On February 15, 2017, the Department of Health and Human Services (HHS) released a proposed rule that includes several modifications intended to help stabilize the Affordable Care Act (ACA) Marketplace health plans in 2018. The rule includes the following changes:

• A shift in the annual open enrollment period to encourage more full-year plan enrollments;
• Required pre-enrollment verification of eligibility for individuals seeking coverage outside of the annual open enrollment period;
• A revision in regulations allowing health plans to apply premium payments to an individual’s past debt owed to the same issuer within the past 12 months;
• An increase in the actuarial value variation requirements for determination of metal levels of coverage; and
• Flexibility for states using federally-facilitated Marketplaces to establish unique network adequacy standards for plans operating within that state.

Comments on the proposed rule are due no later than 5:00 pm ET on Wednesday, March 7, 2017. A final rule would be expected shortly thereafter, as health plans must start filing rates for 2018 plans in April 2017. It remains to be seen if this rule will be enough to shore up the Marketplaces for 2018; Humana announced yesterday that they plan to stop offering Marketplace plans in 2018, while United Healthcare had announced plans to leave “most” states in 2018 in April 2016. Aetna, Anthem, Cigna, and Molina Healthcare have previously stated that their future participation plans are uncertain.

Proposal Would Accelerate Shorter Open Enrollment Period

HHS is proposing to reduce the open enrollment period for 2018 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. The time frame is also aligned with many employer-based coverage open enrollment periods, and the Medicare open enrollment period.

HHS believes that 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.

As of now, the change would only apply to federally-facilitated Marketplaces; HHS is seeking comment on the capacity of state-based Marketplaces to shift to a shorter open enrollment period in 2018.

All Individuals Would be Required to Verify Eligibility for Special Enrollment Periods Starting in June 2017

The ACA allows for special enrollment periods outside of the annual open enrollment for individuals who experience a significant life change, such as marriage, the loss of a job, or the birth or adoption of a child. These individuals are allowed to enroll in, or change existing enrollment, due to these events. Currently, individuals can “self-attest” that they meet the requirements for a special enrollment period, though HHS does require all individuals applying for special enrollment based on certain triggering events to provide documentation.

Under the proposal, all individuals applying for coverage during a special enrollment period would be required to provide verification of such a change. An individual’s coverage would be “pending” until such verification could be confirmed. HHS had previously announced plans to roll-out a pilot program in June 2017 that would require pre-verification of half of individuals applying for coverage during a special enrollment period. If finalized, this would require all individuals to be pre-verified before coverage could begin. HHS estimates that this change may impact 1.3 million individuals.

Individuals would have 30 days from the date of application to submit any documentation necessary for verification. The start date of coverage would be the date of plan selection, meaning that individuals would have retroactive coverage if their verification is approved, and would also be required to pay a premium for that month. Individuals would be able to change the effective date of coverage if a delay in the verification process results in a delay of coverage such that the individual would be required to pay two or more months of retroactive premiums.

Plans would be able to reject enrollment applications for individuals applying for a special enrollment due to loss of coverage, when that loss of coverage was because of non-payment of premiums. Exchanges would be able to collect this information so that the Exchange may automatically prevent those individuals from qualifying.

The agency believes that this change would enhance market stability and limit premium rate increases.  America’s Health Insurance Plans (AHIP), the Blue Cross Blue Shield Association (BCBSA), and the National Association of Health Underwriters had previously advocated for more verification for individuals enrolling during a special enrollment period.

HHS Tries 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 is proposing to modify that requirement to allow health plans to apply premium payments made in one year to any back-debt owed by the same individual from a previous year if the individual applies for coverage from the same plan, regardless of which plan the individual selects. Plans would also be allowed to deny coverage entirely unless the past-due premium was paid. HHS acknowledges that this does not prevent an individual from “plan shopping” – or switching from one plan issuer to another plan issuer. It also does not prevent any individual other than the person contractually responsible for premium payment from purchasing coverage. This proposal is similar to one supported by the BCBSA in a meeting with White House and HHS officials in early February.

Plans would be required to apply the debt-payment rules to all customers equally. The agency is seeking comment on whether plans should be able to implement a threshold policy in which the plan could consider an individual to have satisfied their debt after paying a specified percentage of the debt.

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

The ACA establishes 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 is proposing to increase this allowable variation 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. However, the additional flexibility could lead to modestly lower premiums (~1%-2% less) but could also lead to higher enrollment of healthier individuals, therefore improving the overall risk pool.

The proposal 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).

States Would Have Authority to Determine Network Adequacy Requirements and Modify Essential Community Provider Inclusion Standards

Current network adequacy requirements for federally-facilitated Marketplace plans use time and distance requirements established by HHS. Plans must have a sufficient number of providers within an established time and distance from the majority of plan participants in order to meet adequacy requirements. States operating their own Marketplace are allowed to establish unique network adequacy requirements.

For 2018, HHS proposes to allow states using the federal-facilitated Marketplace to also establish unique network adequacy requirements. This standard must be at least equal to the “reasonable access standard” established by HHS. If a state does not establish such a standard, 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 health plans in states without unique network adequacy requirements would still require review and approval by HHS.

HHS anticipates that this change will increase flexibility in network design for plans, but could also exacerbate existing problems with network access.

ACA rules also require plans to include at least 30% of essential community providers (ECPs) operating within a plan’s geographic area in their network. ECPs serve predominantly low-income and medically underserved individuals, and include 340B drug program providers. HHS is proposing to lower the threshold from 30% to 20%. Approximately 6% of health plans offered in 2017 do not meet the current 30% standard, but would meet the lower 20% standard. Plans will also be able to deviate from a master list of ECPs maintained by HHS and “write-in” ECPs who are not on the master list.

HHS believes that less expansive network size requirements will lead to cost-savings for health plans, but could lead to cost increases for consumers if they experience increased travel time and wait time for appointments or otherwise lose access to a particular provider.

Do you have questions about how this proposed rule might impact you or your business? Would you like help preparing comments? Contact us at 202-558-5272 or melissa@appliedpolicy.com.