My first post on the 2018 proposed Notice of Benefit and Payment Parameters focused on proposed changes to the general insurance market reforms and risk adjustment programs. This post focuses on changes to benefit, eligibility, and enrollment standards and requirements, primarily as they pertain to qualified health plans (QHPs) offered through the exchanges.
Standardized Plans
The 2017 payment notice established six standardized options (also now referred to as simple choice plans), one each for the bronze, silver, gold, and silver cost-sharing variation levels of coverage. These plans were based on the most popular (enrollment-weighted) QHPs in the 2015 individual market federally facilitated exchanges (FFEs). The 2018 proposed payment notice standardized plans reflects changes in QHP enrollment-weighted data from 2015 to 2016—including data from state-based exchanges using the federal enrollment platform (SBE-FPs)—and are designed to comply with state cost-sharing standards.
The 2018 proposed payment notice would establish three sets of six standardized plans. The first would be a version of the 2017 standardized plans reflecting modifications for 2016 enrollment weighted QHPs. The second set of standardized plans are designed to work in states that 1) require that cost sharing for physical, occupational, or speech therapy be not greater than cost sharing for primary care visits; 2) limit the amount charged for each drug tier; or 3) require that drug tiers have copayments rather than coinsurance. The third set of standardized plans are designed for states that have maximum deductible requirements or other cost-sharing standards.
HHS will identify in the final 2018 payment notice which of the three set of standardized plans will be available in each FFE state. (Some states also have oral chemotherapy mandates, but CMS believes that these are consistent with standardized plan options).
The proposed 2018 standardized plans again have a single provider tier, fixed deductible, fixed annual cost-sharing limit, and fixed copayment or coinsurance obligations for a key group of essential health benefits. The fixed cost-sharing values are for in-network care only. Unlike the 2017 standardized plans, the 2018 silver, silver cost-sharing variation, and gold plans have separate medical and drug deductibles, and the 87 and 94 percent silver cost-sharing variations and gold plans have $0 drug deductibles.
The 2018 proposed rule also would include a bronze high-deductible health plan (HDHP) compliant option that would allow an enrollee to qualify for a tax-subsidized health savings account (HSA) under the Internal Revenue Code. As the IRS does not set the parameters for HDHPs until the spring of a year, CMS will establish the parameters of this standardized plan for each year by guidance rather than through the payment notice. This HSA compliant plan will be available in all states in the FFE.
The FFE intends to differentially display standardized plans. SBE-FPs can design their own standardized plans, but HealthCare.gov cannot be customized to display them. SBE-FPs can notify HHS if they wish HealthCare.gov to display HHS-designed standardized plans for them.
Requirements For State-Based Exchanges Using The Federal Platform
The 2017 payment notice recognized SBE-FPs and required SBEs that used Healthcare.gov to apply to QHP standards no less strict than FFE QHP standards. The proposed 2018 rule would go further and require SBE-FPs that use the federal SHOP platform to establish standards and policies consistent with certain federally facilitated SHOP (FF-SHOP) requirements when they use the federal platform for various functions. These include, depending on how the SBE-FP uses the federal platform:
- Premium calculation, payment, and collection requirements;
- Rate change timelines;
- Minimum participation rate requirements and calculation methodologies;
- Employer contribution methodologies;
- Annual employee open enrollment periods;
- Initial group enrollment or renewal coverage effective dates; and
- Termination of SHOP coverage or enrollment rules.
Language Access Requirements
Current federal rules require exchanges, QHP insurers, and web-brokers to include taglines indicating the availability of language services in non-English languages on website content and on documents that are critical for obtaining health insurance coverage or access to health care services through a QHP. The taglines must appear in at least the top 15 languages spoken by limited English proficient (LEP) population in a relevant state. A similar requirement is found in the rules implementing section 1557 of the ACA, which prohibits discrimination on the basis or national origin, and thus language discrimination, in health programs or activities administered by an exchange or HHS or receiving federal funds through HHS.
