Amidst ongoing debate over future of ACA Exchanges, CMS finalizes rule for 2018 and a timeline for submission of plans

The Centers for Medicare and Medicaid Services (CMS) last week released a final rule on the 2018 benefit year for Exchanges established under the Affordable Care Act (ACA), as well as a final timeline for health insurers to submit products for federally-facilitated Exchanges and other tools plans will need to submit products for ACA Exchanges for 2018. Notably, the final rule was published in the Federal Register on the same day that health insurers met with CMS Administrator Seema Verma and other Administration officials about the ACA Exchanges.

The final rule is intended to reduce volatility in the non-group and small group health insurance markets, and it finalizes with few changes policies included in a proposed rule published in the Federal Register on February 17, 2017. The final rule was published in the Federal Register on Tuesday, April 18, 2017, and its provisions take effect June 19, 2017. The policies in the final rule include changes requested by health insurers in previous years.

Key provisions of the final rule include the following:

  • Open enrollment period: The final rule will shorten the open enrollment period for the 2018 benefit year for federally-facilitated Exchanges to six weeks, running from November 1, 2017, through December 15, 2017.
  • Guaranteed issue: The final rule will 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 final rule explains that health plans are not required to adopt such policies and that “States may narrow the circumstances and conditions” under which an issuer could apply such a policy.
  • Special enrollment periods: For all states using the HealthCare.gov platform, the final rule will require pre-enrollment eligibility verification for 100% of individuals seeking to enroll in nongroup market health insurance products via special enrollment periods. A previous policy would have required pre-enrollment eligibility verification for 50% of such cases.
  • Actuarial Value: The final rule will expand the range of allowable variation for actuarial value (AV) of qualified health plans (QHPs) on ACA Exchanges in an effort to give health insurers more flexibility in benefit design. For bronze plans (which generally must have an actuarial value of at least 60%), the range would be +5%/-4%.
  • State oversight: The final rule generally gives states the lead role in network adequacy reviews for QHPs and lowers to 20% (from 40%) the percentage of essential community providers (ECPs) required to be included in products on the individual and small group market.1

In separate guidance, the Center for Consumer Information and Insurance Oversight (CCIIO) within CMS on April 13, 2017, finalized the timetable for issuers to submit bids for QHPs on federally-facilitated Exchanges. CCIIO will begin accepting bids on May 10, 2017, and the deadline for submission will be June 21, 2017. CCIIO on the same date also released the AV Calculator for 2018 and revised guidance for unified rate review timetable for 2018.

Debate over ACA Exchanges heats up

Verma and other Administration officials on Tuesday, April 18, 2017, met with representatives of health insurers and industry trade groups to discuss the future of ACA Exchanges. An issue of top concern for health insurers is whether the Administration will continue to make payments to plans for cost-sharing reduction subsidies (CSRs) for lower-income enrollees in ACA Exchange products. CSRs are available to reduce out-of-pocket costs for individuals with incomes that do not exceed 250% of the federal poverty level who enroll in eligible Exchange plans.

The House of Representatives in 2014 sued the Obama Administration over payment of the CSRs, arguing that the Administration could not make payments to health plans for CSRs without a legislative authorization by Congress. Lower courts ruled in favor of the House, and the case is currently pending before a panel of the Sixth US Court of Appeals awaiting a decision on whether the Trump Administration will continue to defend the case. If the Administration declines to continue to defend the lawsuit and Congress does not appropriate funds for the payments to health plans, insurers in some cases could withdraw from their contracts and exit Exchanges mid-year.

Given the stakes for Exchanges, congressional Democrats have made the funding of payments to plans for CSRs a central condition of their support for any continuing resolution (CR) to avoid a partial shutdown of the federal government when the current CR expires on April 28, 2017. Democrats became more emphatic in their position after President Trump in an April 12, 2017, interview with the Wall Street Journal said, suggested that he would use funding of the payments for CSRs to prompt congressional Democrats to negotiate over health care.2

Without certainty about payments for CSRs, health insurance industry groups and other stakeholders have said plans might decline to participate in Exchanges for 2018 or raise premiums by more than they otherwise would have.

Authors:

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

Daniel Esquibel
Senior Manager | Deloitte Risk and Financial Advisory
Deloitte & Touche LLP

1“Patient Protection and Affordable Care Act; Market Stabilization,” Final Rule, Department of Health and Human Services, April 18, 2017.
2Bender et al., “Trump Threatens to Withhold Payments to Insurers to Press Democrats on Health Bill,” Wall Street Journal, 4/13/17.

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