On September 6, 2016 U.S. Department of Health and Human Services released its latest proposed Notice of Benefit Payment Parameters; the annual omnibus rule to put into place regulatory changes impacting the health insurance marketplaces for the next plan year. Notably, the proposal was released several months earlier than usual this year, likely as a means to finalize changes and gather input prior to a transition of the new Administration.
The proposal includes many provisions that could significantly impact health insurance markets as well as the State-based Marketplaces (SBMs) and the Federally Facilitated Marketplace (FFM). Specifically, the Notice includes changes aimed at addressing affordability and market stability, as well as opportunities for greater state flexibility. Below we highlight five key concerns for states as they review the rule and formulate comments. Comments are due October 6, 2016.
- The Notice is an open opportunity for states to share their ideas for what’s next for health reform and insurance markets. The notice includes many open-ended requests for more information and input on proposals that could significantly shape how the Affordable Care Act (ACA) operates in the years ahead. This includes open solicitations for input on specific policies such as special enrollment periods and spending on marketing and outreach, to a broad request for ideas of how HHS can facilitate issuer, provider, marketplace, or local innovation in ways that contribute to better health outcomes and lower costs. Combined with the recent Request for Information released by the Centers for Medicare and Medicaid Services in relation to the State Innovation Models Initiative, these mark important opportunities for states to share what lessons they have drawn from the ACA’s implementation to date, and how CMS can better support their goals for health reform moving forward.
- The Notice attempts to resolve some current challenges impacting issuer stability and product availability. This comes mostly in the form of significant changes to the risk adjustment program (e.g., addition of new measurements to account for partial year enrollments, high-cost utilizers, and prescription drug spending) though other changes also merit notice such as:
- new age rating bands for those under 21,
- greater flexibility on events that would trigger an issuer “market withdrawal,”
- adjustments to medical loss ratio and actuarial value calculations, and
- clarification or revision of certain issuer responsibilities as conditions of marketplace participation (e.g., requirement that issuers offer one silver and one gold plan in each service area; requirement that plans remain available for the full duration of the coverage term.
Together, the changes attempt to address some recent issues that have led to premium spikes and issuer withdrawal from the marketplaces. Fresh from rate review, states have critical insight into how the proposals may ultimately impact their markets or how future regulations could further strengthen insurance markets.
- The Notice heeds a demand for state flexibility and better alignment with state policies. Both states and the federal government have grown in their understanding of how marketplaces operate, and how functionally they work within the context of existing state and federal institutions and policies. Drawing upon these lessons, the notice offers several proposals that open opportunities for greater state flexibility. These include:
- increased ability for states to propose alternative strategies for tax credit recalculation and data matching functions,
- better alignment of state and federal definitions used for the purposes of risk adjustment; and
- flexibility to enable marketplaces to function more efficiently within the capacity of existing systems (e.g., flexibility on provision of either paper-based or electronic notices, permanent extension of paper-based appeals process, increased ability to use enrollment data from certain government programs).
- The Notice continues momentum toward fostering standard benefit models. To date, few states or issuers have adopted standard benefit designs, but states and the federal government alike have considered whether greater standardization could enable consumers to make easier comparisons between marketplace plans based on key factors like premiums and plan networks. While standard designs show some promise for driving efficiency through promulgation of value-based benefit offerings, issuers counter the designs have the potential to limit choice and constrain innovation of health plans. The proposals, including addition of a new high-deductible option, set new precedents for how benefit offerings may be shaped in the future and invite states to consider how the proposed designs may support or hinder the current offerings of insurance products
- Proposed diminishment of SHOP functionality; establishment of a direct enrollment pathway could increase role of web-brokers and third-party administrators (TPAs). The Notice proposes two changes that could significantly enhance the ability of web-brokers or TPAs to assist in marketplace enrollment through both the FFM and Small Business Health Options Program (SHOP) marketplaces. The first establishes an “enhanced direct enrollment pathway,” which would simplify how consumers interface with web-brokers to complete enrollment. The second proposes elimination of certain SHOP functions, suggesting that TPAs or web-brokers may fill in for enrollment functions currently required of SHOP. The proposals most directly impact states operating in the FFM, but all states may wish to consider how federal and state regulations could be adjusted to account for the new potential role of web-brokers and TPAs, with attention to how these entities could support or supplement existing marketplace tools and the consumer protections that might be necessary to ensure fair and secure acquisition of affordable, quality coverage through these entities under the new structures.
NASHP continues its commitment to serve as a resource in monitoring and encouraging dialogue among states on these issues as states develop responses for the Oct 6 deadline. A more detailed analysis of the proposed regulations is available here.