Implementing Health Reform. One of the central Affordable Care Act strategies for expanding access to health insurance (and thus to health care) has been to create a stable individual insurance market where individuals and families can find affordable coverage regardless of their health status. While there was a market for individual insurance before the ACA, it was a residual market and highly transitory. During the period 2008 to 2011, immediately preceding the ACA reforms, only 42 percent of people insured in the individual insurance market retained coverage after 12 months. Among young people aged 19-35, turnover was particularly high; only 21 percent retained coverage after two years. Coverage was generally underwritten based on health status and pre-existing condition exclusions were common.
The ACA banned health status underwriting and preexisting condition exclusions as of 2014. Permitting individuals to enroll in coverage regardless of their medical condition, however, creates an opportunity for adverse selection. Individuals may wait until they actually become sick or injured and only then purchase health insurance. Health insurance markets cannot function if they only insure high-risk individuals. It is necessary that individuals enroll in coverage while they are healthy.
Annual open enrollment periods are thus essential for market stability. People must know that there will be a window of time each year during which they can enroll in coverage and that if they miss that window, they will have to wait until the next year, even if they encounter significant health care costs in the interim. People must sign up when they are healthy rather than waiting until their health fails.
The ACA in fact requires the marketplaces to establish annual open enrollment periods (which are also imposed generally on the nongroup market). The law also recognizes, however, that special circumstances occur when it is not practical or fair to limit enrollment to an open enrollment period. Obviously it is not appropriate to require a newborn infant or a person who has just lost his or her job—and with it employer coverage—to wait months until the next open enrollment period to get coverage.
The ACA provides, therefore, for special enrollment periods, or SEPs. The statute specifically requires the establishment of SEPs as recognized by the Health Insurance Portability and Accountability Act and similar to those recognized under the Medicare Part D drug program, as well as monthly enrollment opportunities for American Indians.
An Extensive List Of SEPs
The initial marketplace rules published by the Department of Health and Human Services in 2012 included provision for SEPs. That regulation, 45 C.F.R. § 155.420—which has been amended in every year since then—currently provides for SEPs under nine specific circumstances, including loss of some other form of coverage, childbirth, marriage, a move, or the gaining of citizenship or lawful alien status. A number of these categories have subcategories, however, and some are quite open-ended, like category nine, which allows the marketplace to recognize SEPs under "other exceptional circumstances."
In fact, the list of special enrollment periods created through guidance is quite extensive.
In the first half of 2015, 943,934 individuals enrolled through HealthCare.gov through an SEP. This was a little over 10 percent of the number who enrolled during the 2015 open enrollment period. About half of these SEP enrollees enrolled because they had lost another form of coverage. Approximately 15 percent enrolled under a special one-time-only tax season SEP for individuals who paid an individual responsibility fine for 2014 and did not realize until they filed their taxes that they would owe another, larger, fine for 2015.
Insurer Complaints
Insurers have claimed that the SEPs are being abused. They claim that individuals are in fact waiting until they encounter health problems to sign up for coverage through SEPs and then dropping coverage once their problems are resolved. Insurers claim that individuals who enroll through SEPs cost more and enroll for shorter periods of time.
It would, of course, be expected that SEP enrollees would have coverage for shorter periods of time because they are enrolling part way through the year. It is also not surprising that they might use more health care services, given the nature of the SEPs. Newborns, for example, can be quite expensive and job loss is not infrequently accompanied by health problems. The question is whether fraud is in fact occurring.
The CMS Response
On January 11, 2016, CMS Administrator Andy Slavitt announced that CMS would be taking action to clarify and limit SEPs that might be open to abuse. On January 29, 2015, specific actions toward this end were announced by Marketplace CEO Kevin Counihan at the CMS blog, with further details at CMS's REGTAP.info website (registration required).
First, six current SEPs will be eliminated in the federally facilitated marketplaces and state-based marketplaces that use HealthCare.gov, effective January 1, 2016. These are all SEPs that CMS has concluded are obsolete including SEPs for:
- Consumers who enrolled with too much in advance payments of the premium tax credit for 2015 because of a redundant or duplicate policy that resulted from a marketplace error, a system issue that has been identified and corrected;
- Consumers who were affected by a system error in the treatment of Social Security Income for tax dependents, which has since been corrected;
- Lawfully present non-citizens who were affected by a system error in determination of their advance payments of the premium tax credit, an error which again has been fixed;
- Lawfully present non-citizens with incomes below 100 percent of the federal poverty limit who experienced certain processing delays after they were denied Medicaid eligibility;
- Consumers who were eligible for or enrolled in COBRA and not sufficiently informed about their coverage options, a problem that has been solved through updating COBRA notices; and
- Consumers who were previously enrolled in the Pre-Existing Condition Health Insurance Program, which has expired.
