation: $60,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $1,764,806; 
Administrative expenses paid[A] as of March 31, 2011: $338,719; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$1,666,716. 

State: Oregon[B]; 
Enrollment as of April 30, 2011: 822; 
Federal allocation: $66,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $6,350,982; 
Administrative expenses paid[A] as of March 31, 2011: $307,525; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$4,478,465. 

State: Pennsylvania; 
Enrollment as of April 30, 2011: 3,191; 
Federal allocation: $160,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $9,371,095; 
Administrative expenses paid[A] as of March 31, 2011: $779,413; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$6,350,438. 

State: Rhode Island; 
Enrollment as of April 30, 2011: 115; 
Federal allocation: $13,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $802,808; 
Administrative expenses paid[A] as of March 31, 2011: $133,722; 
Expenditures net of premium revenue[A] as of March 31, 2011: $714,754. 

State: South Dakota[B]; 
Enrollment as of April 30, 2011: 94; 
Federal allocation: $11,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $897,353; 
Administrative expenses paid[A] as of March 31, 2011: $103,300; 
Expenditures net of premium revenue[A] as of March 31, 2011: $733,943. 

State: Utah[B]; 
Enrollment as of April 30, 2011: 286; 
Federal allocation: $40,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $1,652,769; 
Administrative expenses paid[A] as of March 31, 2011: $133,573; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$1,466,687. 

State: Washington[B]; 
Enrollment as of April 30, 2011: 341; 
Federal allocation: $102,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $3,631,932; 
Administrative expenses paid[A] as of March 31, 2011: $668,968; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$3,436,908. 

State: Wisconsin[B]; 
Enrollment as of April 30, 2011: 547; 
Federal allocation: $73,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $1,185,319; 
Administrative expenses paid[A] as of March 31, 2011: $785,435; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$1,226,347. 

State: State-run PCIP totals; 
Enrollment as of April 30, 2011: 15,781; 
Federal allocation: $2,884,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $81,338,650; 
Administrative expenses paid[A] as of March 31, 2011: $19,620,486; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$78,336,926. 

Federally run PCIP: 

State: Alabama[B]; 
Enrollment as of April 30, 2011: 91; 
Federal allocation: $69,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $315,073; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Arizona; 
Enrollment as of April 30, 2011: 457; 
Federal allocation: $129,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $1,825,039; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Delaware; 
Enrollment as of April 30, 2011: 54; 
Federal allocation: $13,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $16,867; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: District of Columbia; 
Enrollment as of April 30, 2011: 21; 
Federal allocation: $9,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $15,662; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Florida[B]; 
Enrollment as of April 30, 2011: 925; 
Federal allocation: $351,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $5,474,757; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Georgia; 
Enrollment as of April 30, 2011: 608; 
Federal allocation: $177,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $1,795,661; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Hawaii; 
Enrollment as of April 30, 2011: 27; 
Federal allocation: $16,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $585,987; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Idaho[B]; 
Enrollment as of April 30, 2011: 47; 
Federal allocation: $24,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $432,367; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Indiana[B]; 
Enrollment as of April 30, 2011: 201; 
Federal allocation: $93,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $974,410; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Kentucky[B]; 
Enrollment as of April 30, 2011: 93; 
Federal allocation: $63,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $318,612; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Louisiana[B]; 
Enrollment as of April 30, 2011: 137; 
Federal allocation: $71,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $426,817; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Massachusetts; 
Enrollment as of April 30, 2011: 1; 
Federal allocation: $77,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $0; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Minnesota[B]; 
Enrollment as of April 30, 2011: 49; 
Federal allocation: $68,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $437,350; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Mississippi[B]; 
Enrollment as of April 30, 2011: 75; 
Federal allocation: $47,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $406,488; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Nebraska[B]; 
Enrollment as of April 30, 2011: 61; 
Federal allocation: $23,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $599,177; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Nevada; 
Enrollment as of April 30, 2011: 181; 
Federal allocation: $61,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $921,964; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: North Dakota[B]; 
Enrollment as of April 30, 2011: 9; 
Federal allocation: $8,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $54,777; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: South Carolina[B]; 
Enrollment as of April 30, 2011: 377; 
Federal allocation: $74,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $2,102,372; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Tennessee[B]; 
Enrollment as of April 30, 2011: 314; 
Federal allocation: $97,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $632,263; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Texas[B]; 
Enrollment as of April 30, 2011: 1,528; 
Federal allocation: $493,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: 10,$175,426; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Vermont; 
Enrollment as of April 30, 2011: 0; 
Federal allocation: $8,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $0; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Virginia; 
Enrollment as of April 30, 2011: 320; 
Federal allocation: $113,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $1,043,431; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: West Virginia[B]; 
Enrollment as of April 30, 2011: 24; 
Federal allocation: $27,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $118,947; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Wyoming[B]; 
Enrollment as of April 30, 2011: 73; 
Federal allocation: $8,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $220,185; 
Administrative expenses paid[A] as of March 31, 2011: N/A; 
Expenditures net of premium revenue[A] as of March 31, 2011: N/A. 

