Final Rule Addresses ACA Marketplace Stability (Benefit Minute)

Posted in: Benefit Minute, Employee Benefits

The Centers for Medicare and Medicaid Services (CMS) has issued a final Market Stabilization Rule that is intended to help lower premiums and stabilize the individual and small group markets as well as increase health insurance choices in markets that are threatened by insurer exits.

According to CMS Administrator Seema Varma: “While these steps will help stabilize the individual and small group markets, they are not a long-term cure for the problems that the Affordable Care Act has created in our healthcare system.”  The insurance industry has doubts whether market stability will be achieved, even in the short-term.

The final rule includes the following policy changes which are discussed in more detail below:

  • Shorten the Marketplace open enrollment period;
  • Require supporting documentation for special enrollment periods;
  • Require payment of past-due premiums before renewing with the same insurance carrier;
  • Provide additional actuarial flexibility; and
  • Return oversight of network adequacy to the states.

Marketplace Open Enrollment
The Marketplace open enrollment period for 2018 will begin on November 1, 2017 and end December 15, 2017. It was previously announced that the open enrollment period would end January 31, 2018. This change is intended to encourage individuals to complete enrollment prior to the beginning of the calendar year, allow for collection of a full year’s premiums, and mitigate adverse selection (although there is concern that it is the healthy individuals who will miss the shortened enrollment period). The change to an earlier open enrollment end date was already scheduled to take effect beginning in 2019. The rule allows state-based exchanges to have a special enrollment period after December 15 to account for operational problems that may be encountered while transitioning to the shorter open enrollment period. It is possible that group health plans will see an increase in enrollment requests by those who miss the Marketplace open enrollment, and in many cases, these requests will have to be denied.

Special Enrollment Periods
The final rule requires that supporting documentation be provided to the federal Marketplace for mid-year special enrollment opportunities. A Marketplace special enrollment period is available when certain events occur after open enrollment, including loss of health insurance for specified reasons , change in household size, change in residence, loss of Medicaid or CHIP eligibility or end of incarceration.

Beginning in June 2017, individuals requesting a special enrollment will be given 30 days to provide the requested documentation and then eligibility will be verified using the documentation and other existing government records. Once the supporting documentation is verified, coverage will be retroactive to the application date. This provision is intended to mitigate the opportunity that an individual has to “game the system” by enrolling mid-year after learning of an adverse health condition.

In addition, for a special enrollment due to marriage, the final rule requires that at least one spouse provide proof that he or she had health insurance for at least one day during the two months prior to the marriage.

Marketplace special enrollment periods are distinct from the HIPAA special enrollment rights that apply to group health plans. To encourage new enrollment in Marketplace plans and to help ensure favorable enrollment numbers, the special enrollment opportunities for Marketplace plans are broader than under HIPAA and generally allow for a longer period of time from the date of the occurrence of the event to the date of application for insurance.

Exception to Guaranteed Renewability
The final rule provides an exception to the basic ACA requirement that an insurer must offer coverage to any individual during the annual open enrollment period.  Insurers (included all related insurers in the same controlled group) may now refuse to re-enroll an individual with past-due premiums.  All enrollment materials and notices regarding non-payment of premiums must clearly state the consequences of non-payment.  To the extent that state-specific law/regulations impose more restrictive requirements on insurance carriers, the state laws/regulations will govern.

Actuarial Value
The final rule provides more flexibility to insurance carriers in the individual and small group markets for plans to meet the metal level actuarial requirements. It allows an actuarial value to deviate by -4% to +5% for a bronze plan and by -4% to +2% for all other plan levels beginning in 2018 (as compared to the current range of -2% to +2%). For example, a bronze plan will be compliant with an actuarial value in the range of 56% to 65%. This wider range is intended to give insurers more plan design options to offer in the Marketplace and the small group market. However, the greater variation may result in less rich plan designs, thereby increasing out-of-pocket medical costs.

Network Adequacy
The final rule gives states (instead of the federal government) the authority to ensure that plans offered in the Marketplace offer a sufficient choice of doctors and provide up-to-date information about in-network and out-of-network doctors. If a state does not regulate network adequacy, the insurer’s accrediting agency would be responsible for oversight. The final rule also permits an insurer’s network to include fewer Essential Community Providers who serve primarily lower income enrollees.

Cost Sharing Subsidies
The final rule does not address what many believe is the most important factor in maintaining the stability of Marketplace plans – cost sharing subsidies that reduce out-of-pocket expenses for low income individuals enrolled in Marketplace plans. Insurers still do not know whether Congress will authorize funds to continue these subsidies beyond 2017. Without certainty, some insurers are expected to exit the Marketplace and others are expected to significantly increase premiums for 2018 to account for the government payments that will potentially be lost.