On Thursday, April 13, 2017, the Department of Health and Human Services (HHS) released a final rule aimed at shoring up the Marketplaces created under the Affordable Care Act (ACA). HHS released a proposed rule in February 2017 that included several provisions generally supported by health insurers that participated in the Marketplaces. One open question is whether the final regulations will be enough, as uncertainty over the future of the ACA remains in doubt and multiple insurers have announced plans to exit the markets in 2018. Health plans have until June 2017 to file rates for the 2018 plan year.

HHS generally finalized the proposals with few changes:

• Shortened the open enrollment period to November 1, 2017 – December 15, 2017 to align open enrollment with Medicare’s annual open enrollment period and to encourage more full-year plan enrollments;
• Expanded requirements for individuals enrolling during a special enrollment period (SEP) to provide documentation confirming eligibility;
• Allow health plans to apply premiums to back debt, or deny coverage to individuals with premium debt;
• Increase the actuarial value variation requirements for determination of metal levels of coverage; and
• Relax the network adequacy requirements.

Annual Enrollment Period Shortened, Aligned with Medicare Open Enrollment

HHS has now finalized reducing the open enrollment period for the 2018 benefit year, from November 1, 2017 – January 31, 2018 to November 1, 2017 – December 15, 2017. This shorter open enrollment period is consistent with the scheduled open enrollment periods for 2019 and beyond. Initially, HHS planned to wait until the 2019 benefit year to implement these changes, and initially thought a longer transition period was necessary prior to moving into this shorter enrollment period. As they suggested in the proposed rule, they now believe that the market and issuers are now ready for this adjustment sooner.HHS aimed to better align these dates with many employer-based coverage open enrollment periods, and Medicare Advantage open enrollment periods; although many commenters disagreed. Many expressed concerns that enrollees in employer-based insurance and the Exchanges have different characteristics, and the process for enrolling is significantly different.

HHS believes this change will reduce opportunities for adverse selection and would encourage healthier individuals who might otherwise sign-up for partial year coverage (by delaying enrollment until January 2018) to instead enroll in full-year coverage. Some commenters disagreed with this, stating this would do nothing to reduce premiums or improve the risk pool. Instead, they were concerned that it would lead to confusion, and ultimately discourage enrollment by young healthy people who typically wait until the end of the enrollment period to sign up. HHS responded to these public comments by stating they plan to conduct outreach to consumers, targeting young and healthy individuals, ensuring that they are aware that the deadline for the open enrollment period has changed.

Multiple Changes Made to Special Enrollment Periods in Attempt to Prevent “Gaming” but Stakeholders Express Concerns

In an effort to reduce incentives for individuals to use special enrollment periods (SEPs) in an attempt to delay coverage until it was needed, HHS will require all individuals applying for coverage during an SEP to provide documentation supporting the eligibility within 30 days of enrollment. This requirement will go into effect in June 2017 and is an expansion of a planned pilot program that would have impacted 50% of SEP enrollees. This change will impact federally-facilitated Marketplace plans, but HHS encourages state-based Marketplaces to also enact similar requirements. Health plans supported these proposals.

Commenters expressed concern that the requirements will act as a disincentive for healthy individuals to enroll throughout the year, as only sicker individuals will be motivated to complete the paperwork requirements. Concern was also raised that vulnerable individuals could have difficulty meeting the documentation requirements and that they would act as a functional barrier to coverage. HHS acknowledged this risk and stated that the agency plans to monitor the impact on various populations. The agency will also allow individuals to submit a written statement explaining why the individual is unable to meet the documentation requirements. Electronic resources, such as automatic confirmation of births via public records, will also be used when possible.

Additionally, HHS will prevent individuals from using SEPs to change metal levels or change plans. This is an attempt to prevent individuals from increasing or decreasing coverage in response to health needs throughout the year. Commenters criticized this proposal, saying that it would place newborns at risk, as parents would not be able to change coverage levels in response to the infant’s health care needs, which would be difficult to know before birth. HHS noted in response that children may enroll in plans individually, and a parent would be able to use an SEP to enroll the child in a plan with a higher level of coverage if necessary.

Individuals will also not be eligible for an SEP if they lose coverage due to non-payment of premiums. When a couple claims a marriage SEP, at least one member of the couple must have proof of minimum essential coverage at some point in the 60 days prior to marriage in order to be eligible for the SEP.

HHS Finalizes Proposal to Close a Guaranteed Issue Loophole by Allowing Health Plans to Apply Premiums to Back Debt for All Individuals, or Deny Coverage Until Debt is Satisfied

A loophole exists in current rules that allows individuals to have guaranteed access to coverage, even if they owe debt due to non-payment of premiums, by simply enrolling in a different plan offering the next plan year. For example, if an individual was enrolled in a health plan’s Bronze plan in 2016, and had that coverage terminated for non-payment, the individual would be able to sign-up for a Silver plan from the same plan in 2017, with no impact on their ability to obtain coverage or requirement that their back debt be paid. HHS estimates that 10% of customers had their coverage terminated in 2016 due to premium non-payment.

