This afternoon, the Trump Administration released the first proposed rule under regular order concerning the Affordable Care Act’s Marketplaces (or Exchanges). The rule, which covers benefit and payment parameters for qualified health plans (QHPs) operating on and off the Marketplaces, would impact plans offered in 2019. This is another signal that despite the uncertainty surrounding the status of the ACA, work continues as usual to carry out the law for the foreseeable future, but the Trump Administration is determined to put their stamp on it.
Perhaps unsurprisingly, the rule includes proposals to delegate additional authority to states, increase regulatory flexibility, and reduce costs. Perhaps surprisingly, the rule overall is milder than what some may have expected, and includes many proposals that seem aimed not at undermining the Marketplaces, but instead addressing legitimate administrative issues that stakeholders have raised since 2014.
Stakeholders will have a brief time to provide input: comments are due Monday, November 27, 2017. A final rule should be released in the early parts of 2018, as plans will need to begin preparing bids for review around that time for submission in mid-2018.
If you have questions about how this proposed rule could impact your business or products, contact Melissa Andel, Director of Health Policy, at (202) 558-5272 or melissa@appliedpolicy.com.
States Could See Additional Authority Regarding Essential Health Benefits, But Not as Much as Some May Want
Essential health benefits (EHBs) are 10 benefit categories that QHPs are required to cover, including hospital services, physician services, prescription drugs, maternity care, and mental and behavioral health, among others. While the expanded benefits are popular with many Americans, they also add a lot of costs to health plans, leading to increased premiums and cost-sharing. Specific services under each EHB category are determined at the state level; each state (or HHS, if the state declines to do so) identifies a “benchmark plan.” QHPs offered in a state must offer benefits at least as comprehensive as the benchmark plan.
If finalized, beginning in 2019, states would have more options of benchmark plans to choose from, including benchmark plans used in other states. Republicans have long championed the sale of health insurance across state lines as a viable option to reduce health insurance costs. The proposal appears to allow states to experiment with that concept, especially for certain higher-cost benefit categories, but perhaps in a more controlled manner than simply opening up the sale of health insurance across state lines (which is already allowed under the ACA). The proposal stops short of allowing states to alter the 10 EHB categories themselves, another popular proposal supported by many Republicans.
On the subject of benchmark plan selection, HHS may have tried to slip in a proposal under the radar that could grant states more flexibility to select a narrower plan as a benchmark. The ACA ties a benchmark plan to a “typical employer plan.” The proposed rule includes a passage that would redefine “typical” as any plan with 5,000 or more covered lives. This could potentially open the door to a state selecting a more narrow plan as a “benchmark” which would likewise reduce the mandated benefits for QHPs.
Federally-Facilitated Marketplaces May See More State Involvement
The ACA empowers states to establish their own individual Marketplace/Exchange, select a benchmark plan, and review and approve plan rates. In states that do not run their own Marketplace, HHS has authority to exercise that power (“federally-facilitated Exchanges” or FFEs). FFEs are usually seen in states where the Governor and/or legislature oppose the ACA. Perhaps counterintuitively (and against stated political philosophies), this course of action abdicates state power to exercise control over the QHPs sold in their state back to the federal government.
Under the proposal, states with FFEs would regain the ability to assume a larger role in the QHP certification process within their own state, including the ability of states to enforce network adequacy standards. This could discourage states from establishing their own exchanges in the future. It is unclear whether states that declined to exercise this authority previously will do so now. It would require the state to invest in the administrative costs necessary to carry-out the reviews, which could discourage states from doing so.