Rich Daly | February 16, 2017
Feb. 16—Proposed regulations that aim to stabilize the government-run health insurance marketplaces are expected to provide some assistance to plans sold on the marketplaces. But more work is needed to prevent further unraveling.
Amid additional high-profile insurer departures from the marketplaces created by the Affordable Care Act (ACA), the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to change enrollment rules, network adequacy requirements, and the timeline for qualified health plan certification.
“This proposal will take steps to stabilize the Marketplace, provide more flexibility to states and insurers, and give patients access to more coverage options,” Patrick Conway, MD, acting administrator of CMS, said in a release. The changes “will help protect Americans enrolled in the individual and small group health insurance markets while future reforms are being debated.”
Specific changes proposed in the rule include:
- Expanding pre-enrollment eligibility verification during special enrollment periods (SEPs) in the federal marketplaces
- Allowing insurers to collect premiums for prior unpaid coverage before reenrolling a patient for the following year
- Adjusting the de minimis range used for determining the level of coverage
- Deferring to state reviews of network adequacy
Another major change was that the open-enrollment period for the 2018 coverage year will be half as long at the last one, running from Nov. 1 to Dec. 15.
CMS said it plans to revise the timeline for marketplace plan certification and rate review for plan year 2018. The revised timeline would provide insurers with additional time to implement proposed changes that are finalized prior to the 2018 coverage year.
State policy-form filing deadlines—generally in May—for plans to be sold next year in the marketplaces had led insurer advocates to urge implementation of rules changes by the end of March to keep more plans from dropping out of the marketplaces and to prevent rates from further spiking.
Allowing insurers to reduce the de minimis coverage provided in plans is constructive and may encourage plans to stay in the market, said Dudley Morris a senior adviser for BDC Advisors. However, unless the rule changes result in far lower premiums, they won’t help draw in enough new customers to stabilize the ACA marketplaces.
It’s doubtful that the proposed changes will draw new insurers to the marketplaces, which Humana pulled out of entirely for 2018 while Molina reported $110 million in losses and raised the possibility of withdrawal.
“If Molina, which knows how to make money on Medicaid, can’t turn a profit in the exchanges, it’s hard to believe there will be many new market entrants,” Morris said. “Once existing payers like United and Aetna leave, they won’t return.”
Creation of the proposed rule predated Senate confirmation of HHS Secretary Tom Price. The ACA authorizes the secretary to take additional regulatory actions including providing greater flexibility for required benefits; further tightening rules for SEPs, grace periods, and third-party premium payments; and extending allowances for so-called grandmothered plans.
Changes proposed this week in a letter from the Blue Cross and Blue Shield Association (BCBSA) to congressional leaders included:
- Establishing a 5:1 age band (up from a statutory limit of 3:1 in the ACA)
- Scaling back benefit mandates for plans
- Establishing a waiting period or premium surcharge for those who lack continuous coverage
Congressional Role
The new rule drew some Democratic backlash on capitol hill.
At Thursday’s hearing to confirm Seema Verma as administrator of CMS, Sen. Ron Wyden (D-Ore.) blasted the proposed rule for allowing less coverage, higher premiums, and more out-of-pocket costs.
“From where I sit, the message in yesterday’s rule was insurance companies are back in charge and consumers will take a back seat,” Wyden said.
The recently announced changes may be all CMS can do without legislative actions to bolster the ACA marketplaces, Morris said.
The biggest challenge for CMS, Morris said, is its lack of authority to address the three programs the ACA designed to provide a financial backstop to marketplace insurers. The reinsurance program, which protected against high-cost claims, expired and cannot be renewed. CMS still owes billions of dollars in risk corridor payments and lacks sufficient funding to make those disbursements. And the risk adjustment program was insufficient to stabilize the market.
Congress should focus legislation on fixing the shortcomings of those three programs “and putting in additional funds to pay back losses owed, and extending and expanding the reinsurance program—combined with allowing payers to offer low-cost coverage with only medical benefits,” Morris said.
Insurance-Mandate News
Other marketplace-related developments included an IRS announcement that it will no longer reject tax forms from people who do not answer whether they had health insurance during the previous year. However, the insurance mandate remains in place and those who do not have insurance are still required to pay a tax penalty.
Source: HFMA