HHS proposed to modify the guaranteed issue requirement to allow health plans to apply premium payments made in one year to any back-debt owed by the same individual from the prior 12 months if the individual applies for coverage from the same issuer, regardless of which plan the individual selects. To the extent permitted by state law, plans would effectively be allowed to deny coverage entirely unless the past-due premium was paid. This proposal is similar to one supported by the BCBSA in a meeting with White House and HHS officials in early February. Notably, it required issuers to apply this policy uniformly to all individuals or employers in the market, and DID NOT allow issuers to condition coverage on payments owed to a different issuer, or on non-payment by anyone other than the contractually-obligated payer.

The proposed rule solicited comments as to whether issuers should be allowed to accept a “threshold amount” of past-due premiums as payment in full. All commenters supported this approach, and accordingly the final rule allows issuers to set this threshold in accordance with state law, and mandates that it must be done so uniformly, and without regard to health status.

In addition, HHS also solicited comment on what degree of notice should be required of issuers who adopt a policy of applying payments to back debt. In the final rule, HHS declined to require a separate notice, but requires issuers to clearly describe in their enrollment materials and any notice of non-payment of premiums the consequences of non-payment on future enrollment.

In response to commenters urging expansion of this proposal to allow for collection of payments owed to a different issuer, the final rule allows issuers to refuse coverage unless past-due premiums are paid to an issuer within the same “controlled group.” HHS declined to expand the rule to cover dependents who were not contractually obligated to pay, as well as to change the 12 month lookback period.

Finalized Changes in De Minimis Variation Amounts Aim to Stabilize Premiums, but May Lead to Higher Cost-Sharing Requirements

The ACA established actuarial value (AV) requirements that a plan must meet, which is determined by the plan’s coverage of essential health benefits (EHBs) for a standard population. For example, Bronze plans must have an AV of 60% (in which the plan covers the costs of approximately 60% of EHBs), Silver plans must have an AV of 70%, Gold plans must have an AV of 80% and Platinum plans must have an AV of 90%. There is currently an allowable variation of +/- 2 percentage points (e.g., Bronze plan AVs may fluctuate between 58%-62%).

HHS finalized an increase in this allowable variation for plans beginning in 2018 to a range of -4%/+2% (e.g., Bronze plan AVs would be able to fluctuate between 56%-62%). In the short run, it is likely that this change in policy would lead to higher out-of-pocket costs for consumers. The additional flexibility could lead to modestly lower premiums (~1%-2% less) which could encourage enrollment of healthier individuals, therefore improving the overall risk pool.

These changes would not apply to the de minimis range for Silver plan variations. The ranges would remain at +/- 1% for Silver plans with an AV of 73%, 87%, and 94%. For expanded Bronze plans, the de minimis range would be changed from +5%/-2% to +5%/-4% (expanded Bronze plans must cover and pay for at least one major service, other than preventative services, before the deductible or otherwise meet the requirements of high-deductible health plans).

Comments on the proposals that were finalized ranged from outright opposition and voicing that changing the de minimis range was unlawful, to support of the changes in order to assist with premium impacts and to stabilize the market. HHS finalized the changes as proposed because the agency felt that it provided enough flexibility necessary for new plans to be developed while ensuring comparability of plans within each metal level. Commenters voiced concern about the potential impact on increasing cost sharing for consumers, especially in the form of higher deductibles which was an area where they noted that consumers are already struggling.

Network Adequacy Requirements, Including Those for “Essential Community Providers,” Relaxed

With this final rule, HHS is finalizing their proposals related to network adequacy. For 2018, states that use the federally-facilitated Marketplace will be allowed to rely on State reviews for network adequacy provided that the state has a review process that is at least equal to the “reasonable access standard” established by HHS. In states that do not have a sufficient standard, HHS will rely on an issuer’s accreditation from an HHS-recognized accrediting entity. A plan would be deemed to have an adequate network if the plan is accredited by the National Committee for Quality Assurance (NCQA), URAC, or the Accreditation Association for Ambulatory Health Care (AAAHC). Unaccredited issuers would be required to submit in states without unique network adequacy will be required to submit an access plan as part of the QHP Application.

HHS notes that they received comments both in support and opposed to the proposal to rely primarily on State reviews of network adequacy. Those opposed expressed concerns that it could decrease access and create disparities in both access to and quality of providers. In their response, HHS states that they recognize the importance of access to adequate networks but don’t believe that relying on States will translate to decreased access to providers.

ACA rules require plans to include at least 30% of essential community providers (ECPs) operating within a plan’s geographic area in their network. HHS is finalizing lowering this threshold to 20%, which was previously used for the 2014 plan year. In addition, for plan year 2018, issuers will be able to “write-in” ECPs to count toward satisfying the ECP standard, allowing them to deviate from the master list maintained by HHS.

Comments were both supportive of and in opposition to this policy. Those opposed expressed concerns that lowering the threshold would result in access barriers to care for low-income consumers, restricted access to specialty care, and treatment interruptions. In addition, many commenters stated that lowering the threshold to reduce the administrative burden was unnecessary since 94 percent of issuers satisfied the 30 percent threshold. In its response, HHS reiterated its belief that the lower threshold reduces the burden, particularly for issuers that relied heavily on the write-in process, while still adequately protection consumer access to ECPs.