All of these were SEPs created by guidance, and it is hard to see that any of them would have caused major abuse problems. In addition, CMS has announced that the tax season SEP offered in 2015 will not be available for 2016.
FAQs Regarding The Use Of A SEP When A Person Moves
CMS has also issued at its REGTAP.info website a series of frequently asked questions addressing the proper application of its regulatory SEP that is available when an individual makes a permanent move that provide access to new health plans.
In general, an adult over age 21 is the resident of a service area in which he or she is living and intends to reside. The service area of an exchange is generally the state in which it is located. Individuals intend to reside in a service area in which they are living and intend to remain. Subject to certain exceptions, individuals under the age of 21 are residents of the service area where they reside or in the residence of their parent or caretaker with whom they reside. There is no waiting period for establishing residence. (Special rules apply for institutionalized persons incapable of forming an intent, persons receiving optional state supplementary payments, and children in foster care or receiving adoption assistance).
Residents of the U.S. territories are not residents or a marketplace service area for purposes of establishing marketplace eligibility, as there are no marketplaces in the territories, although individuals from a territory may establish residence—and thus marketplace eligibility—in a state.
Individuals qualify for an SEP if they move permanently to a new location where they gain access to new qualified health plans. The permanent move SEP does not apply for short-term or temporary moves where the consumer does not intend to stay in the new location. It also does not apply if the permanent move is a local move that does not provide access to new qualified health plans.
Individuals who move permanently must report their move within 30 days to the HealthCare.gov website or call center. Individuals who qualify for the permanent move SEP are eligible for up to 60 days after the date of the move, and starting by 2017 will be able to report the move up to 60 days in advance.
Individuals who leave an exchange service area temporarily intending to return have not changed their residence. But individuals who live and work in one area seasonally (such as seasonal farm workers) but maintain a home in another area can establish residency in either area. Individuals who live in one area but commute to work daily in another are resident in the area where they live, not where they work.
Individuals who leave a primary home periodically to visit a secondary home in another area retain their residency in the primary home area, but individuals who spend long periods of time, such as a season, in two primary homes can claim residency in the area of either or both. They may qualify for the permanent move SEP when they move from one place of residence to another, although the guidance notes that it would be better for them to enroll in a plan with national coverage.
Importantly, individuals who are receiving inpatient medical treatment out of the state of their residence are not residents of the state in which they are receiving medical treatment, as they are only there on a temporary basis. They do not qualify, therefore, for a permanent move SEP. The guidance suggests that this may have been an area of potential abuse about which insurers were concerned.
The Debate Over Requiring Proof Of Eligiblity For SEPs
A major complaint of insurers is that SEP applicants are not required to prove their eligibility for an SEP. Applicants simply check a box on the application form claiming eligibility for a particular SEP. The CMS blog post states that CMS intends to take further steps to enforce SEP rules. It notes that applicants are subject to penalties if they provide false information on an application form. CMS will assess plan selections to ensure that consumers are properly using SEPs. The CMS program integrity team will pull samples of consumer records nationally and may request additional information to validate eligibility for SEPs. It will focus scrutiny on the SEPs for loss of minimum essential coverage and permanent moves. CMS will take further steps as necessary to enhance program integrity.
At this point, however, CMS is not requiring further proof of eligibility for SEPs. Eligibility for some SEPs would be difficult to prove, and requiring proof would slow and complicate the enrollment process. It would be particularly problematic to allow insurers to themselves require proof of eligibility or to rescind eligibility where proof of SEP eligibility was not forthcoming. The limits the ACA imposed on insurance rescissions were an important and necessary reform, and giving insurers free rein to rescind coverage would open the doors again to insurer post-claims underwriting and favorable selection.
For now, CMS is acknowledging the potential for SEP abuse and taking some small steps towards tightening up eligibility. CMS seems still to regard its biggest challenge as identifying people eligible for coverage and signing them up. It is not, therefore, taking steps that would seriously impede eligibility determinations.
from Health Affairs Blog http://ift.tt/1n9tFGL
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