State: Federally run PCIP totals; 
Enrollment as of April 30, 2011: 5,673; 
Federal allocation: $2,119,000,000; 
Claims paid as of March 31, 2011: State-run PCIPs: $28,893,632; 
Administrative expenses paid[A] as of March 31, 2011: $5,267,351; 
Expenditures net of premium revenue[A] as of March 31, 2011: 
$25,803,026. 

Source: GAO analysis of HHS and OPM data. 

Legend: N/A = Not applicable: 

[A] For the federally run PCIP states, administrative expenses and 
federal reimbursements were not available on a state-by-state basis. 

[B] Indicates states with an existing high-risk pool. 

[End of table] 

[End of section] 

Appendix V: Comments from the Department of Health & Human Services: 

Department Of Health & Human Services: 
Office Of The Secretary: 
Assistant Secretary for Legislation: 
Washington, DC 20201: 

July 13, 2011: 

John Dicken: 
Director, Health Care: 
U.S. Government Accountability Office: 
441 G Street N.W. 
Washington, DC 20548: 

Dear Mr. Dicken: 

Attached are comments on the U.S. Government Accountability Office's 
(GAO) draft report entitled, "Pre-Existing Condition Insurance Plans: 
Program Features, Early Enrollment and Spending Trends, and Federal 
Oversight Activities" (GAO 11-662). 

The Department appreciates the opportunity to review this report prior 
to publication. 

Sincerely, 

Signed by: 

Jim R. Esquea: 
Assistant Secretary for Legislation: 

Attachment: 

[End of letter] 

General Comments Of The Department Of Health And Human Services (HHS) 
On The Government Accountability Office's (GAO) Draft Report Entitled, 
"Pre-Existing Condition Insurance Plans: Program Features, Early 
Enrollment And Spending Trends, And Federal Oversight Activities" (GA0-
11-662): 

The Department appreciates the opportunity to review and comment on 
this draft report. 

The Affordable Care Act created the Pre-Existing Condition Insurance 
Plan (PCIP) to help uninsured people with a pre-existing condition get 
high quality care at market prices. PCIP serves as a bridge to 2014, 
when insurers will no longer be allowed to deny coverage to people 
with any pre-existing condition. In 27 States, PCIP coverage is run by 
State-based programs. In the other 23 States and the District of 
Columbia, HHS, with the help of the US Office of Personnel Management 
and the US Department of Agriculture's National Finance Center, runs 
the Pre-Existing Condition Insurance Plan. The Federal Government 
contracts with a national insurance plan to administer benefits in 
those States. For a program that has been in operation for only a 
year, PCIP has succeeded in providing vital insurance and life-saving 
care to tens of thousands of Americans who could not find coverage for 
their conditions. 

