10 Significant Changes within HHS’ Proposed Rule on Market Stabilization

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On February 15, 2017, the Department of Health and Human Services (HHS) published a draft version of its proposed Market Stabilization Rule. The proposal aims at stabilizing the Affordable Care Act (ACA) individual and small group markets.

Here is a quick summary of the changes:

  1. Guaranteed Availability of Coverage – According to current guidance, individuals terminated due to non-payment could re-enroll in coverage under another health insurance product, without being required to pay past due premium amounts. Additionally, health insurers are presently allowed to attribute premium payments to prior non-payments for individuals that renew coverage in the same product.  HHS’ proposed Market Stabilization Rule will permit insurers to apply premium payments made to new coverage – whether the same or another health insurance product – to non-payment premium debt from the same insurer, within the past 12 months. It will also allow insurers to refuse to effectuate coverage for failure to pay premiums. A policy will be adopted that could require a policyholder whose coverage is terminated for nonpayment to pay all premiums owed within the last year to enroll in new coverage with the same insurer.
  2. Annual Open Enrollment Period (OEP) – HHS has proposed to alter the 2018 annual open enrollment period to November 1, 2017 to December 15, 2017, rather than the previously established enrollment dates of November 1st through January 31st. Under the proposed rule, Marketplace enrollees would gain coverage effective on January 1, 2018.
  3. Special Enrollment Periods (SEP) Verification – HHS has proposed to conduct pre-enrollment verification of eligibility for all categories of SEPs for new healthcare.gov consumers. Beginning in June 2017, the Exchange would verify eligibility of all new consumers seeking to enroll in coverage for all SEP categories. After completing an application and selecting a plan, the enrollment would be pended and the consumer would have 30 days to provide documentation. Within the draft Market Stabilization Rule, HHS has asked for public comment on whether to require verification on all new SEPs or to leave a small percentage unverified to serve as a control group for purposes of claims comparison.
  4. Special Enrollment Period Plan Change Limits – Three changes have been included in the proposed rule to combat adverse selection. These changes aim at limiting enrollees with SEPs to enroll in a new plan or change metal levels. The changes include:
    1. If an enrollee qualifies for a SEP as the result of gaining a new dependent, the Marketplace can allow the enrollee to add the dependent to their current qualified health plan (QHP). However, if the insurer has business rules that do not allow a new dependent, the Marketplace may allow the enrollee and the new dependent to enroll in another QHP with the same or an adjacent metal level;
    2. If a current enrollee or their dependents are not enrolled in a silver metal level qualified health plan (QHP) and qualify for a SEP as the result of becoming eligible for cost-sharing reductions (CSRs), the Marketplace can allow the enrollee and the dependent to enroll within a silver level plan only; and
    3. For all other SEPs, HHS has proposed that the Marketplace must only allow enrollees and dependents to make enrollment changes in the same plan or change to another plan within the same metal level (if plans are available). This would affect loss of minimum essential coverage (MEC), violation of a material contract provision, gained access to a new QHP due to a permanent move, and material plan or benefit display error.
  5. Tighten Special Enrollment Periods (SEP) – The proposed ruling would strengthen and tighten existing SEP policies. These changes would impact:
    1. Loss of minimum essential coverage (MEC) – Insurers would be permitted to reject an enrollment with a loss of MEC reason code if they have a consumer that was terminated from coverage for non-payment. Additionally, HHS would allow the Marketplace to collect and store insurer termination data (for non-payment of premium) and prevent such consumers from qualifying for a MEC SEP within 60 days of termination for non-payment.
    2. Marriage – For new consumers enrolling in coverage following a marriage SEP, one spouse must have a previous MEC.
    3. Permanent Move – To be eligible for the permanent move SEP, consumers must provide documentation to prove both the old and new address, and that they had coverage at the previous address.
    4. Exceptional Circumstances – HHS has proposed to limit the use of exceptional circumstances SEP. This would be achieved by applying a rigorous test for future uses, such as supporting documentation requirements.
  6. Continuous Coverage – The proposed rule included policies which would promote continuous coverage, encouraging consumers to enroll during the annual open enrollment period. Presently, HHS has not proposed such polices but has sought public comment on the policies that would align with this goal.
  7. Qualified Health Plan (QHP) Certification – HHS has proposed to update the 2018 benefit year’s qualified health plan certification timeline. This measure would provide health insurers with additional time to finalize and submit products and for State form review and rating files.
  8. Actuarial Values – HHS presently permits a de minimis variation of +/- 2 percentage points and provides additional flexibility for certain bronze plans for an allowable variation of -2/+5 percentage points. The draft ruling has proposed amendments to the definition of de minimis to a variation of +2/-4 percentage points for all non-grandfathered plans. This variation would not apply for silver plan variations; the de minimis variation for a silver plan would continue to be one percentage point. Additional flexibility for certain bronze plans would continue to apply. This would result in the following:
    Welltheos-Chart-3-2-17
  9. Network Adequacy – Rather than performing a Federal time and distance standard evaluation, HHS has proposed to defer the review of network adequacy to the States, so long as the State has a sufficient adequacy review process. If finalized, HHS would defer to the States’ review in States with authority that is at least equal to the reasonable access standard. For States that do not have the ability to conduct a sufficient network review, HHS would apply a standard for the 2018 benefit year. This standard would have HHS rely on an issuer’s commercial or Medicaid accreditation from an HHS-recognized entity, such as NCQA, URAC, and AAHC.
  10. Essential Community Providers – HHS had proposed to revert to the essential community provider (ECP) minimum participation percentage, which was utilized during the 2014 benefit year. Rather than requiring issuers to contract with at least 30 percent of available ECPs in a service area, issuers would be required to contract with at least 20 percent.

The public commentary period will remain open until March 7, 2017.

The views and opinions expressed by the authors on this blog website and those providing comments are theirs alone, and do not reflect the opinions of Softheon Inc. (dba Welltheos) or any employee thereof.

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Yvonne Villante
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Yvonne Villante

Senior Research Manager, Healthcare Reform at Welltheos
As our Senior Research Manager, I work closely with our Solution Architect, Product Management, and Sales teams. My role centers around competitive and market analyses, constructing premium content (whitepapers, research briefs, infographics), curating stories for our newsletters, and blogging.

I earned my BAA from the State University of New York at Stony Brook and MBA in Healthcare Administration from the University of Ohio (Athens). I was born and raised on Long Island, NY and enjoy capturing what the island has to offer through photography.
Yvonne Villante
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