CMS streamlines, simplifies, empowers, unburdens exchange regulations

The HHS Notice of Benefit and Payment Parameters for 2019 adopts payment parameters and provisions related to the risk adjustment and risk adjustment data validation programs, cost-sharing parameters, and user fees for federally-facilitated exchanges (FFEs) and state exchanges on the federal platform as described in the advance release and fact sheet for the final rule. The amendments to the regulations advance the Administration’s goals to streamline state and issuer requirements, simplify eligibility and enrollment processes for consumers, increase state flexibility, improve affordability, strengthen program integrity, empower consumers, promote stability, and reduce unnecessary regulatory burdens imposed by the Patient Protection and Affordable Care Act (ACA) in the individual and small group health insurance markets. The proposed rule was published in the Federal Register (82 FR 51052) on November 2, 2017.

Essential health benefits (EHB).

The final rule provides states with additional flexibility in how they select their EHB-benchmark plan as established by ACA section1302 for plan years beginning in 2020. States will be able to:

  • choose from one of the 50 EHB-benchmark plans that other states used for the 2017 plan year;
  • replace one or more of the ten required EHB categories of benefits under its EHB-benchmark plan used for the 2017 plan year with the same categories of benefits from another state’s EHB-benchmark plan used for the 2017 plan year; or
  • select a set of benefits to become its EHB-benchmark plan, provided the EHB-benchmark meets the scope of benefits requirements and other specified requirements.

These options are subject to additional requirements, including two scope of benefits conditions.

Qualified health plan (QHP) certification standards.

The final rule expands states’ role in the QHP certification process established by ACA section1301 for FFEs if the state has a sufficient network adequacy review process for plan years 2019 and beyond. State-based exchanges that use the federal platform (SBE-FPs) to enforce FFE standards for network adequacy and essential community providers’ requirements have been eliminated. SBE-FPs will have the flexibility to establish their own standards.

Special enrollment periods (SEPs).

CMS has aligned the enrollment options for all dependents who are newly enrolling in exchange coverage through an SEP and added to an application with current enrollees regardless of the SEP under which the dependent qualifies. Pregnant women who are receiving health care services through Children’s Health Insurance Program (CHIP) coverage for their unborn child will be allowed to qualify for a loss of coverage SEP upon losing access to this coverage. Finally, CMS exempts consumers from the prior coverage requirement that applies to certain SEPs if they lived in a service area without QHPs available through an exchange during a recent enrollment period for which they were eligible.

Risk adjustment.

The risk adjustment model, established under section 1343 of the ACA will be recalibrated for the 2019 benefit year using blended coefficients from the 2016 enrollee-level External Data Gathering Environment (EDGE) data and 2014 and 2015 MarketScan data. CMS will provide states with the flexibility to request a reduction to the otherwise applicable risk adjustment transfers in the individual, small group, or merged market by up to 50 percent beginning with the 2020 benefit year in states where HHS operates the risk adjustment program.
CMS made numerous changes to HHS-Risk Adjustment Data Validation (HHS-RADV) audits used to validate the accuracy of diagnosis codes submitted by issuers for the risk adjustment transfer calculation. The final rule implements a simplified approach to making payment adjustments as a result of HHS-RADV error rates that will only adjust an issuer’s risk score when the error rate for a group of hierarchical condition categories (HCCs) is an outlier relative to the error rates for that group of HCCs for all issuers in HHS-RADV for the benefit year being validated.

Premium tax credit (APTC).

For households for which trusted data sources such as the Internal Revenue Service and the Social Security Administration reflect income below 100 percent of the federal poverty level by more than a reasonable threshold amount, CMS will generate annual income inconsistencies when those households attest to income that is higher than the amount found in income data received from the exchange. CMS removed the requirement prohibiting exchanges from discontinuing APTC because the tax filer failed to file a tax return and reconcile APTC paid for past benefit years, if the exchange does not first send notice directly to the tax filer (see ACA sections 1331, 1411, 1412).

Medical loss ratio (MLR).

CMS has amended the regulations mandated by section 1331(b)(e) of the ACA to reduce the burden associated with the Quality Improvement Activity reporting requirements, modified the information a state must provide to justify a request to adjust the 80 percent MLR standard in the individual market, and amended provisions to provide more flexibility to states by permitting request for adjustments under certain circumstances.

Small Business Health Options Program (SHOP).

CMS has streamlined the SHOP enrollment process in the SHOP exchanges (see ACA section 1321) using the federal platform for employers to use an issuer-based enrollment approach, allowing SHOPs to eliminate the online enrollment process and employers to enroll directly with an exchange-registered agent, broker, or issuer. SHOP exchanges are no longer required to provide employee eligibility, premium aggregation, and online enrollment functionality and for plan years beginning on or after January 1, 2018.

Rate review.

The final rule (1) exempts student health insurance coverage from the federal rate review process; (2) increases the default threshold for rate increases subject to review to 15 percent from 10 percent; (3) permits states with Effective Rate Review Programs to have different submission deadlines for issuers that only offer non-QHPs; and (4) reduces the advanced notification that states must give CMS about the posting of rate increases from 30 days to 5 business days if the state will be posting prior to the date specified by CMS.

Related documents.

CMS also issued a Final Annual Issuer Letter to provide operational and technical guidance to issuers that want to offer QHPs in FFEs for plan years beginning in 2019; new guidance expanding hardship exemptions; and a bulletin extending the transition period of the ACA’s compliant coverage in the individual and small group health insurance markets for until 2019.

SOURCE: HHS final rule, advance release, scheduled to be published in the April 17 Federal Register.

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