In the past year, the Department has employed a number of strategies 
to reach out to eligible individuals and increase enrollment in the 
program. In January of 2011, we began a coordinated outreach effort to 
providers and consumer groups in order to provide information on PCIP 
to patients and other eligible consumers. HHS has built strong 
partnerships with States that have both a PCIP program and a State-run 
High Risk Pool in order to provide the best coverage at market-aligned 
prices to consumers. HHS is also partnering with CMS regional offices 
to expand the reach and number of outreach events. In the month of 
June alone, PCIP was featured at more than 140 events nationwide. 
Finally, HHS announced that beginning in fall 2011, the federally 
administered PCIP will begin paying agents and brokers for 
successfully connecting eligible people with the PCIP program. 
Enrollment continues to grow at a steady pace. 

The Department has taken several steps to make PCIP more affordable 
and accessible. As of July 1, 2011, HHS has improved the affordability 
of the program by cutting premiums in Federal PCIP programs by as much 
as 40 percent in some States. We have also expanded the eligibility 
pathways into PCIP, also effective July 1, 2011, by permitting all 
applicants to demonstrate eligibility by providing a signed letter 
from a healthcare provider. This option was originally made available 
to children under age 19 in February 2011. 

It is important to note that while this report shows that 
administrative costs in some States and in the federally-run program 
may have exceeded 10 percent in the first year of the program, PCIP 
programs incurred substantial start-up costs in this time. The PCIP 
interim final rule places a limit of 10 percent on administrative 
costs over the life of the program. We anticipate that our overall 
administrative costs will be at 10 percent or less by the end of the 
program and continue to monitor these costs closely. 

HHS continues to build on program integrity best practices in order to 
detect any fraud, waste and abuse. By utilizing innovative strategies 
while working within the authority provided by the Affordable Care 
Act, HHS has helped the PCIP program grow from 23 enrolled individuals 
in June of 2010 into a program that provides comprehensive and 
affordable health coverage to over 21,000 Americans. 

[End of section] 

Appendix VI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

John E. Dicken, (202) 512-7114 or DickenJ@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Randy DiRosa, Assistant 
Director; Laura Brogan; Drew Long; Perry Parsons; Said Sariolghalam; 
and George Bogart made key contributions to this report. 

[End of section] 

Footnotes: 

[1] We previously reported that 19 percent of applicants in the 
individual market were denied enrollment and a quarter of insurers had 
denial rates of 40 percent or higher, based on data collected by HHS 
for the first quarter of 2010. See GAO, Private Health Insurance: Data 
on Application and Coverage Denials, [hyperlink, 
http://www.gao.gov/products/GAO-11-268] (Washington, D.C.: Mar 16, 
2011). 

[2] Pub. L. No. 111-148, §1101(g), 124 Stat. 119, 143. The funds are 
available without fiscal year limitation. 

[3] CCIIO was initially located within HHS and was known as the Office 
of Consumer Information and Insurance Oversight. Its name was changed 
to CCIIO in January 2011 when it was transferred to the Centers for 
Medicare & Medicaid Services. 

[4] PPACA establishes new options for individuals to obtain health 
insurance coverage through the Exchanges starting in 2014, when 
insurers cannot deny such coverage for individuals with pre-existing 
conditions. See Pub. L. No. 111-148, Title I, Subtitle D, 124 Stat. 
162 et seq., as amended by § 10104, 124 Stat. 896, et seq. 
Accordingly, PPACA requires HHS to develop procedures to transition 
PCIP enrollees to the Exchanges in 2014. Pub. L. No. 111-148, 
§1101(g)(3)(B), 124 Stat. 143. 

[5] CBO subsequently estimated in June 2010 that if funding were not 
limited to $5 billion, enrollment could reach 700,000 by the end of 
2013 at a cost of up to $15 billion. 

[6] While HHS did not produce its own estimate of total enrollment, 
the agency indicated in its rule establishing PCIP requirements that 
between 200,000 and 400,000 individuals would likely enroll in the 
program. 

[7] For example, The Commonwealth Fund estimated that about 6 million 
individuals were potentially eligible to enroll in a PCIP. See Jean 
Hall and Janice Moore, "Realizing Health Reform's Potential: Pre- 
existing Condition Insurance Plans Created by the Affordable Care Act 
of 2010," The Commonwealth Fund, vol. 100, pub. 1445 (2010). 

