CMS releases proposed rule intended to provide more certainty on health insurance markets, extends deadlines for plans to file products with Exchanges

The Centers for Medicare and Medicaid Services (CMS) on Wednesday, February 15, 2017, released a proposed rule intended to provide health insurers greater certainty about the individual and small group markets in the 2018 benefit year under the Affordable Care Act (ACA). Days later, a CMS division proposed providing plans with more time to file products for the federally-facilitated Exchanges in order to allow time to modify products in response to the proposed changes.

The policies proposed in the regulation generally have been requested by health insurers in previous years.

America’s Health Insurance Plans, a trade group representing insurers, issued a statement, saying, “We appreciate the Administration’s efforts in proposing policies intended to address stability, affordability, and choice, helping consumers get the coverage they need.”

The proposed rule comes as additional health insurers have raised questions about their participation in ACA Exchanges in 2018. In addition, House Republicans have set February 28, 2017, as the target date to begin marking up legislation to repeal key provisions of the ACA and enacting alternative health policies consistent with the fiscal year (FY) 2017 budget resolution.

CMS is requesting comments on the proposed rule by March 7, 2017.

Highlights of key provisions of the proposed rule and other regulatory actions related to the ACA are provided below.

Open enrollment period

The proposed rule would shorten the open enrollment period for the 2018 benefit year to November 1, 2017, to December 15, 2017. Regulations currently in effect would provide an open enrollment period for the 2018 benefit year of November 1, 2017 to January 31, 2018, and shorten the open enrollment period for benefit years 2019 and later to November 1 through December 15 of the year preceding the benefit year.

Special enrollment periods

Verification of eligibility for special enrollment periods (SEPs) would expand significantly under the proposed rule. For example, the proposed rule would require eligibility to enroll via an SEP to be verified in advance for 100% of cases in states relying on the HealthCare.gov platform.

The proposed rule also outlines new requirements intended to limit the circumstances in which individuals could enroll via SEPs and in some cases, limit the categories of plans in which individuals could enroll via SEPs.

Guaranteed issue

The proposed rule outlines a policy that in effect would permit health plans to collect owed premiums from individuals whose coverage was terminated for non-payment of premiums during the previous 12 months before the individual could resume coverage from that issuer. The proposed policy would apply in the individual and group markets.

Actuarial value

CMS proposed providing additional flexibility for health plans in determining the actuarial value (AV) of products on the individual and small group markets by expanding the range of allowable variation for actuarial value. The AV determines the metal tier that will apply to products sold on Exchanges. For bronze plans (which generally must have an actuarial value of at least 60%), the range would be +5%/-4%.

Network adequacy

Under the proposed rule, states generally would assume the lead role in network adequacy reviews, a shift away from the federal government under the current regulatory framework. Similarly, the proposed rule also would lower the percentage of essential community providers (ECPs) required to be included in products on the individual and small group market from 40% to 20%.

Regulatory options for continuous coverage requirement

Although the proposed rule does not propose policies related to continuous coverage requirements, CMS does seek comment on policies that could encourage continuous coverage within existing legal authorities. Examples provided in the proposed rule include applying a 90-day waiting period to effectuate coverage or a late enrollment penalty for individuals who could not demonstrate continuous coverage but are otherwise eligible for an SEP.

Continuous coverage requirements to avoid medical underwriting and provide consumer protections for individuals with pre-existing health conditions are a center point of Republican health proposals offered as alternatives to the ACA’s individual mandate and guaranteed issue provisions.

Deadline for participation in federally-facilitated Exchanges

CMS’ Center for Consumer Information and Insurance Oversight (CCIIO) on Friday, February 17, 2017, proposed extending the deadline for insurers to file plans on the federally-facilitated Exchanges for the 2018 benefit year from May 3, 2017, to June 21, 2017. Under the proposal, plans could begin filing products May 10, 2017. CCIIO proposes providing final notices to health plans by October 12, 2017, rather than September 22, 2017. Open enrollment for benefit year 2018 is scheduled to begin November 1, 2017.

CMS is requesting comments on the proposal by March 7, 2017.

Enforcement of the individual mandate

Also on Wednesday, the Internal Revenue Service (IRS) announced that it would accept individual tax returns if taxpayers do not indicate on the return whether they are enrolled in health coverage, are exempt, or agree to be subject to the ACA’s individual mandate. The IRS said the change in policy comes in response to President Trump’s January 20, 2017, executive order on the ACA and means that this year’s filing season will follow the same rules as last year.

Authors:

Anne Phelps
Principal | Deloitte Advisory
US Health Care Regulatory Leader
Deloitte & Touche LLP
Latest conversations from Anne Phelps on Twitter

Daniel Esquibel
Senior Manager | Deloitte Advisory
Deloitte & Touche LLP

Heather Hagan
Senior Manager | Deloitte Advisory
Deloitte & Touche LLP

 

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