Centers for Medicare and Medicaid Services: Proposed Rule for ACA “Market Stabilization”

In stunning governmental doublespeak, the Centers for Medicare and Medicaid Services (CMS) has issued this proposed rule misleadingly named “marketplace stabilization” that will severely narrow access the health insurance marketplaces created by the Affordable Care Act (ACA), and reduce costs (and increase the profit margins) for health insurance plans. To add insult to injury, this proposed rule, yet to be published in the Federal Register, only allows less than three weeks for public comments, rather than the usual minimum comment period of 30 days. Comments are due March 7, 2017.

According to CMS, here are the key elements of the proposed rule:

  • Special Enrollment Period Pre-Enrollment Verification: The rule proposes to expand pre-enrollment verification of eligibility to individuals who newly enroll through special enrollment periods in Marketplaces using the HealthCare.gov platform. This proposed change would help make sure that special enrollment periods are available to all who are eligible for them, but will require individuals to submit supporting documentation, a common practice in the employer health insurance market. This will help place downward pressure on premiums, curb abuses, and encourage year-round enrollment.
  • Guaranteed Availability: The rule proposes to address potential abuses by allowing an issuer to collect premiums for prior unpaid coverage, before enrolling a patient in the next year’s plan with the same issuer. This will incentivize patients to avoid coverage lapses.
  • Determining the Level of Coverage: The rule proposes to make adjustments to the de minimis range used for determining the level of coverage by providing greater flexibility to issuers to provide patients with more coverage options.
  • Network Adequacy: The proposed rule takes an important step in reaffirming the traditional role of states to serve their populations. In the review of qualified health plans, CMS proposes to defer to the states’ reviews in states with the authority and means to assess issuer network adequacy. States are best positioned to ensure their residents have access to high quality care networks.
  • Qualified Health Plan (QHP) Certification Calendar: In the rule, CMS announces its intention to release a revised proposed timeline for the QHP certification and rate review process for plan year 2018. The revised timeline would provide issuers with additional time to implement proposed changes that are finalized prior to the 2018 coverage year. These changes will give issuers flexibility to incorporate benefit changes and maximize the number of coverage options available to patients.
  • Open Enrollment Period: The rule also proposes to shorten the upcoming annual open enrollment period for the individual market. For the 2018 coverage year, we propose an open enrollment period of November 1, 2017, to December 15, 2017. This proposed change will align the Marketplaces with the Employer-Sponsored Insurance Market and Medicare, and help lower prices for Americans by reducing adverse selection.

In fact, the new documentation requirements for Special Enrollment Periods are intended to keep Americans out of the health insurance marketplaces by placing new administrative barriers in the way of their enrollment; yet the CMS press release uses the phrase “expand” to make it sound like this is an expansion of coverage. CMS estimates that these new documentation requirements will be required for up to 650,000 enrollees.

CMS uses the heading “Guaranteed Availability” to describe new barriers to continued coverage for individuals who have missed premium payments; this doesn’t “guarantee” availability of coverage, it cuts coverage off. This provision is consistent with the Indiana Medicaid expansion waiver drafted by CMS-nominee Seema Verma and then Governor Mike Pence that allows Indiana to cut Medicaid beneficiaries off from eligibility for missed premium payments.

Similarly, while the heading is “Open Enrollment Period”, the proposed rule change is to cut in half the time period for individuals to enroll for health insurance next coverage year (2018). By giving less time for enrollments, enrollments will decline.

And rather than providing affordable, accessible coverage, the proposed rule instead gives “greater flexibility” to health plans to offer narrower, less health insurance coverage under the ACA’s complex metal tier system  (using the Latin “de minimus” to cover up that this means less, not more coverage).

The proposed rule also narrows the ACA rules for ensuring that there are sufficient providers in health plan networks to actually provide care to those enrolled. By loosening the “network adequacy” rules to only require that 20% rather than 30% of providers be  “essential community providers” and to expand the list of who is considered an essential community provider, the proposed rule makes those networks potentially inadequate, meaning that those with marketplace coverage may not actually have access to sufficient numbers of providers.

And finally, the proposed rule declares CMS’ intention to delay the deadline for submissions by health plans who want to offer coverage through the health insurance marketplaces in 2018, without specifying any new timelines. The first deadline for coverage year 2017 was April 4, 2016. As it still is uncertain whether the Republican-majority Congress and President Trump can reach agreement on how to de-fund or repeal the ACA, the process for continuing the health insurance marketplaces needs to move forward. By announcing that the deadlines will change but not when, less than two months from the first deadline, only adds to the uncertainty and instability.

In its cost analysis, CMS concedes: “changes such as shortened open enrollment period, pre-enrollment verification for special enrollment periods, reduced actuarial value of plans, less expansive provider networks [would] result in lower enrollment, especially for younger, healthier adults” and “would tend to increase premiums”, which also will result in lower enrollments. These changes will only reduce enrollment and de-stabilize the health insurance markets, not stabilize them.

Curiously, the proposed rule does not reference President Donald Trump’s Executive Order 13765 on the ACA but does reference Executive Order 13771 requiring the repeal of two regulations for every new regulation. The proposed rule is exempt from the latter because it reduces, not increases, costs to the federal government. The only way the proposed rule decreases costs is by decreasing enrollment, again highlighting how the rule will de-stabilize the health insurance markets rather than stabilizing them.

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