The proposed payment notice would amend the language of the current rule to clarify that exchange, QHP insurers (including insurers in a group under common control), or web brokers that serve more than one state may aggregate the LEP population across all states they serve to determine the top 15 languages in which to provide taglines. This would explicitly include HealthCare.gov. (This aggregation rule would only apply to a group of insurers treated as a single employer under the Tax Code, not to associations or federations of insurers that are not treated as a single employer). The same aggregation rule would apply to summaries of benefits and coverage, which also, however, must include taglines for any non-English language in which 10 percent or more of the residents of a county in the service are solely literate.
Proposed amendments would provide that exchanges, QHP insurers, and web-brokers would satisfy LEP requirements with respect to web content if their home page has a prominent link directing individuals to the full text of taglines indicating how individuals can get language assistance services and if taglines are also included in any standalone critical document linked to or embedded in the website. Entities subject to 1557 requirements must, however, must also include "in language" web links on their home page directing LEP individuals to the full text of their taglines.
If an entity (such as a QHP insurer) subject to the rule includes the required taglines in a critical document linked or embedded in the website of another entity (such as a web broker), the linking entity can rely on the taglines provided by the entity that provided the document, even though the two entities are not required to provide taglines in the same 15 languages.
HHS seeks comments on its language access requirements. In particular, it asks in the preface whether the language access requirements that apply to exchanges, QHP insurers, and web brokers are duplicative of the section 1557 nondiscrimination requirements. There are some entities to which the HHS rule applies but the section 1557 does not apply, but CMS asks whether the rules could simply require these entities to comply with the 1557 rules. Could separate language access requirements applying to exchanges, QHP insurers, or web brokers simply be repealed since the 1557 regulations apply to most of them?
One complication of simply cross referencing the rule is that some of the requirements of the 1557 LEP notice rules—non-English notices of grievance or complaint procedures, for example—may not be appropriate for all entities governed by the current HHS language access rule. Another is that the section 1557 requirements apply to "significant publications and significant communications," which might not be the same as "critical documents," covered by the current rule. HHS requests comments on these issues.
Agents And Brokers
Current rules govern the role of agents and brokers in assisting qualified individuals, employers, and employees in enrolling in marketplace coverage, subject to state and federal laws. The proposed rule would build on the current rules to provide new procedures and additional consumer protections with respect to agents and brokers who assist with marketplace enrollment.
The 2018 proposed rule will require web-brokers and QHP insurers to differentially display standardized plans when they facilitate direct enrollment through the FFE or a SBE-FP. Web-brokers do not have to display the plans in exactly the same way that HealthCare.gov does, but must get HHS approval for a deviation from the HealthCare.gov approach.
Enhanced Direct Enrollment Process
The proposed rule includes a new "enhanced direct enrollment" process. Under the current direct enrollment process, a consumer begins on the web-broker or insurer website, is then directed to HealthCare.gov for an eligibility application and determination, and is then redirected to the web-broker or insurer website to enroll in coverage.
Under the enhanced direct enrollment process, the consumer would remain on the web-broker or insurer website. The web-broker or insurer would collect the information necessary for an eligibility determination and pass the information to HealthCare.gov, which would make an eligibility determination, which it would then pass back to the consumer through the direct enrollment partner. The consumer would see the eligibility determination on the web-broker or insurer's website. The exchange would verify eligibility with information received from other government agencies which would not be shared with the direct enrollment partner. CMS requests comments on privacy and security concerns raised by this arrangement.
Additional proposed provisions would require web-brokers to prominently display on their websites information provided by HHS pertaining to advance premium tax credit and cost-sharing reduction payment eligibility. Web-brokers would also have to permit enrollees to accept less than the full amount of tax credits for which the applicant is eligible. It may be to the advantage of a tax-filer to receive less than the full amount, for example when an applicant suspects that his or her income might increase or wants an additional tax refund. CMS believes that some web-brokers have not consistently been allowing this. Direct enrollment partners would also be required to obtain necessary attestations from tax filers.
