CMS Issues Final Rule Governing Exchanges, Qualified Health Plans For 2015

The Centers for Medicare and Medicaid Services (CMS) has issued a final rule establishing standards related to health insurance exchanges and insurance market standards under the Patient Protection and Affordable Care Act (ACA). The final rule is scheduled to be published in the May 27 Federal Register.

Specifically, the final rule establishes standards related to product discontinuation and renewal, quality reporting, nondiscrimination standards, minimum certification standards and responsibilities of qualified health plan (QHP) issuers, the Small Business Health Options Program (SHOP), and enforcement remedies in federally-facilitated exchanges. Proposed regulations on the ACA’s premium stabilization programs and medical loss ratio (MLR) program also have been finalized. In fact, the majority of the items found in the proposed rule will be finalized as they were proposed.

Additional SHOP Options. The final rule aligns the start of annual employer election periods in federally-facilitated (FF)-SHOPs for plan years beginning in 2015 with the start of open enrollment in the individual market exchange for the 2015 benefit year to minimize confusion and maximize efficiency, the CMS noted. In all SHOPs, the 30-day minimum time frame for the employer and employee annual election periods has been eliminated. The rule also lists the conditions under which a SHOP would be permitted to not implement “employee choice” in which employers would allow employees to choose one plan, rather than any health plan within a metal tier, if their state insurance commissioner believes it is in the best interest of consumers in their state.

Premium stabilization programs. In the risk corridor program, the final rule raises the ceiling on allowable administrative costs and raises the floor on profits by 2-percentage points. This adjustment will be applied uniformly in all states for 2015 to help with unexpected administrative costs and pricing uncertainties, noted the CMS. In addition, reinsurance contributions will be allocated to the reinsurance payment pool before payments for administrative expenses and to the Treasury if there is a shortfall in the collection of the reinsurance fee.

MLR program. The CMS finalizes various amendments to the MLR program, including standards that would modify the timeframe for which issuers can include their ICD-10 conversion costs in their MLR calculation and account for the special circumstances of issuers during the transition to the 2014 reformed market. The core requirements of the MLR program, for example the requirement that insurers spend at least 80 percent (small group market), or 85 percent (large group market) of premiums on health care and quality improvement, are not affected by these proposed adjustments.

Discontinuation. The ACA provides that health insurance issuers in the group and individual markets must ensure that unless an exception applies, coverage is guaranteed as being available and renewable. The final rule provides information on when a modification to a health plan, now referred to as a “product,” would not constitute the discontinuation of one product and creation of a new product. The final rule also provides that issuers of plans use standard consumer notices in a format designed by the HHS when plans are discontinued or renewed. Furthermore, the final rule provides that determination of whether a coverage modification constitutes continuance of an existing product will be made based on federal standards, and the federal standards will preempt conflicting state definitions.

Contribution percentages. IRC Sec. 5000A states that an individual must maintain minimum essential coverage for each month, qualify for an exemption, or make a shared responsibility payment. The individual would qualify for an exemption from the payment if the payment required exceeds a particular percentage of his or her household income. In 2014 that percentage was set at 8 percent. The final rule establishes the percentage as 8.05 percent for 2015, with subsequent calendar years’ percentage rates to be published in the annual HHS notice of benefits and payment parameters.

Nondiscrimination. In addition to finalizing non-discrimination provisions from the earlier proposed rule, CMS also revised 45 CFR sec. 155.120(c)(2) to clarify that organizations limiting their provision of certified application counselor services to a defined population must still comply with nondiscrimination provisions with respect to the provision of services to the defined population.

Civil money penalties. The final rule establishes CMS’ grounds for imposing civil money penalties (CMPs) on persons who provide false or fraudulent information to the exchanges, as well as persons who use or disclose information improperly. Grounds for imposing a CMP include:

  • negligent failure to provide correct information;
  • knowing and willful provision of false of fraudulent information; and
  • knowing and willful use or disclosure of information in violation of ACA Sec. 1411(g).

Privacy and security regulations at 45 CFR 155.260 will be amended to include the new CMP provisions. The final rule also provides that the HHS may impose CMPs against navigators, non-navigator assistance personnel, certified application counselor designated organizations, and certified application counselors in federally-facilitated exchanges if the entity or individual violates federal requirements regarding its activities.

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