[8] Thirty-five states operate high-risk pools that are separate from, 
and predate, the federal PCIP program. These risk pools similarly 
provide coverage for individuals without access to coverage due to a 
pre-existing medical condition, but differ from the PCIP program in 
certain ways. The existing HRPs collectively covered about 208,000 
people as of December 2009. See "Comprehensive Health Insurance for 
High-Risk Individuals: A State-by-State Analysis," Twenty-fourth 
edition, National Association of State Comprehensive Health Insurance 
Plans, 2010/2011. 

[9] NFC is a federal agency within the U.S. Department of Agriculture, 
which is assisting the federally run PCIP with processing applications 
and premium collection. 

[10] Pub. L. No. 111-148, § 1101(a)-(d), 124 Stat. 141-142. Creditable 
coverage is defined for this purpose by §2701(c)(1) of the Public 
Health Service Act as coverage for an individual under: a group health 
plan, health insurance, Medicare Part A or B, Medicaid, the Indian 
Health Service, a state health benefits high-risk pool, the Federal 
Employees Health Benefits Program, the Peace Corps health benefit 
plan, or a public health plan as defined in regulations. 

[11] Eligible PCIP applicants must also be a citizen, national, or 
lawfully present in the United States, as well as a resident of a 
state that falls within the PCIP service area. 

[12] Some individuals without pre-existing conditions may also be 
eligible for their states' HRPs. For example, about 28 percent of 
those enrolled in state HRPs in 2008 were individuals who were 
eligible because their state used its HRP as a mechanism to implement 
the group to individual market portability provision of the Health 
Insurance Portability and Accountability Act of 1996. See GAO, Health 
Insurance: Enrollment, Benefits, Funding, and Other Characteristics of 
State High-Risk Health Insurance Pools, [hyperlink, 
http://www.gao.gov/products/GAO-09-730R] (Washington, D.C.: July 22, 
2009). 

[13] The Children's Health Insurance Program is a joint state and 
federal program for uninsured children in families whose incomes are 
too high for Medicaid, but too low to afford private coverage. 

[14] PCIP allocations ranged from $8 million for North Dakota, 
Vermont, and Wyoming to $761 million for California. CCIIO reserves 
the right to reallocate unused funds to states in future years from 
initial allocations and make adjustments as necessary to eliminate any 
potential deficit due to projected expenses exceeding a state's 
allocation. 

[15] 75 Fed. Reg. 45014 (Jul. 30, 2010)(to be codified at 45 C.F.R. 
Part 152). 

[16] 75 Fed. Reg. 45030-45031 (to be codified at 45 C.F.R. §§ 
152.14(c), 152.15(c), and 152.19(a)). The interim final rule also 
required all PCIPs to exclude certain services, including benefits for 
cosmetic surgery except to restore bodily function or correct a 
deformity; custodial care except for hospice care associated with the 
palliation of terminal illness; in vitro fertilization; abortion 
except when the life of the woman would be endangered or when a 
pregnancy resulted from an act of rape or incest; and experimental 
care except for clinical trials approved by the Food and Drug 
Administration. 75 Fed. Reg. 45031 (to be codified at 45 C.F.R. § 
152.19(b)). 

[17] In this report, we will refer to the 23 states and the District 
of Columbia included in the federally run PCIP as "24 states." 

[18] GEHA was selected from among 14 interested entities, several of 
which did not meet the statutory requirement of being nonprofit. 

[19] These plan options each had different annual deductibles and 
premiums. An HSA is a type of consumer-directed health plan that 
combines a high-deductible health plan with a tax-advantaged savings 
account that enrollees use to pay for a portion of their health 
expenses. 

[20] The Federal Employees Health Benefits Program covered nearly 8 
million federal employees, dependents, and retirees in 2009. 

[21] See 48 C.F.R. § 16.405-2 (2010)(Federal Acquisition Regulation 
§16.405-2). The fixed award fee was set at 5 percent of annual 
projected administrative costs. The incentive award fee was based on 
performance measures such as claims processing timeliness and 
accuracy, care management, and cost containment. 