Under the proposed rules, agents and brokers who assist consumers with enrollment through the exchange must support post-enrollment activities necessary to effectuate enrollment or resolve enrollment issues, such as data matching issues related to eligibility. Web-brokers will be required under the proposed rule to demonstrate operational readiness before they can access the direct enrollment pathway, including implementation of required privacy and security measures. They must also cooperate with audits and supply requested information in a timely fashion.
The proposed rule would allow HHS to immediately suspend an agent or broker's access to direct enrollment if HHS discovers circumstances posing unacceptable risks to the exchange or its information technology systems. This would include using enrollment processes not approved by HHS. Web-brokers who allow other agents and brokers to use their websites must ensure that downstream third-party websites are compliant with federal requirements.
HHS is considering establishing a process under which approved third-party auditors would test and audit web-broker compliance with regulatory requirements. HHS would also create a process for evaluating and approving third party auditors. The auditors would be required to collect, store, and share data with HHS and to comply with HHS data protection standards. Auditors would be subject to monitoring and periodic recertification by HHS. Their services would be paid for by agents or brokers who used their services.
Finally, agents and brokers that facilitate enrollment through the FFE or SBE-FP must refrain from having a website that might mislead consumers into believing that they are applying through HealthCare.gov. Consumer confusion could be created by names or URLs similar to HealthCare.gov or by combinations of text sizes, colors, fonts, or layouts too similar to HealthCare.gov.
Electronic Appeals, Notices, And Funds Transfers
The proposed rule would once again put off the requirement that exchanges establish electronic appeals processes. Recognizing that some exchanges are still not able to handle electronic appeals processes for individual market eligibility appeals, employer appeals, or SHOP appeals, the proposed rule would continue to allow the use of secure and expedient paper-based processes. Implementation of the electronic appeals processes requirement has been delayed several times and the proposed rule would delay it indefinitely.
The proposed rule would make electronic notices the default for SHOP exchange notices, although mailed paper notices would continue to be available to employers or employees who select this method of communication. Individual and SHOP exchanges would, however, retain the flexibility to send paper notices by mail when technical limitations prevent them from electronic communication, even when an individual, employee, or employer would prefer electronic communication.
The proposed rule preface identifies a potential problem when consumers have arranged for payment of their premiums by electronic funds transfer (EFT) and then lose premium tax credits, for example because of a data matching issue. In this situation the withdrawal of a larger amount than anticipated could result in financial hardship for the consumer. CMS requests comments on how to address this situation, for example by reversal or termination of EFT with simultaneous paper billing.
Exchange Operations
Current rules allow the exchanges to periodically examine available data sources for eligibility determinations for certain government programs such as Medicare, Medicaid and CHIP. The amended rule would allow verification of actual enrollment in such programs and not just eligibility determinations.
Another proposed amendment would give exchanges greater flexibility for dealing with information regarding compliance with tax filing and reconciliation requirements. Proposed changes to allow more flexibility would balance exchange operational flexibility, program integrity concerns, and procedural and privacy protections for consumers. Exchanges would also be granted more flexibility in recalculating the application of advance premium tax credits (APTC) when a consumer's eligibility for APTC changes during a benefit year.
The proposed rule would give exchanges the discretion to allow insurers experiencing billing or enrollment problems due to high volume to implement a reasonable extension of the binder payment deadlines it has set under current rules. CMS is also considering clarifying that a binder payment is not needed when an enrollee actively reenrolls or is passively reenrolled in coverage.
Insurers denied FFE QHP certification may request reconsideration within 7 days of the date of written notice of certification denial. The reconsideration decision of HHS is a final decision and not appealable.
