On February 15, President Trump and new Department of Health and Human Services (HHS) Secretary Tom Price released their first proposed regulations addressing the Affordable Care Act (ACA). While remaining committed to repealing and replacing the ACA, these proposals seek to stabilize the individual and small group insurance markets, with a particular focus on the “Obamacare” health insurance exchanges. This market stabilization effort comes at a particularly sensitive time, as major insurers—Anthem and Molina—have publicly warned that they will diminish their exchange participation in 2018, and Humana has announced its complete withdrawal next year. The market stabilization regulation is part of a broader Trump administration effort to preserve the ACA markets until they can be transitioned to a new program under a replacement plan.
Major provisions of the draft regulation are discussed below.
Re-Enrolling Members With Unpaid Premiums From Prior Year (Guaranteed Availability)
Per the ACA and Centers for Medicare and Medicaid Services (CMS) regulations, non-grandfathered individual and small group markets issuers are required to enroll eligible members without first requiring them to pay unpaid premiums from a previous enrollment. CMS proposes to let issuers refuse new coverage to enrollees until they pay outstanding prior premium debts from a plan sold by the same issuer. This does not prevent enrollees from seeking coverage from another issuer.
Shortening the Open Enrollment Period
CMS proposes to shorten the 2018 open enrollment period to November 1, 2017 – December 15, 2017. In previous years, the enrollment period extended through the end of January.
Special Enrollment Periods
Over the last year, CMS has implemented policy changes designed to reduce special enrollment periods (SEPs) and mitigate alleged “gaming” opportunities by enrollees. This proposed regulation takes several additional steps to limit SEPs and tighten the program operations that permit them.
Effective June 1, CMS proposes to conduct prospective verification of SEP eligibility for all new enrollees in the roughly 40 exchanges that are either federally-facilitated or state-based but dependent upon the federal platform. SEP enrollments will be placed in "pending" status until eligibility is verified by CMS.
CMS proposes several other SEP changes that tighten program requirements:
- Enrollees who qualify for a change-in-circumstance SEP would remain in the same qualified health plan (QHP) until the consumer submits information to verify the change in circumstance.
- Existing marketplace enrollees that qualify for a midyear SEP would be unable to change plan metal levels.
- Enrollees who qualify for a SEP due to birth or adoption would be added to the enrollee's plan and would be required to stay within the same metal level.
- Issuers will be permitted to deny coverage under a SEP for loss of minimum essential coverage if the issuer can demonstrate prior termination of the enrollee due to non-payment of premiums.
Finally, CMS suggests it will explore proposals that promote continuous coverage. One such proposal would extend the "look back" period for prior coverage by 6 to 12 months for SEPs that require enrollees to have prior coverage.
Actuarial Value De Minimus Variation
The ACA establishes metal levels for ACA market plans based upon their level of generosity (actuarial value). CMS permits "de minimis variation" in the actuarial values of +2/-2 percentage points. Per the draft regulation, for 2018, In the interest of permitting greater benefit flexibility, CMS proposes to change the de minimis variation to +2/-4 percentage points for individual and small group market plans required to comply with the actuarial value (AV) requirements.
For federally-facilitated exchanges, CMS has established federal quantitative network adequacy standards for certain types of providers. For 2018, CMS proposes to defer to state reviews of network adequacy and to rely on an issuer's accreditation status in the event that a state does not conduct network adequacy reviews.
Essential Community Providers
The ACA requires issuers to include a sufficient number of safety net providers (Essential Community Providers) in their provider networks for health insurance exchange plans. For 2018, CMS proposes to require an issuer contract with at least 20 percent of available ECPs. This lowers the 30 percent standard used in recent years. CMS also proposes to allow issuers to write-in ECPs, a practice that was not permitted for plan year 2017.
Topics That Went Unaddressed
The proposed regulation did not include an expected change to the age bands that limit premium variations for older and younger enrollees. The ACA set the maximum age band at 3:1, but it was widely reported that this regulation would seek to expend the age band to 3.49:1. The regulation is, however, silent on this topic.
In addition, the regulation did not take on other topics essential to the future of the ACA reformed markets, including: the continuation of consumer subsidies, the future of the risk corridor and reinsurance programs, and the extension of ACA non-compliant “grandmothered” plans. The former two topics may be included in expected legislation, the latter topic may be discussed in imminent sub-regulatory guidance.
States Impacted and Public Comment Period
This proposed regulation applies to states with federally-facilitated exchanges and state-based exchanges that have defaulted to the federal platform—about 40 states in all. The remaining states are not subject to these proposed regulations, but are encouraged to follow the federal example.
The draft regulation is open for public comment until March 7, less than the typical 30-60 day comment period. This suggests that CMS will seek to finalize it quickly in order to let insurers build the regulation’s provisions into their rate and benefit filings.
In a related announcement on February 17, CMS announced it will give insurers six additional weeks to finalize and submit their 2018 product filings.