[22] According to HHS, PCIP coverage was delayed in the three states 
which began in September and October 2010 because they had initially 
told HHS they would operate their own state-run PCIP. 

[23] 75 Fed. Reg. 45032 (to be codified at 45 C.F.R. §§ 152.27 and 
152.28). 

[24] 75 Fed. Reg. 45033 (to be codified at 45 C.F.R. §152.39). 

[25] We define the most popular plans as those with the highest 
enrollment in each state. 

[26] In 2011 the Standard and Extended plans offered separate 
deductibles for medical ($2,000 and $1,000, respectively) and 
prescription expenses ($500 and $250, respectively) whereas the HSA 
plan offered a combined medical and prescription deductible ($2,500). 
In 2010, HHS only offered the HSA plan; however, individuals who were 
enrolled in this plan were given the option to select one of the three 
plans in 2011. For enrollees who did not make a selection, CCIIO 
automatically transferred them into the 2011 Standard plan. 

[27] Where state-run PCIPs offered more than one plan option, the 
coverage limits were generally the same across all plans, except for 
one state for which we present the limits for the most popular plan. 
Similarly, coverage limits were the same for each of the three plans 
offered by the federally run PCIP. 

[28] Premiums were based on rates available as of June 1, 2011. On May 
31, 2011, HHS announced it would reduce PCIP premiums in 18 federally 
run PCIP states, beginning July 1, in order to more closely align 
premiums with each state's individual health insurance market. Premium 
reductions would range from 2 percent in one state to 40 percent in 
six states. See "HHS to Reduce Premiums, Make it Easier for American 
with Pre-Existing Conditions to Get Health Insurance," HHS news 
release (May 31, 2011), accessed June 1, 2011, [hyperlink 
www.hhs.gov/news/press/2011pres/05/20110531b.html]. 

[29] For state-run PCIPs that offered multiple plan options or varied 
premiums by geographic region, we calculated the average premium for a 
50-year-old person across all regions for the most popular plan. If 
the state varied premiums by smoking status, we used premiums for 
nonsmokers. For the federally run PCIP states, we only included 
premiums for the Standard plan, which was the most popular plan in 
2011. To average premiums across multiple states, we did not weight 
the premiums based on enrollment. Because the program is new and many 
states currently have limited enrollment, a weighted average would not 
accurately reflect the range of premiums enrollees face across all 
states. 

[30] Comparable average monthly premiums for a 50-year-old in the HSA 
and Extended plans offered by the federally run PCIP were $385 and 
$498 in 2011, respectively. 

[31] Officials from the states that we interviewed generally described 
their methodologies for determining the standard rates as follows: (1) 
survey top insurance carriers in the state for the rates of benefit 
plans comparable to the PCIP plans; (2) make actuarial adjustments to 
account for differences in factors such as benefits, age bands, and 
regions; and (3) take an average--straight or weighted--of the 
adjusted rates. In contrast, the standard rates for the federally run 
PCIP were based on premiums charged by 24 existing HRPs--specifically, 
by calculating a median of each state's standard rate, adjusted for 
differences in plan benefits and to be age and gender neutral. The 
premiums were then divided into four age bands and adjusted to account 
for geographic cost differences across states. Finally, an estimate of 
per member per month administrative costs was added to the premium 
amounts. 

[32] The denial letter can also be from an insurance agent or broker 
indicating that the applicant is ineligible due to a medical 
condition. Effective with applications received on or after January 
11, 2011, the letter or offer must be dated within 12 months prior to 
the date of application. 

[33] Applicants in Massachusetts and Vermont were eligible if they 
could provide proof of an offered plan within the 12 month period 
prior to their PCIP application that charged premiums at least two 
times the PCIP premiums in their states. This option was available to 
enrollees in Massachusetts and Vermont specifically because these 
states have guaranteed issue laws that prohibit health insurance 
denials based on health status or medical condition. 