Special Enrollment Periods
CMS acknowledges in the preface that it continues to hear complaints from insurers about abuse of special enrollment periods and insurer requests for additional verification of eligibility. It also notes, however, that some believe that a bigger problem is very low take-up of special enrollment by healthy eligible individuals, and that additional verification processes worsen this problem by discouraging healthier and less motivated consumers from enrollment. CMS seeks comments and data addressing this issue.
(A footnote also recognizes complaints by insurers about abuses of the grace period for terminations of consumers receiving APTC for non-payment of premiums, but observes that this is an issue that can only be addressed through legislation).
The rule proposes to codify a number of special enrollment periods now recognized by guidance to improve transparency and ensure appropriate utilization. These include special enrollment periods for:
- Dependents of Indians enrolled or enrolling in a QHP through an exchange at the same time as the Indian;
- Victims of domestic abuse or spousal abandonment and their dependents who are enrolled in coverage but seek to enroll in coverage separately from their abuser or abandoner;
- Consumers and their dependents who apply for coverage during the open enrollment period but are incorrectly denied APTC because they are determined eligible for Medicaid or CHIP, and are later determined ineligible for Medicaid or CHIP
- Consumers disadvantaged by material plan or benefit display errors, including errors related to service areas, covered services or premiums; and
- Consumers who resolve data matching issues after the expiration of an inconsistency period or have income below 100 percent of the federal poverty level and did not enroll in coverage while waiting for HHS to verify lawful status.
Special enrollment periods that are not specific to the exchanges apply throughout the individual and small group markets.
Rescissions
The proposed rule would require QHP insurers that wish to rescind coverage for an enrollee for fraud or material misrepresentation (the only grounds permitted for rescission under the ACA) to establish to the satisfaction of the exchange that rescission is appropriate, if required to do so by the exchange.
Updating Limits And Thresholds
An individual is exempt from the shared responsibility tax if the amount the individual or household would have to pay for minimum essential coverage exceeds a "required contribution percentage." This percentage is equal to 8 percent adjusted for the excess in the rate of premium growth between the preceding calendar year and 2013 over the rate of income growth for that period. For 2018 the required contribution percentage, determined by applying this formula, will be 8.05 percent.
Another parameter that HHS determines annually in the payment notice is the premium adjustment percentage. This parameter is used to adjust annually the maximum annual out-of-pocket limit for cost sharing, the required contribution percentage that individuals must meet to qualify for the hardship exemption from the individual responsibility requirement, and the tax that employers must pay for failing to meet the employer responsibility requirements. The premium adjustment percentage equals the percentage by which the average per capita premium for health insurance coverage in the preceding year exceeds the average capita premium for health insurance for 2013.
Based on this formula, the maximum annual limit for cost-sharing will be increased for 2018 to $7,350 for self-only coverage and $14,300 for other than self-only coverage. These amounts would be reduced by the cost-sharing reductions to $2,450 for self-only coverage and $4,900 for other than self-only coverage for individuals with incomes below 200 percent of the federal poverty level, and to $5,850 and $11,700 for individuals and families with incomes between 200 and 250 percent of the federal poverty level. The annual limit on cost sharing for standalone dental plans if $350 for one child or $700 for two or more children.
Enrollment Effective Dates
Under current rules, the enrollment period for an employee who becomes a qualified employee outside of the initial or annual open enrollment period starts on the first day of becoming a newly qualified employee. The employee must have at least 30 days from that date to make a plan selection. This provision is problematic if employees do not learn of their eligibility until the 30 days has expired. Under the proposed rule, the 30-day period would not begin to run until the employer notifies the SHOP of the employee's eligibility. Qualified employers would be required to notify the exchange of the employee's eligibility within 30 days of the employee becoming eligible for coverage.
The proposed rule also clarifies when enrollment of employees in SHOP coverage becomes effective. Waiting periods in the SHOP may not exceed 60 days, beginning with the date an employee becomes eligible. The measurement period for a variable hour employee eligible for SHOP coverage cannot exceed 10 months. The maximum time that a variable-hour employee who is determined to be a full-time employee can be denied SHOP coverage would be 13 months from the employee's start date (plus the time remaining until the first day of the next calendar month if the employee did not start on the first day of a month.)
Exchange User Fee
The 2018 proposed payment notice would again set the user fee for QHPs for exchange participation at 3.5 percent of premiums charged for coverage issued through the FFE. CMS seeks comments as to whether a specific portion of this fee should be allocated directly to outreach and education efforts. CMS is proposing to charge insurers using SBE-FPs 3 percent, although it seeks comments on whether the increase from 1.5 percent in 2017 to the full 3 percent should be phased in.
Actuarial Value Variations For Bronze Plans
The ACA requires the actuarial value of health plans in the individual and small group market to be set at 60, 70, 80, and 90 percent but allows "de minimis" variations. CMS has defined de minimis to mean plus or minus 2 percentage points. This variation severely limits the ability of bronze (60 percent actuarial value) plans to provide any services other than preventive services before the deductible is met. Indeed, it may be difficult to design an HSA-eligible bronze plan meeting future payment parameters because the annual out-of-pocket limit for HDHPs set by the IRS is likely to be lower than projected out-of-pocket limits for bronze plans. Catastrophic plans, which must cover 3 primary care visits without cost sharing, may also be more generous than permissible bronze plans.
To provide more flexibility for insurers to design plans meeting bronze plan requirements, the proposed rule would redefine de minimis for bronze plans only to allow variance from the 60 percent actuarial value requirement by minus 2 percentage points or by plus 5 percentage points when the positive variance is used to cover major services before the deductible or to establish HDHP eligibility. Insurers could use this flexibility to cover primary care visits; specialist visits; inpatient hospital services; generic, specialty, or preferred branded drugs; and emergency room visits.
Plan Offering Requirements
The ACA requires QHP insurers to provide at least one silver and one gold level plan as a condition for QHP certification. The proposed rule clarifies that this requirement applies at the service coverage area level and not at the exchange level. That is, a QHP insurer must offer both a silver and gold plan in each service area in which it offers coverage through the exchange. A QHP insurer is not in compliance if it offers a silver plan throughout an exchange but a gold plan only in one limited service area somewhere in the exchange.
Under current rules, the FFE will only certify a QHP to offer coverage in the individual market if the issuer (or another issuer in the same issuer group) offers through the SHOP of at least one silver and one gold plan when the insurer has at least a 20 percent share of the small group market in the state measured by earned premium. This policy is not required of state-based SHOPs and none have apparently instituted such a policy. CMS is concerned that this "tying" policy could do more to deter individual market insurer participation than to ensure SHOP participation. It is seeking comments on whether it should be eliminated.
Trading Off Shop As An Online Platform To Save The Individual Market?
CMS recognizes that this change could doom the SHOP in some states, or perhaps the FF-SHOP itself. The preface states that CMS is considering the possibility of terminating enrollment through the FF-SHOP and the use of alternative pathways such as web-brokers or third party administrators for SHOP enrollment if the SHOP becomes unviable. This would effectively mean giving up on the SHOP as an online entity to save the individual market.
Measuring Network Breadth
Beginning with 2017, CMS is pilot testing a policy to provide information on network breadth in six states through HealthCare.gov. The results of this pilot will determine whether CMS expands it to other states. One problem it has encountered is how to deal with integrated delivery systems, which may have narrow networks but offer much better access to care than other narrow network plans.
CMS proposes to incorporate identification of integrated delivery systems into the information displayed in 2018 in states that display network breadth information. Integrated delivery systems would be defined to mean plans that deliver a majority of covered professional services through their employees or through a single contracted medical group.
Notice Of Potential Out-Of-Network Billing
The preface reaffirms the requirement in the 2017 payment notice that QHP insurers must as of 2018 notify enrollees at least 48 hours before the provision of a service at an in-network facility that the enrollee might receive a service from an out-of-network ancillary provider who might balance bill and whose charges are not subject to the in-network cost sharing limit. If the insurer fails to do so, and the enrollee is charged for out-of-network cost sharing by the ancillary provider, the insurer must count the cost-sharing against the enrollee's annual out-of-pocket limit.