[34] Accessed June 1, 2011, [hyperlink, 
http://www.hhs.gov/news/press/2011pres/05/20110531b.html]. This option 
became available for children under age 19 in February 2011. 

[35] The number of required denial letters varied from state to state. 

[36] In these states, applicants were required to provide a letter 
from a health care provider to qualify their condition based on a 
presumptive list of pre-existing conditions. Some states allowed 
applicants to submit letters from providers that documented a medical 
condition not on the state's condition list, for which the state would 
review the condition on a case-by-case basis. Some states, however, 
did not have a condition list, in which case, the state considered a 
provider's letter documenting a diagnosed condition. 

[37] States determined how much higher the premium must be compared to 
those offered by the state's PCIP. For instance, New Mexico accepted 
proof of offered coverage with premiums that are at least 25 percent 
higher than the state's standard rate for similar deductible options. 

[38] State PCIP enrollment estimates were provided for the calendar 
year ending December 31, 2010, while estimates for the federally run 
PCIP were based on the fiscal year ending September 30--39,000 average 
monthly enrollment in fiscal year 2010 and 78,000 for fiscal year 2011. 

[39] Estimates of the uninsured populations were based the U.S. Census 
Bureau's Current Population Survey, 2010 Annual Social and Economic 
Supplement. 

[40] Based on the state-run PCIPs that had accurate demographic data, 
about 53 percent were female and 59 percent were age 45 or older, as 
of March 2011. Similarly, in the federally run PCIP, 52 percent of 
enrollees were female, and 67 percent were age 45 or over. 

[41] Existing high-risk pools collectively covered about 208,000 
people in 2009. 

[42] Premiums for a 50-year-old in the 2011 Standard and HSA plans 
were 19 and 15 percent lower, respectively, than the single plan 
offered in 2010, while premiums for the Extended plan were 10 percent 
higher. The new child-only premiums were 46 and 44 percent lower for 
the Standard and HSA plans, respectively, and 27 percent lower for the 
Extended plan in 2011, compared to what they would have paid in 2010. 

[43] The Social Security Administration has included a paragraph about 
the PCIP program in its mailings to all applicants for Social Security 
Disability Income and Supplemental Security Income. It received over 
3.2 million disability applications in fiscal year 2010. Most 
individuals entitled to disability income must wait 2 years before 
qualifying for Medicare, during which time they could be eligible for 
a PCIP. 

[44] See "Uninsured Americans with Pre-existing Conditions Continue to 
Gain Coverage through Affordable Care Act," HHS news release, issued 
February 10, 2011, accessed February 11, 2011, [hyperlink, 
http://www.hhs.gov/news/press/2011pres/02/20110210a.html]. 

[45] The terms of the federal contract prohibit GEHA from paying for 
advertising. 

[46] Award payments were based on projected, rather than actual, costs 
in order to deter fraudulent over-runs by the contractor. 

[47] In addition to the fixed award fee, GEHA was also authorized to 
receive an incentive award fee based on plan performance. According to 
the original contract, GEHA could earn up to an additional 5 percent 
of annual projected administrative costs ($791,000 in 2010), based 
upon 21 performance measures, such as claims processing timeliness and 
accuracy, care management, and cost containment. However, given the 
lower than expected enrollment and incurred administrative expenses, 
the terms of the contract were renegotiated, and GEHA was paid an 
incentive award of $79,100 for 2010. According to OPM officials, the 
difference was placed into a "bonus pool" that GEHA may receive in 
future years based on performance. 

[48] In addition, each state's approved PCIP proposal was incorporated 
into the contracts by reference. 

[49] CCIIO gave states latitude in determining how they could satisfy 
the maintenance of effort provision. For example, a state could 
maintain its total or per capita funding of the existing HRP, or 
maintain the mechanism by which it collects funds from insurance 
carriers in the state. The state must attain approval from the 
Secretary of HHS to alter the funding mechanism. 

[50] See 75 Fed. Reg. 45032 (to be codified at 45 C.F.R. § 152.32). 

[End of section] 

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