This provision does not apply to balance billing as such—billing for the difference between the provider's charge and the amount the insurer is willing to pay. The insurer is not responsible for balance bills (although they may not be legally enforceable against the consumer). The rule does apply to QHPs both on and off the exchange and regardless of whether the QHP covers out-of-network services.
Other Provisions
The proposed rule would continue the current requirement that QHP issuers cover a percentage of essential community providers in its service area with a single location including multiple providers counting as a single essential community provider.
The proposed rule would require QHP insurers as a condition of participation to make their QHPs available for enrollment for the full year. They cannot enroll members only during the open enrollment period. Violation of this requirement would be grounds for a civil money penalty.
QHPs that are denied certification for a subsequent, consecutive, certification cycle would be required under the proposed rule to give their enrollees 30 days' notice of the denial to give enrollees the opportunity to seek other coverage.
The proposed rule requires QHP insurers in SBE-FPs to comply with FFE enrollment reconciliation process, timeline, and file format requirements. It also requires all QHP insurers that identify a discrepancy in their cost sharing reduction advance payments to notify HHS of the discrepancy within 30 days as a prerequisite of being able to appeal the discrepancy. QHP insurers are subject to compliance reviews. If they fail to cooperate, they are potentially subject to civil money penalties, decertification, and plan suppression.
The proposed rule would update and clarify instructions on how to calibrate the market-wide single risk pool index rate and for applying the permitted rating factors. It would, for example, remove reference to transitional plans which disappear at the end of 2017.
Actuarial Value Calculator
On August 29, 2016 CMS also published, in conjunction with the proposed payment notice, a draft 2018 actuarial value (AV) calculator and calculator methodology. The AV calculator is used to determine the AV of health plans in the individual and small group market. It represents, in the words of CMS, "an empirical estimate of the AV calculated in a manner that provides a close approximation to the actual average spending by a wide range of consumers in a standard population." Insurers input the cost-sharing and benefit parameters of their plans and the AV calculator identifies the plan's AV.
The draft methodology describes in detail the calculator's methodology and operation. I will not attempt to describe that here. The draft also describes how the proposed 2018 version varies from earlier versions. Major changes in the 2018 draft AV calculator methodology include:
- The use of 2015 claims data rather than pre-ACA claims data used in earlier AV calculators;
- The use of data from HMO and EPO type plans; earlier AV calculators only used data from PPO and POS plans;
- Inclusion of claims by enrollees with at least four months' enrollment; earlier calculators only included claims for enrollees enrolled for at least 12 months;
- The removal of adjustments for less common essential health benefits, such as pediatric dental;
- Modified trend factors for trending forward 2015 claims, using a 3.5 percent annual trend factor for medical claims and a 11.5 percent factor for drug claims;
- Adjustment of the enrollment demographic distribution to better match projected 2018 enrollment;
- An update for the 2018 maximum out of pocket limit;
- The ability to enter a plan design with a copayment for an outpatient facility fee and outpatient physician/surgical services;
- A more accurate approach to calculating the effect of coinsurance;
- An updated approach to calculating the effect of two-tier network designs;
- A modification to improve the functionality of calculation of plans with separate deductibles and combined maximum out-of-pocket limits'
- The possibility of including bronze plans with the expanded de minimis range allowed by the 2018 payment rule.
CMS considered but did not adopt changes:
- to augment the model for specific services such as habilitative or pediatric dental services;
- to allow for adjustments for wellness incentives;
- to recognize urgent care cost sharing;
- expanding the drug tiers available under the calculator;
- to allow for beginning mental health/behavioral health and substance abuse service cost sharing after a set number of visits or copayments; and
- to permit separate AV calculations for family plans.
HHS seeks comments on the proposed calculator and methodology.
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